Prior to Whiting Petroleum’s acquisition of Kodiak, Continental was the largest leaseholder and producer in the Bakken play. And at the time Whiting was buying, Continental’s CEO Harold Hamm was selling — he sold privately held Hiland Partners to Kinder Morgan for a reported $3 billion.
The collapse in oil prices is manifest in the comparison between last year’s revenues and this year’s estimate. And as one of the largest players in the Bakken, analysts pay attention to Continental. Here are some ratings and price target changes since the beginning of July:
- Jefferies lowered its price target on the stock to $34 and did not change its Underweight rating.
- Barclays maintained its Equal Weight rating and lifted its price target from $31 to $37.
- Deutsche Bank reiterated its Hold rating and lowered its price target from $55 to $48.
- Susquehanna maintained a Positive rating while lowering the price target from $53 to $47.
- Global Hunter Securities has a Neutral rating and lowered its price target from $50 to $40.
The consensus price target on the stock from 30 analysts is $52.17. The forward price-to-earnings (P/E) ratio is a heady 33.59 and the trailing P/E ratio is 19.72. The price-to-book ratio is 2.46.
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The rather rich valuations here are likely due to Continental’s position as one of the lowest cost producers in the Bakken. Drilling and completion costs fell 15% sequentially in the first quarter of this year, and that number could decline again in the second quarter. It appears that the company can make a profit as long as the West Texas Intermediate (WTI) price remains around $50 a barrel, and that may be a high number.
Shares traded down fractionally in the early afternoon on Tuesday, at $33.19 in a 52-week range of $30.06 to $80.91.
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