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Is This the Best Bakken Stock?

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Major Bakken player Continental Resources (NYSE: CLR  ) is getting better at the game. The North Dakota shale oil reserves are playing true to expectations, and companies operating in this region are making a killing.

Numbers don’t lie
Total production for the second quarter rose a healthy 29% to 54,000 barrels of oil equivalent per day. Bakken production itself grew a fantastic 51% in the corresponding period, accounting for half of the total production. Down south, production from the Woodford shale also increased by an impressive 51%. The fundamentals have shown the kind of growth that Foolish investors should be looking for.  

Not surprisingly, earnings have seen a huge boost. Earnings strictly from operations increased 31%, which shows that a boost in operations has translated into increased cash flow.

Solid growth plans
Continental’s strategy to balance both oil and natural gas production must be commended. The Bakken’s oil-rich reserves are complemented by the liquids-rich natural gas play in Anadarko.

Long-term growth plans look pretty impressive. Management’s aim to triple production and reserves in five years should definitely catch the attention of Fools. And given the company’s progress in developing its wells, I think the target looks achievable.

Competition, after all, is only bound to heat up in this region. EOG Resources (NYSE: EOG  ) , Denbury Resources (NYSE: DNR  ) , and small caps like Kodiak (NYSE: KOG  ) and Brigham Exploration (Nasdaq: BEXP  ) have all increased production substantially.

Continental’s proven reserves have already gone up 15% in the first six months of the year to 421 million barrels of oil equivalent. Stark County looks strong in making a substantial contribution. Early production in the Debrecen 1-3H stands at 1,667 barrels of oil equivalent per day -- Continental’s strongest well to date in the Normandy prospect.

Foolish bottom line
All in all, I believe this is a stock that has fantastic growth prospects. With a $2 billion capital expenditure program for 2011, the company looks on course to expand operations. Among the larger players in Bakken, Continental looks the most promising.

Click here to add Continental Resources to your stock watchlist.

Fool contributor Isac Simon does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Denbury Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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