Continental slashes 2016 budget by 66% to below $1 billion

Continental Resources Inc., Oklahoma City, has reported a capital expenditures budget for 2016 of $920 million, a 66% reduction from the planned $2.7 billion for 2015.

Average production in 2016 is estimated at 200,000 boe/d, down from the expected 221,700 boe/d in 2015.

The 2016 budget is expected to be cash-flow neutral at an average West Texas Intermediate crude oil price of $37/bbl for the full year. At an average price of $40/bbl, the company estimates 2016 results would be cash-flow positive in excess of $100 million.

“In terms of our budget, each $5 move in WTI prices impacts our full-year cash flow by $150 million to $200 million,” said John Hart, Continental senior vice-president and chief financial officer.

Activity focused on Bakken, SCOOP

Continental expects to spend 35% of its 2016 expenditures in the Bakken shale of North Dakota and 28% in the SCOOP play in Oklahoma. Other key investment areas will be the STACK play in Oklahoma with 15%, and the Northwest Cana Joint Development (JDA) area with 7%.

The remaining 15% of the budget will target other expenditures such as routine leasing and renewals, workovers, and facilities.

The budget anticipates an average of 19 operated drilling rigs for the year, with 4 in the Bakken, 5-6 in the SCOOP, 5 in the Northwest Cana JDA, and 4-5 in the STACK.

Continental recently decreased its operated rig count to 19 from 23 by dropping 4 rigs in Bakken, and therefore the current deployment of operated rigs is in line with the expected averages for the 2016 budget.

In terms of wells, the company expects to complete 71 net operated and nonoperated wells in 2016, with 26 in the Bakken, 25 in the SCOOP, 11 in the Northwest Cana JDA, and 9 in the STACK.

Continental plans to defer completing most Bakken wells in 2016, which will increase the drilled but uncompleted (DUC) inventory to 195 gross DUCs at yearend 2016 from 135 gross DUCs at yearend 2015. The company says this is a high-graded inventory of DUCs, with an average estimated ultimate recovery (EUR)/well of 850,000 boe.

In Oklahoma, Continental plans to deploy an average of 2.5 completion crews in 2016. The company ended 2015 with 35 gross DUCs in Oklahoma, and expects to end 2016 with 50 gross DUCs, with an average EUR/well of 1.8 million boe.

“This high-quality DUC inventory represents a significant asset for the company as prices recover,” said Jack Stark, Continental president and chief operating officer.

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...

Leveraging the Power of Information in the Energy Industry

Information Governance is about more than compliance. It’s about using your information to drive ...