Source: Hess Corp. 

It's not often that a company will report a loss, but still be pleased with its performance. However, given the breadth and depth of the oil market downturn, it's no wonder why Continental Resources (NYSE:CLR) CEO Harold Hamm said that the company's results showed "another solid quarter's performance," despite the fact it reported an adjusted loss of $43.5 million, or $0.12 per share. Here are three reasons why the company was pleased with its showing this quarter.

1. Costs are coming down
Continental Resources has really made a lot of progress to push its costs lower, which is reducing some of the pressure the low oil price has on its margins. Evidence of this is in production expense, which was down to $4.00 per barrel of oil equivalent (BOE). That's a significant reduction from the $4.39 per BOE of just last quarter. Further, it is well below the company's initial guidance of $5.50 to $6.00 per BOE that it forecast last December.

Capital costs have also fallen rather dramatically, and are down 25% year over year. It now costs the company $7 million to drill and complete a well in the Bakken, after costing $9.6 million at the end of last year.

One of the factors pushing well costs lower is the fact that Continental is drilling wells much quicker, which, for example, leads to needing less rigs to drill the same amount of wells during the year. That said, we've seen even better reductions at its peers in the Bakken, with Hess (NYSE:HES) pushing its well costs down by 26% year over year to just $5.3 million, suggesting that Continental's well costs still have some room for further improvement.

2. Production is going up
Capital costs are actually coming down a bit faster than Continental expected, which is now enabling the company to grow its production at a faster rate than guidance because it is reinvesting those savings into additional wells. The net result is production that's expected to grow by 24% to 26% over last year, which is up from both its initial guidance of 16% to 20% growth and its most-recent guidance for 19% to 23% growth. In other words, the company is getting more production for less money than initially expected.

3. Committed to living within cash flow
One of the other accomplishments during the quarter was the increase in commitments on its revolving credit facility, to $2.75 billion, as well as the terming out of $500 million in debt. These moves reduced the company's borrowing costs while also improving its liquidity. That being said, CFO John Hart wanted to make one thing abundantly clear,

These transactions do not indicate plans to grow debt. Our focus remains on balancing capital expenditures with cash flows, and therefore not incurring additional debt. If low commodity prices persist in 2016, we have additional Bakken rigs coming off contract, so we can further reduce capital expenditures. We are concentrated on balance sheet strength and optionality, in preparation for a more favorable, long-term commodity price environment.

If Continental Resources does reduce its capex next year, it would be in good company. Hess recently provided its preliminary capex budget for 2016, which calls for spending to fall 27% from the $4.1 billion it expects to spend this year. Hess isn't even trying to keep its production flat next year; instead, it expects production to be in a range of 330,000-350,000 BOE/d, which would be below its average of 370,000-375,000 BOE/d in 2015.

That's a pretty dramatic reduction for Hess, especially because it has one of the strongest balance sheets in the oil industry. It's possibly a much more dramatic cut than the one that Continental would likely make, given its decision to accelerate production growth into an oversupplied oil market in 2015.

Investor takeaway
Continental Resources had three very noteworthy accomplishments during the quarter. First, it made solid progress reducing its costs. This leads into the second accomplishment whereby the company is now able to produce more oil with the same amount of money. Finally, it was able to bolster its liquidity, even though it has no intentions of using it.

All three factors put the company in a position to maintain its flexibility heading into 2016. While it likely won't cut its capex spending as dramatically as Hess, it won't need to because of the progress, both operationally and financially, it made during 2015.

Matt DiLallo 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.