Shale oil producer Continental Resources, Inc. is steering away from debts for now. The company’s chief executive officer, Harold Hamm, made the announcement on Wednesday.
Hamm told investors Continental’s mission to create new wells without borrowing money for funding. “Absolutely no new debt. That's part of our plan, the strategic plan going forward to knock our debt down,” he stated.
In 2014, Continental ended its hedging efforts and this led to an increase to its debt load by 15 percent to $6.54 billion.
A major contributor to Continental’s decision is the current price per barrel which is $45 to $51. This price point is forcing oil companies to spend only what they are earning.
Before Hamm revealed Continental’s goal, the company followed the footsteps of its fellow shale oil producers by cutting expenditures for 2017. It is now aiming to spend between $1.75 billion to $1.95 billion. The initial expected budget for this year was $1.95 million.
“We actually have postponed some development in some very lucrative fields,” Hamm said.
Continental Boosts Production Guidance
Cutting expenses for 2017 did not stop Continental Resources from raising its production guidance. The company is optimistic that it can improve its production even with less money.
Continental increased it by 10,000 barrels of oil equivalent per day. It will now likely make 230,000 to 240,000 barrels of oil equivalent per day. By the end of the year, the company is expecting to produce 260,000 to 275,000 barrels of oil equivalent per day.
According to Continental, there are two reasons that prompted the raise, which are better drilling and great production from most of their wells.
Continental Officials Remain Upbeat
The second-quarter loss ($63.6 million) Continental Resources suffered and the impending financial adjustment are not dampening the optimism of the company’s top officials. Hamm, together with chief financial officer John Hart, expressed their satisfaction.
Hamm believes Continental had discipline and was strategic with its capital spending for the second-quarter of the year. The 71-year-old executive is looking forward to “better results” in 2018.
Meanwhile, Hart was pleased with the company’s overall performance for the first half of 2017. “Continental's results through the first half of the year reflect strong outperformance and continued operating cost and capital expenditure discipline,” he explained.
Subscribe to FSM News and fill yourself in on the freshest marketing news. We provide comprehensive and latest news and analysis regarding Forex, commodities, technology, financial, economy, and more.