Despite missing investor expectations for the second quarter, Oklahoma City-based Continental Resources Inc. said late Monday it expects total production to be at the top end of its full-year production guidance and the forecast 2018 exit rate.
The onshore-focused independent said second quarter production was 284,059 boe/d, with oil production averaging 157,000 b/d, an increase of 25% from the second half of 2017. Some analysts had been expecting total production to come in at 288,000 boe/d, but the company said quarterly production would have been just above 289,000 boe/d except for “abnormally wet weather” in the Bakken Shale and a “voluntary curtailment” of Midcontinent production to gain access to North Texas markets via its Project Wildcat agreement.
Under the Wildcat agreement, Continental realized a 25 cent/MMBtu uplift for June at Tolar versus selling in-basin. For July first-of-month transactions, the company expects to realize a 31 cent/MMBtu price uplift at Tolar versus selling in-basin.
Continental in April signed a firm transportation agreement with Enable Midstream Partners LP for Project Wildcat’s entire takeaway capacity, a 400 MMcf/d natural gas pipeline connecting the Midcontinent to North Texas.
According to Continental, it has 1.13 million acres in the Midcontinent, where 4Q2017 production totaled 111,422 boe/d (59% oil), including 724,000 acres in the South Central Oklahoma Oil Province (SCOOP) and 409,500 acres in the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties (STACK).
Meanwhile, Continental, the Bakken’s top producer, estimated production for the first half of July averaged 296,000-298,000 boe/d as additional Bakken pads came online. The company had six rigs running in the shale play during the first three months of the year, a level it expects to maintain throughout 2018.
Oil production for the first half of July has also recovered, averaging about 166,000 b/d, up 25% year/year, the company said. For the balance of the third quarter, total production is forecast to average 290,000-295,000 boe/d, about 57% weighted to oil. Fourth quarter oil production should average 58-60%.
“We expect to see a significant uplift in oil production growth in the second half of 2018 driven by our large Bakken pads and our Springer, Woodford and Sycamore assets in Project SpringBoard,” said CEO Harold Hamm. “These assets will not only drive a new wave of oil production in the second half of 2018, but will also provide a catalyst for strong oil-weighted growth in 2019.
Continental launched Project SpringBoard earlier this year in the Springer Shale portion of the SCOOP, covering 70 square-miles and about 45,000 gross (31,000 net) contiguous acres. The company expects to eventually drill about 100 wells targeting the Springer and up to 250 wells into the Woodford and/or Sycamore formations. The project is estimated to have a gross unrisked reserve potential of more than 400 million boe.
The first phase of the project is to focus on the Springer, with a second phase focusing on the Woodford and Sycamore. Three rigs have already begun working as part of the project’s first phase. Continental plans to ramp up Project SpringBoard by adding two additional rigs by mid-year.
Continental has scheduled a conference call on Aug. 8 to discuss second quarter earnings results.
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