Continental boosts drilling budget
Higher-than-expected oil prices have allowed Continental Resources executives to boost the company's 2018 drilling budget by $200 million, executives said Wednesday.
Speaking to analysts on a conference call Wednesday morning, Continental Resources CEO Harold Hamm said the increased drilling budget will allow the company to expand drilling activity in both Oklahoma and North Dakota.
"It's a great position to be in," Hamm said. "We have the opportunity for continued debt reduction, and we have the opportunity to put more money back into the growth and into the assets we're developing. I think there will be a balance there."
The increase is funded by $125 million in new cash flow and $75 million reallocated from other operations, Continental Resources President Jack Stark said. One-third of the additional drilling money will be spent in North Dakota's Bakken, with the other two thirds in Oklahoma.
In the Bakken, Continental crews will use the additional money to complete 60 hydraulic fracturing stages on each horizontal well, up from 40 stages previously.
"The shift is based on results from 70 wells that clearly show 60-stage wells are outperforming previous 40-stage completions," Stark said.
In Oklahoma, the company is speeding up its previously announced drilling program, including the massive SpringBoard project, where the company plans to drill 350 wells in a 70-square-mile area. Two additional rigs will allow the company to drill up to 14 additional wells by the end of the year, Stark said.
The increased drilling budget — along than stronger-than-expected production — led Continental Resources executives to raise the company's 2018 production forecast to a range of 290,000 to 300,000 equivalent barrels per day, up from previous guidance of 285,000 to 300,000 equivalent barrels per day.
While the accelerated drilling program likely will help boost 2018 production, most of the benefit will be seen in the future, said John Hart, Continental Resources' senior vice president, chief financial officer and treasurer.
"The greatest benefit of the capital investment announced yesterday will be seen in 2019 and beyond as the accelerated activity results in increased oil production," he said.