It has been about a month since the last earnings report for Continental Resources . Shares have added about 13.1% 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 drivers.
Continental Beats Q2 Earnings & Revenues Estimates
Continental Resources reported second-quarter 2021 adjusted earnings of 91 cents per share, beating the Zacks Consensus Estimate of 57 cents per share. The bottom line turned around from a loss of 71 cents per share in the year-ago quarter.
Total quarterly revenues of $1,235 million outpaced the Zacks Consensus Estimate of $1,119 million. The top line significantly improved from the year-ago figure of $176 million.
The strong quarterly results can be attributed to increased production volumes and higher realizations of commodity prices.
Dividend Hike
The company’s board of directors announced a quarterly fixed dividend payment of 15 cents per share, which increased from 11 cents per share in the previous quarter. The amount will be paid out on Aug 20, 2021, to its stockholders of record as of Aug 10, 2021.
Continental resumed its stock repurchase program of $1 billion, which began in second-quarter 2019. The company already executed $317 million of share repurchases, while $683 million of share repurchase capacity remains available.
Oil Production Increases
Production from continuing operations averaged 338,699 barrels of oil equivalent per day (Boe/d) for the reported quarter (49.2% oil) versus 202,815 Boe/d in the year-ago period. Production volumes increased primarily due to higher output from Bakken assets.
Oil production for the reported quarter was 166,765 barrels per day (Bbls/d), up from 95,174 Bbls/d a year ago. Natural gas production increased from 645,846 thousand cubic feet per day (Mcf/d) in second-quarter 2020 to 1,031,603 Mcf/d.
Crude Equivalent Price Realization Rises
For second-quarter 2021, Crude oil equivalent price increased to $39.99 per barrel from $7.88 in the prior-year period. Natural gas was sold at $3.06 per Mcf, up from 12 cents in the year-ago quarter. Average realized price for oil was $62.37 a barrel, up from $16.35 in the prior-year quarter.
Total Expenses Surge
Total operating expenses of $790 million for the second quarter increased from $472.4 million in the June-end quarter of 2020. Total production costs increased to $96.5 million from $64.7 million in the year-ago quarter. Exploration costs for the reported quarter were $2.3 million compared with $2 million in the year-ago period. Transportation costs increased to $52.5 million from the year-ago level of $32.3 million.
Financials
For second-quarter 2021, the total capital expenditure (excluding acquisitions) was $289.5 million. It generated a free cash flow of $633.5 million in the reported quarter.
As of Jun 30, 2021, the company had total cash and cash equivalents of $150 million. It had long-term debt of $4,741 million (excluding current maturities). It had a debt to capitalization of 40.5%.
Outlook
For 2021, the company maintains its average oil production guidance at 160,000-165,000 barrels per day. It increased its natural gas production guidance to 900,000-1,000,000 Mcf/d from the previously-mentioned 880,000-920,000 Mcf/d. The upstream player expects a capital spending of $1.4 billion for 2021.
The company plans to generate $3.8 billion of cash flow from operations and $2.4 billion of free cash flow for 2021. Also, it is targeting to reduce total debt and net debt by $4.7 billion and $3.7 billion, respectively, by 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 23.15% due to these changes.
VGM Scores
At this time, Continental Resources has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Continental Resources has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Continental Resources (CLR) Up 13.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Continental Resources . Shares have added about 13.1% 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 drivers.
Continental Beats Q2 Earnings & Revenues Estimates
Continental Resources reported second-quarter 2021 adjusted earnings of 91 cents per share, beating the Zacks Consensus Estimate of 57 cents per share. The bottom line turned around from a loss of 71 cents per share in the year-ago quarter.
Total quarterly revenues of $1,235 million outpaced the Zacks Consensus Estimate of $1,119 million. The top line significantly improved from the year-ago figure of $176 million.
The strong quarterly results can be attributed to increased production volumes and higher realizations of commodity prices.
Dividend Hike
The company’s board of directors announced a quarterly fixed dividend payment of 15 cents per share, which increased from 11 cents per share in the previous quarter. The amount will be paid out on Aug 20, 2021, to its stockholders of record as of Aug 10, 2021.
Continental resumed its stock repurchase program of $1 billion, which began in second-quarter 2019. The company already executed $317 million of share repurchases, while $683 million of share repurchase capacity remains available.
Oil Production Increases
Production from continuing operations averaged 338,699 barrels of oil equivalent per day (Boe/d) for the reported quarter (49.2% oil) versus 202,815 Boe/d in the year-ago period. Production volumes increased primarily due to higher output from Bakken assets.
Oil production for the reported quarter was 166,765 barrels per day (Bbls/d), up from 95,174 Bbls/d a year ago. Natural gas production increased from 645,846 thousand cubic feet per day (Mcf/d) in second-quarter 2020 to 1,031,603 Mcf/d.
Crude Equivalent Price Realization Rises
For second-quarter 2021, Crude oil equivalent price increased to $39.99 per barrel from $7.88 in the prior-year period. Natural gas was sold at $3.06 per Mcf, up from 12 cents in the year-ago quarter. Average realized price for oil was $62.37 a barrel, up from $16.35 in the prior-year quarter.
Total Expenses Surge
Total operating expenses of $790 million for the second quarter increased from $472.4 million in the June-end quarter of 2020. Total production costs increased to $96.5 million from $64.7 million in the year-ago quarter. Exploration costs for the reported quarter were $2.3 million compared with $2 million in the year-ago period. Transportation costs increased to $52.5 million from the year-ago level of $32.3 million.
Financials
For second-quarter 2021, the total capital expenditure (excluding acquisitions) was $289.5 million. It generated a free cash flow of $633.5 million in the reported quarter.
As of Jun 30, 2021, the company had total cash and cash equivalents of $150 million. It had long-term debt of $4,741 million (excluding current maturities). It had a debt to capitalization of 40.5%.
Outlook
For 2021, the company maintains its average oil production guidance at 160,000-165,000 barrels per day. It increased its natural gas production guidance to 900,000-1,000,000 Mcf/d from the previously-mentioned 880,000-920,000 Mcf/d. The upstream player expects a capital spending of $1.4 billion for 2021.
The company plans to generate $3.8 billion of cash flow from operations and $2.4 billion of free cash flow for 2021. Also, it is targeting to reduce total debt and net debt by $4.7 billion and $3.7 billion, respectively, by 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 23.15% due to these changes.
VGM Scores
At this time, Continental Resources has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Continental Resources has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.