By Robert Barron, Staff Writer
The third quarter of the year was good to Continental Re-sources.
Continental’s net income for the third quarter was $34.9 million, a 159 percent increase over net income of $13.5 million for the second quarter. In the third quarter of 2008, the company reported income of $105.3 million, when oil and natural gas prices were higher.
The company reported doubling operating earnings and net income in the third quarter, compared with the second quarter. The company also announced plans to increase drilling activity in the fourth quarter and in 2010, based on the increased cash flow.
Jeff Hume, president and chief operating officer, said a number of factors contributed to the growth. An increased production rate resulted in more barrels of oil to sell, but the biggest gain was in oil prices, which have improved significantly in the past three quarters and are expected to be even higher in the fourth quarter.
“We are currently in the mid-70s and touching on $80,” Hume said, “and we’re transferring that profitability and available cash to employ more people and rigs, and take advantage of the drilling inventory in front of us.”
Continental increased its 2009 capital expenditure budget to $415 million, up from $390 million, and expects cash flow to cover increased costs. The company expects 12 operating drilling units by the end of the year, the previous target was six rigs. Of the 12 rigs by year’s end, six will be located in the North Dakota Bakken and one in Montana.
In 2010, Continental will spend $650 million and expects to have 23 operating drilling rigs deployed by mid-year.
Harold Hamm, chairman and chief executive officer, said the actions are consistent with the company’s growth strategy.
“Our shareholders value Con-tinental’s capital discipline and focus on operating costs. We aggressively reduced drilling and other spending as prices fell in late 2008,” he said in a prepared statement.
Hamm said the planned expenditure should result in production growth of about 10 percent, and the company will focus on accelerating production in 2011, then sustaining that growth.
