Continental Resources Sees 16% in 2010 Production

Continental Resources reported strong growth in crude oil and natural gas production for 2010. Total production of 15.8 million barrels of oil equivalent (MMBoe) for the year represented a 16 percent gain over production of 13.6 MMBoe for 2009.

"We achieved our 2010 production target and again reported strong growth in oil-concentrated proved reserves," said Harold Hamm, Chairman and Chief Executive Officer. "We're on track today for 30 percent production growth in 2011."

Fourth Quarter 2010 Results

The Company reported production of 48,034 barrels of oil equivalent per day (Boepd) for the fourth quarter of 2010, a 27 percent increase over production of 37,747 Boepd for the fourth quarter of 2009 and an increase of seven percent over production in the third quarter of 2010.

Crude oil accounted for 73 percent of Continental's fourth quarter 2010 production.

Continental's proved reserves grew to 364.7 MMBoe as of December 31, 2010, 42 percent higher than proved reserves of 257.3 MMBoe at year-end 2009.

The bulk of the increase reflected its drilling program in the Bakken play, which is expected to continue leading Continental's growth.

For the fourth quarter of 2010, the Company reported a net loss of $45.0 million, or $0.27 per diluted share, compared with net income for the fourth quarter of 2009 of $49.5 million, or $0.29 per diluted share.

The net loss for the fourth quarter of 2010 included a $188.4 million loss on mark-to-market derivative instruments, a $15.6 million pre-tax property impairment charge, and a $2.2 million loss on sale of an asset. The loss on derivative instruments was comprised of a $194.4 million unrealized loss, offset partially by a $6.0 million realized gain.

In the fourth quarter, the combined impairment charge, loss on sale of asset and $194.4 million unrealized loss on derivatives reduced net income by $0.78 cents per share on an after-tax basis.

"Throughout 2010 we put in place a series of price swaps and collars to reduce the uncertainty of future cash flow in order to underpin our capital expenditures and drilling plan for the next three years," Mr. Hamm said.

Net income for 2010 as a whole was $168.3 million, or $0.99 per diluted share, compared with net income of $71.3 million, or $0.42 per diluted share for 2009. For 2010, the combined effect of unrealized derivative losses, total property impairment charges, and gain on sale of assets reduced net income by $0.74 cents per share.

Crude oil and natural gas sales were $273.1 million for the fourth quarter of 2010, compared with $203.3 million for the same period of 2009.

Continental reported EBITDAX of $220.9 million for the fourth quarter of 2010, a 40 percent increase over EBITDAX of $158.1 million for the fourth quarter of 2009 and a 12 percent increase over EBITDAX for the third quarter of 2010.

Full-year 2010 EBITDAX was $810.9 million, an increase of 80 percent over 2009 EBITDAX of $450.6 million. For the Company's definition and reconciliation of EBITDAX to net income, see "Non-GAAP Financial Measures" at the end of this press release.

Continental's average realized crude oil price was $75.41 per barrel in the fourth quarter of 2010, while the average realized natural gas price was $4.15 per Mcf, yielding a blended realized price of $61.98 per Boe. In the fourth quarter of 2009, the Company realized a blended price of $56.69 per Boe.

The Company's crude oil price differential for the fourth quarter of 2010 was $9.92 per barrel, and its natural gas price differential was a premium of $0.35 per Mcf.

Production expense was $5.31 per Boe for the fourth quarter of 2010, compared with $6.71 per Boe for the fourth quarter of 2009. The Company attributed the reduced production expense in 2010 primarily to renegotiated equipment leases and reduced injectant costs in the Red River Units, as well as new production growth.

General and administrative expense was $3.09 per Boe for the fourth quarter of 2010, compared with $3.18 per Boe for the comparable period in 2009.

As of December 31, 2010, the Company's balance sheet included $7.9 million in cash and $926.0 million in long-term debt. The Company's long-term debt at year-end 2010 included $30.0 million in borrowings under its $750 million revolving credit facility.

2010 Proved Reserves Grow 42 Percent

Continental increased its proved reserves to 364.7 MMBoe for the year ended December 31, 2010. The additions primarily reflected the Company's accelerated drilling in the North Dakota Bakken. During 2010, Continental completed or participated in completing 76.5 net wells in the Bakken.

Total reserve additions were 95.2 MMBoe, which equated to 602 percent of the year's production of 15.8 MMBoe. Essentially all of Continental's 2010 reserve additions were the result of the Company's exploration and production efforts; only 0.4 MMBoe of proved reserves were acquired by purchase. The proved reserve additions and acquisitions were at an average finding and development (F&D) cost of $12.42 per Boe, excluding revisions. The Company also reported 27.6 MMBoe in positive revisions, yielding a total F&D cost of $9.63, including revisions.

Of the total 2010 proved reserves, 38 percent were proved developed producing (PDP).

The Company's 2010 proved reserves included 1,282 gross (546.7 net) proved undeveloped locations (PUDs). Of these, 393.7 net PUDs, or 72 percent of the total, are located in the Bakken Shale play.

"We have a tremendous, multi-decade growth platform," Mr. Hamm said.

Continental's 2010 proved reserves are primarily located in three plays: The Bakken and the Red River Units in Montana, North Dakota and South Dakota; and in the Oklahoma Woodford play. The Bakken accounted for 54 percent of proved reserves, followed by the Oklahoma Woodford with 26 percent and the Red River Units with 15 percent.

Continental's 2010 proved reserves represented $12.0 billion in undiscounted future net cash flows, before income taxes, with a net present value discounted at 10 percent (PV-10) of $4.6 billion. Continental's standardized measure of discounted future net cash flows, which differs from PV-10 by including the effects of income taxes on future net cash flows, was $3.8 billion at December 31, 2010, representing an $0.8 million difference from PV-10, because of the tax effect.

Ryder Scott Company, L.P. evaluated properties representing 100 percent of the Company's PUDs and 94 percent of Continental's PV-10 at year-end 2010, with Continental reserve engineers evaluating the remaining properties.


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