The Bakken Americas Quality Oil Play! Jack Stark- President 2018 - - PowerPoint PPT Presentation

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May 13, 2023 295 likes •495 views

The Bakken Americas Quality Oil Play! Jack Stark- President 2018 WBPC | Bismarck, ND - May 22-24 PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY

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PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION PROPERTY 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

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PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION PROPERTY 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.

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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

0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

MMBo

CLR

Gross Monthly Production

(January 2018)

CLR 2018 D&C Budget: $2.0 Billion Bakken $1.2 Billion 60% 40% CLR Partner with North Dakota ~ 13% of ND Production

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0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% $50 $60 $70 $80

ROR 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 2011 2014 2015 2017

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200 400 600 800 1,000 1,200 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

# STAGES 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 Volume

RECOVERY FACTOR

CLR’s Growing EUR and Recoveries

180’ 30’

980 Mboe

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CLR Drilling Efficiencies Drive Cycle Times Down

6

33.0 21.7 18.6 17.4 16.4 14.3 11.3 7 11 14 15 19 21 24

5 10 15 20 25 30 5 10 15 20 25 30 35 2011 2012 2013 2014 2015 2016 2017 WELL COUNT DAYS

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

100 200 300 400 500 600 500 1000 1500 2000 2500 3000 3500 2011 2012 2013 2014 2015 2016 2017 COST FT

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

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$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

Bakken CWC ($MM) LIFT CMP DRL

CLR Bakken Well Costs Decrease as Performance Increases

7 ACCELERATED LIFT

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15 24 39 50 57 66 117 136

20 40 60 80 100 120 140 160 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2

Wells

Accelerated Lift – Bringing Bakken Value Forward

8 CLR Bakken Wells on ESP by Quarter

100,000 200,000 300,000 400,000 1 2 3 4 5 6 7 8 9 10 11 12

Cum. Fluid (Bbls)

Months Producing

~3X Total Fluid in 1st Year(1)

50,000 100,000 150,000 200,000 1 2 3 4 5 6 7 8 9 10 11 12

Cum. Oil (Bbls)

Months Producing

~3X Oil in 1st Year(1)

2017 2014 2017 2014

+ 122 MBO / 1 YR + 239 MBbls / 1 YR

(1) CLR Operated Wells

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PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION PROPERTY 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 - 2017 3 Years

Wells or units with wells >100Mboe in 90 Days Approximate Bakken Field Outline

Industry-Wide Bakken Wells or Units that Produced Over 100,000 Boe in 90 Days

100 mi

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PROPERTY OF CONTINENTAL RESOURCES, INC. REPRODUCTION ONLY WITH WRITTEN PERMISSION PROPERTY 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

RAIL PIPE

($11.83) ($9.21) ($8.26) ($6.14) ($4.31)

($14) ($12) ($10) ($8) ($6) ($4) ($2) $0 2014 2015 2016 2017 1Q'18

$ /Barrel

Bakken Oil Differential to WTI

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Bakken Quality Shines Through

11

Bakken

100% 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

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Bakken 100% in Oil Window

12 Oil Window

Oil Window Condensate Window Gas Window

MMBOPD & BCFD MMBOPD & BCFD

Permian Horizontal wells

Bakken Permian

Bakken

1.2 MMBOPD 2.0 BCFD (YE 2017) 2.0 MMBOPD 6.1 BCFD (YE 2017)

Source: IHS

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Bakken Low Water Cut

13

Bakken HZ Production 52% Oil Cut Permian HZ Production 32% 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

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Superior Production from The Bakken

14

Source: JRCO Research, Drilling Info and CLR

20,000 40,000 60,000 80,000 100,000 120,000 140,000 Reeves Midland CLR Bakken

Cumulative Oil Production

2 Most Active Counties in Permian

First 6 Months Cumulative Oil Production 2017

Source: JRCO Research May 2018

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Bakken Consistent High Quality Crude

15 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 Monthly Oil Production Per Well (bbl)

API Gravity Permian Bakken

Wells reported over last 2 years (DrillingInfo)

Source: DrillingInfo

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Early Stage Demands on Bakken Infrastructure Behind Us

16

Permian – 15,000 mi2

463 Active Rigs

Bakken – 14,000 mi2

57 Active Rigs

Max Rig Count – 229 (June 2012)

150 Miles 150 Miles

Delaware Basin

6,700 mi2

Midland Basin

8,300 mi2

Bakken Play Active Rigs

Source: NDIC, IHS, Baker Hughes

150 Miles

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100 200 300 400 500 600 300 600 900 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

Rigs / Monthly Completions

500 400 300 200 100 1,800

ND Production (Mbopd)

1,500 1,200 900 600 300

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Bakken Infrastructure Expanding to Keep up with Growth

18

1,000 1,500 2,000 2,500 3,000 3,500

2009 2011 2013 2015 2017 2019E

Local Refining Pipeline Rail Bakken Production Forecasted Production (50 Rigs) Forecasted Production (60 Rigs)

Thousand Bopd

RAIL PIPE

Crude Oil Takeaway Capacity

BPD

NDIC NGL Takeaway Projection

Source: North Dakota Pipeline Authority and CLR estimates

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Bakken

800,000 net acres

SCOOP/STACK

1,100,000 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 CLR

Delivering Sustainable, Cash-Flow Positive Growth

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

Annual Production Boe per Day

285,000-300,000

2018 Breakout year for CLR

$2.3 Billion CAPEX
17-24% Production Growth
~$1Billion free cash flow
Investment grade status