Continental Resources Reports Third Quarter 2019 Results

OKLAHOMA CITY, Oct. 30, 2019 /PRNewswire/ -- Continental Resources, Inc. (NYSE: CLR) (the Company) today announced third quarter 2019 operating and financial results.

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The Company reported net income of $158.2 million, or $0.43 per diluted share, for the quarter ended September 30, 2019. The Company's net income includes certain items typically excluded by the investment community in published estimates, the result of which is referred to as "adjusted net income." In third quarter 2019, these typically excluded items in aggregate represented $41.2 million, or $0.11 per diluted share, of Continental's reported net income. Adjusted net income for third quarter 2019 was $199.4 million, or $0.54 per diluted share (non-GAAP). Net cash provided by operating activities for third quarter 2019 was $807.0 million and EBITDAX was $828.7 million (non-GAAP).

Adjusted net income, adjusted net income per share, EBITDAX, net debt, net sales prices and cash general and administrative (G&A) expenses per barrel of oil equivalent (Boe) presented herein are non-GAAP financial measures. Definitions and explanations for how these measures relate to the most directly comparable U.S. generally accepted accounting principles (GAAP) financial measures are provided at the conclusion of this press release.

"Continental teams continue to operate at a high performance level across the Bakken and Oklahoma. With an oil-weighted portfolio, investment grade level debt and a total shareholder return strategy, no other E&P company is more aligned with shareholders," said Harold Hamm, Chairman and Chief Executive Officer.

Production Update: 3Q19 Average Daily Oil Production up 20% over 3Q18

Third quarter 2019 oil production increased 20% over third quarter 2018, averaging 198,074 barrels of oil per day (Bopd). Third quarter 2019 total production increased 12% over third quarter 2018, averaging 332,315 Boe per day (Boepd). Third quarter 2019 natural gas production increased 1% over third quarter 2018, averaging 805.4 million cubic feet per day (MMcfpd). The following table provides the Company's average daily production by region for the periods presented.

                              
     3Q       
     3Q       
     YTD        
     YTD


                  Boe per day       2019       2018         2019          2018

    ---


       Bakken                   191,268    167,643      194,872       162,396



       SCOOP                     80,115     63,270       73,127        63,360



       STACK                     53,070     56,129       55,585        53,733



       All other                  7,862      9,862        8,405        10,003




       Total                    332,315    296,904      331,989       289,492

"Approximately 50% of Continental's third quarter oil production growth, year-over-year, came from our Oklahoma assets," said Jack Stark, President. "This growth was driven by the outstanding results being realized from our ongoing development of SCOOP SpringBoard and STACK."

Bakken: 145,436 Average Daily 3Q19 Oil Production up 13% over 3Q18

In third quarter 2019, average daily Bakken oil production increased 13% over third quarter 2018, averaging 145,436 Bopd. The Company's third quarter 2019 total Bakken production increased 14% over third quarter 2018, averaging 191,268 Boepd. During the quarter, the Company completed 57 gross (37 net) operated wells with first production flowing at an average initial 24-hour rate per well of 2,313 Boepd.

The Company moved into manufacturing mode in the Bakken in 2017. Since then, the Company has focused almost exclusively on the multi-zone unit development of the Middle Bakken, Three Forks 1 and Three Forks 2 reservoirs. During this time, the Company has completed 440 gross operated unit wells with an average initial 24-hour rate per well of approximately 2,300 Boepd, with an average 80% oil. Both the 2017 and 2018 Bakken programs have paid out in approximately one year.

"We are more than two years into manufacturing mode and our Bakken assets are delivering remarkably consistent results with some of the best returns in the industry," said Jack Stark, President. "These results provide a great snapshot of the quality of our Bakken assets and reinforce the confidence we have in the Bakken as a key driver of Continental's growth for years to come."

South: 44,854 Average Daily 3Q19 Oil Production up 62% over 3Q18

In third quarter 2019, average daily South oil production increased 62% over third quarter 2018, averaging 44,854 Bopd. The Company's third quarter 2019 total South production increased 11% over third quarter 2018, averaging 133,266 Boepd. In third quarter 2019, the Company completed 80 gross (56 net) operated wells with first production in the South.

The Company exceeded its SCOOP Project SpringBoard oil production target for third quarter 2019 by 31%, averaging 23,641 Bopd. This outperformance was driven by operational efficiencies that brought wells on line ahead of schedule, as well as the outstanding Springer well performance in Rows 2 and 3. These wells flowed at an average initial 24-hour rate of 1,650 Boepd per well, with approximately 80% being oil. As expected, the 52 Springer wells combined in Rows 1, 2 and 3 are performing on average, in line with the blended 1.3 MMBoe unit type curve provided during the January SpringBoard conference call. The Company has raised its SpringBoard oil production target for fourth quarter 2019 from 22,000 Bopd to approximately 24,000 Bopd. To date, approximately 8.7 million gross barrels of oil have been produced from Project SpringBoard alone.

In the Continental STACK, the Reba Jo and Schulte oil units flowed at a combined initial 24-hour rate of 57,292 Boepd, of which 67% was oil, or 38,320 Bopd. Combined, the two units contained 14 unit wells that flowed at an average initial 24-hour rate of 4,092 Boepd per well. Since second quarter 2018, the Company has completed 8 units in the over-pressured window that have outperformed expectations and unit type curves for the STACK.

"Continental's South assets in the SCOOP and over-pressured STACK window continue to deliver outstanding results driven by our geologically superior acreage position, proper unit density design and excellent execution from our operational teams," said Pat Bent, Senior Vice President, Operations.

Total Shareholder Return Strategy Update: Share Repurchases and Quarterly Dividend

The Company has executed $187 million of share repurchases for 5.5 million shares, as of October 29, 2019. As previously announced, an initial share repurchase of up to $1 billion has been authorized by the Board of Directors, which is expected to continue through 2020. Share repurchases will be made at times and levels deemed appropriate by Company management and the Company intends to purchase shares opportunistically using available funds while maintaining sufficient liquidity to fund operating needs, capital program, and dividend payments.

The Company will be distributing its first quarterly dividend of $0.05 per share on the Company's outstanding common stock to stockholders of record on November 7, 2019. This will be payable on November 21, 2019.

Financial Update

"During 2019, Continental has strategically focused on building shareholder value by balancing significant cash flow generation with strong production growth. This has enabled the Company to repurchase $187 million in shares and complete strategic bolt-on acquisitions that add to our deep, oil-focused inventory," said John Hart, Chief Financial Officer.

As of September 30, 2019, the Company's balance sheet included approximately $35.3 million in cash and cash equivalents, $5.57 billion in total debt and $5.54 billion in net debt (non-GAAP).

In third quarter 2019, the Company's average net sales prices excluding the effects of derivative positions were $51.28 per barrel of oil and $1.12 per Mcf of gas, or $33.30 per Boe. Production expense per Boe was $3.73 for third quarter 2019. Total G&A expenses per Boe were $1.54 for third quarter 2019.

The Company's third quarter 2019 crude oil differential was $5.15 per barrel below the NYMEX daily average for the period. The wellhead natural gas price for third quarter 2019 was $1.11 per Mcf below the average NYMEX Henry Hub benchmark price.

Through September 30, 2019, the Company has realized approximately $52 million of cash gains from its natural gas hedges. As of September 30, 2019, the Company's unrealized non-cash mark-to-market gain on its natural gas hedges totaled approximately $17 million.

Non-acquisition capital expenditures for third quarter 2019 totaled approximately $681.5 million, including $578.1 million in exploration and development drilling and completion, $31.4 million in leasehold, $24.5 million in minerals, of which 80% was recouped from Franco-Nevada, and $47.5 million in workovers, recompletions and other.

The Company's full 2019 guidance can be found at the conclusion of this press release.

The following table provides the Company's production results, per-unit operating costs, results of operations and certain non-GAAP financial measures for the periods presented. Average net sales prices exclude any effect of derivative transactions. Per-unit expenses have been calculated using sales volumes.

                                Three months ended September 30,          Nine months ended September 30,



                              2019                           2018       2019                            2018



     Average daily
      production:


     Crude oil (Bbl per
      day)                 198,074                        164,605    195,209                         161,856


     Natural gas (Mcf per
      day)                 805,446                        793,793    820,679                         765,821


     Crude oil
      equivalents (Boe
      per day)             332,315                        296,904    331,989                         289,492


     Average net sales
      prices (non-GAAP),
      excluding effect
      from derivatives:
      (1)


     Crude oil ($/Bbl)      $51.28                         $65.78     $51.99                          $62.73


     Natural gas ($/Mcf)     $1.12                          $3.12      $1.78                           $2.92


     Crude oil
      equivalents ($/Boe)   $33.30                         $44.85     $34.95                          $42.80


     Production expenses
      ($/Boe)                $3.73                          $3.77      $3.68                           $3.62


     Production taxes (%
      of net crude oil
      and gas sales)          8.5%                          8.0%      8.4%                           7.8%


     DD&A ($/Boe)           $15.81                         $17.15     $16.18                          $17.35


     Total general and
      administrative
      expenses ($/Boe)
      (2)                   $1.54                          $1.61      $1.57                           $1.70


     Net income
      attributable to
      Continental
      Resources (in
      thousands)          $158,162                       $314,169   $581,695                        $790,580


     Diluted net income
      per share
      attributable to
      Continental
      Resources              $0.43                          $0.84      $1.56                           $2.11


     Adjusted net income
      (non-GAAP) (in
      thousands) (1)      $199,389                       $337,017   $635,135                        $865,033


     Adjusted diluted net
      income per share
      (non-GAAP) (1)         $0.54                          $0.90      $1.70                           $2.31


     Net cash provided by
      operating
      activities (in
      thousands)          $806,972                       $860,748 $2,311,876                      $2,500,741


     EBITDAX (non-GAAP)
      (in thousands) (1)  $828,704                       $999,882 $2,541,508                      $2,772,733



               (1) Net sales prices, adjusted net
                income, adjusted diluted net
                income per share, and EBITDAX
                represent non-GAAP financial
                measures. Further information
                about these non-GAAP financial
                measures as well as
                reconciliations to the most
                directly comparable U.S. GAAP
                financial measures are provided
                subsequently under the header Non-
                GAAP Financial Measures.




               (2) Total general and
                administrative expense is
                comprised of cash general and
                administrative expense and non-
                cash equity compensation expense.
                Cash general and administrative
                expense per Boe was $1.12, $1.18,
                $1.16, and $1.28 for 3Q 2019, 3Q
                2018, YTD 2019, and YTD 2018,
                respectively. Non-cash equity
                compensation expense per Boe was
                $0.42, $0.43, $0.41, and $0.42 for
                3Q 2019, 3Q 2018, YTD 2019, and
                YTD 2018, respectively.

Third Quarter Earnings Conference Call

The Company plans to host a conference call to discuss third quarter 2019 results on Thursday, October 31, 2019 at 12:00 p.m. ET (11:00 a.m. CT). Those wishing to listen to the conference call may do so via the Company's website at www.CLR.com or by phone:


              Time and date:                    12 p.m. ET, Thursday,
                                                  October 31, 2019



              Dial-in:               
              1-888-317-6003



              Intl. dial-in:         
              1-412-317-6061



              Conference ID:                                  0869596

A replay of the call will be available for 14 days on the Company's website or by dialing:


              Replay number:         
              1-877-344-7529



              Intl. replay:          
              1-412-317-0088



              Conference ID:                            10135294

The Company plans to publish a third quarter 2019 summary presentation to its website at www.CLR.com prior to the start of its conference call on October 31, 2019.

About Continental Resources

Continental Resources (NYSE: CLR) is a top 10 independent oil producer in the U.S. Lower 48 and a leader in America's energy renaissance. Based in Oklahoma City, Continental is the largest leaseholder and the largest producer in the nation's premier oil field, the Bakken play of North Dakota and Montana. The Company also has significant positions in Oklahoma, including its SCOOP Woodford and SCOOP Springer discoveries and the STACK plays. With a focus on the exploration and production of oil, Continental has unlocked the technology and resources vital to American energy independence and our nation's leadership in the new world oil market. In 2019, the Company will celebrate 52 years of operations. For more information, please visit www.CLR.com.

Cautionary Statement for the Purpose of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements included in this press release other than statements of historical fact, including, but not limited to, forecasts or expectations regarding the Company's business and statements or information concerning the Company's future operations, performance, financial condition, production and reserves, schedules, plans, timing of development, rates of return, budgets, costs, business strategy, objectives, and cash flows are forward-looking statements. When used in this press release, the words "could," "may," "believe," "anticipate," "intend," "estimate," "expect," "project," "budget," "target," "plan," "continue," "potential," "guidance," "strategy," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

Forward-looking statements are based on the Company's current expectations and assumptions about future events and currently available information as to the outcome and timing of future events. Although the Company believes these assumptions and expectations are reasonable, they are inherently subject to numerous business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. No assurance can be given that such expectations will be correct or achieved or that the assumptions are accurate. The risks and uncertainties include, but are not limited to, commodity price volatility; the geographic concentration of our operations; financial market and economic volatility; the inability to access needed capital; the risks and potential liabilities inherent in crude oil and natural gas drilling and production and the availability of insurance to cover any losses resulting therefrom; difficulties in estimating proved reserves and other reserves-based measures; declines in the values of our crude oil and natural gas properties resulting in impairment charges; our ability to replace proved reserves and sustain production; our ability to pay future dividends or complete share repurchases; the availability or cost of equipment and oilfield services; leasehold terms expiring on undeveloped acreage before production can be established; our ability to project future production, achieve targeted results in drilling and well operations and predict the amount and timing of development expenditures; the availability and cost of transportation, processing and refining facilities; legislative and regulatory changes adversely affecting our industry and our business, including initiatives related to hydraulic fracturing; increased market and industry competition, including from alternative fuels and other energy sources; and the other risks described under Part I, Item 1A. Risk Factors and elsewhere in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, registration statements and other reports filed from time to time with the SEC, and other announcements the Company makes from time to time.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which such statement is made. Should one or more of the risks or uncertainties described in this press release occur, or should underlying assumptions prove incorrect, the Company's actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Except as otherwise required by applicable law, the Company undertakes no obligation to publicly correct or update any forward-looking statement whether as a result of new information, future events or circumstances after the date of this report, or otherwise.

Readers are cautioned that initial production rates are subject to decline over time and should not be regarded as reflective of sustained production levels. In particular, production from horizontal drilling in shale oil and natural gas resource plays and tight natural gas plays that are stimulated with extensive pressure fracturing are typically characterized by significant early declines in production rates.

We use the term "EUR" or "estimated ultimate recovery" to describe potentially recoverable oil and natural gas hydrocarbon quantities. We include these estimates to demonstrate what we believe to be the potential for future drilling and production on our properties. These estimates are by their nature much more speculative than estimates of proved reserves and require substantial capital spending to implement recovery. Actual locations drilled and quantities that may be ultimately recovered from our properties will differ substantially. EUR data included herein remain subject to change as more well data is analyzed.


     
                Investor Contact:         
     
                Media Contact:



     Rory Sabino                            
     Kristin Thomas



     Vice President, Investor Relations     
     Senior Vice President, Public Relations



     405-234-9620                           
     405-234-9480



     
                Rory.Sabino@CLR.com       
     
                Kristin.Thomas@CLR.com





     Lucy Guttenberger



     Investor Relations Analyst



     405-774-5878



     
                Lucy.Guttenberger@CLR.com

                                
              
                Continental Resources, Inc. and Subsidiaries
                                        Unaudited Condensed Consolidated Statements of Income




                                                                                Three months ended September 30,                             Nine months ended September 30,

                                                                                                                                                  ---

                                                                               2019                          2018                       2019                                         2018

                                                                                                                                                                                   ---


     Revenues:                                                       
              
                In thousands, except per share data


      Crude oil and natural gas
       sales                                                             $1,081,400                    $1,273,238                 $3,328,409                                   $3,524,618


      Gain (loss) on natural gas
       derivatives, net                                                       1,195                       (2,025)                    53,519                                      (4,536)


      Crude oil and natural gas
       service operations                                                    21,602                        10,938                     54,886                                       40,210

                                                                                                                                                                                   ---


     Total revenues                                                      1,104,197                     1,282,151                  3,436,814                                    3,560,292





     Operating costs and expenses:


      Production expenses                                                   114,050                       103,032                    333,446                                      286,165



     Production taxes                                                       86,931                        98,572                    267,237                                      262,747


      Transportation expenses                                                62,038                        46,008                    164,569                                      142,559


      Exploration expenses                                                    2,472                         2,324                      7,399                                        4,347


      Crude oil and natural gas
       service operations                                                     8,224                         5,163                     26,616                                       17,434


      Depreciation, depletion,
       amortization and accretion                                           484,031                       469,333                  1,464,672                                    1,370,912


      Property impairments                                                   20,199                        23,770                     66,854                                       86,715


      General and administrative
       expenses                                                              46,993                        44,151                    141,837                                      134,368


      Net (gain) loss on sale of
       assets and other                                                         535                       (1,510)                       647                                      (8,261)

                                                                                                                                                                                   ---

      Total operating costs and
       expenses                                                             825,473                       790,843                  2,473,277                                    2,296,986

                                                                                                                                                                                   ---

      Income from operations                                                278,724                       491,308                    963,537                                    1,263,306



     Other income (expense):



     Interest expense                                                     (68,090)                     (73,409)                 (204,398)                                   (223,590)


      Loss on extinguishment of
       debt                                                                 (4,584)                      (7,133)                   (4,584)                                     (7,133)



     Other                                                                   1,119                           869                      3,196                                        2,231


                                                                           (71,555)                     (79,673)                 (205,786)                                   (228,492)

                                                                                                                                                                                   ---

      Income before income taxes                                            207,169                       411,635                    757,751                                    1,034,814


      Provision for income taxes                                           (49,747)                     (97,466)                 (177,386)                                   (244,234)

                                                                                                                                                                                   ---


     Net income                                                            157,422                       314,169                    580,365                                      790,580


      Net loss attributable to
       noncontrolling interests                                               (740)                                                (1,330)                                           -



      Net income attributable to
       Continental Resources                                               $158,162                      $314,169                   $581,695                                     $790,580





      Net income per share attributable to Continental Resources:



     Basic                                                                   $0.43                         $0.84                      $1.56                                        $2.13



     Diluted                                                                 $0.43                         $0.84                      $1.56                                        $2.11

                                            
            Continental Resources, Inc. and Subsidiaries
                                              Unaudited Condensed Consolidated Balance Sheets




                     In thousands                    
              September 30, 2019                
     December 31, 2018

    ---

                     Assets


        Cash and cash equivalents                                                   $35,260                            $282,749


        Other current assets                                                      1,190,424                           1,129,612


        Net property and equipment
         (1)                                                                    14,520,573                          13,869,800


        Other noncurrent assets                                                      25,098                              15,786



       Total assets                                                            $15,771,355                         $15,297,947





                     Liabilities and equity


        Current liabilities                                                      $1,371,769                          $1,387,509


        Long-term debt, net of
         current portion                                                          5,568,413                           5,765,989


        Other noncurrent
         liabilities                                                              1,916,993                           1,722,588


        Equity attributable to
         Continental Resources                                                    6,551,985                           6,145,133


        Equity attributable to
         noncontrolling interests                                                   362,195                             276,728



        Total liabilities and
         equity                                                                 $15,771,355                         $15,297,947




               (1) Balance is net of
                accumulated depreciation,
                depletion and amortization of
                $12.29 billion and $10.81
                billion as of September 30,
                2019 and December 31, 2018,
                respectively.

                               
              Continental Resources, Inc. and Subsidiaries
                              Unaudited Condensed Consolidated Statements of Cash Flows




                                                     Three months ended September 30,                 Nine months ended September 30,



                     In thousands                   2019                          2018           2019                         2018

    ---


       Net income                              $157,422                      $314,169       $580,365                     $790,580


        Adjustments to reconcile
         net income to net cash
         provided by operating
         activities:


        Non-cash expenses                        603,397                       619,284      1,759,213                    1,764,566


        Changes in assets and
         liabilities                              46,153                      (72,705)      (27,702)                    (54,405)



        Net cash provided by
         operating activities                    806,972                       860,748      2,311,876                    2,500,741


        Net cash used in investing
         activities                            (696,182)                    (759,880)   (2,253,927)                 (2,103,483)


        Net cash used in financing
         activities                            (282,002)                    (217,976)     (305,458)                   (428,253)


        Effect of exchange rate
         changes on cash                            (10)                           15             20                         (11)



        Net change in cash and
         cash equivalents                      (171,222)                    (117,093)     (247,489)                    (31,006)


        Cash and cash equivalents
         at beginning of period                  206,482                       129,989        282,749                       43,902



        Cash and cash equivalents
         at end of period                        $35,260                       $12,896        $35,260                      $12,896

Non-GAAP Financial Measures

Adjusted net income and adjusted net income per share attributable to Continental

Our presentation of adjusted net income and adjusted net income per share that exclude the effect of certain items are non-GAAP financial measures. Adjusted net income and adjusted net income per share represent net income and diluted net income per share determined under U.S. GAAP without regard to non-cash gains and losses on derivative instruments, property impairments, gains and losses on asset sales, and losses on extinguishment of debt as applicable. Management believes these measures provide useful information to analysts and investors for analysis of our operating results. In addition, management believes these measures are used by analysts and others in valuation, comparison and investment recommendations of companies in the oil and gas industry to allow for analysis without regard to an entity's specific derivative portfolio, impairment methodologies, and property dispositions. Adjusted net income and adjusted net income per share should not be considered in isolation or as an alternative to, or more meaningful than, net income or diluted net income per share as determined in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies. The following tables reconcile net income and diluted net income per share as determined under U.S. GAAP to adjusted net income and adjusted diluted net income per share for the periods presented.

                                                         
     Three months ended September 30,



                                                                       2019                               2018



                     In thousands, except per share data       
              $                 
     Diluted EPS      
            $   
     Diluted EPS

    ---

        Net income attributable to Continental
         Resources (GAAP)                                          $158,162                              $0.43     $314,169               $0.84



       Adjustments:



       Non-cash loss on derivatives                                 29,289                                            548



       Property impairments                                         20,199                                         23,770


        (Gain) loss on sale of assets, net                              535                                        (1,510)


        Loss on extinguishment of debt                                4,584                                          7,133


        Total tax effect of adjustments (1)                        (13,380)                                       (7,093)


        Total adjustments, net of tax                                41,227                               0.11       22,848                0.06



        Adjusted net income (non-GAAP)                             $199,389                              $0.54     $337,017               $0.90


        Weighted average diluted shares
         outstanding                                                370,676                                        374,623



        Adjusted diluted net income per share
         (non-GAAP)                                                   $0.54                                          $0.90




                                                         
     Nine months ended September 30,



                                                                       2019                               2018



                     In thousands, except per share data       
              $                 
     Diluted EPS      
            $   
     Diluted EPS

    ---

        Net income attributable to Continental
         Resources (GAAP)                                          $581,695                              $1.56     $790,580               $2.11



       Adjustments:


        Non-cash (gain) loss on derivatives                         (1,303)                                        12,013



       Property impairments                                         66,854                                         86,715


        (Gain) loss on sale of assets, net                              647                                        (8,261)


        Loss on extinguishment of debt                                4,584                                          7,133


        Total tax effect of adjustments (1)                        (17,342)                                      (23,147)


        Total adjustments, net of tax                                53,440                               0.14       74,453                0.20



        Adjusted net income (non-GAAP)                             $635,135                              $1.70     $865,033               $2.31


        Weighted average diluted shares
         outstanding                                                373,506                                        374,762



        Adjusted diluted net income per share
         (non-GAAP)                                                   $1.70                                          $2.31



               (1) Computed by applying a
                combined federal and state
                statutory tax rate of 24.5% in
                effect for 2019 and 24.0% in
                effect for 2018 to the pre-
                tax amount of adjustments
                associated with our operations
                in the United States.

Net Debt

Net debt is a non-GAAP measure. We define net debt as total debt less cash and cash equivalents as determined under U.S. GAAP. Net debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses net debt to determine the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. We believe this metric is useful to analysts and investors in determining the Company's leverage position since the Company has the ability to, and may decide to, use a portion of its cash and cash equivalents to reduce debt. This metric is sometimes presented as a ratio with EBITDAX in order to provide investors with another means of evaluating the Company's ability to service its existing debt obligations as well as any future increase in the amount of such obligations. At September 30, 2019, the Company's total debt was $5.57 billion and its net debt amounted to $5.54 billion, representing total debt of $5.57 billion less cash and cash equivalents of $35.3 million. From time to time the Company provides forward-looking net debt forecasts; however, the Company is unable to provide a quantitative reconciliation of the forward-looking non-GAAP measure to the most directly comparable forward-looking GAAP measure of total debt because management cannot reliably quantify certain of the necessary components of such forward-looking GAAP measure. The reconciling items in future periods could be significant.

EBITDAX

We use a variety of financial and operational measures to assess our performance. Among these measures is EBITDAX, a non-GAAP measure. We define EBITDAX as earnings before interest expense, income taxes, depreciation, depletion, amortization and accretion, property impairments, exploration expenses, non-cash gains and losses resulting from the requirements of accounting for derivatives, non-cash equity compensation expense, and losses on extinguishment of debt as applicable. EBITDAX is not a measure of net income or net cash provided by operating activities as determined by U.S. GAAP.

Management believes EBITDAX is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. Further, we believe EBITDAX is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet future debt service requirements, if any. We exclude the items listed above from net income/loss and net cash provided by operating activities in arriving at EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired.

EBITDAX should not be considered as an alternative to, or more meaningful than, net income/loss or net cash provided by operating activities as determined in accordance with U.S. GAAP or as an indicator of a company's operating performance or liquidity. Certain items excluded from EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of EBITDAX. Our computations of EBITDAX may not be comparable to other similarly titled measures of other companies.

The following table provides a reconciliation of our net income to EBITDAX for the periods presented.

                                       Three months ended September 30,              Nine months ended September 30,



                     In thousands     2019                           2018       2019                        2018

    ---


       Net income                $157,422                       $314,169   $580,365                    $790,580


        Interest expense            68,090                         73,409    204,398                     223,590


        Provision for income
         taxes                      49,747                         97,466    177,386                     244,234


        Depreciation,
         depletion,
         amortization and
         accretion                 484,031                        469,333  1,464,672                   1,370,912


        Property impairments        20,199                         23,770     66,854                      86,715


        Exploration expenses         2,472                          2,324      7,399                       4,347


        Impact from derivative
         instruments:


        Total (gain) loss on
         derivatives, net          (1,195)                         2,025   (53,519)                      4,536


        Total cash received
         (paid) on
         derivatives, net           30,484                        (1,477)    52,216                       7,477



        Non-cash (gain) loss
         on derivatives, net        29,289                            548    (1,303)                     12,013


        Non-cash equity
         compensation               12,870                         11,730     37,153                      33,209


        Loss on extinguishment
         of debt                     4,584                          7,133      4,584                       7,133



        EBITDAX (non-GAAP)        $828,704                       $999,882 $2,541,508                  $2,772,733



The following table provides a reconciliation of our net cash provided by operating activities to EBITDAX for the periods presented.

                                       Three months ended September 30,              Nine months ended September 30,



                     In thousands     2019                           2018       2019                        2018

    ---

        Net cash
         provided by
         operating
         activities               $806,972                       $860,748 $2,311,876                  $2,500,741


        Current income
         tax provision                                           (7,778)                              (7,778)


        Interest
         expense                    68,090                         73,409    204,398                     223,590


        Exploration
         expenses,
         excluding dry
         hole costs                  2,472                          2,324      7,399                       4,346


        Gain (loss) on
         sale of
         assets, net                 (535)                         1,510      (647)                      8,261


        Other, net                 (2,142)                       (3,036)   (9,220)                   (10,832)


        Changes in
         assets and
         liabilities              (46,153)                        72,705     27,702                      54,405



        EBITDAX (non-
         GAAP)                    $828,704                       $999,882 $2,541,508                  $2,772,733

Net Sales Prices

Revenues and transportation expenses associated with production from our operated properties are reported separately. For non-operated properties, we receive a net payment from the operator for our share of sales proceeds which is net of costs incurred by the operator, if any. Such non-operated revenues are recognized at the net amount of proceeds received. As a result, the separate presentation of revenues and transportation expenses from our operated properties differs from the net presentation from non-operated properties. This impacts the comparability of certain operating metrics, such as per-unit sales prices, when such metrics are prepared in accordance with U.S. GAAP using gross presentation for some revenues and net presentation for others.

In order to provide metrics prepared in a manner consistent with how management assesses the Company's operating results and to achieve comparability between operated and non-operated revenues, we may present crude oil and natural gas sales net of transportation expenses, which we refer to as "net crude oil and natural gas sales," a non-GAAP measure. Average sales prices calculated using net crude oil and natural gas sales are referred to as "net sales prices," a non-GAAP measure, and are calculated by taking revenues less transportation expenses divided by sales volumes, whether for crude oil or natural gas, as applicable. Management believes presenting our revenues and sales prices net of transportation expenses is useful because it normalizes the presentation differences between operated and non-operated revenues and allows for a useful comparison of net realized prices to NYMEX benchmark prices on a Company-wide basis.

The following tables present a reconciliation of crude oil and natural gas sales (GAAP) to net crude oil and natural gas sales and related net sales prices (non-GAAP) for the periods presented.

                                        Three months ended September 30, 2019                     Three months ended September 30, 2018



                     In thousands     
          Crude oil                        
     Natural gas         
              Total                    
     Crude oil         
     Natural gas         
     Total

    ---

        Crude oil and natural gas
         sales (GAAP)                              $989,297                              $92,103                   $1,081,400                    $1,038,558              $234,680          $1,273,238


        Less: Transportation expenses              (53,038)                             (9,000)                    (62,038)                     (39,336)              (6,672)           (46,008)



        Net crude oil and natural gas
         sales (non-GAAP)                          $936,259                              $83,103                   $1,019,362                      $999,222              $228,008          $1,227,230


        Sales volumes (MBbl/MMcf/
         MBoe)                                       18,258                               74,101                       30,608                        15,190                73,029              27,361



        Net sales price (non-GAAP)                   $51.28                                $1.12                       $33.30                        $65.78                 $3.12              $44.85








                                        Nine months ended September 30, 2019                     Nine months ended September 30, 2018



                     In thousands     
          Crude oil                        
     Natural gas         
              Total                    
     Crude oil         
     Natural gas         
     Total

    ---

        Crude oil and natural gas
         sales (GAAP)                            $2,905,561                             $422,848                   $3,328,409                    $2,891,722              $632,896          $3,524,618


        Less: Transportation expenses             (140,666)                            (23,903)                   (164,569)                    (119,939)             (22,620)          (142,559)



        Net crude oil and natural gas
         sales (non-GAAP)                        $2,764,895                             $398,945                   $3,163,840                    $2,771,783              $610,276          $3,382,059


        Sales volumes (MBbl/MMcf/
         MBoe)                                       53,179                              224,045                       90,520                        44,183               209,069              79,028



        Net sales price (non-GAAP)                   $51.99                                $1.78                       $34.95                        $62.73                 $2.92              $42.80

Cash General and Administrative Expenses per Boe

Our presentation of cash general and administrative ("G&A") expenses per Boe is a non-GAAP measure. We define cash G&A per Boe as total G&A determined in accordance with U.S. GAAP less non-cash equity compensation expenses, expressed on a per-Boe basis. We report and provide guidance on cash G&A per Boe because we believe this measure is commonly used by management, analysts and investors as an indicator of cost management and operating efficiency on a comparable basis from period to period. In addition, management believes cash G&A per Boe is used by analysts and others in valuation, comparison and investment recommendations of companies in the oil and gas industry to allow for analysis of G&A spend without regard to stock-based compensation programs which can vary substantially from company to company. Cash G&A per Boe should not be considered as an alternative to, or more meaningful than, total G&A per Boe as determined in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies.

The following table reconciles total G&A per Boe as determined under U.S. GAAP to cash G&A per Boe for the periods presented.

                              Three months ended September 30,           Nine months ended September 30,



                            2019                               2018     2019                              2018



     Total G&A per Boe
      (GAAP)               $1.54                              $1.61    $1.57                             $1.70


     Less: Non-cash
      equity compensation
      per Boe             (0.42)                            (0.43)  (0.41)                           (0.42)



     Cash G&A per Boe
      (non-GAAP)           $1.12                              $1.18    $1.16                             $1.28

                   
              Continental Resources, Inc.


                          
              2019 Guidance


                      
              As of October 30, 2019




                                                                           2019





        Full-year average oil production                     195,000 to 200,000
                                                              Bopd


        Full-year average natural gas                        820,000 to 840,000
         production                                           Mcfpd


        Capital expenditures budget                        
           $2.6 billion




                     Operating Expenses:

    ---

             Production expense per Boe                  
           $3.50 to $4.00


             Production tax (% of net oil &
              gas revenue)                                                 8.5%


             Cash G&A expense per Boe(1)                 
           $1.15 to $1.35


             Non-cash equity compensation per
              Boe                                        
           $0.40 to $0.50



            DD&A per Boe                              
           $15.00 to $17.00




                     Average Price Differentials:

    ---

             NYMEX WTI crude oil (per barrel
              of oil)                                        ($4.50) to ($5.50)


             Henry Hub natural gas (per Mcf)                 ($0.50) to ($1.00)



               (1) Cash G&A is a non-GAAP measure
                and excludes the range of values
                shown for non-cash equity
                compensation per Boe in the item
                appearing immediately below.
                Guidance for total G&A (cash and
                non-cash) is an expected range of
                $1.55 to $1.85 per Boe.

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SOURCE Continental Resources