In the last one year, Continental Resources (NYSE:CLR) has lost 35% of its market capitalization. Given the oversupply in the oil market, which has sent prices spiraling downwards, this is not surprising. The drop in oil prices hurt Continental’s financial performance last quarter.
According to reports, oil production in the Bakken is still profitable. As per the International Energy Agency, Bakken production will remain profitable even at $42 per barrel. Now, the current WTI oil price is hovering around $43 per barrel. Thus, even Continental’s production is probably above break-even at current levels.
Moreover, as reported by Institutional Investor, the statewide average cost of new production in North Dakota, where the Bakken play is located, might be as low as $15 a barrel from the existing portfolio of 11,000 oil wells. Thus, despite a drop in crude oil pricing to its current levels, Bakken players such as Continental might continue drilling for more oil since it is economical at current pricing.