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Continental Resources (CLR) Up 18.1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Continental Resources (CLR - Free Report) . Shares have added about 18.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Continental Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Continental Q4 Earnings Miss Estimates, Revenues Beat

Continentalreported fourth-quarter 2020 adjusted loss of 23 cents per share, wider than the Zacks Consensus Estimate of a loss of 6 cents. In the year-earlier quarter, the upstream energy player reported a profit of 55 cents per share.

Revenues of $838 million beat the Zacks Consensus Estimate of $770 million. However, the figure declined from $1,195 million in the year-ago quarter.

The weak quarterly results were owing to lower crude oil equivalent price and production. This was offset partially by lower exploration costs.

Oil Production Declines

Production from continuing operations averaged 339,307 barrels of oil equivalent per day (Boe/d) for the quarter (52% oil) versus 365,341 Boe/d in the year-ago period. Production volumes declined primarily due to lower output from Bakken assets.

Oil production for the quarter came in at 176,639 barrels per day (Bbls/d), down from 206,249 Bbls/d a year ago. Natural gas production, however, increased from 954,556 thousand cubic feet per day (Mcf/d) in fourth-quarter 2019 to 976,011 Mcf/d.

Crude Equivalent Price Realization Falls

Crude oil equivalent price for the quarter fell to $24.63 per barrel from $33.49 in the prior-year period. However, natural gas was sold at $1.81 per Mcf, up from $1.73 in the year-ago quarter. Notably, average realized price for oil was $37.34 a barrel, down from $51.33 in the prior-year quarter.

Total Expenses Plunge

Total operating expenses of $869.3 million for the fourth quarter fell from $901.3 million in the December quarter of 2019. Total production cost fell to $87.4 million from $111.2 million in the year-ago quarter. Exploration costs for the quarter were $3.1 million compared with $7.3 million in the year-ago period. Transportation costs fell to $48.6 million from the year-ago level of $61.1 million.

Financials

For fourth-quarter 2020, total capital expenditure (excluding acquisitions) was $168.1 million. It generated free cash flow of $332.4 million in the fourth quarter.

As of Dec 31, 2020, the company had total cash and cash equivalents of $47.5 million. It had long-term debt of $5,530.2 million (excluding current maturities). It had a debt to capitalization of 46.3%.

Guidance

The company expects 2021 average oil production at 160,000 to 165,000 barrel per day (Bbl/d). It projects natural gas production for 2021 at 880,000 to 920,000 Mcf/d. Notably, the upstream player has set a capital budget for 2021 at $1.4 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 57.09% due to these changes.

VGM Scores

Currently, Continental Resources has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Continental Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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