CLR 3Q10 Earnings Conference Call

Webcast of conference call here; will only be here for a short period of time.

Some high points from the Q & A portion. I won't post anything on the financials; better to look at the full financial statements yourself.

1. Despite all the talk about adequate pipeline takeaway capacity it is obvious that the pipelines are maxed out. CLR is shipping about 5,000 bbls/day by rail. Rail costs $2 - $3/bbl more than pipeline right now. [That changes over time; it has been as high as $8 - $12/bbl, if I remember correctly.]

2. Interestingly, rail shipment to Cushing gives a better price for the oil. Bakken is very high quality oil and comes close to WTI gold standard for pricing. By rail, it is "pure" Bakken oil. However, by pipeline, the farther it goes, the more the Bakken oil is mixed with other oil that may not be of the same high quality, thus bringing a lower price in the end.

3. Removal of water from well pads is not a problem for most CLR wells. After first two or three months, not much water. Maybe farther north/northwest there is a bigger problem with water. "They" are putting in water, gas, and oil pipeline infrastructure. As an example, last month's (October, 2010) blizzard in North Dakota shut down all truck traffic and oil production had to cease due to water and oil needing to be trucked away where no pipelines.

4. Because CLR got into the Bakken early, the average they pay for royalties is still about 1/6th (83% of their production is at 1/6th royalty. Newer leases are 3/16th; offset by some federal leasing at 1/16).

5. Because of who they are, CLR has better relationships than others when it comes to getting excess oil on  rail. They say they can ship out all the oil they produce; hinting that may not be true for other producers.

6. CLR is deliberately choking down initial production, not because of effect on EUR, but pipeline capacity can't take full production. At one time they thought high IPs might affect EUR, but they don't talk about that any more. Perhaps the very, very high IPs might affect EURs, but CLR hasn't seen any evidence of that. They are choking down first months of production simply because takeaway capacity is maxed out.

7. There was lots of discussion on Eco-Pads. So far, evidence is that the two reservoirs (TFS and MB) are two separate reservoirs in areas they've been in. Side-by-side production comparison from each reservoir will vary from location to location.

8. Much of their oil is hedged this year at $85/bbl; next year $87; following year, $89.

9. I thought I heard Harold Hamm start off the Q & A saying CLR had 22 or 23 rigs in the North Dakota Bakken; last PowerPoint presentation (October, 2010, Conference), the slide shows 21rigs, so possibly CLR has even one or two more rigs than I realized before tonight.

10. CLR has about 178,000 acres in Montana. They spoke briefly about better technology in Montana in 2010 compared to earlier years and production results prove the technology is better.