(By Balachander) Continental Resources Inc. (NYSE: CLR) shares were initiated with a "Buy" rating and price target of $94 by Deutsche Bank (DB).
"Our broader industry view is for less sustainable oil growth than the market expects longer-term, increasing scarcity of quality oil growth assets, limited success in emerging basins (NAV expansion) and range-bound near-term commodities," DB said.
In this environment, CLR is uniquely positioned, with the dominant Bakken position in the industry, peer leading volume and cash flow growth, and deep resource inventory with significant upside from lower benches and downspacing, the bank wrote.
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Cost control will be key, but the bank said it sees costs and capital efficiency turning a corner in 2013.
DB said CLR is an oil growth company (despite its $14 billion market cap), and few companies offer the quality and quantity of resource base to support that growth, or are doing more to continue to expand that resource base.
After tripling production since 2H08, CLR should average 30 percent/yr growth through 2015, with high margin barrels driving cash flow growth per debt adjusted share at a peer-leading 22 percent/yr, DB wrote.
"With over 14 years of drilling inventory at 2013 levels (excluding any contribution from lower benches), CLR's base offers comfortable room to support acceleration plans, in our view," the bank wrote.
The stock, which has been trading in the 52-week range of $61.02 to $97.19, traded 1.53 percent higher at $77.19 on Friday.