Exploration and production companies operating in the Bakken region are seeing the results. Continental Resources (NYSE: CLR) reported strong results for the fiscal first quarter riding on sharp production rise. Losses from derivative instruments, however, marred the company's bottom line. What are Fools to think?

Solid growth
Total production rose to 51,663 barrels of oil equivalent per day -- or BOE/D -- for this quarter. That's a 34% increase from 38,428 BOE/D a year ago. Production in the Bakken rose by 67% over the year-ago quarter to 25,523 BOE/D. This consists of nearly 50% of the company's daily production.

Clearly, the importance of the Bakken reserves cannot be underestimated. Crude oil and natural gas sales for this quarter jumped to $326 million from $217 million a year ago -- a sharp 50% hike.

The dent
However, losses from derivative instruments (generally meant to protect the company from bigger losses) have put the company's bottom line in the red. A net loss of $137 million as compared to net profit of $72 million a year ago actually brings out the glaring disconnect between the operational and notional results that can creep into a company's financial statements.

A $369 million derivative loss, 99% of which is noncash and unrealized, definitely does not look pretty on the income statement. However, the good news is that the contract run through the end of 2013, and there might be a possibility of a turnaround by then.

This should not deter Foolish investors, as the fundamentals for this company look sound and management seems to have ambitious plans to expand operations. Fellow Bakken operator Brigham Exploration (Nasdaq: BEXP) and other players such as Anadarko Petroleum (NYSE: APC) and Noble Energy (NYSE: NBL) are in the same boat -- and I am pretty bullish about the prospects of these companies.

Foolish takeaway
Looking forward, management looks confident in growth prospects. As CEO Harold Hamm said, "We are solidly on track to achieve our 2011 target of 35-37 percent (production) growth."

I do not see any reason to disagree. With substantial upward revision of estimated reserves in the Bakken fields, Foolish investors should find a long-term winner in this stock.

Fool contributor Isac Simon does not own shares of any of the companies mentioned in this article. 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.