Continental Resources Inc. has upwardly revised its 2022 forecast for capital spending, as well as oil and natural gas production, management said Thursday. 

Oklahoma City-based Continental is the top producer in the oily Bakken Shale and the gassy, liquids-rich Anadarko Basin. Following a pair of recent acquisitions, it also is the No. 2 leaseholder in the Powder River Basin and the No. 10 leaseholder in the Permian Basin.

Continental’s updated capital program entails spending of $2.6-2.7 billion, up from previous guidance of $2.3 billion. The spending increase is expected to enhance the company’s return on capital employed and free cash flow versus previous projections, management said.

Continental in late 2021 snapped up Pioneer Natural Resources Co.’s position in the Permian’s Delaware sub-basin in a deal valued at $3.25 billion. This followed a $215 million acquisition of 130,000 net acres in the oily Powder River Basin from Samson Resources II LLC.

The new assets are showing “better than expected productivity, capital efficiency and resource potential,” COO Doug Lawler told analysts during a conference call to discuss first quarter earnings. Lawler joined Continental’s C-suite in January after serving as Chesapeake Energy Corp. CEO from 2013-2021.

Continental reported average daily production of 373,810 boe/d during the first quarter, including 194,767 b/d oil and 1.07 Bcf/d natural gas. These figures compare to 307,942 boe/d, 151,852 b/d and 936 MMcf/d in the year-ago period.

The Bakken led Continental’s quarterly oil and gas production at 171,401 boe/d, up from 160,577 boe/d in the first quarter of 2021. Anadarko output rose to 143,963 boe/d from 138,386 boe/d.

In the Permian, production from the former Pioneer assets was 40,248 boe/d. Powder River Basin production grew to 11,653 boe/d from 2,464 boe/d in the year-ago period.

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Oil production is now expected to average 200,000-210,000 b/d in 2022, versus the prior forecast of 195,000-205,000 b/d. Continental expects to end the year producing about 220,000-230,000 b/d, management added.

For natural gas, Continental has raised its annual production forecast to a range of 1.1-1.2 Bcf/d from 1.04-1.14 Bcf/d.

The uptick in expected gas output is due to “strong early performance from our 2022 gas wells” in the South Central Oklahoma Oil Province (SCOOP) and Southern Trend of the Anadarko Basin, mostly in Canadian and Kingfisher Counties (STACK).

The additional SCOOP and STACK volumes “are benefiting our free cash flow and return on capital employed,” Lawler said. 

CEO William Berry estimated that 19 of Continental’s 20 top producing wells on a boe basis are located in the Anadarko.

Berry noted that Continental has added more than 600,000 net acres to its portfolio over the past 18 months.

He highlighted Continental’s “geographic diversity and commodity optionality” as key to consistently delivering free cash flow.

Continental reported net income of $598 million ($1.65/share) for the first quarter, versus profits of $259.6 million (72 cents) in 1Q2021.