KeyBanc Initiates Coverage on Continental Resources (CLR); Great Story, Strong Management - Waiting for Better Entry Point

June 25, 2009 7:39 AM EDT

KeyBanc initiates coverage on Continental Resources (NYSE: CLR) with a Hold. Price target $26.

KeyBanc analyst says, "At the current share price, CLR is trading at a substantial premium to its peers (on an EV/DCF basis, CLR is trading at 17.7x and 11.6x for 2009 and 2010, vs. its peers' average multiples of 8.1x and 7.2x, respectively); thus, we are initiating with a HOLD rating purely based on valuation. There is no question in our mind that CLR is a best-in-class E&P company with one of the largest positions in the Bakken Shale play and emerging Three Forks/Sanish play, with a very talented technical/operating team. We expect further success from the Company in developing its Three Forks/Sanish position, where we expect the bulk of the Company's activity for the balance of the year. Nevertheless, we believe CLR's strong leasehold position in the Bakken and Three Forks/Sanish play, as well as other shale plays (including both the Arkoma and Anadarko Woodford Shale plays) is reflected in the significant premium valuation relative to peers. CLR is unhedged for its oil production (approximately 72% of total production); thus, CLR's EPS and DCFPS are very sensitive to the movement in crude oil prices. Should crude prices increase/decrease significantly from current levels, we expect a comparative move in CLR's share price."

To see more analyst ratings on CLR Click Here.

Continental Resources, Inc. is an independent oil and natural gas exploration and production company with operations in the Rocky Mountain, Mid-Continent and Gulf Coast regions of the United States.

Related Categories

New Coverage

Stocks Mentioned

Related Entities

• KeyBanc
• Bakken Formation
• Crude Oil

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?