UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-61547
CONTINENTAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-0767549
---------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
302 N. Independence, Suite 300, Enid, Oklahoma 73701
- ---------------------------------------------- ------
(Address of principal executive offices) (Zip Code)
(580) 233-8955
----------------
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if
change since last report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding as of August 13, 2001
------- ---------------------------------
Common Stock, $.01 par value 14,368,919
TABLE OF CONTENTS
PART I. Financial Information
ITEM 1. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . .10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . .15
PART II Other Information
ITEM 1. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . .16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . 17
PART I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
CONTINENTAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
ASSETS
(Unaudited)
December 31, June 30,
2000 2001
------------- -------------
CURRENT ASSETS:
Cash ..................................................... $ 7,151 $ 7,456
Accounts receivable-
Oil and gas sales.................................... 15,778 12,144
Joint interest and other, net........................ 9,839 7,343
Inventories............................................... 4,988 5,675
Prepaid expenses.......................................... 209 326
Advances to affiliates.................................. -- 1,990
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Total current assets...................... 37,965 34,934
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PROPERTY AND EQUIPMENT:
Oil and gas properties
Producing properties................................. 321,197 339,169
Nonproducing leaseholds.............................. 44,544 47,805
Gas gathering and processing facilities................... 25,051 26,581
Service properties, equipment and other................... 15,917 16,118
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Total property and equipment.................. 406,709 429,673
Less--Accumulated depreciation, depletion and
amortization.................................. (151,899) (157,576)
------------- -------------
Net property and equipment.................... 254,810 272,097
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OTHER ASSETS:
Debt issuance costs....................................... 5,842 5,218
Other assets.............................................. 6 5
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Total other assets............................ 5,848 5,223
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Total assets.................................. $ 298,623 $ 312,254
============= =============
CONTINENTAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
December 31, June 30,
2000 2001
------------- -------------
CURRENT LIABILITIES:
Accounts payable.......................................... $ 17,164 $ 14,527
Current debt.............................................. 10,200 --
Revenues and royalties payable............................ 7,181 5,413
Accrued liabilities and other............................. 10,375 10,075
------------- -------------
Total current liabilities..................... 44,920 30,015
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LONG-TERM DEBT, net of current portion........................ 130,150 136,350
OTHER NONCURRENT LIABILITIES.................................. 107 93
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 1,000,000 shares
authorized, 0 shares issued and outstanding.
Common stock, $0.01 par value, 20,000,000 shares authorized,
14,368,919 shares issued and outstanding.............. 144 144
Additional paid-in-capital................................ 25,087 25,087
Retained earnings......................................... 98,215 120,565
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Total stockholders' equity.................... 123,446 145,796
------------- -------------
Total liabilities and stockholders' equity.... $ 298,623 $ 312,254
============= =============
The accompanying notes are an integral part of these consolidated
balance sheets.
CONTINENTAL RESOURCES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Three Months Ended June 30,
---------------------------
2000 2001
------------ ------------
REVENUES:
Oil and gas sales ...................................... $ 26,934 $ 28,605
Crude oil marketing...................................... 70,166 72,317
Gathering, marketing and processing...................... 7,085 11,434
Oil and gas service operations........................... 1,627 2,054
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Total revenues...................................... 105,812 114,410
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OPERATING COSTS AND EXPENSES:
Production expenses ...................................... 4,937 7,920
Production taxes ...................................... 2,185 2,287
Exploration expenses...................................... 3,932 1,599
Crude oil marketing purchases and expenses................ 71,924 72,459
Gathering, marketing and processing....................... 5,756 9,737
Oil and gas service operations............................ 1,218 1,621
Depreciation, depletion and amortization.................. 4,710 7,024
General and administrative................................ 2,248 2,878
------------- -------------
Total operating costs and expenses................... 96,910 105,525
------------- -------------
OPERATING INCOME ............................................. 8,902 8,885
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OTHER INCOME AND EXPENSES
Interest income .......................................... 265 178
Interest expense ......................................... (4,079) (3,569)
Other income(expense), net................................ (399) 2,170
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Total other income and (expenses).................... (4,213) (1,221)
------------- -------------
NET INCOME ................................................... $ 4,689 $ 7,664
============= =============
EARNINGS PER COMMON SHARE:
Basic ................................................... $ 0.33 $ 0.53
============= =============
Diluted ................................................. $ 0.33 $ 0.53
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
CONTINENTAL RESOURCES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Six Months Ended June 30,
---------------------------
2000 2001
------------- ------------
REVENUES:
Oil and gas sales ...................................... $ 54,762 $ 62,825
Crude oil marketing...................................... 131,971 132,416
Gathering, marketing and processing...................... 13,989 24,424
Oil and gas service operations........................... 3,690 4,065
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Total revenues...................................... 204,412 223,730
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OPERATING COSTS AND EXPENSES:
Production expenses ...................................... 9,716 14,397
Production taxes ......................................... 4,329 4,915
Exploration expenses...................................... 4,925 4,171
Crude oil marketing purchases and expenses................ 132,666 132,095
Gathering, marketing and processing....................... 11,066 20,299
Oil and gas service operations............................ 2,399 3,049
Depreciation, depletion and amortization.................. 10,260 12,266
General and administrative................................ 4,381 5,381
------------- ------------
Total operating costs and expenses................... 179,742 196,573
------------- ------------
OPERATING INCOME ............................................. 24,670 27,157
------------- ------------
OTHER INCOME AND EXPENSES
Interest income .......................................... 423 413
Interest expense ......................................... (8,163) (7,206)
Other income, net ........................................ 3,075 1,986
------------- ------------
Total other income and (expenses).................... ( 4,665) (4,807)
------------- ------------
NET INCOME (LOSS) ............................................ $ 20,005 $ 22,350
============= =============
EARNINGS PER COMMON SHARE:
Basic ................................................. $ 1.39 $ 1.56
============= =============
Diluted ............................................... $ 1.39 $ 1.55
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
CONTINENTAL RESOURCES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Six Months Ended June 30,
-------------------------
2000 2001
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ................................................... $ 20,005 $ 22,350
Adjustments to reconcile to net income to
cash provided by operating activities--
Depreciation, depletion and amortization.................. 10,260 12,266
Gain on sale of assets.................................... (3,081) (1,951)
Dry hole cost and impairment of undeveloped leases........ 3,158 1,563
Other noncurrent assets................................... 761 293
Other noncurrent liabilities............................ -- (14)
Changes in current assets and liabilities--
(Increase)/Decrease in accounts receivable................ (131) 6,130
Increase in inventories................................... (1,346) (688)
Decrease/(Increase) in prepaid expenses.................. 1,035 (116)
Increase/(Decrease) in accounts payable................... 5,105 (2,637)
Increase/(Decrease) in revenues and royalties payable..... (848) (1,767)
Increase in accrued liabilities and other................. 769 (300)
------------- ------------
Net cash provided by operating activities 35,687 35,129
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Exploration and development .............................. (19,624) (29,148)
Gas gathering and processing facilities and
service properties, equipment and other ............. (290) (2,148)
Proceeds from sale of assets ............................. 6,959 2,463
Advances to affiliates ................................... -- (1,990)
------------- ------------
Net cash used in investing activities (12,955) (30,823)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit and other ................... 12,600 2,500
Repayment of Senior Subordinated Notes ................. -- (3,000)
Repayment of line of credit and other .................... (34,229) (3,500)
Payment of cash dividend ................................. (1,000) --
------------- ------------
Net cash used in financing activities (22,629) (4,000)
------------- ------------
NET INCREASE IN CASH ......................................... 103 306
CASH AND CASH EQUIVALENTS, beginning of period ............... 10,421 7,150
------------- ------------
CASH AND CASH EQUIVALENTS, end of period ..................... $ 10,524 $ 7,456
============= ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid ............................................ $ 8,493 $ 7,335
The accompanying notes are an integral part of these consolidated
financial statements.
CONTINENTAL RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. CONTINENTAL RESOURCES, INC.'S FINANCIAL STATEMENTS
In the opinion of Continental Resources, Inc. ("CRI" or the "Company") the
accompanying unaudited consolidated financial statements contain all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Company's financial position as of June 30, 2001, the results
of operations and cash flows for the three and six month periods ended June 30,
2000 and 2001. The unaudited consolidated financial statements for the interim
periods presented do not contain all information required by accounting
principles generally accepted in the United States. The results of operations
for any interim period are not necessarily indicative of the results of
operations for the entire year. These consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's annual report on form 10-K for the year ended
December 31, 2000.
On October 1, 2000, the Company's Board of Directors and shareholders
approved an Agreement and Plan of Recapitalization (the "Recapitalization Plan")
and the Amended and Restated Certificate of Incorporation to be filed with the
Oklahoma Secretary of State. As outlined in the Recapitalization Plan, the
authorized number of shares of capital stock were increased from 75,000 shares
of common stock to 21 million shares consisting of 20 million shares of common
stock and one million shares of $0.01 par value Preferred Stock. In addition,
the par value of common stock was adjusted from $1 per share to $0.01 per share
and 1.02 million shares of the common stock were reserved for issuance under the
2000 incentive Stock Plan.
Concurrent with the approval of the Recapitalization Plan, the Company
effected an approximate 293 : 1 stock split whereby the Company issued new
certificates for 14,368,919 shares of the newly authorized common stock in
exchange for the 49,041 previously outstanding shares of common stock. As a
result of the stock split, additional paid-in capital was reduced by
approximately $95,000, offset by an increase in the common stock at par. Per
share amounts for the three and six months ended June 30, 2000, have been
restated to give retroactive effect to the stock split.
On June 19, 2001, the Company formed a new subsidiary, Continental
Resources of Illinois, Inc. (CRII), an Oklahoma corporation. Subsequent to June
30, 2001, the Company through CRII purchased the assets of Farrar Oil Company.
(Note 8)
2. LONG-TERM DEBT:
Long-term debt as of December 31, 2000 and June 30, 2001, consisted of the
following:
December 31, June 30,
2000 2001
---- ----
(dollars in thousands)
Senior Subordinated Notes.......................... $ 130,150 $ 127,150
Credit Facility.................................... 10,200 9,200
--------- ---------
Outstanding debt................................... 140,350 136,350
Less current portion............................... 10,200 --
--------- ---------
Total long-term debt............................... $ 130,150 $ 136,350
========= =========
Subsequent to June 30, 2001, the Company acquired the assets of Farrar Oil
Company and its subsidiary and borrowed $33.7 million against its credit
facility. The current borrowing base of the credit facility is $60.0 million of
which $17.1 million is available.
The Company's Credit Facility matured May 31, 2001, at which time the
Company received an extension until the second restated credit agreement was
entered into on July 9, 2001, to consist of a revolving commitment of $33.0
million and a term commitment of $27.0 million. The revolving maturity date is
May 31, 2003. As of June 30, 2001 the loan balance is reflected as non-current.
The term commitment maturity date is July 9, 2006 and requires quarterly
principal payments of $1,350,000 plus interest, commencing September 30, 2001.
The Credit Facility charges interest based on the lead bank's prime rate or the
London Interbank Offered Rate for 1, 2, 3 or 6-month offshore deposits as
offered by the lead bank to major banks in the London Interbank Market and
adjusted for maximum cost of reserves, if any. The current borrowing base of
thecredit facility is $60 million and there is $17.1 million available.
On May 23, 2001, the Company purchased and retired $3.0 million of the
Senior Subordinated Notes. Through June 30, 2001, the Company had purchased and
retired a total of $22.85 million of these senior subordinated notes.
3. CRUDE OIL MARKETING:
The Company enters into third party contracts to purchase and resell crude
oil at prices based on current month NYMEX prices, current posting prices or at
a stated contract price. Purchases and sales are recorded at the stated contract
price. During the quarter ended June 30, 2001, the Company had revenues from the
resales of crude oil and expenses for the purchase of crude oil of $72.3 million
and $72.5 million, respectively, resulting in a loss from crude oil marketing
activities during the quarter of $0.2 million.
The Company accounts for its crude oil marketing activities in accordance
with EITF 98-10 "Accounting for Energy Trading and Risk Management Activities."
This statement requires that contracts for the purchase and sale of energy
commodities which are entered into for the purpose of speculating on market
movements or otherwise generating gains from market price differences to be
recorded at their market value, as of the balance sheet date, with any
corresponding gains or losses recorded as income from operations. At June 30,
2001, the market value of the Company's open energy trading contracts resulted
in an unrealized gain of $0.2 million which is recorded in crude oil marketing
revenues in the accompanying consolidated statement of operations and prepaid
expenses in the accompanying consolidated balance sheet.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and for Hedging Activities", with an effective date for
periods beginning after June 15, 1999. In July 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133". As a result of SFAS No. 137,
adoption of SFAS No.133 is now required for financial statements for periods
beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities",
which amends the accounting and reporting standards of SFAS No. 133 for certain
derivative instruments and hedging activities. SFAS No. 133 sweeps in a broad
population of transactions and changes the previous accounting definition of a
derivative instrument. Under SFAS No. 133, every derivative instrument is
recorded on the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. During 2000, management reviewed all contracts throughout the Company to
identify both freestanding and embedded derivatives which meet the criteria set
forth in SFAS No. 133 and SFAS No. 138. The Company adopted the new standards
effective January 1, 2001. On June 30, 2001, the Company had no outstanding
hedges or derivatives which had not been previously marked to market through its
accounting for trading activity. As a result, the adoption of SFAS No. 133 and
SFAS No. 138 had no significant impact on the Company's financial position or
results of operations.
4. EARNINGS PER SHARE
Earnings per common share is computed by dividing net income available to
common stockholders by the weighted-average number of shares outstanding for the
period. The weighted-average number of shares used to compute basic earnings per
common share was 14,368,919 in 2000 and 2001. The weighted-average number of
shares used to compute diluted earnings per share was 14,393,132 and 14,368,919
for 2001 and 2000, respectively. There were no common stock equivalents
outstanding during the six months ended June 30, 2000.
5. GUARANTOR SUBSIDIARIES
The Company's wholly owned subsidiaries, Continental Gas, Inc. (CGI),
Continental Crude Co. (CCC) and Continental Resources of Illinois, Inc. (CRII)
have guaranteed the Senior Subordinated Notes and the Credit Facility. The
following is a summary of the financial information of Continental Gas, Inc. as
of December 31, 2000 and June 30, 2001, and for the six month periods ended June
30, 2000 and 2001.
AS OF:
(dollars in thousands)
December 31, 2000 June 30, 2001
----------------- -------------
Current assets............................... $ 5,835 $ 3,965
Noncurrent assets............................ 19,467 20,085
--------- ----------
Total assets................................. $ 25,302 $ 24,050
========= ==========
Current liabilities.......................... $ 10,972 $ 7,293
Noncurrent liabilities....................... -- --
Stockholder's equity......................... 14,330 16,757
--------- ----------
Total liabilities and stockholder's equity... $ 25,302 $ 24,050
========= ==========
FOR THE THREE MONTH AND
SIX MONTH PERIODS ENDED JUNE 30,
(dollars in thousands)
2000 2001
--------------------- ---------------------
3 month 6 month 3 month 6 month
------- ------- ------- -------
Total revenue ............................ $ 8,070 $ 15,853 $ 12,390 $ 26,884
Operating costs and expenses............... 7,374 14,210 11,537 24,265
------- -------- -------- --------
Operating income .......................... 696 1,643 853 2,619
Other income (expenses).................... (468) 229 (90) (192)
------- ---------- -------- --------
Net income ............................ $ 228 $ 1,872 $ 763 $ 2,427
======= ========= ======== ========
At June 30, 2001, current liabilities payable to the Company by CGI totaled
approximately $4.5 million. For the six months ended June 30, 2000 and 2001,
depreciation, depletion and amortization included in CGI's operating costs
remained constant at approximately $1.0 million for both years. Other income for
the six month period ended June 30, 2000, included a gain from the sale of two
gas systems of $0.9 million offset by interest expense.
As of June 30, 2001, since their incorporation, CCC and CRII have had no
operations, have acquired no assets and have incurred no liabilities.
Subsequent to June 30, 2001, CRII purchased the assets of Farrar Oil
Company. (Note 8)
6. RELATED PARTY TRANSACTIONS
On May 30, 2001, the Company made a short term advancement to an affiliated
company for $1.9 million with an interest rate of 6% annually. Subsequent to
June 30, 2001, the affiliated company had paid the balance on this advancement.
7. ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued
statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," and No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141
requires all business combinations initiated after June 30, 2001, to be
accounted for using the purchase method. With the adoption of SFAS No. 142,
goodwill is no longer subject to amortization but will be subject to at least an
annual assessment for impairment by applying a fair-value-based test. Under the
new rules, an acquired intangible asset should be separately recognized if the
benefit of the intangible asset is obtained through contractual or other legal
rights, or if the intangible asset can be sold, transferred, licensed, rented,
or exchanged, regardless of the acquirer's intent to do so. The Company's
acquisition of the assets of Farrar Oil Company in July 2001 (Note 8) is subject
to these new standards. The Company does not anticipate recognizing goodwill in
connection with this acquisition.
8. SUBSEQUENT EVENT
On July 9, 2001, the Company, through its subsidiary, CRII, completed the
purchase of the assets of Farrar Oil Company and its subsidiary based in Mount
Vernon, Illinois with an effective date of May 15, 2001. The total purchase
price (subject to post closing adjustments for May and June cash flows) was
approximately $33.7 million. The Company will account for the acquisition
utilizing the purchase of accounting and does not anticipate recognizing
goodwill in connection with this acquisition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001, COMPARED TO THREE MONTHS ENDED JUNE 30, 2000
The following discussion and analysis should be read in conjunction with
our unaudited consolidated financial statements and the notes thereto appearing
elsewhere in this report. Our operating results for the periods discussed may
not be indicative of future performance. In the text below, financial statement
numbers have been rounded; however, the percentage changes are based on
unrounded amounts.
RESULTS OF OPERATIONS
REVENUES
GENERAL
Our revenues, excluding crude oil marketing, increased $6.4 million, or
18%, to $42.0 million during the three months ended June 30, 2001, from $35.6
million during the comparable period in 2000. The increase is mainly
attributable to higher gas prices and a slight increase in gas production.
OIL AND GAS SALES
Our oil and gas sales revenue for the three months ended June 30, 2001,
increased $1.7 million, or 6%, to $28.6 million from $26.9 million during the
comparable period in 2000 due primarily to the increase in gas prices. During
the three months ended June 30, 2001, we sold 771 MBbls of oil and 2,454 MMcf of
natural gas, or 1,180 MBoe compared to sales of 1,176 MBoe for the same period
in 2000. Our oil revenues, exclusive of hedging activities, for the three months
ended June 30, 2001, decreased $3.2 million, or 13%, to $20.0 million from $23.2
million during the same period in 2000. Our oil production decreased by 85 MBbls
to 771 MBbls, or 10%, for the three months ended June 30, 2001, from 856 MBbls
for the comparable period in 2000. Oil prices, exclusive of hedging and
adjustments, decreased to an average of $25.92/Bbl, or 4%, during the three
months ended June 30, 2001, from $27.05/Bbl, for the comparable 2000 period. Our
gas revenues increased $4.0 million, or 86%, to $8.6 million from $4.6 million
for the three month period ended June 30, 2001 compared to the same period in
2000. Our gas production for the period increased 536 Mmcf, or 28%, to 2,454
Mmcf from 1,918 Mmcf in 2000. Gas prices increased to an average of $3.50/Mcf,
or 46%, from $2.42/Mcf for the comparable 2000 period.
CRUDE OIL MARKETING
During the three month period ended June 30, 2001, we recognized revenues
on crude oil purchased for resale of $72.3 million, a $2.2 million or 3%
increase compared to $70.1 million for the three month period ended June 30,
2000. We received higher prices on the contracts resulting in our increase in
crude oil marketing revenues for the three months periods even though volumes
decreased by approximately 300,000 barrels.
GATHERING, MARKETING AND PROCESSING
Our gathering, marketing and processing revenue in the second quarter of
2001 was $11.4 million, an increase of $4.3 million, or 61%, from $7.1 million
in the same period in 2000. This increase in revenue during the second quarter
was attributable to increased system volumes resulting from the expansion of
existing facilities and the construction and operation of our new gathering and
compression facilities in the state of Texas and higher natural gas and liquid
prices in the 2001 period.
OIL AND GAS SERVICE OPERATIONS
Our oil and gas service operations for the three months ended June 30, 2001
was $2.0 million, an increase of $0.4 million or 26% from $1.6 million for the
three months ended June 30, 2000. The increase was due primarily to greater
volumes of reclaimed oil sales from our central treating unit.
OPERATING COSTS AND EXPENSES
PRODUCTION EXPENSES
Our production expenses increased by $3.0 million, or 61%, to $7.9 million
during the three months ended June 30, 2001, from $4.9 million during the
comparable period in 2000. The increase was primarily due to increased energy
costs of approximately $1.1 million and increased repairs and labor costs of
approximately $0.9 million.
PRODUCTION TAXES
Our production taxes increased by $0.1 million, or 5%, to $2.3 million
during the three months ended June 30, 2001, from $2.2 million during the
comparable period in 2000. The increase was due to higher gas prices and higher
tax rates on wells in North Dakota that have reached the expiration date of tax
relief given on newly drilled wells.
EXPLORATION EXPENSES
For the three months ended June 30, 2001, our exploration expenses
decreased $2.3 million, or 59%, to $1.6 million from $3.9 million during the
comparable period of 2000. The decrease was due to a $2.7 million decrease in
dry hole and expired lease costs offset by an increase of $0.4 million in
plugging costs.
CRUDE OIL MARKETING
For the three months ended June 30, 2001, we recognized expense for the
purchases of crude oil purchased for resale of $72.5 million, an increase of
$0.6 million, or .8%, compared to purchases of crude oil for resale of $71.9
million for the three months ended June 30, 2000. The increase was due to an
increase in costs of crude oil purchased even though volumes decreased.
GATHERING, MARKETING, AND PROCESSING
During the three months ended June 30, 2001, we incurred gathering,
marketing and processing expenses of $9.7 million, representing a $4.0 million,
or 70% increase from the $5.7 million incurred in the second quarter of 2000 due
to increased system volumes resulting from the expansion of existing facilities
and the construction and operation of our new gathering and compression
facilities in the state of Texas and higher natural gas and liquid prices.
OIL AND GAS SERVICE OPERATIONS
During the three months ended June 30, 2001, we incurred oil and gas
services operations expenses of $1.6 million, an increase of $0.4 million, or
33% from $1.2 million in the second quarter of 2000. The increase is due to
greater volumes treated at our central treating unit.
DEPRECIATION, DEPLETION AND AMORTIZATION (DD&A)
For the three months ended June 30, 2001, our DD&A expense increased $2.3
million, or 49%, to $7.0 million from $4.7 million for the comparable period in
2000. The increase is primarily due to the decrease in reserves as of June 30,
2001, due to decreased production and an economic loss of reserves on the
Worland properties due to the loss of a contract.
GENERAL AND ADMINISTRATIVE ("G&A")
For the three months ended June 30, 2001, our G&A expense was $2.9 million,
net of overhead reimbursement of $0.4 million, for a period total of $2.5
million or an increase of $0.7 million or 39%, from our G&A expense of $2.2
million net of overhead reimbursement of $0.4 million for a net of $1.8 million
during the comparable period in 2000. The increase was primarily due to
increased legal expenses and increased employment expense. Our G&A expenses per
Boe for the second quarter of 2001 was $2.13 compared to $1.53 for the second
quarter of 2000.
INTEREST EXPENSE
For the three months ended June 30, 2001, our interest expense decreased
$0.5 million, or 12% to $3.6 million from $4.1 million for the three months
ended June 30, 2000. Of the $0.5 million decrease, $0.3 million was attributable
to the amount of interest set aside to pay the interest on our senior
subordinated notes and the $0.2 million less interest paid to our credit
facility.
OTHER INCOME
Our other income for the three months ended June 30, 2001, was income of
$2.2 million compared to an expense of $0.4 million for the same period in 2000.
The 2001 income was primarily from the sale of 62 uneconomical properties at the
Clearinghouse Auction on April 11, 2001, for $2.0 million.
NET INCOME
For the three months ended June 30, 2001, our net income was $7.6 million,
an increase in net income of $3.0 million, or 63%, from $4.6 million for the
comparable period in 2000. The increase in net income was due primarily to
higher gas prices and a slight increase in production volumes and the sale of
properties at the Clearinghouse Auction.
SIX MONTHS ENDED JUNE 30, 2001, COMPARED TO SIX MONTHS ENDED JUNE 30, 2000
REVENUES
GENERAL
Our revenues, excluding crude oil marketing, increased $18.9 million, or
26%, to $91.3 million during the six months ended June 30, 2001, from $72.4
million during the comparable period in 2000. The increase is mainly
attributable to higher gas prices and a slight increase in gas production and a
new gathering and compression facilities.
OIL AND GAS SALES
Our oil and gas sales revenue for the six months ended June 30, 2001,
increased $8.1 million, or 14%, to $62.8 million from $54.7 million during the
same period in 2000 due to increased gas prices. During the six months ended
June 30, 2001, we sold 1,594 MBbls of oil and 4,258 MMcf of natural gas, or
2,304 MBoe compared to sales of 2,382 MBoe for the same period in 2000. Our oil
revenues for the six months ended June 30, 2001, decreased $4.9 million, or 10%,
to $42.6 million from $47.5 million in the same period in 2000. Our oil
production decreased by 116 MBbls to 1,594 MBbls, or 7%, for the six months
ended June 30, 2001, from 1,710 MBbls for the same period in 2000. Oil prices,
exclusive of hedging and adjustments, decreased to an average of $26.71/Bbl, or
4%, during the six months ended June 30, 2001, from $27.74/Bbl, for the
comparable 2000 period. The decrease in oil sales is due to lower oil prices in
2001 and the decrease in production. Our gas revenues for the six months ended
June 30, 2001, increased $11.5 million, or 130%, to $20.3 million from $8.8
million in the same period in 2000. Our gas production for the period increased
233 Mmcf, or 6%, to 4,258 Mmcf from 4,025 Mmcf in 2000. Gas prices increase to
an average of $4.73/Mcf, or 118%, from $2.19/Mcf, for the comparable 2000
period. The increase in gas revenues is due to higher prices in 2001 and
increased volumes primarily in our Gulf Coast region.
CRUDE OIL MARKETING
For the year to date period ended June 30, 2001, we have recognized $132.4
million, a $0.4 million increase on crude oil purchased for resale compared to
$132.0 million for the six months ended June 30, 2000. We received higher prices
on the contracts resulting in our increase in crude oil marketing revenues for
the six months periods even though volumes decreased by approximately 700,000
barrels.
GATHERING, MARKETING AND PROCESSING
Our gathering, marketing and processing revenue for the six months ended
June 30, 2001, was $24.4 million, a $10.4 million, or 74% increase, from $14.0
million in the comparable 2000 period. The increase for the six month period was
due to increased system volumes resulting from the expansion of existing
facilities and the construction and operation of our new gathering and
compression facilities in the state of Texas and higher natural gas and liquid
prices in the 2001 period.
OIL AND GAS SERVICE OPERATIONS
Our oil and gas service operations for the six months ended June 30, 2001,
increased $0.4 million, or 11%, to $4.1 million from $3.7 million during the
same period in 2000. The increase was due primarily to greater volumes of
reclaimed oil sales from our central treating unit.
OPERATING COSTS AND EXPENSES
PRODUCTION EXPENSES
Our production expenses increased by $4.7 million, or 48%, to $14.4 million
for the six months ended June 30, 2001, from $9.7 million during the comparable
period in 2000. The increase was primarily due to the increase in energy costs
of approximately $2.1 million and the increased repairs and labor costs of
approximately $1.2 million.
PRODUCTION TAXES
Our production taxes for the six months ended June 30, 2001, increased by
$0.6 million, or 14%, to $4.9 million compared to $4.3 million in the comparable
period of 2000. The increase was due to higher gas prices and higher tax rates
on wells in North Dakota that have reached the expiration date of tax relief
given on newly drilled wells.
EXPLORATION EXPENSES
Our expense for the six months ended June 30, 2001, decreased $0.7 million,
or 14%, to $4.2 million from $4.9 million incurred in the comparable period in
2000. The decrease was due primarily to a $1.9 million decrease in expired lease
costs offset by an increase of $1.3 million in dry hole costs and plugging
costs.
CRUDE OIL MARKETING
For the six month period ended June 30, 2001, our purchases of crude oil
decreased by $.6 million, or 0.4%, to $132.0 million from $132.6 million for the
same period in 2000.
GATHERING, MARKETING, AND PROCESSING
Our gathering, marketing and processing expenses for the six months ended
June 30, 2001, were $20.3 million, a $9.3 million, or 83% increase, from $11.0
million in the same period in 2000 due to increased system volumes resulting
from the expansion of existing facilities and the construction and operation of
our new gathering and compression facilities in the state of Texas and higher
natural gas and liquids prices.
OIL AND GAS SERVICE OPERATIONS
Our oil and gas service operations expenses increased by $0.6 million, or
27% to $3.0 million for the six months ended June 30, 2001, compared to $2.4
million for the same period in 2000. The increase is due to greater volumes
treated at our central treating unit.
DEPRECIATION, DEPLETION AND AMORTIZATION (DD&A)
For the six months ended June 30, 2001, our DD&A expense increased $2.0
million, or 20% to $12.3 million from $10.3 million for the same period in 2000.
The increase is primarily due to the decrease in reserves as of June 30, 2001,
due to decreased production and an economic loss of reserves on the Worland
properties due to the loss of a contract.
GENERAL AND ADMINISTRATIVE ("G&A")
For the six month period ended June 30, 2001, our G&A expense was $5.4
million, net of overhead reimbursement of $0.9 million, for a period total of
$4.5 million or an increase of $1.1 million, or 33%, from our G&A expense of
$4.4 million net of overhead reimbursement of $1.0 million for a total of $3.4
million during the comparable period in 2000. Our G&A expense per Boe for the
first six months of 2001 was $1.96 compared to $1.43 for the same period in
2000. The increase was primarily due to increased legal expense and increased
employment expense.
INTEREST EXPENSE
For the six months ended June 30, 2001, our interest expense decreased $1.0
million , or 12% to $7.2 million from $8.2 million for the same period in 2000.
Of the $1.0 million decrease, $0.8 million was attributable to the amount of
interest set aside to pay the interest on our senior subordinated notes and the
remainder was interest paid to our credit facility.
OTHER INCOME
Our other income for the year to date ended June 30, 2001, was $2.0 million
compared to $3.1 million for the year to date ended June 30, 2000. The decrease
reflects the sale of the Arkoma properties for $3.1 million in 2000 compared to
the sale of 62 uneconomical wells at the Clearinghouse Auction on April 11,
2001, which was approximately $2.0 million and a gain on the repurchase of our
senior subordinated notes of $0.1 million offset by other miscellaneous
expenses.
NET INCOME
For the six months ended June 30, 2001, our net income was $22.3 million,
an increase in net income of $2.3 million, or 12%, from $20.0 million for the
comparable period in 2000. The increase in net income was due to higher gas
prices and a gain on the sale of uneconomical wells at the Clearinghouse Auction
on April 11, 2001, which was approximately $2.0 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW FROM OPERATIONS
Net cash provided by our operating activities for the six months ended June
30, 2001, was $35.1 million, a decrease of $0.6 million, or 2%, from $35.7
million provided by operating activities during the comparable 2000 period. We
had cash as of June 30, 2001, of $7.5 million, an increase of $0.3 million or 4%
of the balance of $7.2 million held at December 31, 2000. Of the $7.5 million
balance at June 30, 2001, $5.4 million was set aside and used by us to make our
August 1, 2001, interest payment on our 10.25% senior subordinated notes.
DEBT
Our long-term debt at December 31, 2000, and June 30, 2001, was $130.1
million and $136.3 million, respectively. During the quarter ended June 30,
2001, we purchased and retired $3.0 million of our senior subordinated notes.
Subsequent to June 30, 2001, we purchased the assets of Farrar Oil Company and
its subsidiaries and borrowed $33.7 million against our credit facility,
increasing the outstanding borrowings against our credit facility to $42.9
million.
CREDIT FACILITY
Our long-term debt outstanding under the line of credit at June 30, 2001
included $9.2 million of revolving credit debt. The effective rate of interest
under the credit facility was 5.8% at June 30, 2001. Our credit facility matured
May 31, 2001 at which time we received an extension until the second restated
credit agreement was amended on July 9, 2001, to consist of a revolving
commitment of $33.0 million and a term commitment of $27.0 million. The
revolving maturity date is May 31, 2003. As of June 30, 2001 the loan balance is
non-current. The term commitment maturity date is July 9, 2006 and requires
quarterly principal payments of $1,350,000 plus interest, commencing September
30, 2001. The Credit Facility charges interest based on the lead bank's prime
rate or the London Interbank Offered Rate for 1, 2, 3 or 6-month offshore
deposits as offered by the lead bank to major banks in the London Interbank
Market and adjusted for maximum cost of reserves, if any. The current borrowing
base of our credit facility is $60 million and there is $17.1 million available.
CAPITAL EXPENDITURES
Our 2001 capital expenditures budget is $70.7 million, exclusive of
acquisitions. During the six months ended June 30, 2001, we incurred $31.3
million of capital expenditures, exclusive of acquisitions , compared to $19.9
million, exclusive of acquisitions, in the six month period of 2000. The $11.4
million, or 57% increase was the result of increased drilling activity in the
Rocky Mountain and Gulf Coast. We expect to fund the remainder of our 2001
capital budget through cash flow from operations and our credit facility.
On July 9, 2001, we completed the purchase of the assets of Farrar Oil
Company and its subsidiary based in Mount Vernon, Illinois with an effective
date of May 15, 2001. The total purchase price (subject to post closing
adjustments for May and June cash flows) was approximately $33.7 million. We do
not expect to recognize any goodwill associated with this transaction.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements". All statements other
than statements of historical fact, including, without limitation, statements
contained under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" regarding the Company's financial position, business
strategy, plans and objectives of management of the Company for future
operations and industry conditions, are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations ("Cautionary Statements")
include without limitation future production levels, future prices and demand
for oil and gas, results of future exploration and development activities,
future operating and development cost, the effect of existing and future laws
and governmental regulations (including those pertaining to the environment) and
the political and economic climate of the United States as discussed in this
quarterly report and the other documents of the Company filed with the
Securities and Exchange Commission (the "Commission"). All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the Cautionary
Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to market risk in the normal course of its business
operations. Management believes that the Company is well positioned with its mix
of oil and gas reserves to take advantage of future price increases that may
occur. However, the uncertainty of oil and gas prices continues to impact the
domestic oil and gas industry. Due to the volatility of oil and gas prices, the
Company, from time to time, has used derivative hedging and may do so in the
future as a means of controlling its exposure to price changes. Most of the
Company's purchases are made at either a NYMEX based price or a fixed price. As
of June 30, 2001, the Company had entered into no fixed sales contracts in order
to hedge its price risk exposure on its production.
RISK MANAGEMENT
The risk management process established by the Company is designed to
measure both quantitative and qualitative risks in its businesses. The Company
is exposed to market risk, including changes in interest rates and certain
commodity prices.
To manage the volatility relating to these exposures, periodically the
Company enters into various derivative transactions pursuant to the Company's
policies on hedging practices. Derivative positions are monitored using
techniques such as mark-to-market valuation and value-at-risk and sensitivity
analysis.
COMMODITY PRICE EXPOSURE
The market risk inherent in the Company's market risk sensitive instruments
and positions is the potential loss in value arising from adverse changes in the
Company's commodity prices.
The prices of crude oil, natural gas, and natural gas liquids are subject
to fluctuations resulting from changes in supply and demand. To partially reduce
price risk caused by these market fluctuations, the Company may hedge (through
the utilization of derivatives) a portion of the Company's production and sale
contracts. Because the commodities covered by these derivatives are
substantially the same commodities that the Company buys and sells in the
physical market, no special studies other than monitoring the degree of
correlation between the derivative and cash markets, are deemed necessary.
A sensitivity analysis has been prepared to estimate the price exposure to
the market risk of the Company's crude oil, natural gas and natural gas liquids
commodity positions. The Company's daily net commodity position consists of
crude inventories, commodity purchase and sales contracts and derivative
commodity instruments. The fair value of such position is a summation of the
fair values calculated for each commodity by valuing each net position at quoted
futures prices. Market risk is estimated as the potential loss in fair value
resulting from a hypothetical 10 percent adverse change in such prices over the
next 12 months. Based on this analysis, the Company has no significant market
risk related to its crude trading or hedging portfolios. The Company has no oil
or gas hedging transactions for its production or net long or short fixed price
positions in respect to its crude oil marketing activities as of June 30, 2001.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and for Hedging Activities", with an effective date for
periods beginning after June 15, 1999. In July 1999 the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133". As a result of SFAS No. 137,
adoption of SFAS No. 133 is now required for financial statements for periods
beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities",
which amends the accounting and reporting standards of SFAS No. 133 for certain
derivative instruments and hedging activities. SFAS No. 133 sweeps in a broad
population of transactions and changes the previous accounting definition of a
derivative instrument. Under SFAS No. 133 every derivative instrument is
recorded on the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. During 2000, management reviewed all contracts throughout the Company to
identify both freestanding and embedded derivatives which meet the criteria set
forth in SFAS No. 133 and SFAS No. 138. The Company adopted the new standards
effective January 1, 2001. The Company had no outstanding hedges or derivatives
which had not been previously marked to market through its accounting for
trading activity. As a result, the adoption of SFAS No. 133 and SFAS No. 138 had
no significant impact.
INTEREST RATE RISK
The Company's exposure to changes in interest rates relates primarily to
long-term debt obligations. The Company manages its interest rate exposure by
limiting its variable-rate debt to a certain percentage of total capitalization
and by monitoring the effects of market changes in interest rates. The Company
may utilize interest rate derivatives to alter interest rate exposure in an
attempt to reduce interest rate expense related to existing debt issues.
Interest rate derivatives are used solely to modify interest rate exposure and
not to modify the overall leverage of the debt portfolio. The fair value of
long-term debt is estimated based on quoted market prices and management's
estimate of current rates available for similar issues. The following table
itemizes the Company's long-term debt maturities and the weighted-average
interest rates by maturity date.
- -------------------------------------------------------------------------------------------------------------------
2001
(dollars in millions) 2001 2002 2003 2004 Thereafter Total Fair Value
- -------------------------------------------------------------------------------------------------------------------
Fixed rate debt:
Principal amount $127,150 $127,150 $117,938
Weighted-average
interest rate 10.25% 10.25% --
Variable-rate debt:
Principal amount $9,200 -- -- -- -- $9,200 $9,200
Weighted-average
interest rate 5.6% -- -- -- 5.6% 5.6% --
- -------------------------------------------------------------------------------------------------------------------
PART II. Other Information
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is party to litigation or other legal
proceedings that it considers to be a part of the ordinary course of its
business. The Company is not involved in any legal proceedings nor is it party
to any pending or threatened claims that could reasonably be expected to have a
material adverse effect on its financial condition or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a). Exhibits
DESCRIPTION
2.1 Agreement and Plan of Recapitalization of Continental Resources, Inc.
dated October 1, 2000. [2.1](4)
3.1 Amended and Restated Certificate of Incorporation of Continental
Resources, Inc. [3.1](1)
3.2 Amended and Restate Bylaws of Continental Resources, Inc. [3.2](1)
3.3 Certificate of Incorporation of Continental Gas, Inc. [3.3](1)
3.4 Bylaws of Continental Gas, Inc., as amended and restated. [3.4](1)
3.5 Certificate of Incorporation of Continental Crude Co. [3.5](1)
3.6 Bylaws of Continental Crude Co. [3.6](1)
4.1 Restated Credit Agreement dated April 21, 2000 among Continental
Resources, Inc. and Continental Gas, Inc., as Borrowers and MidFirst
Bank as Agent (the "Credit Agreement") [4.4](3)
4.1.1 Form of Consolidated Revolving Note under the Credit Agreement
[4.4](3)
4.1.2 Second Amended and Restated Credit Agreement among Continental
Resources, Inc., Continental Gas, Inc. and Continental Resources of
Illinois, Inc., as Borrowers, and MidFirst Bank, dated July 9, 2001.
[10.1](5)
4.3 Indenture dated as of July 24, 1998 between Continental Resources,
Inc., as Issuer, the Subsidiary Guarantors named therein and the
United States Trust Company of New York, as Trustee [4.3](1)
10.4 Conveyance Agreement of Worland Area Properties from Harold G. Hamm,
Trustee of the Harold G. Hamm Revocable Intervivos Trust dated April
23, 1984 to Continental Resources, Inc. [10.4](2)
10.5 Purchase Agreement signed January 2000, effective October 1, 1999 by
and between Patrick Energy Corporation as Buyer and Continental
Resource, Inc. as Seller [10.5](2)
10.6 Continental Resources, Inc. 2000 Stock Option Plan [10.6](4)
10.7 Form of Incentive Stock Option Agreement [10.7](4)
10.8 Form of Non-Qualified Stock Option Agreement [10.8](4)
10.9 Purchase and Sales Agreement between Farrar Oil Company and Har-Ken
Oil Company, as Sellers, and Continental Resources of Illinois, Inc.,
as Purchaser, dated May 14, 2001 [2.1](5)
12.1 Statement re computation of ratio of debt to Adjusted EBITDA [12.1](4)
12.2 Statement re computation of ratio of earning to fixed charges
[12.2](4)
12.3 Statement re computation of ratio of Adjusted EBITDA to interest
expense [12.3](4)
21.0 Subsidiaries [21.0]
- ----------------
(1) Filed as an exhibit to the Company's Registration Statement on Form
S-4, as amended (No. 333-61547) which was filed with the Securities
and Exchange Commission. The exhibit number is indicated in brackets
and incorporated herein by reference.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999. The exhibit number is
indicated in brackets and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2000. The exhibit number is
indicated in brackets and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Annual Report of Form 10-K for
the fiscal year ended December 31, 2000. The exhibit number is
indicated in brackets and incorporated herein by reference.
(5) Filed as an exhibit to current report on Form 8-K dated July 18, 2001
(b). Reports on Form 8-K
On July 18, 2001, the Registrant filed a current report on Form 8-K
describing the purchase of certain oil and gas properties from Farrar
Oil Company and Har-Ken Oil Company, and the Second Amended and
Restated Credit Agreement with MidFirst Bank.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CONTINENTAL RESOURCES, INC.
ROGER V. CLEMENT
Roger V. Clement
Senior Vice President
(Chief Financial Officer)
Date: August 13, 2001
EXHIBIT INDEX
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
2.1 Agreement and Plan of Incorporated herein by reference
Recapitalization of Continental
Resources, Inc. dated October 1, 2000
3.1 Amended and Restated Certificate of Incorporated herein by reference
Incorporation of Continental
Resources, Inc.
3.2 Amended and Restate Bylaws of Incorporated herein by reference
Continental Resources, Inc.
3.3 Certificate of Incorporation of Incorporated herein by reference
Continental Gas, Inc.
3.4 Bylaws of Continental Gas, Inc., as Incorporated herein by reference
amended and restated.
3.5 Certificate of Incorporation of Incorporated herein by reference
Continental Crude Co.
3.6 Bylaws of Continental Crude Co. Incorporated herein by reference
4.1 Restated Credit Agreement dated April Incorporated herein by reference
21, 2000 among Continental Resources,
Inc. and Continental Gas, Inc., as
Borrowers and MidFirst Bank as Agent
(the "Credit Agreement")
4.1.1 Form of Consolidated Revolving Note Incorporated herein by reference
under the Credit Agreement
4.1.2 Second Amended and Restated Credit Incorporated herein by reference
Agreement among Continental
Resources, Inc., Continental Gas,
Inc. and Continental Resources of
Illinois, Inc., as Borrowers, and
MidFirst Bank, dated July 9, 2001
4.3 Indenture dated as of July 24, 1998 Incorporated herein by reference
between Continental Resources, Inc.,
as Issuer, the Subsidiary Guarantors
named therein and the United States
Trust Company of New York, as Trustee
10.4 Conveyance Agreement of Worland Area Incorporated herein by reference
Properties from Harold G. Hamm,
Trustee of the Harold G. Hamm
Revocable Intervivos Trust dated
April 23, 1984 to Continental
Resources, Inc.
10.5 Purchase Agreement signed January Incorporated herein by reference
2000, effective October 1, 1999 by
and between Patrick Energy
Corporation as Buyer and Continental
Resource, Inc. as Seller
10.6 Continental Resources, Inc. 2000 Incorporated herein by reference
Stock Option Plan
10.7 Form of Incentive Stock Option Incorporated herein by reference
Agreement
10.8 Form of Non-Qualified Stock Option Incorporated herein by reference
Agreement
10.9 Purchase and Sales Agreement between Incorporated herein by reference
Farrar Oil Company and Har-Ken Oil
Company, as Sellers, and Continental
Resources of Illinois, Inc., as
Purchaser, dated May 14, 2001
12.1 Statement re computation of ratio of Incorporated herein by reference
debt to Adjusted EBITDA
12.2 Statement re computation of ratio of Incorporated herein by reference
earning to fixed charges
12.3 Statement re computation of ratio of Incorporated herein by reference
Adjusted EBITDA to interest expense
21.0 Subsidiaries Filed herewith electronically