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Continental Resources’ Record Production In the Second Quarter of 2012 Prompts Higher 2012 Growth Guidance

August 8, 2012

OKLAHOMA CITY, Aug. 8, 2012 /PRNewswire/ — Continental Resources, Inc. (NYSE: CLR) announced record production for the second quarter ended June 30, 2012.

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Significant accomplishments in the second quarter included:

  • Achieved record production of 94,852 barrels of oil equivalent per day (Boepd), a 76 percent increase over production of 53,984 Boepd for the second quarter of 2011. Production reached 100,000 Boepd in June 2012.
  • Earned $421.9 million of EBITDAX, 48 percent higher than the second quarter of 2011, and increased net income compared to the second quarter last year.
  • Accelerated the value of high rate-of-return projects in the Bakken play of North Dakota and Montana and the Anadarko Woodford play of Oklahoma through increased drilling efficiencies and capital spending.
  • Continued to simultaneously de-risk and extend the proven inventory in the Bakken play while accelerating its transition to multi-well pad drilling to more efficiently develop this inventory.

Record Production and Proved Reserves

Continental’s production was 94,852 Boepd in the second quarter of 2012, an increase of 76 percent over the second quarter of 2011 and 11 percent over the first quarter of 2012.

The Company increased 2012 full-year production growth guidance to a range of 57 percent to 59 percent, while reducing its operated rig count to 29 rigs today from 44 in late 2011.

“Our operating results have been exceptionally strong. We are significantly ahead of plan to achieve our five-year goal of tripling production from 2009 to 2014,” said Harold Hamm, Chairman and Chief Executive Officer. “We have demonstrated increasing efficiencies by delivering higher production with fewer rigs, and we expect to hit our five-year target during the first half of 2013, which is 18-to-24 months earlier than our original plan. This speaks to the quality of our assets and tremendous team performance by the people at Continental.”

Continental announced a 20 percent increase in proved reserves to 610 MMBoe at June 30, 2012, based on its mid-year internal evaluation. This compared with total proved reserves of 508 MMBoe at year-end 2011 and 421 MMBoe at June 30, 2011.

Capital Expenditures

Continental reported capital expenditures (excluding acquisitions in all cases) of $827 million for the second quarter of 2012, bringing total capital expenditures for the first half of the year to $1.6 billion.

The Company has increased its 2012 capital expenditures budget to $3.0 billion. This incremental capital in the revised budget reflects accelerated spending to drill high rate-of-return projects in the Bakken and increases in Continental’s average working interests in Bakken and Anadarko Woodford wells, which has helped boost production growth. The increase in average working interest results from acquisitions and enhanced ownership through continuous leasing, trades, farm-ins and pooled interests.

Drilling and completion costs have also been higher. In the Bakken, drilling and completion costs have trended higher, with operated wells averaging $9.2 million per well and non-operated wells averaging $11.3 million. Continental continues to work with service providers to maintain its low-cost leadership through operational efficiencies, addressing supply chain issues, and reducing the strain on infrastructure in this developing field.

“Our overall goal is to maximize the value of our premier assets in the Bakken and Anadarko Woodford plays,” said Rick Bott, President and Chief Operating Officer. “Specifically for the Bakken, we’ve accelerated our transition to ECO-Pad capable rigs, now representing half of our drilling fleet, while continuing to grow production at an industry-leading rate. We are moving into full development mode, which will enable us to reduce operating costs, more efficiently develop our multi-year drilling inventory, and realize more quickly the value of our assets.”

Financial Results

Continental’s oil and natural gas sales were $523.4 million for the second quarter of 2012, compared with $388.8 million for the same period of 2011.

Continental reported net income of $405.7 million, or $2.25 per diluted share, for the second quarter of 2012, compared with net income of $239.2 million, or $1.33 per diluted share for the second quarter of 2011. The year-over-year growth in net income reflected Continental’s crude oil-weighted production growth.

Second quarter 2012 net income, on an after-tax basis, included a net non-cash unrealized gain on derivatives of $296.4 million, a $10.8 million net gain on sale of assets, net property impairment charges of $22.2 million, and a net $2.1 million in costs related to the Company’s relocation of its headquarters to Oklahoma City. Excluding the combined effects of the non-cash unrealized gain on derivatives, the gain on sale of assets, the property impairment charge and the relocation expense, Continental’s earnings would have been $0.68 per diluted share for the second quarter of 2012. On a comparable basis, its adjusted earnings per share would have been $0.60 per diluted share for the second quarter of 2011. For the reconciliation of this result to U.S. GAAP earnings per share, see “Non-GAAP Financial Measures – Adjusted earnings per share” at the end of this press release.

The Company reported EBITDAX of $421.9 million, a 48 percent increase compared with the second quarter of 2011. For the Company’s definition and reconciliation of EBITDAX to net income and operating cash flows, see “Non-GAAP Financial Measures” at the end of this press release.

Production expense was $5.16 per Boe for the second quarter of 2012, compared with $6.65 per Boe for the second quarter of 2011. Continental has revised its 2012 guidance and now expects production expense will average in a range of $5.25 to $5.75 per Boe, compared with its original guidance of $6 to $7 per Boe.

General and administrative expense (G&A) was $3.51 per Boe, slightly lower than the second quarter of 2011. Excluding non-cash equity compensation and relocation expenses, G&A for the second quarter of 2012 was $2.20 per Boe, compared with $2.66 per Boe for the second quarter of 2011.

The Company has revised its guidance for G&A and now expects it will average in a range of $2.10 to $2.35 per Boe for 2012, compared with its original guidance of $2.50 to $2.75 per Boe.

Marketing and Commodity Prices

Crude oil represented 69 percent of Continental’s second quarter 2012 production.

Continental reported a blended realized price of $61.69 per Boe (barrel of oil equivalent) in the second quarter of 2012, comprised of an average realized crude oil price of $80.56 per barrel and an average realized natural gas price of $3.51 per Mcf. The Company’s second quarter 2012 average realized price for crude oil does not include the effect of $7.1 million of pre-tax realized losses on mark-to-market derivatives for the quarter. In the second quarter of 2011, it reported a blended realized price of $79.86 per Boe. Continental’s oil price differential was $12.63 per barrel for the second quarter of 2012.

“We continue to identify additional opportunities to transport Bakken oil to water-borne sourced U.S. markets that yield the highest net price per barrel at the wellhead,” Mr. Hamm said. “Demand for high quality domestic crude, especially Bakken barrels, is increasing in all markets. We are aggressively supporting the expansion and construction of current and new pipeline systems. With infrastructure improvements like the reversal and volume expansion of the Seaway pipeline, other new pipeline construction, and expanding rail capacity, we expect the intrinsic value of the Bakken barrel to be realized over time.”

The Company’s natural gas price differential to Henry Hub was a premium of $1.29 per Mcf, reflecting the high liquids content of its natural gas. This compared with a premium of $1.16 per Mcf for the second quarter of 2011.

Strong Financial Position

As of June 30, 2012, the Company’s balance sheet included $29.1 million in cash and cash equivalents and $2.3 billion in total long-term debt. Total long-term debt at June 30, 2012 included $537 million in borrowings under Continental’s revolving credit facility. The commitments and borrowing base under its revolving credit facility were recently increased to $1.5 billion and $2.75 billion, respectively.

“We have accelerated our capital program because of the tremendous opportunities in front of us,” said John Hart, Senior Vice President and Chief Financial Officer. “We are delivering strong production growth while maintaining favorable debt metrics. We are well in line with debt-to-EBITDAX commitments that we have set for our Company.”

Bakken Results

Continental continues to realize strong initial per-well production rates in the Bakken, in line with expectations. Bakken production was 53,471 Boepd for the second quarter of 2012, a 97 percent increase over the second quarter of 2011.

The Company continues to see strong production results from new wells in the Middle Bakken and Three Forks zones. Successful results continue to expand the proven extents of the play laterally, and in the coming months Continental will continue exploring lower benches in the Three Forks to expand the play vertically. The first two tests of the second bench, completed earlier this year, continue to perform in line with typical Three Forks producers.

For the quarter, the Company participated in 154 gross (56 net) wells. In terms of operated wells, Continental completed 69 gross (46 net) wells in the Bakken in the second quarter of 2012, with 62 gross (41 net) wells in North Dakota and 7 gross (5 net) wells in Montana.

Continental continued to build its strategic leasehold and ownership interest by adding 31,057 net acres in the North Dakota Bakken since the beginning of 2012, bringing its total Bakken ownership to 946,248 net acres at June 30, 2012.

The Company currently has 19 operated drilling rigs in the Bakken, a reduction from the peak of 26 operated rigs in the first half of 2012. The current rig fleet includes 15 operated rigs in North Dakota and four in Montana. Nine of the North Dakota rigs are drilling ECO-Pad projects.

Anadarko Woodford Well Results

Production in the Anadarko Woodford in the second quarter of 2012 was more than 4X production in the same quarter of 2011 (16,672 Boepd versus 4,031 Boepd). The Company participated in 31 gross (17 net) wells in the play. In terms of Continental-operated wells, it completed 19 gross (16 net) wells in the Anadarko Woodford play in the second quarter of 2012. Initial well production rates continue to meet expectations and support this strong production growth.

Continental has expanded its lease position in the Anadarko Woodford play by 12.5 percent, with 37,559 net acres added since the beginning of 2012. Total leasehold was 315,675 net acres as of June 30, 2012.

To optimize capital, align with infrastructure timing, and maximize returns, the Company has reduced its operated rig fleet to seven in the Anadarko Woodford, compared with a peak level of 16 operated rigs in the play in late 2011. Continental plans to release one additional rig by the end of the month and is concentrating its drilling activity in the oil-rich southernmost segment of the play.

Operating Highlights

                        Three months ended June 30, Six months ended June 30,
                        --------------------------- -------------------------
                                               2012         2011                 2012 2011
                                               ----         ----                 ---- ----
    Average daily
     production:
    Crude oil (Bbl per
     day)                                            65,274                    40,382       62,587  39,420
    Natural gas (Mcf
     per day)                                       177,471                    81,609      165,611  80,459
    Crude oil
     equivalents (Boe
     per day)                                        94,852                    53,984       90,189  52,830
    Average sales
     prices: (1)
    Crude oil ($/Bbl)                                $80.56                    $95.88       $85.40  $90.78
    Natural gas ($/Mcf)                                3.51                      5.47         3.96    5.29
    Crude oil
     equivalents
     ($/Boe)                                          61.69                     79.86        66.31   75.63
    Production expenses
     ($/Boe) (1)                                       5.16                      6.65         5.17    6.52
    General and
     administrative
     expenses ($/Boe)
     (1)(2)                                            3.51                      3.53         3.38    3.55
    Net income (in
     thousands)                                     405,684                   239,194      474,778 101,993
    Diluted net income
     per share                                         2.25                      1.33         2.63    0.58
    EBITDAX (in
     thousands)(3)                                  421,860                   285,631      876,392 554,286
             (1)   Average sales prices and per unit
                   expenses have been calculated
                   using sales volumes and exclude
                   any effect of derivative
                   transactions.
             (2)   General and administrative expense
                   ($/Boe) includes non-cash equity
                   compensation expense of $0.92 per
                   Boe and $0.79 per Boe for the
                   three months ended June 30, 2012
                   and 2011, respectively, and $0.82
                   per Boe and $0.79 per Boe for the
                   six months ended June 30, 2012 and
                   2011, respectively.
             (3)   EBITDAX represents earnings before
                   interest expense, income taxes,
                   depreciation, depletion,
                   amortization and accretion,
                   property impairments, exploration
                   expenses, non-cash gains and
                   losses resulting from the
                   requirements of accounting for
                   derivatives, and non-cash equity
                   compensation expense. EBITDAX is
                   not a measure of net income or
                   operating cash flows as determined
                   by U.S. GAAP. Reconciliations of
                   net income and operating cash
                   flows to EBITDAX are provided
                   subsequently under the header Non-
                   GAAP Financial Measures.

The following table presents the Company’s average daily production by region for the periods presented.

                        2Q        1Q        2Q
    Boe per day              2012      2012      2011
    -----------              ----      ----      ----
    North Region:
    North Dakota Bakken    47,166    41,895    21,682
    Montana Bakken          6,305     6,129     5,495
    Red River Units        15,482    15,415    14,328
    Other                   1,445     1,445     1,024

    South Region:
    Anadarko Woodford      16,672    12,826     4,031
    Arkoma Woodford         3,806     3,637     3,236
    Other                   2,912     2,988     3,118
    East Region             1,064     1,191     1,070
                            -----     -----     -----
    Total                  94,852    85,526    53,984

Revised 2012 Guidance

                                             Current       Previous Guidance

    2012 Production growth range                57% to 59%          47% to 50%
    Crude oil price differential per barrel     $11 to $13            $9 to $11
    Production expense per Boe              $5.25 to $5.75             $6 to $7
    G&A expense per Boe*                    $2.10 to $2.35       $2.50 to $2.75
    Capital expenditures**                           $3.0B                $2.3B

In addition, the Company expects to incur approximately $9-to-$12 million in headquarters relocation expenses in 2012. Through the first half of 2012, relocation expenses were $5.1 million.

*Excludes non-cash equity compensation and headquarters relocation expenses

** Excludes acquisition capital expenditures

Conference Call Information

Continental Resources plans to host its second quarter 2012 earnings conference call on Thursday, August 9, 2012, at 10 a.m. ET. Those wishing to listen to the conference call may do so via the Company’s web site at www.clr.com or by phone:

    Time and date:     10 a.m. ET
                       Thursday, August 9, 2012

    Dial in:                        888 713 4205
    Intl. dial in:                  617 213 4862
    Pass code:                          14752483

A replay of the call will be available for 30 days on the Company’s web site or by dialing:

    Replay number:                                888 286 8010
    Intl. replay                                  617 801 6888
    Pass code:                                        36347483

Conference Presentations and 2012 Continental Resources Investors Day

Continental management is currently scheduled to present at the following research conferences. Presentation materials will be available on the Company’s web site.

    Aug. 14                 ENERCOM Energy Conference, Denver
    Sept. 19-20              Imperial Capital Global Opportunities
                             Conference, New York
    Oct. 9                   Continental Resources Investors Day,
                             Oklahoma City
    Oct. 15-17              Canaccord/Genuity Energy Conference, Miami

The Company will host its 2012 Continental Resources Investors Day in Oklahoma City on Tuesday, October 9, 2012. At that time, the Company plans to discuss its growth strategy for the 2013-2017 period, as well as its general 10-year outlook for growing production and proved reserves. Presentation materials for research conferences and the 2012 Continental Resources Investors Day will be available on the Company’s web site the day of the presentations.

About Continental Resources

Continental Resources is a Top 10 petroleum liquids producer in the United States and the largest leaseholder in the nation’s premier oil play, the Bakken play of North Dakota and Montana. Based in Oklahoma City, the company also has a leading presence in the Anadarko Woodford play of Oklahoma and the Red River Units play of North Dakota, South Dakota and Montana. Founded in 1967, Continental’s growth strategy has focused on crude oil since the 1980s. The company reported total revenues of $1.6 billion for 2011 and is ahead of plan to triple production and proved reserves from 2009 to 2014. Visit www.CLR.com for more information.

Forward-Looking Statements

This press release includes forward-looking information that is subject to a number of risks and uncertainties, many of which are beyond the Company’s control. Other than historical facts included in this press release, all information regarding strategy, future operations, drilling plans, estimated reserves, future production, estimated capital expenditures, projected costs, the potential of drilling prospects and other plans and objectives of management are forward-looking information. All forward-looking statements speak only as of the date of this press release. Although the Company believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Actual results may differ materially from those anticipated due to many factors, including oil and natural gas prices, industry conditions, drilling results, uncertainties in estimating reserves, uncertainties in estimating future production from enhanced recovery operations, availability of drilling rigs and other services, availability of crude oil and natural gas transportation capacity, availability of capital resources and other factors listed in reports we have filed or may file with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statement to reflect events or circumstances that may arise after the date of this press release.

    CONTACTS: Continental Resources, Inc.

    Investors                             Media
    Warren Henry, VP Investor Relations   Kristin Miskovsky, VP Public Relations
    405-234-9127                          405-234-9480
    Warren.Henry@CLR.com                  Kristin.Miskovsky@CLR.com


    Unaudited Condensed Consolidated Statements of Income

                                                  Three months ended June 30,                      Six months ended June 30,
                                                  ---------------------------                      -------------------------
                                                    2012                   2011                   2012                 2011
                                                    ----                   ----                   ----                 ----
    Revenues:                                                 In thousands, except per share data
    Crude oil and natural gas
     sales                                                  $523,393                          $388,784                       $1,075,651                         $715,251
    Gain (loss) on derivative
     instruments, net                                        471,728                           204,453                          302,671                         (164,850)
    Crude oil and natural gas service
     operations                                                9,598                             9,655                           21,497                           16,281
                                                               -----                             -----                           ------                           ------
    Total revenues                                         1,004,719                           602,892                        1,399,819                          566,682

    Operating costs and expenses:
    Production expenses                                       43,756                            32,361                           83,831                           61,631
    Production taxes and other expenses                       49,227                            33,491                           99,967                           61,053
    Exploration expenses                                       8,702                             5,034                           12,853                           11,846
    Crude oil and natural gas service
     operations                                                7,255                             8,064                           17,097                           13,515
    Depreciation, depletion,
     amortization and accretion                              161,018                            83,501                          310,473                          159,151
    Property impairments                                      35,871                            19,242                           65,778                           40,090
    General and administrative expenses
     (1)                                                      29,813                            17,209                           54,779                           33,556
    Gain on sale of assets, net                              (17,397)                             (318)                         (67,024)                         (15,575)
                                                             -------                              ----                          -------                          -------
    Total operating costs and expenses                       318,245                           198,584                          577,754                          365,267
                                                             -------                           -------                          -------                          -------
    Income from operations                                   686,474                           404,308                          822,065                          201,415
    Other income (expense):
    Interest expense                                         (31,691)                          (18,785)                         (55,969)                         (37,756)
    Other                                                        789                             1,022                            1,570                            1,531
                                                             (30,902)                          (17,763)                         (54,399)                         (36,225)
                                                             -------                           -------                          -------                          -------
    Income before income taxes                               655,572                           386,545                          767,666                          165,190
    Provision for income taxes                               249,888                           147,351                          292,888                           63,197
                                                             -------                           -------                          -------                           ------
    Net income                                              $405,684                          $239,194                         $474,778                         $101,993
                                                            --------                          --------                         --------                         --------
    Basic net income per
     share                                                     $2.26                             $1.33                            $2.64                            $0.58
    Diluted net income per
     share                                                     $2.25                             $1.33                            $2.63                            $0.58

    (1) Includes non-cash charges for equity compensation of $7.8 million and $3.9 million for the three months ended June 30, 2012 and 2011, respectively, and $13.3 million and $7.5 million for
     the six months ended June 30, 2012 and 2011, respectively.


    Unaudited Condensed Consolidated Balance Sheets

                                           June 30,               December 31,
                                                 2012                     2011
                                                 ----                     ----
    Assets                                           In thousands
    Current assets                                       $930,576                $936,373
    Net property and
     equipment                                          6,178,663               4,681,733
    Other noncurrent
     assets                                               145,073                  27,980
    Total assets                                       $7,254,312              $5,646,086
                                                       ----------              ----------

    Liabilities and
     shareholders'
     equity
    Current liabilities                                $1,081,990              $1,111,801
    Long-term debt                                      2,252,918               1,254,301
    Other noncurrent
     liabilities                                        1,127,907                 971,858
    Total shareholders'
     equity                                             2,791,497               2,308,126
                                                        ---------               ---------
    Total liabilities
     and shareholders'
     equity                                            $7,254,312              $5,646,086
                                                       ----------              ----------

    Unaudited Condensed Consolidated Statements of Cash Flows

                                               Six months ended June 30,
                                               -------------------------
                                                2012                  2011
                                                ----                  ----
                                                     In thousands
    Net income                                           $474,778          $101,993
    Adjustments to reconcile
     net income to net cash
     provided by operating
     activities:
    Non-cash expenses                                     269,885           393,358
    Changes in assets and
     liabilities                                           26,167           (66,385)
                                                           ------           -------
    Net cash provided by
     operating activities                                 770,830           428,966

    Net cash used in
     investing activities                             (1,773,492)          (803,616)

    Net cash provided by
     financing activities                                 978,255           628,142
                                                          -------           -------

    Net change in cash and
     cash equivalents                                     (24,407)          253,492
    Cash and cash equivalents
     at beginning of period                                53,544             7,916
                                                           ------             -----
    Cash and cash equivalents
     at end of period                                     $29,137          $261,408

Non-GAAP Financial Measures

EBITDAX represents earnings before interest expense, income taxes, depreciation, depletion, amortization and accretion, property impairments, exploration expenses, non-cash gains and losses resulting from the requirements of Accounting for Derivatives, and non-cash equity compensation expense. EBITDAX is not a measure of net income or operating cash flows as determined by U.S. GAAP. Management believes EBITDAX is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. We exclude the items listed above from net income and operating cash flows in arriving at EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. EBITDAX should not be considered as an alternative to, or more meaningful than, net income or operating cash flows as determined in accordance with U.S. GAAP or as an indicator of a company’s operating performance or liquidity. Certain items excluded from EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of EBITDAX. Our computations of EBITDAX may not be comparable to other similarly titled measures of other companies. We believe EBITDAX is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet future debt service requirements, if any. At June 30, 2012, our credit facility required that we maintain a total funded debt to EBITDAX ratio of no greater than 3.75 to 1.0 on a rolling four-quarter basis, which was subsequently amended to 4.0 to 1.0 effective July 26, 2012. This ratio represents the sum of outstanding borrowings and the letters of credit under our credit facility plus our note payable and senior note obligations, divided by total EBITDAX for the most recent four quarters. Our credit facility defines EBITDAX consistently with the definition of EBITDAX utilized and presented by us. The following table is a reconciliation of our net income to EBITDAX for the periods presented.

                                           Three months ended June 30,                     Six months ended June 30,
                                           ---------------------------                     -------------------------
                                              2012                2011                   2012                   2011
                                              ----                ----                   ----                   ----
                                                                   in thousands
    Net income                                       $405,684                        $239,194                           $474,778         $101,993
    Interest expense                                     31,691                          18,785                             55,969           37,756
    Provision for income taxes                          249,888                         147,351                            292,888           63,197
    Depreciation, depletion,
     amortization and accretion                         161,018                          83,501                            310,473          159,151
    Property impairments                                 35,871                          19,242                             65,778           40,090
    Exploration expenses                                8,702                           5,034                             12,853           11,846
    Impact from derivative
     instruments:
    Total (gain) loss on
     derivatives, net                               (471,728)                       (204,453)                           (302,671)         164,850
    Total realized loss (cash
     outflow) on derivatives, net                      (7,056)                        (26,878)                           (46,981)         (32,094)
                                                       ------                         -------                            -------          -------
    Non-cash (gain) loss on
     derivatives, net                               (478,784)                       (231,331)                           (349,652)         132,756
    Non-cash equity compensation                        7,790                           3,855                             13,305            7,497
                                                        -----                           -----                             ------            -----
    EBITDAX                                          $421,860                        $285,631                           $876,392         $554,286

    The following table provides a reconciliation of our net cash provided by operating activities to EBITDAX for the periods presented.

                                         Six months ended June 30,
                                         -------------------------
                                              2012                2011
                                              ----                ----
                                                in thousands
    Net cash provided
     by operating
     activities                                      $770,830                        $428,966
    Current income tax provision             2,150                             960
    Interest expense                        55,969                          37,756
    Exploration expenses,
     excluding dry hole costs               12,755                           8,476
    Gain on sale of assets, net             67,024                          15,575
    Other, net                              (6,169)                         (3,832)
    Changes in assets and
     liabilities                           (26,167)                         66,385
                                           -------                          ------
    EBITDAX                                          $876,392                        $554,286

Adjusted earnings per share

Our presentation of adjusted earnings per share that excludes the effect of certain items is a non-GAAP financial measure. Adjusted earnings per share represents diluted earnings per share determined under U.S. GAAP without regard to non-cash gains and losses on derivative instruments, property impairments, gains and losses on asset sales, and corporate relocation expenses. Management believes this measure provides useful information to analysts and investors for analysis of our operating results on a recurring, comparable basis from period to period. In addition, management believes this measure is used by analysts and others in valuation, comparison and investment recommendations of companies in the oil and gas industry to allow for analysis without regard to an entity’s specific derivative portfolio, impairment methodologies, and nonrecurring transactions. Adjusted earnings per share should not be considered in isolation or as a substitute for earnings per share as determined in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies. The following table reconciles earnings and diluted earnings per share as determined under U.S. GAAP to adjusted earnings and adjusted diluted earnings per share.

                                                                                                                          Three months ended June 30,
                                                                                                                          ---------------------------
                                                                                                                                                                2012                            2011
                                                                                                                                                                ----                            ----
    In thousands, except per share data     After-Tax $                Diluted EPS           After-Tax $                                                              Diluted EPS
                                            -----------                -----------           -----------                                                              -----------
    Net income (GAAP)                             $405,684                   $2.25              $239,194                                                                    $1.33
    Adjustments, net of tax:
                                          Non-cash gain on
                                          derivatives, net  (296,367)                 (1.64)                                                                (143,425)              (0.80)
                                          Property
                                          impairments          22,204                  0.12                                                                   11,930                 0.07
                                          Gain on sale of
                                          assets, net         (10,769)                (0.06)                                                                    (197)                   -
                                          Corporate
                                          relocation
                                          expenses              2,064                  0.01                                                                      243                    -
                                                                -----
                                          Adjusted net
                                          income (Non-
                                          GAAP)              $122,816                 $0.68                                                                 $107,745                $0.60
                                          Weighted
                                          average
                                          diluted shares
                                          outstanding         180,335                                                                                        180,229
                                                              -------                                                                                        -------
                                          Adjusted
                                          diluted net
                                          income per
                                          share (Non-
                                          GAAP)                 $0.68                                                                                          $0.60

SOURCE Continental Resources


Source: PR Newswire