1.6.15 Goldman Sachs IR presentation-Article/... · • Continue to encounter CLR:strong production...
Transcript of 1.6.15 Goldman Sachs IR presentation-Article/... · • Continue to encounter CLR:strong production...
Property of Continental Resources, Inc. Reproduction and distribution only with written permission
2015: Embracing Market Change
• Revised 2015 capex and production guidance– $2.7 billion capex (reduced 41%)– Targeting cash flow neutrality by mid‐year 2015– 16%‐20% YOY production growth
• Priorities– Maintain strong balance sheet and financial flexibility– Align capex near discretionary cash flow– Maximize returns and growth by focusing on high
rate‐of‐return (ROR) inventory
• Opportunities– Reduce well and service costs – Build efficiencies – Remain opportunistic
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Leasehold, $180MM
Other, $147MM
Bakken Drilling,
$1,549MM
SCOOP Drilling, $722MM
Other Drilling, $102MM
Non‐Acquisition Capital Expenditures: $2.7B
Property of Continental Resources, Inc. Reproduction and distribution only with written permission
• Leading positions in both the Bakken and SCOOP
– Largest leasehold owner• Bakken 1.2 million net acres• SCOOP 471,000 net acres• Captured “core of the basin” leasehold as an
early entrant and first mover in both plays
• Decades of repeatable, low risk inventory to fuel future growth
– Bakken• 4.1 Billion Boe net unrisked resource potential
(11,817 net unrisked potential locations)• 10 years of inventory averaging 775 MBoe/well*• 25 years of inventory averaging 600 MBoe/well*
– SCOOP• 3.6 Billion Boe net unrisked resource potential
(~4,750 net unrisked potential locations)
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Two World‐Class Platforms for Growth:
Production Growth (Boe per Day)
* Based on current run rate of 188 net wells /year
37,32443,318
61,865
97,583
135,919
182,335
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2009 2010 2011 2012 2013 3Q 2014
Boe/Day
Legacy Bakken SCOOP
Property of Continental Resources, Inc. Reproduction and distribution only with written permission7
High Quality Assets Provide Optionality
Area EUR, MBoe Lateral Length, ftBakken Oil 800 9,800Springer Oil 940 4,500Woodford Condensate 1,725 7,500Woodford Oil 650 7,500NW Cana Gas 1,525 7,500
0%
20%
40%
60%
80%
100%
120%
140%
$40 $45 $50 $55 $60 $65 $70 $75 $80 $85 $90
ROR
Oil Price, $/BBL
ROR vs. Oil Price: Current & Expected Lower CWC ComparisonBakken Oil Bakken Oil 15% CWC ReductionNW Cana Gas with Carry NW Cana Gas With Carry 15% CWC ReductionSCOOP Woodford Condensate SCOOP Woodford Condensate 15% CWC ReductionSpringer Oil Springer Oil 15% CWC ReductionSCOOP Woodford Oil SCOOP Woodford Oil 15% CWC Reduction
Gas Price = $3.50
Property of Continental Resources, Inc. Reproduction and distribution only with written permission11
SCOOP Woodford: Continues to Grow • Excellent production extended another 12 miles
south– Connell 1‐13‐12XH: IP 10,951 Mcfd and 518 Bopd
• 9,500’ lateral
– Ritter 1‐3‐34XH: IP 11,747 Mcfd• 6,500’ lateral• Rich gas – 1,100+ BTU
• Continue to encounter strong production moving west
– Wilkins 1‐29H: IP 11,461 Mcfpd and 51 Bopd– Wilbern 1‐15H: IP 8,021 Mcfpd and 47 Bopd– Both average 4,500’ laterals
• Plan to average ~10‐13 operated rigs in 2015
Oklahoma City
CLR Acreage
Condensate FairwayGas Fairway
Oil Fairway
CLR: Connell 1‐13‐12XH IP: 518 Bopd & 10,951 Mcfpd
CLR: Ritter 1‐3‐34XHIP: 11,747 Mcfpd(1,100+ BTU)
CLR: Love 1‐26‐23XHIP: 291 Bopd & 6,691 Mcfpd
CLR: George 1‐17HIP: 279 Bopd &4,773 Mcfpd
CLR: Galvin 1‐22‐27XHIP: 739 Bopd & 1,074 Mcfpd
Peer CompletionsCLR Completions
CLR: Wilkins 1‐29HIP: 51 Bopd & 11,461 Mcfpd
CLR: Wilbern 1‐15HIP: 47 Bopd & 8,021 Mcfpd
Property of Continental Resources, Inc. Reproduction and distribution only with written permission
• Approximately 70% of 2015 wells will be extended laterals
– 7,500’ on average (10,000’ where possible)
• EUR: 1,725 MBoe (normalized to 7,500’)
• Current completed well cost: $12.2 MM– Anticipate ~15% or greater reduction during
2015
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Higher Returns With Extended LateralsWoodford Condensate Fairway
0%
20%
40%
60%
80%
100%
$2 $3 $4 $5 $6
ROR
Gas Price, $/MCF
Condensate ROR vs Gas Price
Oil Price: $60/BBL
1,725 MBoe Model Parameters
7,500‘ lateral lengthOil IP Rate, Bbl/day 280Oil 30 day IP Rate,Bbl/day 262
Oil Initial Decline 61%Oil b factor 1.1Oil EUR, MBo 295Gas IP Rate, Mcf/day 7,000Gas 30 day IP Rate, Mcf/day 6,595
Gas Initial Decline 58%Gas b factor 1.2Gas EUR, MMcf 8,580Equivalent EUR, MBoe 1,725Minimum Decline 6%Capital, $MM 12.2
15% CWC Reduction
Current CWC ($12.2 MM)Condensate Fairway
(53% Liquids)
Gas47%
Oil13%
NGL40%
0
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270
0 6 12 18 24 30 360
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Well Cou
nt
Producing Months
Boep
d
Condensate Fairway Type Curve4,500' Act. Well CountExt. Act. Well Count4,500' Act. ProductionExt. Type Curve (Normalized to 7,500' LL)Ext. Act. Production (8,800' Avg LL)
Property of Continental Resources, Inc. Reproduction and distribution only with written permission
SCOOP Springer: Expanding Oil Discovery
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• Continued success with oil fairway step‐outs – Schoof 1‐17H: IP 1,465 Boepd– Lyle Land 1‐25H: IP 1,134 Boepd– Martha 1‐34H: IP 934 Boepd– Wells average ~4,500’ laterals and 75% oil
• First extended lateral underway
• 195,000 net acres in the heart of SCOOP– 118,000 net acres in oil fairway
• 46,000 net acres de‐risked– 127 MMBoe net unrisked resource
potential– 188 net (252 gross) operated locations– 27 net (147 gross) non‐operated locations
• 72,000 net acres of additional upside being tested
– 77,000 net acres in gas/condensate fairway to be tested
• 6 rigs currently drilling
• Plan to average ~3‐6 operated rigs in 2015
SCOOP
Springer Fairway
12 Miles
Springer Fairway
SCOOP Outline
CLR Springer Shale Producers
CLR Leasehold
CLR 2013 Key Delineation Wells
Non‐Op. Springer Shale Producer
CLR: Lyle Land 1‐25HIP: 1,134 Boepd
CLR: Schoof 1‐17HIP: 1,465 Boepd
CLR: Martha 1‐34HIP: 934 Boepd
Property of Continental Resources, Inc. Reproduction and distribution only with written permission14
SCOOP Springer Oil: Exceptional Economics
• Current EUR/Well Model: 940 MBoe
• 4,500’ lateral
• Current completed well cost: $9.7 MM– Expect ~15% or more reduction in cost during
2015
20%
40%
60%
80%
100%
120%
140%
$40 $50 $60 $70 $80 $90 $100
ROR
Oil Price, $/BBL
Oil ROR vs Oil Price
Gas Price: $3.50/MCF
15% CWC Reduction
Current CWC ($9.7 MM)
Springer Fairway(84% Liquids)
Gas16%
Oil67%
NGL17%
0
10
20
30
40
0 6 12 18 24 30 360
100
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400
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600
700
800
900
Well Cou
nt
Producing Months
Boep
d
Springer Shale Type CurveWell Count
Type Curve (Normalized to 4,500' LL)
Act. Production (4,275' Avg LL)
Install Tubing and Gas Lift
940 MBoe Model Parameters
4,500‘ lateral lengthOil IP Rate, Bbl/day 670Oil 30 day IP Rate,bbl/day 618
Oil Initial Decline 62%Oil b factor 1.25Oil EUR, MBo 735Gas IP Rate, Mcf/day 867Gas 30 day IP Rate, Mcf/day 810
Gas Initial Decline 56%Gas b factor 1.4Gas EUR, MMcf 1,230Equivalent EUR, MBoe 940Minimum Decline 6%
Property of Continental Resources, Inc. Reproduction and distribution only with written permission15
Incremental Value Captured Through NW Cana JV• Formed JV with SK E&S (South Korean
based)
• Sold 49.9% interest in 44,000 acres and 37 producing wells for total consideration of $360 million
– $90 million cash at closing– 5‐year $270 million carry for 50% of CLR’s future
D&C capital
• Plan to operate 4 rigs in 2015
• Blaine County– Carried returns of 85% for current CWC and over
100% for target CWC at $3.50/Mcf & $60 oil– EUR: 1,872 MBoe– CWC: $11.8 MM
• Dewey County– Carried returns of 84% at current CWC and over
100% for target CWC at $3.50/Mcf and $60 oil– EUR: 1,525 MBoe– CWC: $10.3 MM
Oklahoma
Texas
Woodford Shale Thickness
>200 ft
50 ft
100 ft
25 Miles
SCOOP
NW Cana STACK
Cana Field
Property of Continental Resources, Inc. Reproduction and distribution only with written permission
2015 Capital Expenditures Budget
Non‐Acquisition Capital Expenditures: $2.7B
Leasehold, $180MM Other,
$147MM
Bakken Drilling,
$1,549MM
SCOOP Drilling, $722MM
Other Drilling, $102MM
Drilling capital allocation:• Bakken: 65%• SCOOP: 31%
Woodford: 24% Springer: 7%
• NW Cana JV & Other: 4%
Average 31 operated rigs in 2015
2015 YOY production growth of 16‐20%
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AverageOperated Rigs
Net Wells(1)
Bakken 11 188
SCOOP Woodford 10‐13 ~63
SCOOP Springer 3‐6 ~18
NW Cana JV & Other 4 11
Totals 31 ~280
(1) Includes operated and non‐operated wells with first production
Woodford Thickness Expands Across Leasehold
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Hunton
South
Woodford950’
380’
560’
245’150’
465’
295’
230’
Development Program Initiated
Brittleness
Gamma Ray
Hunton
North
130’
2013 – 2014 Exploratory Program
25 Mi.
Property of Continental Resources, Inc. Reproduction and distribution only with written permission24
NW Cana Joint Venture
0%
50%
100%
150%
200%
$2 $3 $4 $5
ROR
Gas Price, $/Mcf
Dewey ROR vs. Gas Price (with Carry)
Current CWC
15% CWC Reduction
Oil Price= $600%
50%
100%
150%
200%
$2 $3 $4 $5
ROR
Gas Price, $/Mcf
Blaine ROR vs. Gas Price (with Carry)
Current CWC
15% CWC Reduction
Oil Price= $60
Blaine Gas
7,500’ Lateral Length
Oil IP Rate, Bbl/day 1Oil 30 day IP Rate, bbl/day 1Oil Initial Decline 79%Oil b factor 1.4Oil EUR, MBo 1.2Gas IP Rate, Mcf/day 8,900Gas 30 day IP Rate, MCF/day 8,340
Gas Initial Decline 59%Gas b factor 1.3Gas EUR, MMcf 11,222Equivalent EUR, MBoe 1,872Minimum Decline 6%
Dewey Gas
7,500’ Lateral Length
Oil IP Rate, Bbl/day 99
Oil 30 day IP Rate, bbl/day 91Oil Initial Decline 66%Oil b factor 1.3
Oil EUR, MBo 96Gas IP Rate, Mcf/day 5,998
Gas 30 day IP Rate, MCF/day 5,704Gas Initial Decline 53%Gas b factor 1.3
Gas EUR, MMcf 8,581Equivalent EUR, MBoe 1,525
Minimum Decline 6%
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0 6 12 18 24 30 36
Well Cou
nt
Gross BOE Ra
te, b
bls/d
Producing Months
Dewey Type Curve4500' Actual Prod.
Extended Type Curve (Normalizedto 7500') BOE4500' Type Curve BOE
4500' Actual Well Count
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40
60
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1,500
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Well Cou
nt
Gross BOE Ra
te, b
bls/d
Producing Months
Blaine Type CurveActual Well Count
Actual Prod. (4350' Avg LL)
Extended Type Curve (Normalized to 7500') BOE
4500' Type Curve BOE
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20
40
60
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800
1,200
0 6 12 18 24 30 36
Well Cou
nt
Gross BOE Ra
te, b
bls/d
Producing Months
Dewey Type CurveActual Well Count
Actual Prod. (3475' Avg LL)
Extended Type Curve (Normalized to 7500') BOE
4500' Type Curve BOE
($10.3 MM)($11.8 MM)