Continental Resources ups production, CAPEX due in part to Bakken potential
Continental Resources Inc. grew production 18% in the second quarter of 2009, compared with the second quarter last year and has raised its capital expenditure budget 42% to $390 million.
For 2Q09, Continental reported net income of $13.5 million, or $0.08 per diluted share, compared with net income of $127.3 million, or $0.75 per diluted share, for 2Q08. Average daily production was 37,347 boe/d for 2Q09, 18% higher than production of 31,623 boe/d in 2Q08. At June 30, 2009, the company's balance sheet included $5.1 million in cash and $592.0 million in long-term debt. As of August 6, 2009, $572 million was drawn against its revolving credit facility, leaving available borrowing capacity at $178 million, based on commitments of $750 million.
Production expense declined to $7.14 per boe in the quarter, compared with $9.32 in the second quarter last year.
"We are proud of our operating and financial achievements, but clearly the most significant milestone in the quarter was our successful Mathistad 2-35H test," noted Continental CEO Harold Hamm. The companion well was drilled horizontally in the Middle Bakken zone approximately 50 feet above the horizontal of the Mathistad 1-35H.
The Mathistad 1-35H was completed as a producing Three Forks/Sanish well in June 2008. By the time Continental started drilling the Mathistad 2-35H, the Mathistad 1-35H had produced 103,000 boe and was pumping 187 boe/d. In contrast, the Mathistad 2-35H flowed at 995 boe/d during its initial test period, more than four times the rate at which the first well had been performing on pump.
The well was drilled to test the company's theory that the Middle Bakken and Three Forks/Sanish zones act as separate reservoirs in portions of the North Dakota shale play. "Based on the results of the Mathistad 2-35H, we believe the reserve potential of the Bakken play just went up," said Hamm.
Recently, the company recently obtained approval from the North Dakota Industrial Commission to drill multiple horizontal wells from a single pad with zero boundary-line setbacks, instead of the normal 500-foot setbacks. Using this ECOPad approach, the company plans to drill up to two Middle Bakken and two Three Forks/Sanish wells per pad leaving a smaller surface footprint in the process. The company expects the approach to reduce the drilling and completion costs per well by roughly 10%.
— Mikaila Adams
Anadarko makes Vito discovery
Anadarko Petroleum Corp. has made a discovery at the Vito exploration well in Mississippi Canyon block 984. The well encountered more than 250 net feet of oil pay in subsalt Miocene sands.
The Vito well was drilled to a total depth of roughly 32,000 feet in 4,038 feet of water, using the Noble Amos Runner deepwater drilling rig. Anadarko operates the Vito well with a 20% working interest. Co-owners in the discovery include Shell Offshore Inc. with a 55% working interest and StatoilHydro USA E&P Inc. with a 25% working interest. Shell will assume operatorship of Vito after rig release on the current well.
According to Bob Daniels, Anadarko senior vice president, worldwide exploration, the company expects to drill two additional prospects that target similar subsalt Miocene objective sections along the same trend at its Silverado and Haleakala prospects in Mississippi Canyon in 2010.
Forest Oil to sell certain West Texas, New Mexico assets for $118 million
Denver-based Forest Oil Corp. has entered into two agreements to sell certain operated and non-operated properties in West Texas and New Mexico for roughly $118 million. These properties are currently producing 9 MMcfe/d.
The company's current borrowing base totals $1.62 billion resulting in roughly $981 million of remaining borrowing capacity under its bank credit facilities at July 31, 2009.
Proceeds from these divestitures will be used to further reduce debt. Pro forma availability under the bank credit facilities would be $1.1 billion as of July 31, 2009.
The two transactions are expected to close in the third quarter of 2009.