Continental Resources (NYSE:CLR), Harold Hamm's masterpiece, just updated investors on its operations. Continental Resources has 1.2 million net acres in the Bakken, which makes it the biggest leaseholder in the area.

A heavy lean
Two-thirds of Continental's production came from the Bakken, which pumped out 94,500 boe/d in the third quarter. This represents 7% growth quarter over quarter; year over year, Continental Resources saw Bakken output increase by a stellar 51%.

With 20 rigs operating in the area, Continental was able to bring 75 net wells online last quarter. Year to date, Continental Resources has brought online 214 net wells in the Bakken, so if it meets its guidance to bring 282 net wells online for 2013 it will complete 68 net wells in the fourth quarter.

Continental has beaten its guidance to reduce well completion costs down to $8 million by the end of 2013, which Continental had previously been guiding to be at $8.2 million by year's end. Now that well completion costs are down to $8 million, Continental plans on running just 20 rigs throughout 2013 instead of 22 because it can complete wells faster and cheaper.

Continental Resources also plans on utilizing downspacing to increase the amount of possible drilling locations and potentially increase its recoverable reserves. 

A head start
The Hawkinson Downspacing pilot test is one month ahead of schedule, and is the first of four of its downspacing pilot projects.

The purpose of this project is to test out each of the benches of the Bakken and Three-Forks play. From the surface to the third bench of the Three-Forks play, these 14 wells drill into all of them. Four wells are drilling into the Middle Bakken, three into the first bench of the Three-Forks play, four into the second bench of the Three-Forks, and three into the third bench of the Three-Forks play.

This is the industry's first downspacing density project that includes each bench of the stacked Bakken play, and so far it's going very well.

Continental isn't the only player who has been able to use downspacing in the Bakken: Whiting Petroleum (NYSE:WLL) has seen impressive results as well.

Sanish
In the Sanish Field, which is in the Williston Basin, Whiting Petroleum has been able to almost double the amount of potential drilling locations. Previously Whiting was drilling 3-3.5 wells per 1,280 acre unit, but high-density downspacing could boost that by three wells per 1,280 acre unit.

What this does is boost the amount of recoverable oil Whiting can get its hands on. In the Three-Forks bench alone, which is below the Middle Bakken, there is an additional 9 million barrels of oil equivalent per 1,280 acre unit of oil in place.

Oil in place shouldn't be confused with recoverable reserves, and the average recovery rate in the Bakken is around 3.5%-5%, according to Continental's estimates. If that holds true for Whiting's position in the Sanish Field, then Whiting Petroleum will be increasing the amount of recoverable oil per unit by 315,000 barrels of oil equivalent.

Both Whiting and Continental have been successful with their downspacing tests in the Bakken, and going forward both companies will be able to test out downspacing in other parts of the play.

Continental Resources is largely a Bakken play, but it knows that to truly reward investors it needs to diversify.

So what's the SCOOP?
The SCOOP is the South Central Oklahoma Oil Province, which Continental is also invested in.

Production from SCOOP increased 14% quarter over quarter and 293% year over year, hitting 20,100 boe/d in Continental Resources' third quarter. To push up growth further, Continental plans on increasing its rig count in the area from 12 currently to 15 by year's end.

As Continental continues to invest heavily in the play, it will keep seeing strong production growth. 293% output growth is nothing to laugh at; that is enormous. Even social media companies don't see that kind of growth.

Final thoughts
Investors should have high hopes for Continental Resources for a few reasons. One, Continental is ahead of schedule to increase production by 300% from 2012 to 2017. Two, Continental is leading the charge in Bakken downspacing tests, and it's the first operator to drill into every bench in the play. Three, Continental Resources is diversifying into other plays to reduce its dependence on the Bakken.

Continental Resources is worth looking into as a E&P growth story. How many oil companies have market caps north of $20 billion and are increasing production by 300%?

 

Callum Turcan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.