jack stark- president · 2018. 6. 1. · • optimized completions • drilling efficiencies •...
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PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
The Bakken… America’s Quality Oil Play!
2018 WBPC | Bismarck, ND - May 22-24
Jack Stark- President
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Forward-Looking Information
2
Cautionary Statement for the Purpose of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 This presentation 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 presentation 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 presentation, the words “could,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget,” “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 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 exploration, drilling and production and the availability of insurance to cover any losses resulting therefrom; difficulties in estimating proved reserves and other revenue-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; 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, 2016, 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 presentation 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 expressly stated above or 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 presentation, 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.
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION 3
CLR: #1 Producer and #1 Leasehold Owner in the Bakken
Source: NDIC/ Select peers include WLL, HES, COP, EOG, OAS, XOM, WPX, STL, MRO.
• 1,650 Bakken well Completed to Date• 4,000+ Bakken wells in Inventory• 800,000 net acres• 6 Drilling Rigs • 8 Stim Crews• ~ 56% of CLR Production Q1 2018
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
MM
Bo
CLR
Gross Monthly Production(January 2018)
CLR 2018 D&C Budget: $2.0 Billion
Bakken$1.2 Billion60%
40%
CLR Partner with North Dakota
~ 13% of ND Production
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
$50 $60 $70 $80
RO
R
WTI Oil Price, $/BBL
430 MBOE Model
603 MBOE Model
800 MBOE Model
980 MBOE Model
1,100 MBOE Model (2018 $7.9MM)
CLR Bakken Returns Have Never Been Better
4
165% ROR(1) from 1.1 MMboe Type Curve • 7 month Payout
• $15MM+ PV10 per well
• 80% oil
• $26/BO PV-10 Break even
Driven By Ingenuity and Technology• Optimized completions
• Drilling Efficiencies
• Infrastructure Improvements
Rocks Did Not Change!
1. ROR, PV-10 & payout are based on $70 WTI and $3.00 gas
Evolution of EUR and ROR for CLR Bakken Wells
2018 165% ROR
20112014
2015
2017
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
0
200
400
600
800
1,000
1,200
0
10
20
30
40
50
60
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
LBS/FT
# STAGES
EUR MBOE TC
It’s All About Connecting with the Rock!
5
Based on 2 mile lateral
# ST
AGES
LBS/FT &
EUR
Mboe
1.1MMboe
800 Mboe
603 Mboe
430 Mboe
279 Mboe
PERF SPACING
FLUID X-LINK GEL HYBRID / SLICKWATER
3%-5% 15%-20%More Stimulated Rock VolumeRECOVERY FACTOR
CLR’s Growing EUR and Recoveries
180’ 30’
980 Mboe
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
CLR Drilling Efficiencies Drive Cycle Times Down
6
33.0 21.7 18.6 17.4 16.4 14.3 11.3
7
11
1415
1921
24
0
5
10
15
20
25
30
0
5
10
15
20
25
30
35
2011 2012 2013 2014 2015 2016 2017
WELL C
OU
NT
DAY
S
SPUD to TD WELLS per RIG YEAR
832 1,150 1,333 1,495 1,903 2,402 3,154
$506
$438$390
$367
$293
$223$193
0
100
200
300
400
500
600
0
500
1000
1500
2000
2500
3000
3500
2011 2012 2013 2014 2015 2016 2017
CO
STFT
LATERAL FT per DAY COST per LATERAL FT
Driven by technology: Multi-well pads │ Super “Spec” rigs │ Motor technology │ Bit advancements │ Rotary steerable systems │ Geo-steering technology │ Improved geologic targeting
Spud to TD 3X Faster vs 2011 4X Feet per Day in Lateral vs 2011
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
$4.8$4.2
$3.6 $3.4 $3.0$2.5 $2.0 $2.2
$5.3$5.4
$4.9
$6.6
$6.4
$4.2$4.7
$4.8
$0.8$0.8
$10.1$9.6
$8.5
$10.1$9.4
$6.7
$7.5$7.9
$0
$2
$4
$6
$8
$10
$12
2011 2012 2013 2014 2015 2016 2017 2018
Bak
ken
CW
C ($
MM
)
LIFT CMP DRL
CLR Bakken Well Costs Decrease as Performance Increases
7
ACCELERATED LIFT
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
1524
39
5057
66
117
136
0
20
40
60
80
100
120
140
160
16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2
Wel
ls
Accelerated Lift – Bringing Bakken Value Forward
8
CLR Bakken Wells on ESP by Quarter
0
100,000
200,000
300,000
400,000
0 1 2 3 4 5 6 7 8 9 10 11 12
Cum
. Flu
id (B
bls)
Months Producing
~3X Total Fluid in 1st Year(1)
0
50,000
100,000
150,000
200,000
0 1 2 3 4 5 6 7 8 9 10 11 12
Cum
. Oil
(Bbl
s)
Months Producing
~3X Oil in 1st Year(1)
2017 2014
2017 2014
+ 122 MBO / 1 YR
+ 239 MBbls / 1 YR
(1) CLR Operated Wells
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Source: IHS and Internal Reporting
9
Step Change in Well Performance Rapidly Expanding Across the Bakken Field- Industry Wide
2000 - 2014 15 Years
2015 - 20173 Years
Wells or units with wells >100Mboe in 90 DaysApproximate Bakken Field Outline
Industry-Wide Bakken Wells or Units that Produced Over 100,000 Boe in 90 Days
100 mi
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
CLR Crude Differentials Improved 65% since 2014
10
No Longer “Disadvantage Crude”
• Netbacks increased $7.52/bbl since 2014
• Growing Infrastructure brings better pricing• DAPL• Renegotiated Contracts
• Catalyst for exporting Bakken Crude• CLR has exported almost 2MM barrels of Bakken
Crude to Asia and UK• Other opportunities being evaluated• Bakken quality ideal for European and Asian
refineries
RAI
LPI
PE
($11.83)
($9.21)
($8.26)
($6.14)
($4.31)
($14)
($12)
($10)
($8)
($6)
($4)
($2)
$02014 2015 2016 2017 1Q'18
$ /B
arre
l
Bakken Oil Differential to WTI
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Bakken Quality Shines Through
11
Bakken100% of Reservoir in Oil Window
80% Oil
Low Water Cut (Avg. <50%)
Consistent API Crude
Permian Multi-Phase Reservoir (Oil/Condensate/Gas)
~65% Oil (Avg.)
High Water Cut (Avg. ~70%)
Variable API Crude
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Bakken 100% in Oil Window
12
Oil Window
Oil WindowCondensate WindowGas Window
MMBOPD & BCFD
MMBOPD & BCFDPermian
Horizontal wells
Bakken
Permian
Bakken
1.2 MMBOPD 2.0 BCFD (YE 2017)
2.0 MMBOPD 6.1 BCFD(YE 2017)
Source: IHS
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Bakken Low Water Cut
13
Bakken HZ Production52% Oil Cut
Permian HZ Production32% Oil Cut
MMBbls / Daily MMBbls / Daily
WATER
WATER
1.2 MMBOPD 1.1 MMBWPD
(YE 2017)
2.0 MMBOPD 4.3 MMBWPD
(YE 2017)
Source: IHS
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Superior Production from The Bakken
14
Source: JRCO Research, Drilling Info and CLR
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Reeves Midland CLR Bakken
Cum
ulat
ive
Oil
Prod
uctio
n
2 Most Active Counties in Permian
First 6 Months Cumulative Oil Production 2017
Source: JRCO Research May 2018
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Bakken Consistent High Quality Crude
15
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
20 30 40 50 60
Peak
Mon
thly
Oil
Prod
uctio
n Pe
r Wel
l (bb
l)
API Gravity
Permian Bakken
Wells reported over last 2 years (DrillingInfo)
Source: DrillingInfo
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Early Stage Demands on Bakken Infrastructure Behind Us
16
Permian – 15,000 mi2463 Active Rigs
Bakken – 14,000 mi257 Active Rigs
Max Rig Count – 229 (June 2012)
150
Mile
s150 Miles
Delaware Basin6,700 mi2
Midland Basin8,300 mi2
Bakken Play
Active Rigs
Source: NDIC, IHS, Baker Hughes
150 Miles
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
0
100
200
300
400
500
600
0
300
600
900
1,200
1,500
1,800
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
70 Rigs
17
North Dakota Actual and Projected Crude Oil Growth
ND Production (Mbopd)
Monthly Completions
ND Rigs
Source: NDIC, IHS, and CLR estimates
Projected Growth
600
Rig
s / M
onth
ly C
ompl
etio
ns
500
400
300
200
100
0
1,800
ND
Production(M
bopd)
1,500
1,200
900
600
300
0
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Bakken Infrastructure Expanding to Keep up with Growth
18
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2009 2011 2013 2015 2017 2019E
Local Refining PipelineRail Bakken ProductionForecasted Production (50 Rigs) Forecasted Production (60 Rigs)
Thou
sand
Bop
d
RAI
LPI
PECrude Oil Takeaway Capacity
BPD
NDIC NGL Takeaway Projection
Source: North Dakota Pipeline Authority and CLR estimates
PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSIONPROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION
Bakken800,000 net acres
SCOOP/STACK1,100,000 net acres
1.9 Million Net Reservoir Acres (~70% HBP
(1))
1. Acreage numbers and HBP numbers are approximate as of 1Q18.
19
2018: Breakout Year For CLRDelivering Sustainable, Cash-Flow Positive Growth
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2010 2011 2012 2013 2014 2015 2016 2017 2018E
STACK
SCOOP
Bakken
Legacy
242,637
Annu
al P
rodu
ctio
n B
oe p
er D
ay
285,000-300,000
2018 Breakout year for CLR
• $2.3 Billion CAPEX
• 17-24% Production Growth
• ~$1Billion free cash flow
• Investment grade status