When it comes to the Bakken shale, perhaps no one does it better than first mover Continental Resources (CLR). Founder Harold Hamm saw the potential of the field early on and used the E&P firm to amass a huge 1.1 million-acre stake in the field. That significant acreage continues to pay benefits for the firm.
Just how significant? Continental expects to raise its total production by 38% this year, which will mark the fourth year of double-digit increases. Perhaps more impressively, CLR estimates that 2014 will see oil and natural production grow by another staggering 32% in 2014 — reaching an average daily production of 170,000 to 180,000 barrels of oil equivalent per day. Of that total production, 70% is expected to be higher-priced and higher-valued crude oil.
With West Texas Intermediate oil prices now hovering in the $100 to $105 per barrel range, Continental has become a cash flow machine. Operating cash flows have surged from less than $650 million back in 2010 to more than $2 billion for the last four quarters.
With a forward P/E of around 15, CLR shares aren’t exactly cheap. However, you’re paying a premium for the leading producer in the region and with price targets in the $130 range — a 16% increase over current prices.