Continental reported a net loss of US$198 million for the quarter, but operational results were strong. Production was up 4% on last quarter and 12% year-on-year. Better than expected performance across the portfolio, but particularly from enhanced completions in the Bakken, spurred an increase in production guidance for the year by 10,000 boe/d. But average 2016 production is still expected to be around 5% below 2015. Costs continue to trend down, with Bakken well costs down US$500,000/well during the quarter and STACK well costs down 5%. Capital guidance for the year remains the same at US$920 million. In 2016, Continental expects to be cash-flow neutral at US$37/bbl WTI. As the oil price recovers, the company's priority will be its balance sheet and reducing debt. Following this, it will begin to work down its inventory of drilled uncompleted (DUC) wells in the Bakken. Prices would need to stabilize at US60/bbl before it would consider adding back rigs.
The upstream oil and gas industry conducts activities against a backdrop of growing energy and environmental challenges. Political instabilities, international conflicts and government and environmental regulation have all impacted the production process.
This has forced companies to re-examine their corporate strategy, moving away from high-risk exploratory drilling to lower-risk exploration in mature basins as they search for increased returns.
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