UPDATE: Global Hunter Securities Upgrades Continental Resources (CLR) to Buy

(Updated - September 19, 2014 9:47 AM EDT)

Global Hunter Securities upgraded Continental Resources (NYSE: CLR) from Neutral to Buy with a price target of $85 (from $77). The stock declined during its analyst day yesterday.

Analyst Mike Kelly said, "CLR shares took it on the chin yesterday (down ~8%) as investors took concern with two items highlighted during its Analyst Day: 1) quality concerns pertaining to the Bakken inventory (slide 21 indirectly inferred that only ~20% of inventory is comprised of 600+ Mboe wells); and 2) Bakken well cost increasing $2MM-$2.5MM without a corresponding "official" increase to its 603 Mboe Bakken type-curve (also the main driver of 2015 capex coming in 17% higher than Street expectations). We're comfortable with both of these issues as management's conservatism showed with regards to the lack of a type curve bump (we believe a >25% uptick is coming once all the science is done, which was alluded to during the Q&A session)."

"Additionally, we think management unintentionally and mistakenly signaled that the majority of Bakken inventory is under its 603 Mboe (see more below). However, even after we apply a higher risk factor to CLR's massive 1.2MM net acres in the Bakken (essentially reducing our estimate of the core), the present value on ~2,400 net undrilled wells (subset of CLR's stated inventory of 11,800) with 800 Mboe EURs (bakes in uptick due to completion upgrades) is worth ~$18B on our math, which is actually higher than our prior NAV (quality over quantity wins)," he said. "Overall, we see the CLR story as strong as it’s ever been – the company has multiple catalysts still on the horizon (Bakken EUR upticks, Springer delineation, 500K+ New Ventures portfolio, upward SCOOP oil EUR revisions) and more importantly its growth outlook through 2019 remains almost unprecedented for a company its size (Q2:14 production of 168 Mboepd rises to >500 Mboepd by 2019). "

For an analyst ratings summary and ratings history on Continental Resources click here. For more ratings news on Continental Resources click here.

Shares of Continental Resources closed at $70.05 yesterday.

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