As part of its second quarter 2016 presentation, Continental Resources noted it had signed a definitive purchase and sale agreement with an undisclosed buyer to sell approximately 29,500 net acres of non-strategic leasehold in the SCOOP play in Oklahoma for $281 million.
Located primarily on the eastern side of SCOOP, predominantly in Garvin and McClain counties, the leasehold represents approximately 550 Boe per day of net production and less than 1% of Continental’s proved reserves, Raymond James analysts said. Following the transaction’s close, Continental will hold approximately 384,000 net acres of leasehold in SCOOP.
The deal comes on the heels of a May 2016 transaction in which it sold approximately 132,000 net acres of leasehold in the Washakie Basin of Wyoming for $110 million. As part of the 2Q16 results presentation, Jack Stark, the company’s president and COO, noted that Continental has "additional opportunities to sell non-strategic assets for continued debt reduction."
Raymond James and Wunderlich Securities analysts maintain a Buy rating for Continental as it appears well-positioned for an oil price recovery.
"Continental is now reducing debt through operations and asset sales as it prepares for a higher commodity price environment in the future. Impressively CLR has been able to reduce its costs/spending to a point that allows the company to generate free cash flow from operations even in the current environment. This has allowed CLR to reduce debt nicely during 2Q16 and that trend should continue in 2H16 given the current spending rates," commented Wunderlich Securities analysts in a note Monday.
With its exposure to Mid-continent resource plays, its "peer-leading Bakken position," and extensive Bakken DUC inventory, Raymond James said Monday that it believes Continental "is among the best positioned to capitalize on our bullish oil price outlook; we reiterate our Strong Buy rating."