Continental Resources CEO Harold Hamm has achieved national prominence since being appointed Donald Trump’s top energy advisor earlier this year. With the election of Trump to the presidency, speculation that Hamm could be appointed as energy secretary or to another top energy post has grown.
“Donald Trump is not my last choice, he is the best choice,” Hamm said back in April.
Given his emergence on the national stage, it is timely to look at Hamm’s latest insights regarding the U.S. oil and gas landscape, and to assess the current state of the company he captains.
A Reassuring Email…
Earlier this month, Hamm sent an email to his employees at Continental Resources addressing questions as to his role at the company given his involvement in the Trump transition. He pledged his continued commitment to building “this great company.”
“As excited as I am to see this change come to Washington, D.C., I remain committed to you, our company and the city,” Hamm said in the email, as reported by newsok.com. “Our efforts to help President Trump get elected have been about creating a better working environment for the oil industry and Continental Resources, but our focus remains on building this great company.”
He also wrote, “Continental’s success is vital to the future of Oklahoma City, our great state and our country.”
Hamm also addressed Trump’s “business acumen,” which he says will greatly benefit the U.S. oil industry. “President-Elect Donald Trump will bring his unmatched business acumen to government, paving the way for prosperity in our industrial and business sectors that have been stifled by job-killing regulations over the past eight years,” he said in the email.
Hamm Speaks To Obama’s Hostility to O&G
Speaking specifically to the impact of President Obama’s anti-oil agenda and policies, Hamm told CNBC earlier this month that “overreaching regulations” have produced “death by a thousand cuts.”
“There’s so many of these overreaching regulations that’s gone on. My goodness. We called it death by a thousand cuts, and that’s exactly what it was intended to do,” he said.
Hamm also told CNBC that these regulations are impeding U.S. E&Ps like Continental Resources, particularly regarding the government’s hostility to leasing federal land for drilling. “Permitting is almost nonexistent out there. It takes years sometimes to get permits,” he said.
The Bureau of Land Management last year issued 852 leases for oil and gas drilling on a total of 810,000 acres. “That’s down from a five-year high of 2,188 leases issued in 2011 for more than 2 million acres of federal land,” the CNBC report said.
Where Continental Stands Right Now
Turning now to Continental Resources’ performance during the oil price downturn, the company said in its 3Q16 report that it expects to end 2017 with production volumes that are approximately 5 percent higher than the company estimated in August. Continental said that progress in its core areas- North Dakota’s Bakken shale and Oklahoma’s STACK and SCOOP plays- should drive this growth. “We have expanded the productive footprint of STACK, SCOOP and the Bakken core, and are increasing the value of these assets,” Hamm said in the report.
Continental now projects that full-year production will range between 215,000 and 220,000 boepd, an increase of 5,000 boepd from the low end of previous guidance given in August 2016, and 15,000 to 20,000 boepd higher than the original guidance given in January 2016. The company expects to exit 2016 with production between 205,000 and 210,000 boepd, reflecting a 10,000 boepd increase from the low end of previous guidance given in August.
The company added that its net production in the third quarter was around 5 percent lower than the previous and 9 percent lower year-on-year. The bulk of this decline came from the Bakken play, though the company emphasized that it was increasing activity there after curtailing it in response to low oil prices.
Hamm said that in 3Q16, “we brought on several excellent producers in the Bakken using enhanced completion designs, including two wells that generated CLR-record 30-day initial rates for the Bakken. This is an encouraging start as the Company begins working down its large backlog of Bakken uncompleted wells and capturing their value.”
By the end of the year, Continental plans to increase the total number of gross operated well completions in 2016 by 32, versus its previous plan. It now expects to complete 119 gross operated wells with first production for the year, including 29 gross operated wells in the Bakken, 33 in SCOOP, 25 in Northwest Cana JDA and 32 in STACK Meramec.
Continental posted a $109.6 million net loss for the quarter- 33 percent greater than the loss in the 3Q15. In August, Continental divested some of its Bakken assets for approximately $600 million, which helped the company strengthen its balance sheet and decrease debt.