Continental Resources Inc, the second-largest oil producer in North Dakota’s Bakken shale formation, posted a better-than-expected quarterly profit on Wednesday as the company slashed costs to offset plunging crude prices.
In a bet on the ability to keep costs low, Chief Executive Harold Hamm boosted Continental’s 2015 production guidance.
“Our teams are performing very efficiently,” Hamm said in a statement, forecasting output this year should rise 19 to 23 percent. Continental previously expected a 16 to 20 percent rise for 2015.
Shares of Continental rose 4.1 percent to $33.38 in after-hours trading on Wednesday. The stock has lost 17 percent of its value so far this year.
The company posted second-quarter net income of $403,000, or break-even on a per-share basis, compared with $103.5 million, or 28 cents per share, in the year-ago period.
Excluding one-time items, including derivative losses and the write-down on the value of some assets, Continental earned 13 cents per share.
By that measure, analysts expected earnings of 4 cents per share, according to Thomson Reuters I/B/E/S.
Continental has slowly been winding down its derivatives since Hamm canceled oil hedges last fall, though the company has some hedges on natural gas.
The move to cancel hedges shocked Wall Street, though Hamm vowed he would be proven right. Since Hamm announced the move, though, U.S. crude prices are down more than 40 percent.
It was only through cost cuts that the company has managed to maintain profitability.
Continental said its drilling and completion costs for new wells has dropped 20 percent this year, and that it expects an additional 5 to 10 percent drop by December.
Average daily production increased 35 percent to 226,547 barrels of oil equivalent per day (boepd).
In North Dakota, Continental’s largest area of operations, output rose 4 percent to 127,872 boepd. In Oklahoma’s SCOOP formation, which Hamm has repeatedly touted as integral to Continental’s growth prospects, production rose 83 percent to 62,546 boepd.
(Reporting by Ernest Scheyder; Editing by Cynthia Osterman and Chris Reese)
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