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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
FORM 10-Q
________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-32886
 ____________________________________
clr-20200930_g1.jpg
 CONTINENTAL RESOURCES, INC
(Exact name of registrant as specified in its charter)
 ____________________________________
Oklahoma 73-0767549
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
20 N. Broadway,Oklahoma City,Oklahoma73102
(Address of principal executive offices)(Zip Code)
(405234-9000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueCLRNew York Stock Exchange
 ____________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes x    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x  Accelerated filer  
Non-accelerated filer   Smaller reporting company  
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No x
365,234,283 shares of our $0.01 par value common stock were outstanding on October 31, 2020.



Table of Contents
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
When we refer to “us,” “we,” “our,” “Company,” or “Continental” we are describing Continental Resources, Inc. and our subsidiaries.



Glossary of Crude Oil and Natural Gas Terms

The terms defined in this section may be used throughout this report:
“Bbl” One stock tank barrel, of 42 U.S. gallons liquid volume, used herein in reference to crude oil, condensate or natural gas liquids.
“Boe” Barrels of crude oil equivalent, with six thousand cubic feet of natural gas being equivalent to one barrel of crude oil based on the average equivalent energy content of the two commodities.
“Btu” British thermal unit, which represents the amount of energy needed to heat one pound of water by one degree Fahrenheit and can be used to describe the energy content of fuels.
“completion” The process of treating a drilled well followed by the installation of permanent equipment for the production of crude oil and/or natural gas.
“developed acreage” The number of acres allocated or assignable to productive wells or wells capable of production.
“development well” A well drilled within the proved area of a crude oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
“dry hole” Exploratory or development well that does not produce crude oil and/or natural gas in economically producible quantities.
“exploratory well” A well drilled to find crude oil or natural gas in an unproved area, to find a new reservoir in an existing field previously found to be productive of crude oil or natural gas in another reservoir, or to extend a known reservoir beyond the proved area.
“field” An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
“formation” A layer of rock which has distinct characteristics that differs from nearby rock.
"gross acres" or "gross wells" Refers to the total acres or wells in which a working interest is owned.
“MBbl” One thousand barrels of crude oil, condensate or natural gas liquids.
“MBoe” One thousand Boe.
“Mcf” One thousand cubic feet of natural gas.
“MMBoe” One million Boe.
“MMBtu” One million British thermal units.
“MMcf” One million cubic feet of natural gas.
net acres” or "net wells" Refers to the sum of the fractional working interests owned in gross acres or gross wells.
"Net crude oil and natural gas sales" Represents total crude oil and natural gas sales less total transportation expenses. Net crude oil and natural gas sales presented herein are non-GAAP measures. See Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures for a discussion and calculation of this measure.
"Net sales price" Represents the average net wellhead sales price received by the Company for its crude oil or natural gas sales after deducting transportation expenses. Amount is calculated by taking revenues less transportation expenses divided by sales volumes for a period, whether for crude oil or natural gas, as applicable. Net sales prices presented herein are non-GAAP measures. See Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures for a discussion and calculation of this measure.
“NYMEX” The New York Mercantile Exchange.
i


“play” A portion of the exploration and production cycle following the identification by geologists and geophysicists of areas with potential crude oil and natural gas reserves.
“proved reserves” The quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs and under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates renewal is reasonably certain.
“reservoir” A porous and permeable underground formation containing a natural accumulation of producible crude oil and/or natural gas that is confined by impermeable rock or water barriers and is separate from other reservoirs.
“royalty interest” Refers to the ownership of a percentage of the resources or revenues produced from a crude oil or natural gas property. A royalty interest owner does not bear exploration, development, or operating expenses associated with drilling and producing a crude oil or natural gas property.
“SCOOP” Refers to the South Central Oklahoma Oil Province, a term used to describe properties located in the Anadarko basin of Oklahoma in which we operate. Our SCOOP acreage extends across portions of Garvin, Grady, Stephens, Carter, McClain and Love counties of Oklahoma and has the potential to contain hydrocarbons from a variety of conventional and unconventional reservoirs overlying and underlying the Woodford formation.
"STACK" Refers to Sooner Trend Anadarko Canadian Kingfisher, a term used to describe a resource play located in the Anadarko Basin of Oklahoma characterized by stacked geologic formations with major targets in the Meramec, Osage and Woodford formations. A significant portion of our STACK acreage is located in over-pressured portions of Blaine, Dewey and Custer counties of Oklahoma.
“undeveloped acreage” Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of crude oil and/or natural gas.
“unit” The joining of all or substantially all interests in a reservoir or field, rather than a single tract, to provide for development and operation without regard to separate property interests. Also, the area covered by a unitization agreement.
“working interest” The right granted to the lessee of a property to explore for and to produce and own crude oil, natural gas, or other minerals. The working interest owners bear the exploration, development, and operating costs on either a cash, penalty, or carried basis.
 

ii


Cautionary Statement for Purpose of “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995
This report and information incorporated by reference in this report include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact, including, but not limited to, forecasts or expectations regarding the Company's business and statements or information concerning the Company’s future operations, performance, financial condition, production and reserves, schedules, plans, timing of development, rates of return, budgets, costs, business strategy, objectives, and cash flows, included in this report are forward-looking statements. The words “could,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “budget,” “target,” “plan,” “continue,” “potential,” “guidance,” “strategy” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
Forward-looking statements may include, but are not limited to, statements about:
our strategy;
our business and financial plans;
our future operations;
our crude oil and natural gas reserves and related development plans;
technology;
future crude oil, natural gas liquids, and natural gas prices and differentials;
the timing and amount of future production of crude oil and natural gas and flaring activities;
the amount, nature and timing of capital expenditures;
estimated revenues, expenses and results of operations;
drilling and completing of wells;
shutting in of production and the resumption of production activities;
competition;
marketing of crude oil and natural gas;
transportation of crude oil, natural gas liquids, and natural gas to markets;
property exploitation, property acquisitions and dispositions, or joint development opportunities;
costs of exploiting and developing our properties and conducting other operations;
our financial position, dividend payments, bond repurchases, or share repurchases;
the impact of the COVID-19 (novel coronavirus) pandemic on economic conditions, the demand for crude oil, the Company's operations and the operations of its customers, suppliers, and service providers;
credit markets;
our liquidity and access to capital;
the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us and of scheduled or potential regulatory or legal changes;
our future operating and financial results;
our future commodity or other hedging arrangements; and
the ability and willingness of current or potential lenders, hedging contract counterparties, customers, and working interest owners to fulfill their obligations to us or to enter into transactions with us in the future on terms that are acceptable to us.
Forward-looking statements are based on the Company’s current expectations and assumptions about future events and currently available information as to the outcome and timing of future events. Although the Company believes these assumptions and expectations are reasonable, they are inherently subject to numerous business, economic, competitive, regulatory and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. No assurance can be given that such expectations will be correct or achieved or that the assumptions are accurate or will not change over time. The risks and uncertainties that may affect the operations, performance and results of the business and forward-looking statements include, but are not limited to, those risk factors and other cautionary statements described under Part II, Item 1A. Risk Factors and elsewhere in this report, if any, our Annual Report on Form 10-K for the year ended December 31, 2019, our Form 10-Qs for the quarters ended March 31, 2020 and June 30, 2020, registration statements we file from time to time with the Securities and Exchange Commission, and other announcements we make from time to time.
Many of the foregoing risks and uncertainties have been, and may further be, exacerbated by the COVID-19 pandemic and any consequent worsening of the global economic environment. New factors emerge from time to time, and it is not possible for us to predict all such factors. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which such statement is made. Should one or more of the risks or uncertainties described in this report, our Annual Report on Form 10-K, or our Form 10-Qs for the quarters ended March 31, 2020 and June 30, 2020 occur, or should underlying assumptions prove incorrect, the Company's actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.
iii


Except as expressly stated above or otherwise required by applicable law, the Company undertakes no obligation to publicly correct or update any forward-looking statement whether as a result of new information, future events or circumstances after the date of this report, or otherwise.
iv


PART I. Financial Information
ITEM 1.    Financial Statements
Continental Resources, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, 2020December 31, 2019
In thousands, except par values and share data(Unaudited) 
Assets
Current assets:
Cash and cash equivalents$21,237 $39,400 
Receivables:
Crude oil and natural gas sales475,187 726,876 
Joint interest and other126,135 317,018 
Allowance for credit losses(2,220)(2,407)
Receivables, net599,102 1,041,487 
Derivative assets346  
Inventories63,170 109,536 
Prepaid expenses and other15,907 16,592 
Total current assets699,762 1,207,015 
Net property and equipment, based on successful efforts method of accounting14,004,414 14,497,726 
Operating lease right-of-use assets10,396 9,128 
Other noncurrent assets13,652 14,038 
Total assets$14,728,224 $15,727,907 
Liabilities and equity
Current liabilities:
Accounts payable trade$321,975 $629,264 
Revenues and royalties payable260,887 470,264 
Accrued liabilities and other151,662 230,368 
Derivative liabilities7,086  
Current portion of operating lease liabilities4,225 3,695 
Current portion of long-term debt2,225 2,435 
Total current liabilities748,060 1,336,026 
Long-term debt, net of current portion5,629,133 5,324,079 
Other noncurrent liabilities:
Deferred income tax liabilities, net1,650,998 1,787,125 
Asset retirement obligations, net of current portion173,762 151,774 
Derivative liabilities, noncurrent1,820  
Operating lease liabilities, net of current portion6,005 5,433 
Other noncurrent liabilities14,332 15,119 
Total other noncurrent liabilities1,846,917 1,959,451 
Commitments and contingencies (Note 10)
Equity:
Preferred stock, $0.01 par value; 25,000,000 shares authorized; no shares issued and outstanding  
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 365,112,162 shares issued and outstanding at September 30, 2020; 371,074,036 shares issued and outstanding at December 31, 20193,651 3,711 
Additional paid-in capital1,188,891 1,274,732 
Retained earnings4,940,142 5,463,224 
Total shareholders’ equity attributable to Continental Resources6,132,684 6,741,667 
Noncontrolling interests371,430 366,684 
Total equity6,504,114 7,108,351 
Total liabilities and equity$14,728,224 $15,727,907 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1


Continental Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)
 
 Three months ended September 30,Nine months ended September 30,
In thousands, except per share data2020201920202019
Revenues:
Crude oil and natural gas sales$701,468 $1,081,400 $1,738,863 $3,328,409 
Gain (loss) on derivative instruments, net(17,853)1,195 (25,635)53,519 
Crude oil and natural gas service operations8,755 21,602 35,602 54,886 
Total revenues692,370 1,104,197 1,748,830 3,436,814 
Operating costs and expenses:
Production expenses88,701 114,050 271,852 333,446 
Production taxes50,153 86,931 132,444 267,237 
Transportation expenses55,272 62,038 148,079 164,569 
Exploration expenses1,041 2,472 14,638 7,399 
Crude oil and natural gas service operations3,316 8,224 15,288 26,616 
Depreciation, depletion, amortization and accretion461,191 484,031 1,288,185 1,464,672 
Property impairments18,518 20,199 264,976 66,854 
General and administrative expenses45,273 46,993 129,713 141,837 
Net (gain) loss on sale of assets and other800 535 5,914 647 
Total operating costs and expenses724,265 825,473 2,271,089 2,473,277 
Income (loss) from operations(31,895)278,724 (522,259)963,537 
Other income (expense):
Interest expense(63,884)(68,090)(192,547)(204,398)
Gain (loss) on extinguishment of debt (4,584)64,573 (4,584)
Other224 1,119 1,385 3,196 
(63,660)(71,555)(126,589)(205,786)
Income (loss) before income taxes(95,555)207,169 (648,848)757,751 
(Provision) benefit for income taxes13,972 (49,747)138,350 (177,386)
Net income (loss)(81,583)157,422 (510,498)580,365 
Net loss attributable to noncontrolling interests(2,161)(740)(6,126)(1,330)
Net income (loss) attributable to Continental Resources$(79,422)$158,162 $(504,372)$581,695 
Net income (loss) per share attributable to Continental Resources:
Basic$(0.22)$0.43 $(1.39)$1.56 
Diluted$(0.22)$0.43 $(1.39)$1.56 
Comprehensive income (loss):
Net income (loss)$(81,583)$157,422 $(510,498)$580,365 
Other comprehensive income, net of tax:
Foreign currency translation adjustments (18) 128 
Total other comprehensive income, net of tax (18) 128 
Comprehensive income (loss)(81,583)157,404 (510,498)580,493 
Comprehensive loss attributable to noncontrolling interests(2,161)(740)(6,126)(1,330)
Comprehensive income (loss) attributable to Continental Resources$(79,422)$158,144 $(504,372)$581,823 
The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Continental Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity

Shareholders’ equity attributable to Continental Resources
In thousands, except share dataShares
outstanding
Common
stock
Additional
paid-in
capital
Accumulated
other
comprehensive
income
Treasury
stock
Retained
earnings
Total shareholders’ equity of Continental ResourcesNoncontrolling
interests
Total equity
Balance at December 31, 2019371,074,036 $3,711 $1,274,732 $ $— $5,463,224 $6,741,667 $366,684 $7,108,351 
Net income (loss)— — — — — (185,664)(185,664)(1,120)(186,784)
Cumulative effect adjustment from adoption of ASU 2016-13— — — — — (137)(137)— (137)
Cash dividends declared ($0.05 per share)— — — — — (18,580)(18,580)— (18,580)
Change in dividends payable— — — — — 2 2 — 2 
Common stock repurchased— — — — (126,906)— (126,906)— (126,906)
Common stock retired(8,122,104)(81)(126,825)— 126,906 — — — — 
Stock-based compensation— — 16,411 — — — 16,411 — 16,411 
Restricted stock:
Granted2,454,235 24 — — — — 24 — 24 
Repurchased and canceled(246,346)(2)(6,452)— — — (6,454)— (6,454)
Forfeited(42,818)(1)— — — — (1)— (1)
Contributions from noncontrolling interests— — — — — — — 16,950 16,950 
Distributions to noncontrolling interests— — — — — — — (5,618)(5,618)
Balance at March 31, 2020365,117,003 $3,651 $1,157,866 $ $— $5,258,845 $6,420,362 $376,896 $6,797,258 
Net income (loss)— — — — — (239,286)(239,286)(2,845)(242,131)
Change in dividends payable— — — — — 2 2 — 2 
Stock-based compensation— — 15,313 — — — 15,313 — 15,313 
Restricted stock:
Granted85,514 1 — — — — 1 — 1 
Repurchased and canceled(19,037) (247)— — — (247)— (247)
Forfeited(39,237)(1)— — — — (1)— (1)
Contributions from noncontrolling interests— — — — — — — 4,015 4,015 
Distributions to noncontrolling interests— — — — — — — (2,958)(2,958)
Balance at June 30, 2020365,144,243 $3,651 $1,172,932 $ $— $5,019,561 $6,196,144 $375,108 $6,571,252 
Net income (loss)— — — — — (79,422)(79,422)(2,161)(81,583)
Change in dividends payable— — — — — 3 3 — 3 
Stock-based compensation— — 16,330 — — — 16,330 — 16,330 
Restricted stock:
Granted43,241 1 — — — — 1 — 1 
Repurchased and canceled(20,873) (371)— — — (371)— (371)
Forfeited(54,449)(1)— — — — (1)— (1)
Contributions from noncontrolling interests— — — — — — — 36 36 
Distributions to noncontrolling interests— — — — — — — (1,553)(1,553)
Balance at September 30, 2020365,112,162 $3,651 $1,188,891 $ $— $4,940,142 $6,132,684 $371,430 $6,504,114 

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Continental Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity (Continued)

Shareholders’ equity attributable to Continental Resources
In thousands, except share dataShares
outstanding
Common
stock
Additional
paid-in
capital
Accumulated
other
comprehensive
income
Treasury
stock
Retained
earnings
Total shareholders’ equity of Continental ResourcesNoncontrolling
interests
Total equity
Balance at December 31, 2018376,021,575 $3,760 $1,434,823 $415 $— $4,706,135 $6,145,133 $276,728 $6,421,861 
Net income (loss)— — — — — 186,976 186,976 (483)186,493 
Other comprehensive income, net of tax— — — 116 — — 116 — 116 
Stock-based compensation— — 12,095 — — — 12,095 — 12,095 
Restricted stock:
Granted1,333,602 13 — — — — 13 — 13 
Repurchased and canceled(439,419)(4)(20,618)— — — (20,622)— (20,622)
Forfeited(147,074)(1)— — — — (1)— (1)
Contributions from noncontrolling interests— — — — — — — 42,204 42,204 
Distributions to noncontrolling interests— — — — — — — (3,856)(3,856)
Balance at March 31, 2019376,768,684 $3,768 $1,426,300 $531 $— $4,893,111 $6,323,710 $314,593 $6,638,303 
Net income (loss)— — — — — 236,557 236,557 (107)236,450 
Cash dividends declared ($0.05 per share)— — — — — (18,747)(18,747)— (18,747)
Common stock repurchased— — — — (69,661)— (69,661)— (69,661)
Common stock retired(1,800,000)(18)(69,643)— 69,661 — — — — 
Other comprehensive income, net of tax— — — 30 — — 30 — 30 
Stock-based compensation— — 12,176 — — — 12,176 — 12,176 
Restricted stock:
Granted59,639 1 — — — — 1 — 1 
Repurchased and canceled(13,335)(1)(561)— — — (562)— (562)
Forfeited(71,440)(1)— — — — (1)— (1)
Contributions from noncontrolling interests— — — — — — — 35,118 35,118 
Distributions to noncontrolling interests— — — — — — — (3,272)(3,272)
Balance at June 30, 2019374,943,548 $3,749 $1,368,272 $561 $— $5,110,921 $6,483,503 $346,332 $6,829,835 
Net income (loss)— — — — — 158,162 158,162 (740)157,422 
Change in dividends payable— — — — — 160 160 — 160 
Common stock repurchased— — — — (102,304)— (102,304)— (102,304)
Common stock retired(3,206,553)(32)(102,272)— 102,304 — — — — 
Other comprehensive loss, net of tax— — — (18)— — (18)— (18)
Stock-based compensation— — 12,871 — — — 12,871 — 12,871 
Restricted stock:
Granted102,945 1 — — — — 1 — 1 
Repurchased and canceled(13,353) (389)— — — (389)— (389)
Forfeited(96,099)(1)— — — — (1)— (1)
Contributions from noncontrolling interests— — — — — — — 19,713 19,713 
Distributions to noncontrolling interests— — — — — — — (3,110)(3,110)
Balance at September 30, 2019371,730,488 $3,717 $1,278,482 $543 $— $5,269,243 $6,551,985 $362,195 $6,914,180 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Continental Resources, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
 Nine months ended September 30,
In thousands20202019
Cash flows from operating activities
Net income (loss)$(510,498)$580,365 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion1,286,889 1,465,856 
Property impairments264,976 66,854 
Non-cash (gain) loss on derivatives8,560 (1,303)
Stock-based compensation48,086 37,153 
Provision (benefit) for deferred income taxes(136,127)177,386 
Dry hole costs6,456  
Net (gain) loss on sale of assets and other5,914 647 
(Gain) loss on extinguishment of debt(64,573)4,584 
Other, net7,811 8,036 
Changes in assets and liabilities:
Accounts receivable435,862 (42,269)
Inventories21,846 (21,867)
Other current assets1,196 (3,808)
Accounts payable trade(150,645)56,624 
Revenues and royalties payable(209,258)(309)
Accrued liabilities and other(80,227)(15,707)
Other noncurrent assets and liabilities(1,501)(366)
Net cash provided by operating activities934,767 2,311,876 
Cash flows from investing activities
Exploration and development(1,139,447)(2,268,594)
Purchase of producing crude oil and natural gas properties(23,318)(49,324)
Purchase of other property and equipment(21,306)(22,875)
Proceeds from sale of assets2,205 86,866 
Net cash used in investing activities(1,181,866)(2,253,927)
Cash flows from financing activities
Credit facility borrowings1,657,000 776,000 
Repayment of credit facility(1,237,000)(476,000)
Redemption of Senior Notes(74,032)(500,000)
Premium and costs on redemption of Senior Notes (4,167)
Proceeds from other debt26,000