Betting On The Biggest Producer In The Bakken

| About: Continental Resources, (CLR)
This article is now exclusive for PRO subscribers.

One of the stocks I have been meaning to do a piece on for quite some time now is Continental Resources (NYSE:CLR). The company is the largest producer in the Bakken shale region and has had some very positive news/catalysts recently. It is well on its way to becoming a super independent and it should merit serious consideration for growth investors with a long term perspective.

Recent positives for Continental:

  • Continental unveiled a five year plan that will triple reserves and oil production by 2017.
  • It announced a major new find in Oklahoma.
  • It also announced plans to knock a $1mm off the cost of each new well in 2013.
  • Howard Weill just upgraded the shares to "Market Outperform" from "Market Perform"
  • Jefferies also just upped CLR's price target to $91 a share.
  • Consensus estimates for both FY2012 and FY2013 have moved up nicely over the last two months.

Continental Resources produces crude oil and natural gas from its properties in the north, south, and east regions of the United States. The company has interests in over 3200 wells.

4 additional reasons CLR is a good growth play at under $78 a share:

  1. The company is the biggest producer in the Bakken with almost a million acres there. In addition to its impressive production growth, the company has more than tripled its EBITDA in the last three years. This has helped it raise debt with lower interest payments than most of its competitors as well.
  2. The company is tracking to 45% revenue growth in FY2012. Analysts expect 30% sales increases in FY2013, although the company is projecting 35% production growth. The stock sports a five year projected PEG of under 1 (.85).
  3. The company is tilted toward oil production, not natural gas. Its production is 85% oil from the Bakken and its Eagle Ford properties are over 60% oil.
  4. The company has more than tripled its operating cash flow and the median price target on the shares is $89 a share by the 16 analysts that follow the company. I would look for these to increase based on the bevy of positive developments at Continental in short order.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CLR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.