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Continental Resources (CLR) Up 10.8% 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 10.8% 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 Resources Beats on Q1 Earnings Estimates

Continental reported first-quarter 2022 adjusted earnings of $2.65 per share, beating the Zacks Consensus Estimate of $2.41. The bottom line significantly improved from the year-ago quarter’s 77 cents per share.

Total quarterly revenues of $1,816 million missed the Zacks Consensus Estimate of $2,156 million. However, the top line improved from the year-ago quarter’s $1,216 million.

The strong quarterly earnings can be attributed to higher oil-equivalent production volumes and commodity price realizations.

Dividend Hike

The company’s board of directors announced a quarterly dividend payment of 28 cents per share, a 21.7% increase from 23 cents paid out in the previous quarter. The amount will be paid out on May 23, 2022, to stockholders of record as of May 9, 2022.

Oil Production

Production from continuing operations averaged 373,810 barrels of oil equivalent per day (Boe/d) for the reported quarter (52.1% oil) versus 307,942 Boe/d in the year-ago period. Production volumes increased primarily due to higher output from the Bakken assets.

Oil production for the reported quarter was 194,767 barrels per day (Bbls/d), up from 151,852 Bbls/d a year ago. Natural gas production increased from 936,540 thousand cubic feet per day (Mcf/d) in first-quarter 2021 to 1,074,255 Mcf/d.

Crude-Equivalent Price Realization

For first-quarter 2022, the crude oil-equivalent price increased to $65.51 per barrel from $43.11 in the prior-year period. Natural gas was sold at $6.34 per Mcf, up from $5.56 in the year-ago quarter. The average realized price for oil was $90.83 a barrel, up from $53.09 in the prior-year quarter.

Total Expenses

In the first quarter, total operating expenses of $950 million increased from $810.1 million in the March-end quarter of 2021. Total production costs increased to $137.3 million from $93.1 million in the year-ago quarter. Exploration expenses for the reported quarter were $13 million compared with $4.6 million in the year-ago period. Also, transportation, gathering, processing and compression costs increased to $74.8 million from the year-ago level of $50.3 million.

Financials

For first-quarter 2022, the total capital expenditure was $525.8 million. It generated a free cash flow of $1,147.1 million in the reported quarter.

As of Mar 31, 2022, the company had total cash and cash equivalents of $4.2 million. It had long-term debt of $6,562.8 million (excluding current maturities). It had a debt-to-capitalization of 44.2%.

Outlook

For 2022, Continental revised its average oil production upward to 200,000-210,000 Bbls/d from 195,000-205,000 Bbls/d mentioned earlier. Natural gas production is expected to be 1,100,000-1,200,000 Mcf/d.

Continental increased its capital spending budget to $2.6-$2.7 billion for the year from $2.3 billion mentioned earlier. The upstream player plans to generate $6.5-$7 billion of cash flow from operations and $4.3-$4.7 billion of free cash flow in 2022.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Continental Resources has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Continental Resources has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Continental Resources is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, CNX Resources Corporation. (CNX - Free Report) , a stock from the same industry, has gained 10.2%. The company reported its results for the quarter ended March 2022 more than a month ago.

CNX Resources Corporation. reported revenues of $474 million in the last reported quarter, representing a year-over-year change of +0.2%. EPS of $0.79 for the same period compares with $0.36 a year ago.

CNX Resources Corporation. is expected to post earnings of $0.71 per share for the current quarter, representing a year-over-year change of +294.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +11.5%.

CNX Resources Corporation. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.


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