Photo credit: Flickr/Tulane Public Relations.

Jim Cramer is right, again. America's oil boom isn't slowing down which means investors can profit by investing in great energy growth stocks. This week, Cramer suggested investors buy Continental Resources (CLR), which he sees as "the poster-child for the domestic oil explosion" thanks to its strong position in the Bakken shale. 

The Bakken is big and getting bigger
Continental Resources is the top leaseholder in the Bakken shale, with 1.2 million net acres. Continental Resources sees the play fueling its plan to triple production from 2012 levels by 2017. That plan remains on schedule -- in 2013 the Bakken shale-focused driller grew production by 39%; the company sees production this year growing another 26%-32%.

That growth rate, however, doesn't even begin to tell the whole story. Continental is one of the leaders in a basin-wide effort to optimize the recovery of oil. That included testing the Lower Three Forks formation below the Bakken shale, as well as testing closer well spacing in an effort to get more oil out of the play.


Photo credit: Flickr/Lindsey G 

Downspacing tests are yielding incredible additional growth potential for Continental and other Bakken-focused peers such as Kodiak Oil & Gas (NYSE: KOG). Continental is working on a 1,320-foot same-zone spacing project and another 660-foot same-zone spacing test. Meanwhile, Kodiak's Polar Pilot Project is testing 800-foot spacing between wellbores, while its Polar Pilot Project 2.0 is testing 600-650 foot spacing. Initial results have yielded strong performance which suggests that additional drilling locations will be added as these companies can drill more wells in the region without interfering with the production of existing wells.

That's certainly what Continental Resources sees. Two years ago it felt the industry 50,000 would need wells to develop the oil potential in the region. Now the company sees that well number doubling. Also increasing is the amount of oil that we now know is locked within the formation. It is estimated that there are more than 900 billion barrels of oil and gas trapped in these tight shale formations. Using current technology only about 3.5% of that oil will be recovered, but given the astounding innovations over just the past few years, that recovery factor should increase over time. Continental Resources sees at least three decades' worth of growth from this play. 

Beyond the Bakken
Continental isn't content to just rely on the oil potential from the Bakken shale. This year the company is spending a quarter of its capital budget to develop a promising oil-rich position in Oklahoma. Over the past few years the driller leased 400,000 net acres to become a dominant leaseholder in what is called the SCOOP, or South Central Oklahoma Oil Province. While it's not as oily as the Bakken, the liquids-rich play does have compelling economics.

Continental Resources isn't the only energy company flocking to Oklahoma to fuel production growth. Marathon Oil (MRO -0.25%), for example, grew its acreage position in the SCOOP by 20% last year. It is also increasing its capital spending in the state as Marathon Oil is actually doubling its 2014 rig count. Overall, it sees the potential to capture 1.2 billion barrels of oil equivalent from the play.

Photo credit: Marathon Oil.  

Both companies see the SCOOP as a high-impact resource play. It has a lot of oil in place, multiple oil-bearing zones, and strong initial well performance. It will be an important component of Continental's ambitious plan to triple its production, as well as its reserves, by 2017.

Investor takeaway
Continental Resources is well positioned to profit from the American oil growth story. That story isn't slowing down as new technology, techniques, and resources plays open up even more oil. Jim Cramer is spot on when he said that "growth stocks go higher and Continental is a great growth stock."

But is Continental Resources the top growth stock to buy?