Continental Resources Inc. said it was ahead of schedule with a multi-year program to develop oil and liquids-rich assets in Oklahoma’s stacked reservoirs, but it will hold the line on spending, even as a rebound in oil prices is projected to bring close to $1 billion in free cash flow by year’s end.

The Oklahoma City-based independent raised its net oil production target for Project SpringBoard to 18,000 b/d in 3Q2019, up from a previous goal of 16,500 b/d. The decision follows growing production from the project, which averaged 8,700 b/d in 1Q2019 and 14,000 b/d over a 28-day period in April.

Continental maintained plans to spend $2.6 billion on capital expenditures (capex) in 2019, including about $2.2 billion in drilling and completions, evenly divided between the Bakken and Oklahoma. Also unchanged was full-year production guidance of 190,000-200,000 b/d for oil and 790-810 MMcf/d for natural gas. It also is deploying 19 rigs in Oklahoma and six in the Bakken. Three of the 12 rigs focused on SpringBoard in 4Q2018 were moved to other South Central Oklahoma Oil Province, i.e. SCOOP assets.

“We do recognize that oil prices are well above the $55 price at which we budgeted and provided guidance,” CFO John Hart said of West Texas Intermediate (WTI) prices during an earnings call Tuesday. “At $55, we were projecting free cash flow of $500-600 million. Recall that every $5 change in WTI is about $325 million in free cash flow for the year. We are now through a quarter of the year, and with the rise in oil prices we are tracking toward $1 billion of free cash flow for 2019…

“If these higher prices are sustained, we will make a determination of the proper use of additional cash flow later in the year. Any use of the incremental cash will be prioritized toward debt reduction and building free cash flow.”

CEO Harold Hamm noted there was “an unusual amount of interest with acquisitions” across the exploration and production sector. “There is a realization that companies are undervalued. And certainly, we’ve seen a correction with some of that just recently. We continue looking at strategic opportunities that come around and we’ve seen few of those recently.”

A surge in production from the Bakken boosted overall production in 1Q2019, while smaller year/year (y/y) increases were reported in the SCOOP and the Sooner Trend of the Anadarko Basin mostly in Canadian and Kingfisher counties, aka the STACK.

Continental reported production of 332,236 boe/d in the first quarter, up 15.6% from 1Q2018 and 2.5% sequentially. Bakken production averaged 199,423 boe/d in 1Q2019, up 23.6% from the year-ago quarter and 8.5% sequentially, while SCOOP production was 67,659 boe/d, up 9.1% from 1Q2018 and 0.6% sequentially. STACK production averaged 56,513 boe/d, up 5.9% y/y but down 10.2% from 4Q2018.

The company completed and turned to sales 58 net operated wells during the first quarter, with 40 in the Bakken, 13 in the SCOOP and five in the STACK. Continental said it also completed three step-out wells in the Bakken, as well as its first six wells targeting the Woodford Shale as part of Project SpringBoard.

Net income was $187 million (50 cents/share) in 1Q2019 from $233.9 million (63 cents) in the year-ago quarter. Revenues totaled $1.12 billion, versus $1.14 billion in 1Q2018.