1. Important disclosures appear on the last page of this report.
1
Analysts
Michael Faraone
michael-faraone@uiowa.edu
Jeff Pomykala
jeffrey-pomykala@uiowa.edu
Brock Gilbert
brock-gilbert@uiowa.edu
Company Overview
Continental Resources is an independent crude oil and natural
gas exploration and production company headquartered in
Oklahoma City, Oklahoma. Continental’s strategy has been
focused on crude oil since the 1980’s, and it is on track to triple
its proved reserves by 2017. Continental is currently a top ten
petroleum producer and operates in the North, South, and East
regions of the United States. Its two highest producing leaseholds
are the Bakken for crude oil and the Anadarko Woodford for
natural gas. At year-end 2011, Continental Resources reported
revenues of $1.6 billion.
Stock Performance Highlights
52 week High $97.19
52 week Low $57.02
Beta Value 1.65
Average Daily Volume 1.05 m
Share Highlights yellow is yahoo
Market Capitalization $13.11 b
Shares Outstanding 179.80 m
Book Value per share $15.53
EPS (ttm) $4.45
P/E Ratio (ttm) 16.39
Dividend Yield N/A
Dividend Payout Ratio N/A
Company Performance Highlights
ROA 13.83%
ROE 33.64%
Sales 2.05 b
Financial Ratios
Current Ratio 0.86
Debt to Equity 29.36
Current Price: $69.48
Target Price Range: $90-96
An Expansion of Continental Proportion
 Realizing Growth Potential: Continental has increased its
leasehold’s in the nation’s premiere oil plays by 51% in the
Bakken play and 113% in the Anadarko Woodford play since
2009.
 Continuing to Explore: Through increasing their capital
expenditure’s budget to $3.4B for 2013, CLR continues to see
growth potential in their current and new oil play leaseholds.
 Realizing Growth Potential: CLR is a leader in horizontal
drilling and other leading drilling technology; this in turn has
reduced cycle time by 25% to 50% and has increased overall rig
efficiency.
 Production Growth: We project that Continental will grow
production from 36 MMBoe per year in 2012 to 95+ MMBoe per
year in 2020.
 The Next Super-Independent: Through their focus on
high-margin projects and maintaining capital discipline,
becoming the next super-independent oil producer is more than
just a pipe dream.
CLR YTD price performance vs. S&P 500 Source: Yahoo!
Finance
Krause Fund Research
Fall 2012
Energy
Continental Resources Inc.
NYSE: CLR
Recommendation: BUY November 13, 2012

2. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
2
Through company and industry-specific research, as well
as valuation models, we calculated the intrinsic value of
CLR common stock as $93.44, concluding that the market
price is undervalued. After our research, we placed a buy
rating on this stock. The following analysis and models
contained in this report explain our investment
recommendation
Key Economic Variables
Real GDP
The United States real GDP was 2% annualized growth for
the third quarter of 2012. The real GDP increased from the
second quarter, which was revised down to 1.3%, but still
fell short of the 2011 year end real GDP of 3%. The
increase between Q2 and Q3 was caused in large part by
the increase in personal consumption. The personal
consumption increase was led by purchases of durable
goods, indicating that consumers are more optimistic to
make these larger purchases, a positive sign for further
economic improvement looking forward. The energy
sector is a key driver of GDP with energy as an input for
all goods produced. We expect that the real GDP will
remain at 2% over the upcoming 6 month period and
slowly increase back to the average 3% within 3 years. Oil
& Gas Exploration and Production is expected to average
annual growth of 6.9%, compared to GDP growth forecasts
of 2.6% through 20151
.
Historical GDP Growth. Source: Trading Economics
Interest Rates
Ben Bernanke recently announced implementation of QE3,
the difference of this round compared to other attempts is
that it is open-ended. Interest rates will remain depressed at
a range of 0 – 0.25% through 2015; a year longer than first
proposed, at a range of 0 - 0.25%. The depressed FFR will
likely keep market interest rates low. This is beneficial for
companies within the energy sector as it is a capital
intensive industry. With an enhanced ability to borrow at
lower costs, we expect many companies in the energy
sector to continue increasing their capital expenditure
programs. Low rates will also allow companies to
refinance current debt at lower costs, in-line with increased
capital expenditure programs. Mid-year mergers and
acquisitions were at 231 compared to 256 at the same time
period in 20112
. With the rates depressed, we expect that
M&A will still play a major role, but their impact will
continue to slow as interest rates in future years begin to
rise.
Historical Interest Rates. Source: Yahoo! Finance
U.S. Dollar Index
As indicated by the graph below, the U.S. dollar index has
an inverse relationship with oil prices, as do all
commodities. For oil being traded in U.S. dollars, this is
not an ideal situation. Other countries are able to purchase
more oil with a weakened dollar, increasing demand, and
therefore, price. Since the U.S. dollar index is positively
correlated with interest rates and the QE3 will keep interest
rates low through 2015, we should see the U.S. dollar
index remain stable in the short term; assuming no
European Union Collapse. The U.S. dollar index is
dependent on the outcome of the Eurozone crisis.
Depending on what becomes of the Eurozone crisis, there
may be an impact on the U.S. dollar index. The European
Central Bank’s recent bailout offers an unlimited amount
of bond buying in those countries still struggling to repay
debt. Spain and Greece remain threats, especially since
Spain has refused bailout help and continues to increase
debt. Another area of concern is the banks that suffered
losses from defaults and have decreased lending, further
hurting the European Economy. The bond buying program
has bought Europe roughly a year to solve their issues3
.
Investment Thesis
Economic Outlook

3. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
3
U.S.Dollar Index vs. Crude Oil Price. Source: Y-Charts
Unemployment Rate
The unemployment rate came in at 7.9% for the month of
October, a .1% increase over September’s figure. There
were also 171,000 jobs added to the economy in October.
The increase was caused in part by an increase in the labor
pool, with over 500,000 workers re-entering the job search
market4
. Though the numbers show improvement, they
remain high with below average growths in GDP. The
impending fiscal cliff plays a large role in determining
expectations for what unemployment will be in the short-
term. The Congressional Budget office warns that
unemployment could reach as high as 9.1% in 2013 if a
solution is not reached5
. We feel that a solution will be
achieved and that unemployment will stay right around the
8% mark for the next six months as the economy improves
slowly but surely. In the long term (2-3 years), we expect
unemployment to decrease to just below 7%. We expect
the energy sector to see benefits from the economic growth
predicted.
Historical Unemployment Rate. Source: Trading Economics
Consumer Confidence Index
The consumer confidence index forecasts how confident
consumers are with the economy and their current financial
situation. It is also an important measure of consumers’
trust in the future state of the economy. Consumer
sentiment measured 84.9 in November 2012; a 5-year high.
This marked the fourth month in a row that consumers
showed increasing confidence in the economy. After the
release of this data, oil futures increased 1.2%. The
increase in confidence means consumers are willing to
spend more money and an increase in spending stimulates
demand and spurs economic growth. This is unexpected as
we come ever closer to the fiscal cliff that will increase
taxes and decrease government spending. It seems that
consumers are confident that the government will find a
solution to avoid this fiscal cliff; at least for the time being.
We expect that consumer confidence will stay at these high
levels, further improving the economy in the short term. If
the fiscal cliff is avoided, we expect to see consumer
confidence levels reach close to 89, the average prior to
entering the recession6
. We also expect the economic
growth to increase demand amongst firms in the energy
sector.
Consumer Sentiment Index. Source: Advisor Perspectives
Over the past 5 years, the performance of this industry has
seen a lot of volatility. Through the year 2017, industry
revenue is expected to grow by 2.6% annually7
. However,
not every year is going to yield growth due to a variety of
factors such as volatile natural gas and crude oil prices.
Due to low natural gas prices, many companies are shifting
away from natural gas exploration to drill for oil. This is
because there is an over abundant supply with low demand,
which has led to depressed prices.
Oil & Gas Exploration and Production
Companies in the Oil & Gas Exploration & Production
industry explore, develop, and work in offshore or onshore
oil and natural gas fields. The companies in this industry
focus on production of crude petroleum, mining and
extracting oil, producing natural gas, recovering sulfur
from natural gas, and recovering hydrocarbon liquids. The
Industry Analysis
Crude Oil Price
U.S. Dollar Index

4. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
4
oil is mined and extracted from oil shale and oil sands.
Primary activities and services in the oil & gas exploration
and production industry include crude oil extraction,
liquefied natural gas production (LNG), liquefied
petroleum production (LNP), natural gas extraction, oil and
gas extraction, and oil shale extraction7
.
Recent Developments and Trends
We currently have a positive outlook on the E&P industry
in the long term. Recently, we have seen a move towards
unconventional methods of extracting oil and natural gas
liquids. There is a high concentration of these liquids
located in Oklahoma, Montana, and North Dakota.
Currently, companies are competing for acreage along
these basins since there is high growth potential for E&P
participants. These new onshore discoveries have made the
U.S. one of the most active areas in the world7
.
CLR Areas of Operations. Source: Contres
The map above displays the more active oil plays within
the country. The highlighted areas are CLR’s areas of
leaseholds and operation. The oil fields located in Montana
and North Dakota are known as the Bakken and Three
Forks reservoirs. The Bakken is the largest oil
accumulation in the U.S. and is approximately 14,700
square miles. These two reservoirs are estimated to hold
approximately 24 billion barrels of crude oil equivalent. If
this estimation is correct, it would double the U.S. oil
reserves. Continental is currently the largest acreage holder
in the Bakken play, with 946,248 net acres. The other
highlighted oil field located in Montana, North Dakota and
South Dakota is known as the Red River Units play. It is
the 7th
largest onshore field in the lower 48 states, ranked
by proved reserves. The Niobrara formation, located in
Wyoming and Colorado, is an emerging oil play.
Continental currently holds 25,000 net acres in this region.
In Oklahoma, we see the Anadarko Woodford and Arkoma
Woodford plays, where competition for acreage has been
rapidly increasing due to previous drilling success in the
Anadarko play. The Arkoma Woodford play is a natural
gas producing reservoir, here Continental has completed
640-acres of exploratory and 80-acres of infield
development wells8
. At year-end 2011, production for
Continental was approximately 73% oil and 27% natural
gas9
. We expect that this mix will hold fairly constant over
the next few years.
CLR Product Mix. Source: Contres
Oil and gas prices have seen added volatility due to
numerous reasons. Continued turmoil in the Middle East
has added to the rise in oil prices, as well as, production
concerns in the North Sea. As domestic production
continues to increase, we project the price of crude oil to
increase by 4.5% through 20202
.
Markets and Competition
Companies involved in the E&P industry have a large
number of competitors. They compete against large
integrated energy companies like Chevron, Conoco
Phillips, and Exxon, as well as, smaller companies that
specialize specifically in the E&P industry of the energy
sector. In 2011, the Energy Information Administration
estimated that global oil demand rose by 1 MMBbl/day. As
of August 2012, we saw growth of 0.76 MMBbl/day, with
projected growth of 0.87 MMBbl/day in 2013. The U.S.
onshore production will become critical over the next
decade due to the new OPEC capacity of 35.03 million
barrels per day. This new capacity is 85% lower than
originally estimated by the IEA3
.
Supply vs. Demand Analysis
Estimates of world supply vary by source, but the
consensus is that the world oil supply is enough to last a
few more decades with current usage patterns3
. The
emerging economies of China and India are putting added
strain on the supply through increased energy demands. As
the supply continues to deplete, the long term price of oil
will begin to rise to reflect increased demand. To meet the

5. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
5
increasing energy demand, companies will need to shift
their focus to alternative energy sources.
E&PMarket Segmentation. Source: IBISWorld
The industries that consume the oil and gas produced by
the E&P industry can be seen in the pie chart above. As the
chart illustrates, the petroleum refining industry is the
largest purchaser of crude oil and is a critical component to
the success of the industry.
In the recent IEA Word Energy Outlook publication, it is
stated that the world energy flows will shift in the long
term. The United States will become a net exporter of oil
by 2035 and will almost be self-sufficient in energy. We
expect the U.S. to also become a net exporter of natural gas
by 2020; this will be driven by the construction of natural
gas exporting facilities10
.
The potential for the U.S. to become energy self-sufficient
is positive for Continental. Its current positioning will
allow it to capitalize on this opportunity by increasing its
production potential. By continuing to increase its
leasehold’s and proved reserves, it will be able to increase
production to better meet demand. The current growth
strategy being implemented gives Continental a long-term
advantage to profit from increasing domestic energy
demands.
Price Analysis
The key economic drivers of the E&P industry are the
world prices of crude oil and natural gas. Currently, there is
an abundant supply of natural gas in the U.S. Therefore,
the price of natural gas has become very depressed.
Without an increase in demand, we expect the price levels
to remain low. On April 16, 2012, The Federal Energy
Regulatory Commission (FERC) approved the construction
of the first LNG exporting facility, to be constructed by
Cheniere Energy, Inc. The price of natural gas could
benefit from the approval of this facility, especially with
high natural gas demand in China. However, construction
on the first facility is scheduled to start in 201511
.
Consequently, there will be no short-term benefit reflected
in the gas price. Since Continental focuses a large portion
of its operations on crude oil, this would not have a big
impact on the company. The relationship between
Continental and the WTI crude oil spot price can be seen
on the graph below.
CLR vs. WTI Oil Spot Price. Source: Y-Charts
As the figure above illustrates, Continental’s stock price
performance has a high correlation with the WTI crude oil
spot price. Over the past five years, we have witnessed a
large increase in the price of oil, as seen above. Many
factors have contributed to this increase such as continued
tension in the Middle East, difficulty of extraction,
increased demand, etc. The main factor tempering the price
of oil is increased competition from alternative energy
sources, most notably, natural gas. Although alternative
sources of energy continue to be developed, crude oil is a
commodity in high demand with healthy margins. Looking
forward through 2020, we predict that the price of oil will
increase at an average rate of 4.5%. This is due to
increasing demand from emerging economies, supply
depletion, unpredictable OPEC activity, and increased
regulation3
.
Company Overview
Continental Resources is an independent oil and gas
exploration and production company headquartered in
Oklahoma City, Oklahoma. Continental is currently a top
ten petroleum liquid producer in the U.S. and has focused
their growth strategy on crude oil since the 1980’s. In
2011, the company reported $1.6 Billion in total revenues
and is currently on track to triple reserves by 201712
. They
Continental Resources Analysis

6. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
6
operate in the United States with inland properties located
in the North, South, and East regions. The north region
includes property in the North Dakota and Montana
Bakken, Red River units, and Niobrara in Colorado and
Wyoming. Kansas and all properties south of Kansas and
west of the Mississippi including Anadarko Woodford and
Arkoma Woodford in Oklahoma comprise the south
region. The Illinois Basin and the state of Michigan make
up the east region. At year-end 2011, production averaged
61,865 barrels of oil equivalent per day8
.
Products and Markets
The Oil & Gas Exploration and Production industry has
two main products; crude oil and natural gas. Based on
estimates, crude oil is projected to account for 58.4% of the
industry revenue with natural gas at 41.6% in 2012.
Revenue Breakdown for E&P Industry. Source: IBISWorld
A majority of the crude oil produced by Continental is sold
to end users in major market centers. Select midstream
marketing companies or crude oil refining companies in the
lease are also sold to in lower volume. A majority of oil
produced is transported by rail or truck, and then delivered
to the most efficient point on a pipeline system. It is then
delivered to a point of sale downstream on another
connected pipeline. For the years 2011, 2010, and 2009,
Marathon Oil Company was the largest purchaser of
Continental’s crude oil at 41%, 57%, and 56%,
respectively. All other purchasers accounted for less than
10% of sales9
.
Production and Distribution
CLR employs multiple drilling methods to extract oil and
natural gas. These methods include Hydraulic Fracturing,
Horizontal Drilling, and Eco-Pad® drilling8
. Eco-Pad® is
the most efficient way to extract oil and gas from the earth,
as well as the most environmentally friendly.
Eco-Pad® refers to the process by which Continental
simultaneously drills 4 different wells on a single drilling
pad, which benefits the company and the environment. It
also cuts down on the transportation of drilling equipment
because the same machine does not need to be broken
down and reconstructed at 4 different sites. Continental
sees a fiscal benefit from the efficiency of the process. It is
estimated that each Eco-Pad® carries a cost savings of
roughly 10% per well, which is approximately $2.5 million
dollars for 4 wells (one Eco-Pad®). The speed at which
each well is drilled is reduced by 2-3 days, which
contributes to the cost savings as well. Currently,
Continental employs this method in the Bakken play in the
North region of the country. They have increased their
leasehold’s in the Bakken region by 51% and have
increased their leasehold in Anadarko Woodford by 113%
since year-end 2009. As they further improve this
technology, they will employ it in the other regions where
they hold leases8
.
CLR Leasehold Increases Since YE2009. Source: Contres
In 2011, the net production of natural gas and crude oil was
36,671 MMcf and 16,469 MBbls, respectively. Average
sales price for crude was $88.51/Bbl and $5.24/Mcf for
natural gas on a total company level. The production cost
on a total company level was $6.13/Boe9
. Hedging activity
consisted of approximately 27% of total production. We
can expect Continental to continue hedging between 20% -
30% of total production in the future. We project
production costs to rise through 2020, due to added
difficulty of reaching the underground resources and added
competition for labor and well equipment. Continental puts
more emphasis on the production of crude oil because it
has better margins and is more profitable overall for the
company. At year-end 2011, production was 73% crude oil
and 27% natural gas9
. We project the product mix to be
roughly 75% crude oil and 25% natural gas through 2020.

7. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
7
Competition
The E&P industry is a highly competitive environment.
Direct competitors of CLR vary by which region they are
producing in. The most competitive segment of the E&P
industry is locating a feasible oil field to begin drilling.
Some of CLR’s competitors have more cash on hand,
which allows them to pay higher prices for viable land and
acquire more acreage along oil rich deposits. There is also
substantial competition in acquiring capital to purchase
these plots of land along with high rig costs associated with
extracting oil and gas. The high cost associated with
extracting oil makes the E&P industry highly capital
intensive. This leads many companies to finance ventures
through high levels of debt. This also causes volatile
earnings due to higher fixed costs and interest expenses.
The table below compares CLR to 6 of its competitors
based on market capitalization.
CLR vs. Competitors by Market Cap. Source: Yahoo! Finance
One thing to note is that Continental puts a larger focus on
oil production than its competitors. This better positions
them in the industry moving forward due to the more
attractive profit margins associated with oil. Also, limiting
exposure to natural gas is going to be beneficial in the
short-term due to a depressed natural gas market. As there
is a push towards alternative sources of energy, the product
mix of Continental may shift towards a focus on natural
gas, however, that shift would happen past our forecast
horizon. From the table, we can also see that CLR has
lower cash on hand than some of its competitors.
Therefore, funding for future expansion will require debt
which they fund through their revolving credit facility and
bond issues. They currently have 2.943 billion of long term
debt on their books with a weighted average interest rate of
roughly 6.8%9
.
Some direct competitors to Continental based on market
capitalization include: Noble Energy, Inc. (NBL), Pioneer
Natural Resources Co. (PXD), Southwestern Energy
(SWN), Chesapeake Energy Corporation (CHK), Range
Resources Corporation (RRC), and Linn Energy, LLC
(LINE) 13
. The chart below compares the year to date stock
price performances of Continental, four of its competitors,
and the S&P 500.
CLR Performance vs. Competitors. Source: Yahoo! Finance
Growth Potential
A recent discovery of oil shale in Oklahoma may add as
much as 1.8 billion barrels of oil equivalent to the
company’s proven reserves. This play is known as SCOOP,
or the South Central Oklahoma Oil Province. Continental
currently holds 170,600 acres of leaseholds on this play
and has been continuously adding to this figure.
Continental has also dedicated $136 million of their capital
expenditure budget to exploring two other, non-disclosed
oil plays in 2013. Current plans are to drill as many as 300
new wells in 201314
. The current expansion of Continental
demonstrates strong growth potential through the
acquisition and exploration of new leasehold’s on oil rich
land. This expansion of leasehold’s will allow for future
drilling and production to increase. With a projected
growth in the price of oil over the long term, acquiring oil
rich land now at fair market value will prove to be an
advantage in the long term.
Regulation
The E&P industry is a heavily regulated industry;
regulations are put into place by the federal, state, and local
governments. Regulation comes in many forms, like
regulation of sales and transportation of crude oil and
natural gas liquids, production, derivative trading
regulation (Dodd-Frank Act), Energy Policy Act of 2005,
Company
Market
Cap (B) Oil
Natural
Gas
Natural
Gas
Liquids
Proven
Reserves 2012
Cash on
Hand
(million)
Noble Energy, Inc. (NBL) 16.91 29.9% 63.1% 7.0% 1,209.0 MMBoe 1455
Continental Resources, Inc. (CLR) 12.85 73.0% 27.0% 0.0% 508.4MMBoe 54
Pioneer Natural Resources Co. (PXD) 12.80 33.7% 47.6% 18.7% 1062.9 MMBoe 537
Southwestern Energy Co. (SWN) 11.95 1.0% 99.0% 0.0% 5.9 tcfe 16
Chesapeake Energy Corporation (CHK) 10.97 1.4% 45.0% 53.6% 18.8 tcfe 351
Range Resources Corporation (RRC) 10.55 6.2% 76.8% 17.0% 5.1 tcfe 0
Linn Energy, LLC (LINE) 7.80 35.0% 47.4% 17.6% 3.4 tcfe 1
Catalysts for Growth/Change

8. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
8
and environmental, health, and safety regulation. These
regulation laws are frequently amended and can be
interpreted in various ways, making compliance with all
regulation difficult. There are also hefty fines associated
with not complying with all regulation, which can
adversely affect the bottom line. Some regulation
infractions carry penalties of up to $1,000,000 per day until
the company can comply with the law9
. In the long term,
we expect regulation to continue to be more thorough.
Climate changes associated with global warming and CO2
content in the atmosphere has led to concern with the
sustainability of fossil fuels and their negative impact on
the environment. However, we do not expect drastic policy
changes until 2025 or later.
Prices
Continental’s profitability relies heavily on the overall
economy, as well as, the market price for crude oil and
natural gas. Since these prices are determined by the
market and have historically been volatile, cash flows and
overall revenue are also subject to this volatility. However,
Continental participates in the derivatives market in order
to hedge their business. This also brings added risk if the
market trends in an unexpected direction. The large
influencers of the prices of crude oil are macro-economic
conditions, the actions of OPEC, weather conditions, and
the political conditions surrounding the industry9
.
Land and Rig Costs
In 2011, Continental invested $2.2 billion in their capital
program and budgeted $1.75 billion for 2012 with a
projected budget of $3.4 billion for 2013. Financing for
these expenditures comes from cash generated from
operations, issuance of debt and equity securities, and
borrowing under a revolving credit facility. These capital
expenditures are subject to the prices of the market; if the
commodity price drops, capital expenditures will decrease,
and vice versa. Access to capital is also subject to changes
in proved reserves, volume of production in current wells,
and the ability to secure credit. The use of a revolving
credit facility is advantageous to Continental. The terms
surrounding the agreement give CLR a borrowing base of
up to $2.25 billion at a rate equal to LIBOR for the term of
the loan, plus 175 to 275 basis points9
.
As of year-end 2011, Continental reported proved reserves
of 508,438 Mboe, the PV-10 value of these proved reserves
is $9.2 billion. Net developed acres were 665,317 and net
undeveloped acres were 1,229,266. As Continental
continues to discover new oil plays, as well as acquiring
new leasehold’s, we can expect these figures to grow. With
the recent discovery of the potential of the SCOOP play,
CLR may be able to increase proved reserves by as much
as 1.8 billion barrels of oil equivalent8
.
Investment Overview
Positives
Continental is a top ten petroleum liquid producer in the
United States and the largest leaseholder in the Bakken oil
play of North Dakota and Montana, as well as a leading
presence in the Anadarko Woodford play in Oklahoma,
and the Red River Units play in North Dakota, South
Dakota and Montana. They have also acquired leasehold’s
in the SCOOP play recently8
.
Current Proved Reserve Holdings. Source: Contres
The above chart shows Continental’s proved reserves as of
December 31, 2011 by location. The makeup of these
reserves consists of 64% oil and 36% natural gas8
. Having
these reserves is a positive for the company because they
have the ability to produce from these reserves with
guaranteed sales after producing the crude oil. Year-end
proved reserves totaled roughly 508 million barrels of oil
equivalent and are projected to triple by 2017 at current
growth estimates.
Growth in Proved Reserves. Source: Contres
The above chart illustrates the growth in proved reserves in
CLR’s possession since 2006. We can expect the growth to
continue as new oil patch discoveries are made and as CLR
acquires more acreage on current oil fields. The growth in

9. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
9
proved reserves can be credited to the continued
acquisition of leasehold’s on current and new oil field
plays.
Growth in Oil and Natural Gas Production. Source: Contres
The above graph illustrates the growth in production of oil
and natural gas from 2006. We can expect production to
continue to grow as they continue to produce from their
growing proved reserves. Production growth in the Bakken
leaseholds has increased from 0.8 MMBoe in the first
quarter of 2008 to 4.9 MMBoe in the second quarter of
2012. This growth resulted in a 51% CAGR for the region
with production expected to continue to grow12
.
Investment Negatives
A substantial decrease in the price of oil over an extended
period of time would negatively impact margins and the
bottom line. The profitability of the E&P business is
heavily weighted on current market prices for crude oil and
natural gas. If we were to see an extended decline in
commodity prices, Continental would not be able to
finance further E&P activity and would fail to meet its
current financial commitments.
76% of total production was completed in the north region
of their properties. This makes them vulnerable to risks
associated with this region like pipeline constraints,
pricing, available rigs/equipment, labor, capacity, and
severe seasonal weather9
. However, the company continues
to diversify their leasehold locations as new oil discoveries
are made in the United States.
The act of extracting oil is a dangerous, high-risk activity.
Many uncertainties are associated with drilling and
extraction: irregularities in geological formations,
equipment failure/shortages, environmental hazards,
spillage or mishandling of oil, and shortages of qualified
personnel9
. As competition continues to increase,
competition for rig equipment and operators will continue
to grow. This increased demand for equipment and skilled
labor will drive up production costs in the long term and
could have a negative impact on margins.
Overview
When valuing Continental Resources we employed four
different valuation models: Discounted Cash Flow (DCF),
Economic Profit (EP), Dividend Discount Model (DDM),
and Relative Valuation. Based on the results from these
models, we projected a price target range of $90-$96.
Continental Energy currently trades for $69.48.
Recommendation
We concluded our research and analysis by placing a buy
rating on CLR common stock. Although crude oil and
natural gas prices have been volatile in recent years, we
expect oil prices to steadily rise in the future. Continental
will continue to increase production, and with oil prices
rising, will remain a highly profitable company.
Revenue Decomposition
We forecasted revenue based on a variety of different
factors. First, we applied a growth rate of 4.5% to crude oil
prices. This growth rate was obtained through industry
estimates and macro-economic outlook. When estimating
production volume, we took a more conservative approach
than management’s guidance. We estimated that CLR will
reach 95,983 MBoe in production by 2020. When
calculating sales volumes, we estimated that they would
sell 99% of total production for 2012 and 2013. As
production continues to increase in 2014 and 2015, we
expect them to sell 95% of total production. From 2016
and forward, we expect them to sell 90% of total
production.
Expenses
For production expenses and production taxes, we used a
base of $6.00 and $6.70 in 2012, respectively. We then
grew them by an average of 10% to reflect increased
expenses in future years. For depreciation, depletion,
amortization, and accretion, we looked historically and
found an average of 8% of beginning book value of
property, plant, and equipment. For forecasting purposes,
most other expenses were held at a constant percentage of
sales revenue.
Valuation Analysis

10. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
10
WACC Estimation
To calculate our WACC, we used the CAPM model to
reach our cost of equity. With the growth rate of the
economy staying low, we used the 30-year Treasury Bond
yield of 2.92% as our risk-free rate. For our equity risk
premium, we used Damodaran’s implied risk premium of
5.92%. We then found the raw beta using an average from
the Bloomberg terminal, which came out as 1.65. Using the
CAPM formula, we found our cost of equity to be 12.69%.
Using FINRA and the 30 year treasury yield, we found cost
of debt to be 8.25%. We then found the after-tax cost of
debt to be 5.12% using a 38% marginal tax rate. Finally,
we calculated WACC to be 10.97% after calculating the
market weights of debt and equity.
DCF and EP Valuation
We used the DCF and EP models to reach a target price of
$93.44 as of November 13, 2012. In the DCF model, we
used our WACC estimation to discount future cash flows.
For the EP model, we calculated economic profit by
subtracting the WACC multiplied by the beginning
invested capital from NOPLAT. When calculating the
continuing value for these models, we applied a CV growth
rate of 3.50% to account for inflation. After obtaining the
value of operating assets from these models, we added
back non-operating assets and subtracted the value of debt
and other claims to arrive at the value of equity.
Dividend Discount Model
Using the dividend discount model, we calculated an
intrinsic value of $42.80. However, we do not believe this
model accurately predicts the value of CLR stock. This low
intrinsic value is mainly due to our expectations that CLR
will not pay any dividends within the model’s forecast
period. Therefore, we chose to disregard this model when
making our final investment recommendation.
Relative Valuation
To compute the value of CLR stock using relative
valuation, we found peer competitors in the same industry
based on market capitalization. We then removed any
outliers from the group after calculating P/E. When
compared to these peers, the model yielded a valuation of
$83.01 for 2012 and $103.23 for 2013.
We used a variety of variables that we felt were important
to the target price when constructing our sensitivity
analysis. These tests allowed us to see how small changes
in key variables affect the target price of CLR stock. We
concluded that our target price has a valid range after
running the sensitivity analysis.
CV Growth vs. WACC
Our first test was the CV growth rate against the WACC.
The CV growth rate is an important factor in our model
because it causes our value of equity to change, which
affects the DCF target price. Since WACC is also
incorporated into the DCF target price, we were interested
in seeing how changes in both of the variables would affect
the outcome of CLR stock price.
MRP vs. Risk-Free Rate
We then tested our risk premium against our risk-free rate.
Since both of these variables are incorporated into
calculating the cost of equity, which is used to calculate
DDM price, we felt it was an important test to run.
CV Growth vs. Beta
We also tested CV growth against beta, since both of these
variables are included in calculating the DCF target price.
This analysis had a much smaller effect on the target price
than testing CV growth against WACC.
MRP vs. Beta
We tested market risk premium against beta to see how
changes in cost of equity would affect the target price. As
expected, small changes in either variable caused drastic
changes to the target price of CLR.
Important Disclaimer
This report was created by students enrolled in the Security
Analysis (6F:112) class at the University of Iowa. The
report was originally created to offer an internal investment
recommendation for the University of Iowa Krause Fund
and its advisory board. The report also provides potential
employers and other interested parties an example of the
students’ skills, knowledge and abilities. Members of the
Krause Fund are not registered investment advisors,
brokers or officially licensed financial professionals. The
investment advice contained in this report does not
Sensitivity Analysis

11. The University of Iowa
Krause Fund Research Henry B. Tippie College of Business
Important disclosures appear on the last page of this report.
11
represent an offer or solicitation to buy or sell any of the
securities mentioned. Unless otherwise noted, facts and
figures included in this report are from publicly available
sources. This report is not a complete compilation of data,
and its accuracy is not guaranteed. From time to time, the
University of Iowa, its faculty, staff, students, or the
Krause Fund may hold a financial interest in the companies
mentioned in this report.
References:
1
Bloomberg Economic Calendar
http://www.bloomberg.com/markets/economic-calendar/
2
Deloitte Oil & Gas Pricing Outlook
http://www.deloitte.com/assets/Dcom-
UnitedStates/Local%20Assets/Documents/Energy_us_er/u
s_er_MAReport_Midyear2012_0812.PDF
3
Europe Turn Corner
http://www.oregonlive.com/newsflash/index.ssf/story/after
-3-bumpy-years-europe-turns-
corner/4a468ac330664326a44f36de609236b4
4
U.S. Unemployment Rate Rises
http://articles.nydailynews.com/2012-11-
02/news/34881947_1_unemployment-rate-jobs-report-
jobless-rate
5
Fiscal Cliff Effect on Unemployment
http://www.examiner.com/article/cbo-warns-
unemployment-will-rise-to-9-1-if-deal-on-fiscal-cliff-is-
not-reached-1
6
Oil Rises as Consumer Sentiment Gains
http://www.businessweek.com/news/2012-11-09/oil-is-
steady-as-politicians-squabble-while-gasoline
7
Oil & Gas Exploration and Production Report
http://clients1.ibisworld.com/reports/us/industry/default.as
px?entid=103
8
Continental Resources Investor Information
http://www.clr.com/operations
9
Continental Resources 10-K
http://sec.gov/Archives/edgar/data/732834/0001193125120
77054/d267719d10k.htm#toc267719_10
10
World Energy Outlook, International Energy Agency
http://www.iea.org/newsroomandevents/pressreleases/2012
/november/name,33015,en.html
11
NetAdvantage Natural Gas Report
http://www.netadvantage.standardandpoors.com/NASApp/
NetAdvantage/showIndustrySurvey.do?code=ngd
12
CLR Energy Conference Presentation
http://phx.corporateir.net/phoenix.zhtml?c=197380&p=irol
-calendar
13
Industry Analysis, Yahoo Finance
http://biz.yahoo.com/p/121conameu.html
14
SCOOP Oil Discovery
http://www.tulsaworld.com/business/article.aspx?subjectid
=49&articleid=20121010_49_E1_CUTLIN621608

12. Continental Resources Inc.
Key Assumptions of Valuation Model
Ticker Symbol CLR
Current Share Price 69.48
Fiscal Year End Dec. 31
Pre‐Tax Cost of Debt 8.25%
Cost of Equity 12.69%
Beta 1.65
Risk‐Free Rate 2.92%
Equity Risk‐Premium 5.92%
CV Growth 3.50%
CV ROIC 22.51%
WACC 10.97%
Normal Cash(% of Revenue) 4.00%
Marginal Tax Rate 38.00%
For Fiscal Years Ending Dec. 31 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
Production:
Oil (MBbl) 24,500.4 35,438.1 42,525.7 51,030.8 58,685.4 63,086.8 66,241.2 69,553.2 71,987.6
Natural Gas (MMcf) 62,371.0 70,167.4 80,798.8 96,958.5 105,633.8 113,556.3 119,234.1 125,195.8 129,577.7
Total Production (Mboe) 34,650.5 46,778.2 53,865.8 64,639.0 70,422.5 75,704.2 79,489.4 83,463.9 86,385.1
Production Growth 55% 35% 20% 20% 15% 8% 5% 5% 4%
Production Costs:
Production Expenses ($/Mboe) 6.00$ 6.60$ 7.13$ 7.70$ 8.31$ 8.98$ 9.70$ 10.47$ 11.31$
Production Taxes and Other Expenses ($/Mboe) 6.70 7.37 9.00 9.90 10.89 11.98 13.18 14.49 15.94
Depreciation, depletion, amortization & accretion 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
(as % of Beginning Book Value)
SG&A (as % of Sales) 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5%
Exploration Expenses (% of Sales) 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Production Expenses to Affiliates (% of Sales) 0.20% 0.14% 0.12% 0.09% 0.08% 0.07% 0.07% 0.06% 0.06%
Crude oil & natural gas service operations 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% 1.8%
Commodity Price Growth:
Crude Oil Price Growth 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Natural Gas Price Growth 4.63% 4.63% 4.63% 4.63% 4.63% 4.63% 4.63% 4.63% 4.63%

13. Continental Resources Inc
Income Statement
$ Amounts in Millions
Fiscal Years Ending Dec. 31 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
Revenue
Crude oil & natural gas sales 584.09 917.50 1553.63 2,194.17 3,238.83 3,897.80 4,888.36 5,565.98 6,253.34 6,862.21 7,530.35 8,145.50
Crude oil & natural gas sales to affiliates 26.61 31.02 93.79 65.83 97.16 116.93 146.65 166.98 187.60 205.87 225.91 244.36
Gain (loss) on mark-to-market derivative instruments, net (1.52) (130.76) (30.05) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Crude oil & natural gas service operations 17.03 21.30 32.42 50.47 74.49 89.65 112.43 128.02 143.83 157.83 173.20 187.35
Total Operating Revenues 626.21 839.07 1649.79 2,310.46 3,410.49 4,104.39 5,147.44 5,860.98 6,584.77 7,225.90 7,929.46 8,577.21
Production expenses 76.72 86.56 135.18 207.90 308.74 383.96 497.61 585.50 679.77 770.85 874.15 977.12
Production expenses to affiliates 16.52 6.65 4.63 4.68 4.73 4.77 4.82 4.87 4.92 4.97 5.02 5.07
Production taxes & other expenses 45.65 76.66 143.24 232.16 344.76 484.79 639.93 766.90 906.86 1,047.42 1,209.77 1,377.33
Exploration expenses 12.62 12.76 27.92 46.21 68.21 82.09 102.95 117.22 131.70 144.52 158.59 171.54
Crude oil & natural gas service operations 10.74 18.07 26.74 41.59 61.39 73.88 92.65 105.50 118.53 130.07 142.73 154.39
Depreciation, depletion, amortization & accretion 207.60 243.60 390.90 493.12 725.12 921.12 1,097.12 1,257.12 1,417.12 1,569.12 1,721.12 1,853.12
Property impairments 83.69 64.95 108.46 113.88 119.57 125.55 131.83 138.42 145.34 152.61 160.24 168.25
General & administrative expenses 41.09 49.09 72.82 127.08 187.58 225.74 283.11 322.35 362.16 397.42 436.12 471.75
(Gain) loss on sale of assets (0.71) (29.59) (20.84) (21.88) (22.97) (24.12) (25.33) (26.60) (27.92) (29.32) (30.79) (32.33)
Total operating costs & expenses 493.92 528.74 889.04 1,244.73 1,797.11 2,277.78 2,824.68 3,271.28 3,738.46 4,187.66 4,676.95 5,146.24
Income (Loss) from operations 132.29 310.32 760.75 1,065.73 1,613.38 1,826.61 2,322.76 2,589.69 2,846.31 3,038.24 3,252.51 3,430.97
Interest expense (23.23) (53.15) (76.72) (227.48) (290.36) (335.25) (374.84) (426.10) (477.36) (528.62) (579.88) (631.14)
Other income (expense) 0.95 1.29 3.42 3.42 3.42 3.42 3.42 3.42 3.42 3.42 3.42 3.42
Total other income (expense) (22.28) (51.85) (73.31) (224.06) (286.94) (331.83) (371.42) (422.68) (473.94) (525.20) (576.46) (627.72)
Income before income taxes 110.01 258.47 687.45 841.67 1,326.44 1,494.78 1,951.34 2,167.01 2,372.37 2,513.04 2,676.05 2,803.25
Total current tax provision 2.55 12.85 13.17 42.08 42.50 42.93 43.36 43.79 44.23 44.67 45.12 45.57
Total deferred income tax provision 36.12 77.36 245.20 264.82 286.00 308.89 333.60 360.28 389.11 420.23 453.85 490.16
Provision (benefit) for income taxes 38.67 90.21 258.37 306.90 328.51 351.81 376.95 404.08 433.34 464.91 498.97 535.73
Net income (loss) 71.34 168.26 429.07 534.77 997.93 1,142.97 1,574.38 1,762.94 1,939.03 2,048.14 2,177.08 2,267.52
Basic Earnings per share 0.42 0.99 2.41 2.96 5.48 6.27 8.64 9.68 10.64 11.24 11.95 12.45
Number of Shares Outstanding 169.97 170.41 180.87 180.96 182.16 182.16 182.16 182.16 182.16 182.16 182.16 182.16
Dividends per Share 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

14. Continental Resources Inc
Revenue Decomposition
$ Amounts in Thousands
Fiscal Years Ending Dec. 31 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
Production volumes:
Crude oil (MBbl) 10,022.00 11,820.00 16,469.00 24,500.39 35,438.06 42,525.67 51,030.80 58,685.42 63,086.83 66,241.17 69,553.23 71,987.59
Natural gas (MMcf) 21,606.00 23,943.00 36,671.00 63,000.99 70,876.11 85,051.34 102,061.60 117,370.84 126,173.66 132,482.34 139,106.46 143,975.18
Crude oil equivalents (MBoe) 13,623.00 15,811.00 22,581.00 35,000.55 47,250.74 56,700.89 68,041.07 78,247.23 84,115.77 88,321.56 92,737.64 95,983.46
.
Sales volumes:
Crude oil (MMBbl) 9,940.00 11,898.00 16,439.00 24,255.38 35,083.68 40,399.38 48,479.26 52,816.88 56,778.15 59,617.05 62,597.91 64,788.83
Natural gas (MMcf) 21,606.00 23,943.00 36,671.00 62,370.98 70,167.35 80,798.77 96,958.52 105,633.76 113,556.29 119,234.11 125,195.81 129,577.67
Crude oil equivalents (MBoe) 13,541.00 15,889.00 22,551.00 34,650.54 46,778.24 53,865.85 64,639.02 70,422.51 75,704.19 79,489.40 83,463.87 86,385.11
Crude oil and natural gas sales ($ In Millions) 610.70 948.52 1,647.42 2,194.17 3,238.83 3,897.80 4,888.36 5,565.98 6,253.34 6,862.21 7,530.35 8,145.50
% Change in Sales Volume:
Crude Oil (MMBbl) 7.53% 19.70% 38.17% 47.55% 44.64% 15.15% 20.00% 8.95% 7.50% 5.00% 5.00% 3.50%
Natural Gas (MMcf) 25.98% 10.82% 53.16% 70.08% 12.50% 15.15% 20.00% 8.95% 7.50% 5.00% 5.00% 3.50%
Crude oil equivalents (MBoe) 11.88% 17.34% 41.93% 53.65% 35.00% 15.15% 20.00% 8.95% 7.50% 5.00% 5.00% 3.50%
Average sales prices
Realized Price:
Crude oil ($/Bbl) 54.44 70.69 88.51 89.87 93.91 98.14 102.56 107.17 111.99 117.03 122.30 127.80
Actual Realized WTI(90% of Crude Est.) 80.88 84.52 88.33 92.30 96.45 100.79 105.33 110.07 115.02
Natural gas ($/Mcf) 3.22 4.49 5.24 3.72 3.90 4.08 4.27 4.46 4.67 4.89 5.11 5.35
.
Average daily production:
Crude oil (Bopd) 27,459.00 32,385.00 45,121.00 48,121.00 52,621.00 57,121.00 59,121.00 61,121.00 63,121.00 65,121.00 67,121.00 69,121.00
Natural gas (Mcfd) 59,194.00 65,598.00 100,469.00 103,469.00 106,469.00 109,469.00 111,469.00 113,469.00 115,469.00 117,469.00 119,469.00 121,469.00
Crude oil equivalents (Boepd) 37,324.00 43,318.00 61,865.00 64,865.00 67,865.00 70,865.00 72,865.00 74,865.00 76,865.00 78,865.00 80,865.00 82,865.00

15. Continental Resources Inc
Balance Sheet
$ Amounts in Millions
Fiscal Years Ending Dec. 31 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
Cash & cash equivalents 14.2 7.9 53.5 169.8 77.3 495.9 1495.8 3228.0 5434.3 7994.2 11108.7 14488.7
Accounts Receivable 185.6 482.8 777.5 1039.7 1534.7 1847.0 2316.3 2637.4 2963.1 3251.7 3568.3 3859.7
Derivative assets 21.4 6.7 27.7 40.9 49.3 61.8 70.3 79.0 86.7 95.2 102.9
Tubular goods & equipment 12.0 16.3 15.7 33.0 48.8 58.7 73.6 83.8 94.2 103.3 113.4 122.7
Crude oil 14.7 22.1 25.6 45.1 66.5 80.0 100.4 114.3 128.4 140.9 154.6 167.3
Inventories 26.7 38.4 41.3 78.1 115.3 138.7 174.0 198.1 222.6 244.2 268.0 289.9
Deferred & prepaid taxes 4.6 22.7 47.7 46.2 68.2 82.1 102.9 117.2 131.7 144.5 158.6 171.5
Prepaid expenses & other current assets 4.9 9.2 9.7 14.6 21.5 25.9 32.4 36.9 41.5 45.5 50.0 54.0
Total current assets 236.0 582.3 936.4 1376.1 1857.9 2638.8 4183.3 6288.0 8872.2 11766.9 15248.6 18966.9
Total property & equipment 2915.1 4059.0 6164.0 9064.0 11514.0 13714.0 15714.0 17714.0 19614.0 21514.0 23164.0 24864.0
Less: accumulated depreciation, depletion & amortization 847.1 1077.1 1482.2 1975.3 2700.5 3621.6 4718.7 5975.8 7392.9 8962.0 10683.2 12536.3
Net property & equipment, based on successful efforts method of accounting 2068.1 2982.0 4681.7 7088.6 8813.5 10092.4 10995.3 11738.1 12221.0 12551.9 12480.8 12327.7
Debt issuance costs, net 10.8 27.5 24.4 25.1 25.8 26.6 27.4 25.5 23.7 22.0 20.5 19.1
Noncurrent derivative assets 0.0 0.0 3.6 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7
Total assets 2314.9 3591.8 5646.1 8490.5 10698.0 12758.6 15206.7 18052.4 21117.7 24341.5 27750.7 31314.4
Accounts payable trade 91.2 390.9 642.9 707.2 777.9 855.7 941.3 1035.4 1138.9 1252.8 1378.1 1515.9
Payables to affiliated parties 4.4 9.9 15.5 16.3 17.1 17.9 18.8 19.8 20.8 21.8 22.9
Accrued liabilities & other current liabilities 49.6 94.8 117.7 123.6 129.7 136.2 143.0 150.2 157.7 165.6 173.9 182.5
Revenues & royalties payable 66.8 133.1 222.0 228.7 235.5 242.6 249.9 257.4 265.1 273.1 281.3 289.7
Derivative liabilities 76.8 117.0 115.4 115.4 115.4 115.4 115.4 115.4 115.4 115.4 115.4
Current portion of asset retirement obligations 2.5 2.2 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3
Total current liabilities 219.7 702.2 1111.8 1192.5 1277.1 1369.2 1469.7 1579.4 1699.1 1829.8 1972.6 2128.7
Long-term debt 523.5 926.0 1254.3 3328.3 4248.3 4905.1 5484.4 6234.4 6984.4 7734.4 8484.4 9234.4
Deferred income tax liabilities 489.2 582.8 850.3 977.8 1124.5 1293.2 1487.1 1710.2 1966.8 2261.8 2601.0 2991.2
Asset retirement obligations, net of current portion 47.7 54.1 60.3 60.3 60.3 60.3 60.3 60.3 60.3 60.3 60.3 60.3
Noncurrent derivative liabilities - 112.9 57.6 85.3 85.3 85.3 85.3 85.3 85.3 85.3 85.3 85.3
Other noncurrent liabilities 4.5 5.6 3.6 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3
Total other noncurrent liabilities 541.4 755.4 971.9 1126.7 1273.4 1442.1 1636.1 1859.1 2115.7 2410.7 2750.0 3140.1
Total Liabilities 1284.6 2383.6 3338.0 5647.6 6798.8 7716.4 8590.2 9672.9 10799.2 11974.9 13206.9 14503.1
Common Equity 432.0 441.6 1112.5 1112.6 1170.9 1170.9 1170.9 1170.9 1170.9 1170.9 1170.9 1170.9
Retained earnings 598.3 766.6 1195.6 1730.4 2728.3 3871.3 5445.7 7208.6 9147.6 11195.8 13372.9 15640.4
Total shareholders' equity 1030.3 1208.2 2308.1 2843.0 3899.2 5042.2 6616.6 8379.5 10318.5 12366.7 14543.7 16811.2
Total liabilities and shareholders equity 2314.9 3591.8 5646.1 8490.5 10698.0 12758.5 15206.7 18052.4 21117.7 24341.5 27750.7 31314.4

16. Continental Resources Inc
Cash Flow Statement
$ Amounts in Millions
Fiscal Years Ending Dec. 31 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
Cash Flow from Operating Activities:
Net Income 534.77 997.93 1142.97 1574.38 1762.94 1939.03 2048.14 2177.08 2267.52
Depreciation, Depletion, and Amortization 493.12 725.12 921.12 1097.12 1257.12 1417.12 1569.12 1721.12 1853.12
Deferred Income Taxes 127.54 146.67 168.67 193.98 223.07 256.53 295.01 339.27 390.15
Accounts Recievable (262.17) (495.01) (312.25) (469.37) (321.09) (325.71) (288.51) (316.60) (291.49)
Inventories (36.82) (37.18) (23.45) (35.26) (24.12) (24.46) (21.67) (23.78) (21.89)
Derivative Assets (21.06) (13.20) (8.33) (12.52) (8.56) (8.69) (7.69) (8.44) (7.77)
Deferred and Prepaid Taxes 1.45 (22.00) (13.88) (20.86) (14.27) (14.48) (12.82) (14.07) (12.96)
Prepaid Expenses/Other Current Assets (4.86) (6.93) (4.37) (6.57) (4.50) (4.56) (4.04) (4.43) (4.08)
Accounts Payable 64.29 70.72 77.79 85.57 94.13 103.54 113.89 125.28 137.81
Payables to Affiliated Partners 5.56 0.78 0.81 0.85 0.90 0.94 0.99 1.04 1.09
Accrued Liabilities/Other Current Liabilities 5.88 6.18 6.49 6.81 7.15 7.51 7.88 8.28 8.69
Revenues and Royalties Payable 6.66 6.86 7.07 7.28 7.50 7.72 7.95 8.19 8.44
Derivative Liabilities (1.61) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Current Portion of Asset Retirement Obligations (0.04) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Cash Provided by Operating Activities 912.72 1379.93 1962.63 2421.41 2980.26 3354.50 3708.25 4012.92 4328.63
Cash Flow from Investing Activities:
Capital Expenditures (2900.00) (2450.00) (2200.00) (2000.00) (2000.00) (1900.00) (1900.00) (1650.00) (1700.00)
Other Assets 2.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Liabilities (0.33) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Cash Provided (Used) by Investing Activities (2897.44) (2450.00) (2200.00) (2000.00) (2000.00) (1900.00) (1900.00) (1650.00) (1700.00)
Cash Flow from Financing Activities:
Long-Term Debt 2073.26 919.23 656.00 578.51 751.92 751.78 751.66 751.54 751.44
Noncurrent Derivative Liabilities 27.67 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Change in Capital Stock 0.06 58.31 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Cash Provided (Used) by Financing Activities 2100.99 977.54 656.00 578.51 751.92 751.78 751.66 751.54 751.44
Change in Cash 116.27 (92.53) 418.64 999.91 1732.18 2206.29 2559.91 3114.46 3380.06
Net Cash, Beginning of Period 53.54 169.82 77.29 495.92 1495.84 3228.02 5434.30 7994.21 11108.68
Net Cash, End of Period 169.82 77.29 495.92 1495.84 3228.02 5434.30 7994.21 11108.68 14488.74

17. Continental Resources Inc
Common Size Income Statement
Fiscal Years Ending Dec. 31 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
Revenues
Crude oil & natural gas sales 93.27% 109.35% 94.17% 94.97% 94.97% 94.97% 94.97% 94.97% 94.97% 94.97% 94.97% 94.97%
Crude oil & natural gas sales to affiliates 4.25% 3.70% 5.68% 2.85% 2.85% 2.85% 2.85% 2.85% 2.85% 2.85% 2.85% 2.85%
Gain (loss) on mark-to-market derivative instruments, net ‐0.24% ‐15.58% ‐1.82% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Crude oil & natural gas service operations 2.72% 2.54% 1.97% 2.18% 2.18% 2.18% 2.18% 2.18% 2.18% 2.18% 2.18% 2.18%
Total Operating Revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Production expenses 12.25% 10.32% 8.19% 9.00% 9.05% 9.35% 9.67% 9.99% 10.32% 10.67% 11.02% 11.39%
Production expenses to affiliates 2.64% 0.79% 0.28% 0.20% 0.14% 0.12% 0.09% 0.08% 0.07% 0.07% 0.06% 0.06%
Production taxes & other expenses 8.68% 9.14% 7.29% 10.05% 10.11% 11.81% 12.43% 13.08% 13.77% 14.50% 15.26% 16.06%
Exploration expenses 2.01% 1.52% 1.69% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Crude oil & natural gas service operations 1.72% 2.15% 1.62% 1.80% 1.80% 1.80% 1.80% 1.80% 1.80% 1.80% 1.80% 1.80%
Depreciation, depletion, amortization & accretion 33.15% 29.03% 23.69% 21.34% 21.26% 22.44% 21.31% 21.45% 21.52% 21.72% 21.71% 21.61%
Property impairments 13.37% 7.74% 6.57% 4.93% 3.51% 3.06% 2.56% 2.36% 2.21% 2.11% 2.02% 1.96%
General & administrative expenses 6.56% 5.85% 4.41% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50%
Gain (loss) on sale of assets ‐0.11% ‐3.53% ‐1.26% ‐0.95% ‐0.67% ‐0.59% ‐0.49% ‐0.45% ‐0.42% ‐0.41% ‐0.39% ‐0.38%
Total operating costs & expenses 78.87% 63.02% 53.89% 53.87% 52.69% 55.50% 54.88% 55.81% 56.77% 57.95% 58.98% 60.00%
Income (loss) from operations 21.13% 36.98% 46.11% 46.13% 47.31% 44.50% 45.12% 44.19% 43.23% 42.05% 41.02% 40.00%
Interest expense ‐3.71% ‐6.33% ‐4.65% ‐9.85% ‐8.51% ‐8.17% ‐7.28% ‐7.27% ‐7.25% ‐7.32% ‐7.31% ‐7.36%
Other income (expense) 0.15% 0.15% 0.21% 0.15% 0.10% 0.08% 0.07% 0.06% 0.05% 0.05% 0.04% 0.04%
Total other income (expense) ‐3.56% ‐6.18% ‐4.44% ‐9.70% ‐8.41% ‐8.08% ‐7.22% ‐7.21% ‐7.20% ‐7.27% ‐7.27% ‐7.32%
Income before income taxes 17.57% 30.80% 41.67% 36.43% 38.89% 36.42% 37.91% 36.97% 36.03% 34.78% 33.75% 32.68%
0.00%
Total current tax provision 0.41% 1.53% 0.80% 1.82% 1.25% 1.05% 0.84% 0.75% 0.67% 0.62% 0.57% 0.53%
Total deferred income tax provision 5.77% 9.22% 14.86% 11.46% 8.39% 7.53% 6.48% 6.15% 5.91% 5.82% 5.72% 5.71%
Provision (benefit) for income taxes 6.18% 10.75% 15.66% 13.28% 9.63% 8.57% 7.32% 6.89% 6.58% 6.43% 6.29% 6.25%
Net income (loss) 11.39% 20.05% 26.01% 23.15% 29.26% 27.85% 30.59% 30.08% 29.45% 28.34% 27.46% 26.44%

18. Continental Resources Inc
Common Size Balance Sheet
Fiscal Years Ending Dec. 31 2009 2010 2011 2012 E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
Total revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cash & cash equivalents 2.27% 0.94% 3.25% 7.35% 2.27% 12.08% 29.06% 55.08% 82.53% 121.40% 168.70% 220.03%
Accounts Receivable 29.63% 57.54% 47.13% 45.00% 45.00% 45.00% 45.00% 45.00% 45.00% 45.00% 45.00% 45.00%
Derivative assets - 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.32% 1.45% 1.56%
Tubular goods & equipment 1.92% 1.94% 0.95% 1.43% 1.43% 1.43% 1.43% 1.43% 1.43% 1.57% 1.72% 1.86%
Crude oil 2.34% 2.63% 1.55% 1.95% 1.95% 1.95% 1.95% 1.95% 1.95% 2.14% 2.35% 2.54%
Inventories 4.27% 4.57% 2.50% 3.38% 3.38% 3.38% 3.38% 3.38% 3.38% 3.71% 4.07% 4.40%
Deferred & prepaid taxes 0.73% 2.70% 2.89% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.19% 2.41% 2.61%
Prepaid expenses & other current assets 0.79% 1.09% 0.59% 0.63% 0.63% 0.63% 0.63% 0.63% 0.63% 0.69% 0.76% 0.82%
Total current assets 37.69% 69.40% 56.76% 59.56% 54.48% 64.29% 81.27% 107.29% 134.74% 178.70% 231.57% 288.04%
Total property & equipment 465.52% 483.76% 373.62% 392.30% 337.60% 334.13% 305.28% 302.24% 297.87% 297.73% 292.13% 289.88%
Less: accumulated depreciation, depletion & amortization 135.27% 128.36% 89.84% 85.50% 79.18% 88.24% 91.67% 101.96% 112.27% 136.10% 162.24% 190.38%
Net property & equipment, based on successful efforts method of accounting 330.25% 355.39% 283.78% 306.81% 258.42% 245.89% 213.61% 200.28% 185.60% 190.62% 189.54% 187.22%
Debt issuance costs, net 1.73% 3.27% 1.48% 1.09% 0.76% 0.65% 0.53% 0.43% 0.36% 0.33% 0.31% 0.29%
Noncurrent derivative assets - - 0.22% 0.03% 0.02% 0.02% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01%
Total assets 369.67% 428.07% 342.23% 367.48% 313.68% 310.85% 295.42% 308.01% 320.70% 369.66% 421.44% 475.56%
Accounts payable trade 14.57% 46.59% 38.97% 30.61% 22.81% 20.85% 18.29% 17.67% 17.30% 19.03% 20.93% 23.02%
Payables to affiliated parties - 0.53% 0.60% 0.67% 0.48% 0.42% 0.35% 0.32% 0.30% 0.32% 0.33% 0.35%
Accrued liabilities & other current liabilities 7.92% 11.30% 7.13% 5.35% 3.80% 3.32% 2.78% 2.56% 2.39% 2.51% 2.64% 2.77%
Revenues & royalties payable 10.67% 15.86% 13.46% 9.90% 6.91% 5.91% 4.85% 4.39% 4.03% 4.15% 4.27% 4.40%
Derivative liabilities - 9.15% 7.09% 4.99% 3.38% 2.81% 2.24% 1.97% 1.75% 1.75% 1.75% 1.75%
Current portion of asset retirement obligations 0.39% 0.27% 0.14% 0.10% 0.07% 0.05% 0.04% 0.04% 0.03% 0.03% 0.03% 0.03%
Total current liabilities 35.09% 83.69% 67.39% 51.62% 37.45% 33.36% 28.55% 26.95% 25.80% 27.79% 29.96% 32.33%
Long-term debt 83.60% 110.36% 76.03% 144.05% 124.56% 119.51% 106.55% 106.37% 106.07% 117.46% 128.85% 140.24%
Deferred income tax liabilities 78.13% 69.46% 51.54% 42.32% 32.97% 31.51% 28.89% 29.18% 29.87% 34.35% 39.50% 45.43%
Asset retirement obligations, net of current portion 7.62% 6.45% 3.66% 2.61% 1.77% 1.47% 1.17% 1.03% 0.92% 0.92% 0.92% 0.92%
Noncurrent derivative liabilities - 13.46% 3.49% 3.69% 2.50% 2.08% 1.66% 1.45% 1.29% 1.29% 1.29% 1.29%
Other noncurrent liabilities 0.71% 0.66% 0.22% 0.14% 0.10% 0.08% 0.06% 0.06% 0.05% 0.05% 0.05% 0.05%
Total other noncurrent liabilities 86.46% 90.03% 58.91% 48.77% 37.34% 35.14% 31.78% 31.72% 32.13% 36.61% 41.76% 47.69%
Total Liabilities 244.44% 199.35% 188.00% 166.88% 165.04% 164.00% 181.86% 200.57% 220.25%
Common Equity 68.98% 52.63% 67.43% 48.15% 34.33% 28.53% 22.75% 19.98% 17.78% 16.20% 14.77% 13.65%
Retained earnings 95.54% 91.36% 72.47% 74.89% 80.00% 94.32% 105.79% 122.99% 138.92% 170.03% 203.09% 237.52%
Total shareholders' equity 164.53% 143.99% 139.90% 123.05% 114.33% 122.85% 128.54% 142.97% 156.70% 187.81% 220.87% 255.31%
Total Shareholder's Equity and Liabilities 369.67% 428.07% 342.23% 367.48% 313.68% 310.85% 295.42% 308.01% 320.70% 369.66% 421.44% 475.56%

19. Continental Resources Inc
Value Driver Estimation
Fiscal Years Ending Dec. 31 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
NOPLAT:
Total revenues 626.21 839.07 1649.79 2310.46 3410.49 4104.39 5147.44 5860.98 6584.77 7225.90 7929.46 8577.21
Production expenses 76.72 86.56 135.18 207.90 308.74 383.96 497.61 585.50 679.77 770.85 874.15 977.12
Production taxes & other expenses 45.65 76.66 143.24 232.16 344.76 484.79 639.93 766.90 906.86 1047.42 1209.77 1377.33
Exploration expenses 12.62 12.76 27.92 46.21 68.21 82.09 102.95 117.22 131.70 144.52 158.59 171.54
Crude oil & natural gas service operations 10.74 18.07 26.74 41.59 61.39 73.88 92.65 105.50 118.53 130.07 142.73 154.39
Depreciation, depletion, amortization & accretion 207.60 243.60 390.90 493.12 725.12 921.12 1097.12 1257.12 1417.12 1569.12 1721.12 1853.12
General & administrative expenses 41.09 49.09 72.82 127.08 187.58 225.74 283.11 322.35 362.16 397.42 436.12 471.75
Less: Total Operating Costs 394.42 486.74 796.79 1148.05 1695.78 2171.57 2713.36 3154.59 3616.13 4059.40 4542.48 5005.25
Add: Implied Interest on Lease Operations 0.08 0.03 0.30 0.45 0.57 0.65 0.71 0.75 0.78 0.80 0.80 0.79
EBITA 231.87 352.36 853.30 1162.86 1715.27 1933.46 2434.78 2707.14 2969.43 3167.30 3387.78 3572.75
Adjusted Taxes
Provision (benefit) for income taxes 38.67 90.21 258.37 306.90 328.51 351.81 376.95 404.08 433.34 464.91 498.97 535.73
Add: Tax Shield on Interest Expense 8.11 18.46 31.84 86.44 110.34 127.39 142.44 161.92 181.40 200.88 220.35 239.83
Add: Tax Shield on Property Impairments 29.21 22.56 45.01 43.27 45.44 47.71 50.10 52.60 55.23 57.99 60.89 63.94
Add: Tax Shield on Operating Leases 0.03 0.01 0.12 0.17 0.21 0.25 0.27 0.29 0.30 0.31 0.30 0.30
Less: Tax Shield on Other Income (7.78) (18.01) (30.42) (85.14) (109.04) (126.09) (141.14) (160.62) (180.10) (199.58) (219.05) (238.53)
Less: Tax Shield on gain on sale of assets (0.25) (10.28) (8.65) (8.31) (8.73) (9.17) (9.62) (10.11) (10.61) (11.14) (11.70) (12.28)
Total Adjusted Taxes 68.52 148.38 308.75 343.34 366.73 391.90 418.99 448.16 479.55 513.36 549.77 588.98
Add: Change in Deferred Income Taxes 77.36 245.20 128.99 124.67 154.80 173.11 208.80 242.06 282.19 325.19 377.20
NOPLAT 163.35 281.34 789.76 948.52 1473.21 1696.35 2188.91 2467.79 2731.93 2936.13 3163.20 3360.97
Operating Assets:
Cash & cash equivalents (lessor of actual or 4% of revenue) 12.52 7.92 33.00 92.42 136.42 164.18 205.90 234.44 263.39 289.04 317.18 343.09
Accounts Receivable 185.58 482.84 777.54 1039.71 1534.72 1846.97 2316.35 2637.44 2963.15 3251.66 3568.26 3859.74
Inventories 26.71 38.36 41.27 78.09 115.27 138.73 173.98 198.10 222.57 244.24 268.02 289.91
Prepaid expenses & other current assets 4.94 9.17 9.69 14.56 21.49 25.86 32.43 36.92 41.48 45.52 49.96 54.04
Tubular goods & equipment 12.04 16.31 15.67 33.04 48.77 58.69 73.61 83.81 94.16 103.33 113.39 122.65
Crude oil 14.67 22.06 25.61 45.05 66.50 80.04 100.38 114.29 128.40 140.91 154.62 167.26
Total Current Operating Assets 256.466 576.655 902.768 1302.868 1923.175 2314.463 2902.642 3305.006 3713.152 4074.686 4471.422 4836.689
Operating Liabilities:
Accounts payable trade 91.25 390.89 642.89 707.18 777.90 855.69 941.25 1035.38 1138.92 1252.81 1378.09 1515.90
Accrued liabilities & other current liabilities 49.60 94.83 117.67 123.55 129.73 136.22 143.03 150.18 157.69 165.57 173.85 182.54
Revenues & royalties payable 66.79 133.05 222.03 228.69 235.55 242.61 249.89 257.39 265.11 273.07 281.26 289.69
Other accrued liabilities 49.60 94.83 117.67 123.55 129.73 136.22 143.03 150.18 157.69 165.57 173.85 182.54
Payables to affiliated parties 9.61 4.44 9.94 15.50 16.28 17.09 17.94 18.84 19.78 20.77 21.81 22.90
Total Current Operating Liabilities 266.85 718.04 1110.20 1198.47 1289.18 1387.82 1495.15 1611.97 1739.19 1877.79 2028.86 2193.58
Net Operating Working Capital (10.38) (141.39) (207.43) 104.40 633.99 926.64 1407.49 1693.04 1973.96 2196.89 2442.56 2643.11
Add: Net PPE 2068.06 2981.99 4681.73 7088.62 8813.50 10092.38 10995.27 11738.15 12221.03 12551.92 12480.80 12327.68
Add: Other Operating Assets
Operating Leases 1.27 0.52 5.00 7.58 9.42 10.79 11.75 12.55 13.06 13.42 13.34 13.18
Total Other Operating Assets 1.27 0.52 5.00 7.58 9.42 10.79 11.75 12.55 13.06 13.42 13.34 13.18
Less: Other Operating Liabilities
Other noncurrent liabilities 4.47 5.56 3.64 3.31 3.31 3.31 3.31 3.31 3.31 3.31 3.31 3.31
Total Other Operating Liabilities 4.47 5.56 3.64 3.31 3.31 3.31 3.31 3.31 3.31 3.31 3.31 3.31
Invested Capital 2054.48 2835.57 4475.67 7197.28 9453.60 11026.50 12411.20 13440.42 14204.75 14758.92 14933.39 14980.65
ROIC= (NOPLAT/Beginning IC) 9.16% 13.69% 27.85% 21.19% 20.47% 17.94% 19.85% 19.88% 20.33% 20.67% 21.43% 22.51%
NOPLAT 163.35 281.34 789.76 948.52 1473.21 1696.35 2188.91 2467.79 2731.93 2936.13 3163.20 3360.97
BEGINNING IC 1782.66 2054.48 2835.57 4475.67 7197.28 9453.60 11026.50 12411.20 13440.42 14204.75 14758.92 14933.39
FCF=NOPLAT‐CHANGE IN IC (108.47) (499.76) (850.34) (1773.09) (783.11) 123.46 804.20 1438.57 1967.61 2381.96 2988.73 3313.70
NOPLAT 163.35 281.34 789.76 948.52 1473.21 1696.35 2188.91 2467.79 2731.93 2936.13 3163.20 3360.97
CHANGE IN IC 271.82 781.09 1640.10 2721.61 2256.32 1572.90 1384.70 1029.22 764.33 554.17 174.47 47.26
EP=NOPLAT‐BEGINNING IC*WACC (32.19) 55.97 478.72 457.57 683.72 659.35 979.37 1106.36 1257.61 1377.96 1544.25 1722.87
NOPLAT 163.35 281.34 789.76 948.52 1473.21 1696.35 2188.91 2467.79 2731.93 2936.13 3163.20 3360.97
BEGINNING IC 1782.66 2054.48 2835.57 4475.67 7197.28 9453.60 11026.50 12411.20 13440.42 14204.75 14758.92 14933.39
WACC 10.97% 10.97% 10.97% 10.97% 10.97% 10.97% 10.97% 10.97% 10.97% 10.97% 10.97% 10.97%

20. Continental Resources Inc.
Weighted Average Cost of Capital (WACC) Estimation
Risk Free Rate 2.92%
MRP 5.92%
Beta 1.65
Cost of Equity 12.69%
Debt Rating BB+
Pre‐tax Cost of Debt 8.25%
Tax Rate 38.00%
After‐Tax Cost of Debt 5.12%
Shares Outstanding 185.02
Current Stock Price 70.59
Market Value of Equity 13060.28
Value of Debt 3829.086
PV of Operating Leases 5
Market Value of Debt 3834.086
Market Value of firm 16894.37
Weight of Debt 22.69%
Weight of Equity 77.31%
Weighted Average Cost of Capital 10.97%

21. Continental Resources Inc
Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models
Key Inputs:
CV Growth 3.50%
CV ROIC 22.51%
WACC 10.97%
Cost of Equity 12.69%
Fiscal Years Ending Dec. 31 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
DCF Model
Free Cash Flows (1,773.09) (783.11) 123.46 804.20 1,438.57 1,967.61 2,381.96 2,988.73
Continuing Value 37,999.29
Present Value Factors 1.11 1.23 1.37 1.52 1.68 1.87 2.07 2.30
PV of FCF discounted by WACC (1,597.82) (635.94) 90.35 530.34 854.90 1,053.71 1,149.51 1,299.76 16,525.37
Value of Operating Assets 19,270.17
Add: Non‐Operating Assets
Derivative Assets 10.29
Less: Debt
Long Term 3,829.09
Less: Other Claims
Operating Leases 5.00
ESOP 38.05
Derivative Liabilities 174.58
Enterprise Value 15,233.75
Shares Outstanding 180.87
Price 84.22
Adjusted Price 93.44
Fiscal Years Ending 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
EP Model
Economic Profit 457.57 683.72 659.35 979.37 1,106.36 1,257.61 1,377.96 1,544.25
Present Value Factors 1.11 1.23 1.37 1.52 1.68 1.87 2.07 2.30
Continuing Value 23,065.90
PV of Economic Profit 412.34 555.23 482.51 645.86 657.48 673.48 664.99 671.57 10,031.04
PV of EP and Continuing Value 14,794.50
Invested Capital 2011 4,475.67
Value of Operating Assets 19,270.17
Add: Non‐Operating Assets
Derivative Assets 10.29
Less: Debt
Long Term 3,829.09
Less: Other Claims
Operating Leases 5.00
ESOP 38.05
Derivative liabilites 174.58
Enterprise Value 15,233.74
Shares Outstanding 180.87
Price 84.22
Adjusted Price 93.44

22. Continental Resources Inc
Dividend Discount Model (DDM) or Fundamental P/E Valuation Model
Fiscal Years Ending Dec. 31 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E(CV)
EPS 2.96$ 5.48$ 6.27$ 8.64$ 9.68$ 10.64$ 11.24$ 11.95$ 12.45$
Key Assumptions
CV growth 3.50%
CV ROE 13.49%
Cost of Equity 12.69%
Future Cash Flows
P/E Multiple 8.06
EPS(next period) 12.45$
Future Stock Price 100.33$
Dividends Per Share ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$
Future Cash Flows 100.33$
Discount Rate 1.127 1.27 1.43 1.61 1.82 2.05 2.31 2.60
Discounted Cash Flows ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ 38.58$
Intrinsic Value 38.58$
Adjusted Value 42.80$

23. Continental Resources Inc
Dividend Discount Model (DDM) or Fundamental P/E Valuation Model
EPS EPS Est.
Ticker Company Price 2012E 2013E P/E 12 P/E 13 5yr Gr. PEG 12 PEG 13
PXD Pioneer Natural Resources Co 103.63 3.92 5.4 26.4 19.19 13.50 1.96 1.42
NBL Noble Energy Inc 95.00 4.57 6.47 20.8 14.68 9.10 2.28 1.61
LINE Linn Energy LLC 38.74 1.44 1.71 26.9 22.65 7.00 3.84 3.24
CHK Chesapeake Energy Corp 17.39 0.49 1.32 35.5 13.17 8.45 4.20 1.56
TLM Talisman Energy Inc. 11.41 0.37 0.52 30.8 21.94 24.7 1.25 0.89
Average 28.1 18.8 2.7 2.1
CLR Continental Resources Inc 69.48$ $2.96 $5.48 23.5 12.7 32.06 0.7 0.4
Implied Value:
Relative P/E (EPS12) $ 83.01
Relative P/E (EPS13) 103.23$
PEG Ratio (EPS12) 255.32$
PEG Ratio (EPS13) 367.12$

24. WACC Risk-Free Rate
93.44 9.77% 10.17% 10.57% 10.97% 11.37% 11.77% 12.17% 93.44 1.42% 1.92% 2.42% 2.92% 3.42% 3.92% 4.42%
2.30% 111.61 101.76 92.91 84.92 77.69 71.10 65.09 4.42% 213.11 189.34 169.20 151.93 136.96 123.88 112.35
2.70% 115.80 105.30 95.91 87.49 79.88 72.98 66.71 4.92% 175.89 157.69 141.97 128.27 116.23 105.57 96.08
3.10% 120.50 109.24 99.25 90.31 82.28 75.04 68.47 5.42% 147.22 132.86 120.27 109.16 99.28 90.46 82.52
CV Growth 3.50% 125.79 113.66 102.95 93.44 84.93 77.29 70.39 MRP 5.92% 124.49 112.90 102.61 93.44 85.20 77.78 71.06
3.90% 131.81 118.64 107.11 96.92 87.87 79.77 72.50 6.42% 106.08 96.53 87.99 80.29 73.34 67.02 61.26
4.30% 138.71 124.30 111.79 100.82 91.13 82.52 74.82 6.92% 90.87 82.90 75.70 69.17 63.22 57.79 52.81
4.70% 146.69 130.79 117.11 105.21 94.79 85.58 77.40 7.42% 78.14 71.38 65.24 59.63 54.50 49.79 45.45
Beta Beta
93.44 1.35 1.45 1.55 1.65 1.75 1.85 1.95 93.44 1.35 1.45 1.55 1.65 1.75 1.85 1.95
2.30% 116.22 104.49 94.12 84.92 76.70 69.32 62.66 4.42% 204.37 184.38 167.06 151.93 138.59 126.77 116.21
2.70% 120.74 108.20 97.20 87.48 78.84 71.12 64.17 4.92% 174.95 157.15 141.73 128.27 116.41 105.90 96.52
3.10% 125.81 112.35 100.62 90.31 81.19 73.08 65.82 5.42% 151.16 135.14 121.27 109.16 98.51 89.06 80.65
CV Growth 3.50% 131.55 117.00 104.42 93.44 83.78 75.23 67.61 MRP 5.92% 131.55 117.00 104.42 93.44 83.78 75.23 67.61
3.90% 138.09 122.26 108.68 96.92 86.64 77.60 69.58 6.42% 115.13 101.82 90.32 80.29 71.48 63.69 56.75
4.30% 145.63 128.24 113.49 100.82 89.83 80.22 71.74 6.92% 101.19 88.95 78.38 69.17 61.08 53.93 47.57
4.70% 154.39 135.12 118.96 105.21 93.39 83.12 74.13 7.42% 89.23 77.91 68.14 59.63 52.17 45.58 39.73

25. Continental Resources Inc
Key Management Ratios
Fiscal Years Ending Dec. 31 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Liquidity Ratios
Current Ratio (CA/CL) 107.43% 82.93% 84.22% 115.39% 145.48% 192.72% 284.63% 398.12% 522.16% 643.05% 773.01% 891.02%
Quick Ratio (Cash+AR)/CL 95.27% 77.46% 80.51% 108.84% 136.45% 182.59% 272.79% 385.58% 509.06% 629.70% 759.42% 877.40%
Cash Ratio (Cash/CL) 1.11% 0.33% 1.60% 3.01% 1.14% 6.43% 17.41% 33.37% 50.32% 66.76% 84.11% 99.90%
Activity or Asset‐Management Ratios
Asset Turnover (Sales/Assets) 27.05% 23.36% 29.22% 27.21% 31.88% 32.17% 33.85% 32.47% 31.18% 29.69% 28.57% 27.39%
Inventory Turnover (COGS/INV) 23.44 21.87 39.98 29.59 29.59 29.59 29.59 29.59 29.59 29.59 29.59 29.59
A/R Turnover (Sales/AR) 337.44% 173.78% 212.18% 268.24% 311.68% 328.39% 349.25% 358.36% 365.75% 370.47% 375.09% 378.16%
Financial Leverage Ratios
Debt Ratio (TL/TA) 55.49% 66.36% 59.12% 66.52% 63.55% 60.48% 56.49% 53.58% 51.14% 49.20% 47.59% 46.31%
Times Interest Earned (EBIT/Interest Expense) 5.69 5.84 9.92 4.68 5.56 5.45 6.20 6.08 5.96 5.75 5.61 5.44
Profitability Ratios
ROA (NI/TOA) 3.08% 4.68% 7.60% 6.30% 9.33% 8.96% 10.35% 9.77% 9.18% 8.41% 7.85% 7.24%
ROE (NI/Equity) 6.92% 13.93% 18.59% 18.81% 25.59% 22.67% 23.79% 21.04% 18.79% 16.56% 14.97% 13.49%
Operating Margin (OI/Sales) 17.57% 30.80% 41.67% 36.43% 38.89% 36.42% 37.91% 36.97% 36.03% 34.78% 33.75% 32.68%
Payout Ratio 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

26. 2011
Present Value of Operating Lease Obligations
Operating
Fiscal Years Ending Dec. 31 Leases
2012 2.191
2013 1.67
2014 1.67
2015 0.088
2016 0.088
Thereafter 0.194
Total Minimum Payments 5.901
Less: Interest 1
PV of Minimum Payments 5.00
Capitalization of Operating Leases
Pre‐Tax Cost of Debt 8.25%
Number Years Implied by Year 6 Payment 2.2
Lease PV Lease
Year Commitment Payment
1 2.191 2.0
2 1.67 1.4
3 1.67 1.3
4 0.088 0.1
5 0.088 0.1
6 & beyond 0.088 0.1
PV of Minimum Payments 5.0

27. Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding
Number of Options Outstanding (shares): 86,500
Average Time to Maturity (years): 1.25
Expected Annual Number of Options Exercised: 69,200
Current Average Strike Price: 45.43$
Cost of Equity: 9.00%
Current Stock Price: 69.48$
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Increase in Shares Outstanding: 86,500 1,198,344
Average Strike Price: 0.71$ 48.66$
Increase in Common Stock Account: 61,415 58,311,419 - - - - - - - -
Change in Treasury Stock 0 0 0 0 0 0 0 0 0 0
Expected Price of Repurchased Shares: 69.48$ 75.73$ 82.55$ 89.98$ 98.08$ 106.90$ 116.52$ 127.01$ 138.44$ 150.90$
Number of Shares Repurchased: - - - - - - - - - -
Shares Outstanding (beginning of the year) 180,871,688 180,958,188 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532
Plus: Shares Issued Through ESOP 86,500 1,198,344 0 0 0 0 0 0 0 0
Less: Shares Repurchased in Treasury - - - - - - - - - -
Shares Outstanding (end of the year) 180,958,188 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532 182,156,532

28. VALUATION OF OPTIONS GRANTED IN ESOP
Ticker Symbol CLR
Current Stock Price 69.48
Risk Free Rate 4.80%
Current Dividend Yield 0.79%
Annualized St. Dev. of Stock Returns 38.80%
Average Average B‐S Value
Range of Number Exercise Remaining Option of Options
Outstanding Options of Shares Price Life (yrs) Price Granted
ESOP 86,500 0.71 0.25 68.64$ 5,937,479$
Restricted Stock 1,198,344 48.66 1.70 26.79$ 32,107,990$
Total 1,284,844 45.43$ 1.60 29.49$ 38,045,469$