Continental Resources Swings to 4th-Quarter Profit as Production Increases

By Nathalie Tadena

Oklahoma City-based Continental Resources Inc. (CLR) swung to a fourth-quarter profit as the oil and natural-gas company's production increased and as a loss on derivatives weighed on year-ago results.

Shares jumped 2.7% to $86.20 after hours as results beat analyst expectations. The stock has climbed 24% over the past three months.

Continental has reported quarterly revenue gains for more than three years as new wells in North Dakota and Oklahoma have boosted its production. The company had benefited from higher prices for oil, which accounts for most of its output, though hedging impacts have frequently affected bottom-line results.

In November, the company agreed to acquire certain producing and undeveloped properties in the Bakken Shale, an oilfield in North Dakota, for $650 million. Continental is currently the largest leaseholder in the Bakken. It also said it would sell noncore properties in its east region for $126 million.

The company has said it plans to triple its production and proven reserves by the end of 2017, as it focuses on its oil and natural-gas-liquids assets in the Bakken and Anadarko Woodford plays.

"Production has increased, and realized oil prices have been strong as we market an increased share of our Bakken production to U.S. coastal markets," said Chairman and Chief Executive Harold Hamm. "We've seen a fundamental change in oil markets with the significant increase in rail transportation capacity out of the Bakken."

The latest period included a $4.3 million unrealized gain on derivatives, compared with a year-earlier loss of $247.2 million. The most recent quarter also included a $42.7 million gain on the sale of assets, compared with a $3.4 million gain a year earlier.

Overall, Continental reported a fourth-quarter profit of $220.5 million, or $1.19 a share, compared with a year- earlier loss of $112.1 million, or 62 cents a share. Excluding derivative impacts and other special items, per-share earnings rose to $1.04 from 88 cents.

Oil and gas revenue increased 32% to $670.4 million.

Analysts polled by Thomson Reuters had projected a profit of 87 cents a share and $655 million in oil and gas sales.

Average daily oil production jumped 42% though prices slipped 4.8%. Production of natural gas was up 43% while prices slid 3%. Production of crude oil equivalents increased 42% and prices fell 5.1%.

-Write to Nathalie Tadena at nathalie.tadena@dowjones.com

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