October 30, 2018 / 5:15 PM / 19 days ago

Continental Resources eyes widening fourth-quarter oil differential

FILE PHOTO - Birds fly over storage tanks on a Continental Resources oil production site near Williston, North Dakota January 23, 2015. REUTERS/Andrew Cullen

HOUSTON (Reuters) - Oil producer Continental Resources (CLR.N) on Tuesday said it anticipated Bakken oil price differentials to widen in the fourth quarter amid a heavy refinery maintenance season, resulting in lower prices for crude.

The Oklahoma City-based company expects its oil to fetch between a $3.50 and $4.50 discount to NYMEX West Texas Intermediate futures, which are trading around $66 per barrel CLc1. About 50 percent of its Bakken volumes have firm take-away commitments at around a sub-$4 per barrel discount to WTI, executives said in a conference call on Tuesday.

New pipelines and expansions to existing lines out of North Dakota are anticipated to help improve prices going forward, the company also said.

Continental has not hedged, or locked-in prices, for its oil production. This has enabled it to benefit from stronger prices, Chief Executive Harold Hamm said, while some peers have warned of expected losses on commodity derivatives this quarter after oil prices rose more than expected.

The company said it expects capital expenditures for the fourth quarter to average between $600 million and $700 million, versus $790.8 million in the third quarter, which was up in part due to an increase in completion work amid favorable weather.

The company will average six well-completion crews in the fourth quarter, versus nine crews in the third quarter, and expects to return to a more normal backlog of drilled-but-uncompleted wells, or DUCs, by the end of the year.

Continental shares were up about 1.5 percent at $51.11 in afternoon trading.

Reporting by Liz Hampton; Editing by Dan Grebler and Tom Brown

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