CLR Notes

Continental reported Q1 results last night and held their conference call this morning.  Some highlights:

Growth is robust on the back of the Bakken.  Drilling efficiency continues to improve meaningfully as they move up the learning curve while increasing 2012 capex and production targets.  Half of their Bakken is being moved by rail and bypassing WTI pricing, yet Continental missed revenue expectations on higher Bakken mid-continent discounts of $12+ a barrel.  Their Bakken natural gas capture rose to 88%, effecting product mix.  As the largest Bakken player, they view their role as the consolidator.  The stock is richly priced; CLR’s market cap is almost 50% higher than CHK (though a little less on an enterprise value basis).

Separately, the great, prudent, shareholder friendly CEO Harold Hamm and the Continental President and COO have their own little production participation agreement, ala Aubrey at CHK.  Hamm’s agreement is being ended early in exchange for CLR shares.