GO
Loading...

UPDATE 1-Continental targets big savings in Bakken by end-2013

* Sees Bakken per-well cost at $8.2 mln by end-2013, down $1 mln

* Company plans to increase production by 30-35 pct in 2013 * Shares end 2.8 pct higher

(Adds details from investor meeting, analyst comment, updates stock price)

By Braden Reddall

Oct 9 (Reuters) - Continental Resources Inc , the top oil producer in the Bakken oil region, said on Tuesday it expects to cut $1 million off the cost of its average well there by the end of 2013, as it takes on one of the biggest challenges in the booming oil basin.

The company aims to bring its per-well cost down to $8.2 million by the end of 2013 from $9.2 million in the first half of 2012, Chief Operating Officer Rick Bott said in a presentation to analysts.

Many operators in the region also plan to drive down costs in the area now that infrastructure has improved and they move to drilling more wells from single locations.

The Bakken, centered in North Dakota and running into Montana and Canada, is Continental's main development, while it also has a large interest in Oklahoma's Anadarko Woodford basin.

The company had said late on Monday it expects to increase company-wide production in 2013 by between 30 and 35 percent, while drilling 300 "net" wells - accounting for its share of partly owned wells - up from 286 net wells this year.

Capital expenditure will rise to $3.4 billion from $3 billion in 2012, and two-thirds of the company's $2.9 billion in 2013 drilling capital would be spent in the Bakken.

Continental said the average rig count should be 35 for 2013, before ramping up to more than 40 the following year and then running at between 50 and 55 rigs for the rest of the five-year plan - effectively double the level of today.

The presentation, made available by webcast, was held in Oklahoma City, where the company just completed the move of its headquarters this year from its old home in Enid, a few hours' drive north.

Shares of Continental, which have increased by more than 50 percent in the last year, ended 2.8 percent higher at $78.66 on Tuesday on the New York Stock Exchange.

"We are raising our 2013 estimates as a result of both stronger growth and spending outlooks, but remain fans of the name," said Raymond James analyst Andrew Coleman. "Even with our cautious oil outlook, we see (Continental's) balance sheet holding up well."

A few Continental executives talked of the consolidation now under way in the Bakken, with their company alone adding 130,000 acres there in just over a year.

"We look at five to 10 different acquisition offers every week," said Chief Executive Harold Hamm.

Hamm has thrust himself into the political limelight this year by serving as energy adviser to Republican presidential candidate Mitt Romney.

Even the investor presentation on Tuesday took on a political hue, with Oklahoma Gov. Mary Fallin, also a Republican, giving the opening remarks and decrying the "challenges" for business currently presented by Washington.

(Reporting by Braden Reddall in San Francisco; editing by Leslie Gevirtz and Matthew Lewis)

((braden.reddall@thomsonreuters.com)(+1 415 677 2543)(Reuters Messaging: braden.reddall.thomsonreuters.com@reuters.net))

Keywords: CONTINENTALRESOURCES OUTLOOK/