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Continental Resources ups US shale play spending to $1.3B

Continental Resources Inc. (NYSE: CLR) has increased its 2010 capital expenditure budget to from $850 million to $1.3 billion to accelerate its drilling program and to increase its acreage positions in strategic US shale plays including the Bakken, Woodford, and Niobrara.

Continental now expects production growth in a range of 15% to 17% (up from previous growth guidance of 13%) for 2010 and stronger growth in 2011.

"We are responding to tremendous opportunities to accelerate our drilling program and to increase our valuable acreage positions in oil-rich and liquids-rich shale plays in the United States, focusing on the Bakken shale of North Dakota and Montana, the Anadarko Woodford shale in western Oklahoma, and the Niobrara Shale in Colorado and Wyoming," said Harold Hamm, chairman and CEO.

The company is operating a total of 26 rigs, 18 of those in the Bakken where it is the largest leaseholder with 806,576 net acres (up25% from the 645,347 net acres at year-end 2009). “We plan to increase the number in the Bakken by year end, given our improving well productivity and strong economics at current oil prices," said Hamm.

The company is operating three rigs in the Anadarko Woodford, where holds 233,321 net acres (up 57% from its year-end 2009 148,520 net acres) and reports “encouraging results” and plans to increase the rig count by year end.

"Our entry into the Niobrara Shale is another great fit with our long-term, oil-concentrated growth strategy," he said. Continental has leased 59,071 net acres in the Niobrara and plans to spud its first well in the play by year-end 2010.

Financing
Higher land capital expenditures in the revised budget are expected to be partially offset with ongoing sales of positions in resource plays that are “not strategic to long-term growth plans.”

The company has also entered into an amended credit agreement with Union Bank NA and the other lenders. Among other things, the banks agreed to increase the maximum size of the credit facility to $2.5 billion from $750 million; maintain aggregate commitments under the credit facility at $750 million; increase the borrowing base from $1.0 billion to $1.3 billion; and extend the maturity of the credit facility from April 12, 2011 to July 1, 2015.

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