(Reuters) - Top Bakken producer Continental Resources Inc nearly doubled its 2019 outlook for free cash flow to $1 billion on Tuesday, citing an uptick in oil prices.
The increase comes as investors, frustrated with more than four years of low returns from oil producers, have pushed the companies to shore up capital for shareholder returns like dividends and buybacks, rather than spending to drill more and boost production and revenue numbers.
“We are now through a quarter of the year, and with the rise in oil prices, we are tracking toward $1 billion of free cash flow for 2019,” Chief Financial Officer John Hart said on a post-earnings conference call with analysts.
The company said the incremental level of cash flow would help it cut debt faster to $5 billion or below this year. It did not specify if it would look to return capital to shareholders, but left the door open on dividend payouts later.
Continental, whose production growth is primarily oil-weighted, had forecast cash flow of about $500 million to $600 million for the year in February, if U.S. crude prices averaged $55 and gas prices were about $3.
Since then, oil prices have risen 15 percent to $63.9.
Continental’s shares briefly went up about 1.6 percent when the company delivered comments related to cash flow, but then gave up those gains and were trading down 3.1 percent at $46.53 at 1245 ET.
On Monday, Continental, however, reiterated its plans to spend about $2.6 billion through the year, after it beat Wall Street estimates for quarterly profit, fueled by higher production at its oil-rich North Dakota shale field, sending shares up more than 4 percent in extended trading.
Reporting by Arathy S Nair in Bengaluru; Editing by Shailesh Kuber