Continental Resources, Inc.

Good day, ladies and gentlemen, and welcome to the Continental Resources, Inc. Third Quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Rory Sabino, Vice President of Investor Relations. Please go ahead, sir.

Good morning, everybody, and thank you for joining us. Welcome to today's earnings call. We will start today's call with remarks from Bill Berry, Continental's Chief Executive Officer, John Hart, Chief Financial Officer and Chief Strategy Officer, and Jack Stark, President and Chief Operating Officer. Additional members of our senior executive team, including Mr. Harold Hamm, Chairman of the Board, will be available for Q&A. Today's call will contain forward-looking statements that address projections, assumptions, and guidance. Actual results may differ materially from those contained in forward-looking statements. Please refer to the company's SEC filings for additional information concerning these statements and risks. In addition, Continental does not undertake any obligation to update forward-looking statements made on this call. Finally, on the call, we will refer to certain non-GAAP financial measures. For a reconciliation of these measures to generally accepted accounting principles, please refer to the updated investor presentation that has been posted on the company's website at www.clr.com. With that, I will turn the call over to Mr. Berry. Bill?

Thank you, Rory, and good morning, everyone. I hope moving the earnings date was not an inconvenience for any of you. We did this to be able to share several exciting things with you today. First is our record free cash flow for the quarter of $669 million. Clearly, 2021 is going to be a record year for us in terms of free cash flow generation. We have expanded both our shareholder capital and corporate returns. This includes increasing our dividend by 33% from 15 cents to 20 cents per share, with our return on capital employed increasing to approximately 21%. Third is the exciting news that we now have strategic positions in four leading basins across the lower 48, with a $3.25 billion acquisition of Delaware assets from Pioneer. providing our company and shareholders with material, geologic, and geographic diversity. Like our first quarter Powder River Basin acquisition, this transaction is accretive on key financial metrics, and the acquired assets will complement our existing deep portfolio in the Bakken, Oklahoma, and Powder River. And fourth, we are now, post this transaction, we have been fully returned to fully investment grade. And as we've indicated on previous calls, we believe Continental has more alignment with shareholders than any other public EMP company. We focus every day on maximizing both shareholder and corporate returns. The Permian Basin acquisition will be an integral contributor to these shareholder return plans. This is an outstanding asset with 92,000 acres, over 1,000 locations, 50,000 net royalty acres. The acquisition also comes with about 55,000 BOE per day from PDP and anticipated volumes from Wells in Progress. And finally, and possibly most importantly, this Permian transaction is projected to add up to 2% to our return on capital employed annually over the next five years. The acquisition of these assets strongly supports the tenets of continental shareholder return on investment and return of investment. dividends, and share repurchases. These are all driven by continued commitment to strong free cash flow. Our plans for low single-digit production growth are the foundation for being able to deliver strong free cash flow. During the third quarter, we took additional steps to increase returns to shareholders with our third dividend increase in as many quarters and executing on $65 million in share repurchases. While we will be taking on some additional debt to pay for the transaction, our net debt to EBITDA target remains the same, less than one. We expect to exit this year at a quarter annualized net debt to EBITDA of about 1.3 and expect to be below 1.0 by year end 2022, assuming $60 and strip gas pricing. We are unwavering in our commitment to reduce debt. Our 2021 cash flow generation remains very competitive versus our peers in the broader market, as shown on slide 7. This is even after our stock has nearly tripled year-to-date. We see the potential to generate $2.6 billion of free cash flow this year, which equates to about 14% free cash flow yield at current prices. This is significantly above the majority of our industry peers in the broader market, indicating further upside in the value of our stock. As we look to 2022, we expect to provide updates on capital budget and operations, including the pending integration of our newly acquired permanent assets early next year. We are confident this acquisition will further enhance our free cash flow generation. Our ESG performance is top of mind for me, and I want to update you with regards to our ESG performance year to date. In the third quarter, we achieved a 98.9% gas capture rate, up from 98.3% in 2020. In support of our industry-leading ESG gas capture stewardship, we have deferred approximately $45 million in revenue in 2021. Additionally, we have achieved zero reportable injuries among our employees through the third quarter of 2021. Congratulations to the team on outstanding performance. We're proud of our teams and their exceptional commitment to continuously operate with integrity in a safe and environmentally responsible manner. We'll spend the remainder of the call discussing some of the specifics on our recently announced and highly accretive expansion into the Permian Basin. John will highlight the compelling financial aspects of our expansion, and Jack will provide details regarding the outstanding geologic attributes and fully integrated nature of the deal. Our new position in Permian, as shown on slide four, was driven by our geology-led corporate strategy and is built on a strong foundation of geoscience and technical operation skills, coupled with a management team fully aligned with shareholders. This transaction increases Continental's operational footprint in the area, with our current acreage position across the Permian now approximately 140,000 net acres. Later on the call, Jack will provide details regarding this expanded Permian footprint, along with the tremendous success our teams have had growing our top tier portfolio of lower 48 assets. Approximately 75% of the price of this asset is covered by PDP value and wells in progress at current strip prices, leaving significant upside value in undeveloped acreage. On a pro forma basis and at current strip prices, we expect to generate at least $3 billion of cash flow in 2022. Our pro forma free cash flow in 2022 is projected to be about 17 percent. This compares very favorably to our 2021 projected free cash flow yield of about 14 percent. Like our other assets, the fully integrated nature of this asset offers a multifaceted value proposition, including minerals and water infrastructure that we control and provides tremendous optionality and upside in the future, as shown on slide four. The transaction has been unanimously approved by the company's board of directors and is effective as of October 1st, with an expected closing date in the fourth quarter. I'll now turn the call over to John and Jack for more texture on the acquisition. Thank you, Bill.