American Oil and Gas Reporter - April 2018 - 51

EMPOWERING THE FUTURE
As you can imagine, there is endless engineering involved in
avoiding subsurface collisions, arranging surface holes on a
single pad location and the significant logistics involved in
getting materials to the right locations.
We constantly are looking at ways to do business more efficiently, including better drainage with fewer wells, more stacked
pads, and facilities equipped to increase capacity and handle
larger volumes. The most important component of any procedure
is ensuring we do it safely and sustainably. Our teams put
measurable and thoughtful planning into each and every well,
especially in the areas of safety environmental sustainability.

How do you see the Permian positioned to
Q: supply
U.S. refining and petrochemical demand centers in 2020 and beyond? As the fastest
growing basin in the world, do you see any potential
constraints down the road that could limit future
Permian output, such as pipeline take-away capacities
for oil or associated gas?
DOVE: With Permian Basin production set to exceed 7
million bbl/d over the next 10 years, we will absolutely need
additional infrastructure investments to meet that growth in the
forms of more oil and gas pipeline take-away, gas processing
plants, and improved road infrastructure to handle the truck
traffic, among other things. In the event production exceeds capacity, shortages will be temporary as midstream companies
will build out necessary take-away.
Fortunately, Texas is familiar with-and renowned for-its ties
to the oil and gas industry, so some of the regulatory issues other
states have experienced will result in a better outcome here.

T I G H T O I L T I TA N
Continental Resources was among the first
Q: movers
in tight oil plays, entering the Bakken
in 2003 at a time when the concept of a "horizontal
tight oil resource play" had scarcely been conceived.
How would you summarize Continental's journey
from its initial foray into the Bakken to becoming
one of America's 10 largest independent oil producers? Where does the journey go from here?
What are the key elements of the company's strategy
for success through 2020?
STARK: Without a doubt, the Bakken has been a key component of Continental's journey to becoming one of the top 10
independent oil producers in the United States today. It was
made possible through the hard work and ingenuity of our
talented employees. Through sound, grassroots exploration and
staying on the leading edge (and often the cutting edge) of technology, Continental now controls approximately 1.9 million net
reservoir acres in the heart of three of the top resource plays in
the country today; the Bakken, SCOOP and STACK.

Knowledge gained from the Bakken led to our discovery of
SCOOP, which in turn, opened our eyes to the opportunities in
STACK. We were early entrants in these plays, which enabled
us to lock up the best rock and keep our cost of entry low.
Likewise, operational efficiencies that were transferred from
one play to another continue to lower our costs, increase
recoveries and improve the profitability of all of our plays.
Looking forward, 2018 represents a turning point for Continental as we begin to harvest more than two decades of highquality inventory. We call it our "breakout year" as we transition
from predominantly an outspending exploration and asset accumulation mode to a sustainable, positive cash flow growth
mode. Today, approximately 70 percent of our net reservoir
acres are held by production and secured for development. This
provides us with optionality and enables us to focus on
maximizing the value of these assets for our shareholders.
In 2018 we expect to fund our $2.3 billion CAPEX program
entirely from operating cash flow and grow production 17-24
percent, while throwing off up to $900 million free cash flow.
Although we could grow our production at a higher rate, we are
targeting this excess cash for further debt reduction. We believe
this is the most prudent use of this cash in today's market to
continue to build shareholder value. The key point here is that
this cash flow positive growth is sustainable going forward and
we expect to deliver similar results in 2019 and beyond.
Others agree. We were the only exploration, drilling and
production company selected for Raymond James Best Ideas
List for 2018 and Morgan Stanley's Fresh Money Buy List, and
we were the top pick at Wolfe Research for 2018. Likewise,
Standard & Poor's recently returned Continental to investmentgrade status.
In 2018, our return on capital employed (ROCE) is projected
to range from 10 to 15 percent, approaching the average 20
percent ROCE the company delivered from 2010 through 2014.
I have to say, in the 26 years I have been with Continental, the
depth and quality of our inventory, as well as our operational
expertise and cost structure, have never been better. The company
is well-positioned to be a leader in this new era for oil.

In 2004, Continental completed the first
Q: commercially
successful hydraulically fractured horizontal well in the North Dakota portion
of the Bakken play. Four years later, it completed
the first horizontal well in the Three Forks formation.
What has Continental learned from its long experience about Bakken/Three Forks geology? Where
do you see Continental on the learning curve with
respect to optimizing drilling and completion designs
for these wells? Will well productivities continue to
improve? What have you learned about decline
curves and EURs?
STARK: Looking back, we knew the potential of the Bakken
was tremendous based on the subsurface well control in the
basin. Who knew the Bakken would become the template for
APRIL 2018 51



American Oil and Gas Reporter - April 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2018

Contents
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