Dec. 9, 2014, 5:45 PM
- Harold Hamm’s willingness to make risky bets helped him build Continental Resources (NYSE:CLR) into the one of the biggest oil producers in North Dakota’s Bakken Shale, but his latest gamble that counts on a quick rebound in crude prices is rubbing some observers the wrong way.
- Hamm's move last month to cash in nearly all of CLR's financial hedges is coming in for some second-guessing; if CLR had kept the contracts that insured it against lower crude prices, it could have reaped $52M more for its oil last month and possibly another $74M this month - and those projections would continue to rise in the coming months if oil prices remain below $96/bbl - according to a WSJ review.
- “It was a bad move with terrible timing,” says Caymus Capital's Gregg Jacobson; though he thinks the hedging sale will prompt some investors to view CLR as unusually risky, Jacobson says he remains a supporter because of its executives’ skill in finding and drilling for oil.
Dec. 5, 2014, 7:05 PM
- The ex-wife of Continental Resources (NYSE:CLR) oil magnate Harold Hamm has formally appealed the November divorce ruling that awarded her nearly $1B, citing 78 alleged errors and missteps that caused a judge to grossly undervalue her stake in one of America's greatest oil fortunes.
- The court ruling was considered a victory for Hamm, who was allowed to retain all of his 68% ownership of CLR in part because witnesses testified he was the driving force behind the company.
- Sue Ann Arnall's lawyers during the trial valued the marital estate at ~$18B, and say the judge never explained how only $1.4B of the $14B rise in the value of Hamm's CLR shares during the marriage was divided by the court.
Dec. 1, 2014, 6:42 PM
- Lower oil prices will continue for at least several more quarters, meaning that shares of many U.S. oil producers also will remain under pressure, CLSA research analyst Eric Otto tells CNBC, while noting there are haves and have-nots within the group.
- Among Bakken shale plays, Otto is still a buyer of Cimarex Energy (NYSE:XEC) because it is barely outspending its internally generated cash flow of a very strong balance sheet, and half of its production comes from gas; he also likes gas producers Cabot Oil & Gas (NYSE:COG) and EQT.
- He remains negative on Continental Resources (NYSE:CLR) after the company's "wrong-headed move" to monetize its hedges in order to participate in what it saw as a near-term oil price recovery, as well as Laredo Petroleum (NYSE:LPI) as it continues to far outspend internally generated cash flow.
Dec. 1, 2014, 12:56 PM
- It's been a bad three months or so for Continental Resources (CLR -3.5%) CEO and founder Harold Hamm, whose personal fortune has been cut in half thanks to a 51% drop in the price of CLR shares - including a 30% drop in the past week alone - and a relatively favorable ruling to pay his ex-wife nearly $1B in a divorce judgment.
- Since the end of August, Hamm has seen the value of his shares in the company fall from $20B in late August to slightly more than $10B on Friday.
- Hamm is hardly a pauper, of course, even though he's down to his last $8B-$10B.
Nov. 28, 2014, 9:17 AM| 13 Comments
Nov. 20, 2014, 11:59 AM
- With crude at $75/bbl - the price Goldman Sachs says will be the average in next year's Q1 - 19 U.S. shale regions including parts of the Eaglebine and Eagle Ford in Texas are no longer profitable, according to data compiled by Bloomberg.
- At least a dozen companies including Continental Resources (NYSE:CLR) and SandRidge (NYSE:SD) said on conference calls in the past month that they would reduce capital spending plans because of lower prices; Apache (NYSE:APA) said today it would cut spending in North America by 25% while still increasing production 8%-12% vs. an annual average of 29% since 2009.
- By contrast, the biggest-producing fields - North Dakota's Bakken and the Permian and Eagle Ford in Texas - pump a combined 4.7M bbl/day, and those regions remain economic at $55-$65/bbl.
- ETFs: XLE, ERX, VDE, OIH, XOP, FCG, ERY, DIG, GASL, DUG, XES, IYE, IEO, IEZ, GASX, PXE, FENY, PXJ, RYE, FXN, DDG
Nov. 13, 2014, 7:23 PM
- North Dakota regulators today proposed standards for requiring energy companies to treat the crude they pump from the Bakken Shale to make it less volatile before shipment by pipeline or train.
- "Our crude oil leaving North Dakota will behave like the gasoline you put in your car," says the head of the state's Department of Mineral Resources, which came up with the recommendations.
- The new rules would require every barrel of oil produced in the state to undergo some kind of treatment, with the goal that all oil-producing Bakken Shale wells ship crude with a vapor pressure below 13.7 psi, similar to 13.5 psi for most automobile gasoline.
- Top Bakken producers: CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Nov. 13, 2014, 6:10 PM
- The nearly $1B divorce settlement apparently is not enough for Sue Ann Hamm, the ex-wife of Continental Resources (NYSE:CLR) CEO and chairman Harold Hamm, as an attorney says Sue Ann will appeal the judgment.
- The $995M award - less than some observers had expected - was “not equitable,” says the attorney, pointing out that Harold Hamm would keep most of his $18B fortune, which includes 68% of CLR's shares.
- The judge ruled that $1.4B of the growth in Harold's CLR shares during the 25-year marriage marriage was "marital capital" to be split with Sue Ann, while the rest was awarded to Harold as “separate property.”
Nov. 13, 2014, 11:59 AM
- Regulators set to decide on rules for shipping crude oil via railroad are relying on testing methods that may understate the explosive risk of North Dakota crude, according to a WSJ report citing industry and Canadian officials.
- The testing controversy centers on how to determine vapor pressure, a measure of how quickly a liquid fuel evaporates and emits gases; the industry has long relied on a decades-old methodology that does not require sealed or pressurized containers to collect or test crude samples.
- The North Dakota Industrial Commission is set to rule on what steps, if any, producers must take to strip volatile gases out of crude oil before loading it into railroad tank cars.
- Top Bakken producers include CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Nov. 12, 2014, 6:45 PM
- Whether or not there is an oil "price war," the U.S. shale industry is flinching only a little, essentially committing to concentrate their efforts where they will be most effective rather than admit defeat, according to an FT report.
- To be sure, activity is starting to slow: Continental Resources (NYSE:CLR), Rosetta Resources (NASDAQ:ROSE) and ConocoPhillips (NYSE:COP) are among leading shale oil companies that have announced reductions in their capital spending plans, and EOG suggested as much last week when it said it would make sure its capital spending plus dividend payments were in line with the cash flow it has coming in.
- If statements from shale industry leaders are even broadly accurate, oil prices may have to go much lower before U.S. oil production starts to fall; EOG CEO William Thomas says that even if oil fell to $40, his company could still earn a 10% return in some areas, such as the Bakken and Eagle Ford.
- Although they may be drilling less than they had expected, oil companies also will focus on maximizing production from the rigs they are already using, which encourages continued expectations for output growth from the likes of Devon Energy (NYSE:DVN), EOG, CLR and Pioneer Natural (NYSE:PXD).
Nov. 10, 2014, 2:27 PM
- An Oklahoma judge orders Continental Resources (CLR -0.6%) CEO Harold Hamm to pay $995M in a divorce settlement, with about a third of the funds to be paid by the end of this year.
- To secure the judgment, the judge placed a lien on 20M shares of CLR stock.
- The ruling, which is subject to appeal, comes after a nine-week divorce trial that ended last month.
Nov. 7, 2014, 5:55 PM
- Signs are building that falling oil prices are curtailing record drilling in the U.S., as oil rigs fell by 14 to 1,568 this week, the lowest level since Aug. 22, according to Baker Hughes' (NYSE:BHI) latest monthly tally.
- The oil rig count will drop to 1,325 by the middle of next year after reaching a peak of 1,609 on Oct. 10, energy data company Genscape forecasts, as drillers from Apache (NYSE:APA) to Continental Resources (NYSE:CLR) have said this week they are reducing rigs in some oil plays.
Nov. 7, 2014, 2:38 PM
- "If you want to play oil prices at this point, why not play Continental?" Wunderlich analyst Jason Wangler writes on Continental Resources' (CLR +3.6%) "gutsy move" to cash in its oil hedges through 2016.
- Wangler's expectations are aligned with CLR, so he likes the move in agreeing with the thesis that oil prices at current levels are unsustainable and will move back into the $90/bbl area.
- Meanwhile, Reuters reports unusual actions in the courtroom by CLR's attorney in CEO Harold Hamm's divorce case, which at least one attorney following the case says "all but guarantees that the verdict will be appealed and could be thrown out."
Nov. 6, 2014, 11:44 AM
- The surprising move by Continental Resources (CLR -4.4%) CEO Harold Hamm to sell all of the company's hedges is effectively a bet that the steep drop in crude oil prices is a short-term fluke that will reverse course soon.
- "We view the recent downdraft in oil prices as unsustainable given the lack of fundamental change in supply and demand," Hamm said in CLR's Q3 earnings report.
- But in something of a strategic hedge, CLR is cutting its 2015 capital spending budget by $600M and will not put more drilling rigs in the field while prices are low; CLR said next year's production will rise 23%-29% Y/Y, slower than its previous forecast of a 26%-32% gain.
- The move to sell all crude oil hedge positions for the next three years netted CLR a $433M one-time earnings gain during Q3.
Nov. 5, 2014, 5:57 PM
- Continental Resources (NYSE:CLR) -2.9% AH after Q3 earnings and revenues are in line with expectations, but says it will cut its 2015 capital spending budget by $600M to $4.6B as it postpones a planned drilling expansion due to falling oil prices.
- CLR says Q3 production averaged 182,335 boe/day, up 29% Y/Y, which included 127,788 bbl/day of oil (70% of production) and 327M cf/day of natural gas; October production averaged more than 187K boe/day.
- Says it recorded a $474M gain on derivatives vs. a $203M loss on derivatives in the year-ago period.
Nov. 5, 2014, 5:28 PM
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