Continental Resources Capital Spending vs Production Review 2007 through 2015

Oil Price Rollercoaster Ride since 2008 – U.S. Supply / Crisis Driven TB B L S D A Y US PRODUCTION $ / B L OIL PRICE / BBL LOWEST PRODUCTION LEVEL SINCE 1940s Graph by Author using EIA oil production and price data (12/10.2015) Major Event: Shale Oil Boom 2010-2014 reversed multi-decade oil production low U.S. Supply: Peaked at 9.6M BBL per day in June 2015. Oil Price: High pre-Lehman bankruptcy at $145 / BBL; lows under $40 per BBL in late Dec 2008 – March 2008 , Aug 2015 and Dec 2015 - ?.

Very Steep U.S. Production decline without substantial on-going CapEx Current EIA Estimate 8.8M AVG ‘16 TB B L S D A Y 2M BBL / day marginal supply gone $ / B L Price ? or ? in the future INDEX TO SEPT 2015 DOLLARS Graph by Author using EIA oil production and price data (9/30.2015), Federal Reserve CPI Index (10/30/2015)

44 U.S. Shale Oil Drillers Capital Spending: 2007 – 2015 Recent Oil Price Drop has caused Major Reset in Shale Driller Capital Budgets 44 U.S. Shale Oil Drillers Capital Spending: 2007 – 2015 Q4’14: $40B $31B $22B $18B Q3 Source: cnbc.com, “US Drillers- Stuck with Negative Cash Flow and Lots of Debt’, 12/2/2015 Peak U.S. Oil production: 9.6M BBL/Day (Jun’15) Current U.S. Oil production: 9.2M BBL/Day (Nov’15) EIA Estimated 2016 Production: Average 8.8M BBL/Day Source: EIA.gov, 12/10/15

CLR OIL PRODUCTION HAS RISEN WITH LARGE CAPEX INVESTMENT $ M I L O N ? B L S D A Y CAPEX $M OIL BBL/DAY Graph by Author using data from CLR 10-Q,s and 10-Ks 2007-2015,

Example Company with Steep CapEx Spending Decline: CLR 2014 AVG $1200M / QTR $ M I L O N CAPEX $M EST. 2016 RUN RATE $400-$500M / QTR Graph by Author using data from CLR 10-Q,s and 10-Ks 2007-2015, CLR Guidance

Bakken Play Horizontal Tight Oil Well Decline Rate http://www.postcarbon.org/wp-content/uploads/2014/10/Drilling-Deeper_PART-2-Tight-Oil.pdf Preliminary analysis which tends to show EIA forecast may overstate 2016 U.S. oil production capability

Shale Oil Play High Contribution to U.S. Oil Production Increase Continental Resources: Tight Oil Drives U.S. Production Increase 1.6% Market Share B L / D A Y B L / D A Y US TOTAL CLR .5% Market Share Graph by Author using data from CLR 10-Q,s and 10-Ks 2007-2015, EIA.gov

Example: Continental Resources Expected production decline Continental Resources Expected Oil Production Decline Rate CLR model update once more rapid decline begins Q4 and Q1 will be important information. Models of other major shale drillers being prepared to confirm analysis FORECAST +/- 10% B L / D A Y $ M I L O N ASSUMES CLR CAPEX BUDGET CUT TO $500M / QTR SUSTAINED THROUGH 2016 FORECAST BASED ON REGRESSION OF 6 MTH LAG OF TRAILING 2 YEARS OF EFFECTIVE CAPITAL SPENDING EFFECTIVE 2Y CAPITAL SPENDING IS ACTUAL SPENDING ADJUSTED BY ESTIMATED WELL DECLINE RATE OVER A TWO YEAR PERIOD (i.e. Spending 2 1/2 years ago is given 21% weight) CORRELATION OF 6 MTH LAG OF 2Y EFFECTIVE CAPEX TO CURRENT QTR PRODUCTION IS .9816 Graph by Author using data from CLR 10-Q,s and 10-Ks 2007-2015, Proprietary data forecasting model CLR 3Q’15 Guidance: Maintenance capital to maintain 2016 production at the 2015 exit rate (200000 BOE/day, including gas) is now projected to be $1.6 to $2.0 billion.

Alarming Trend: Shale Fields Showing Rapid Shift to Natural Gas 25% 30% 35% OIL 75% 70% 65% Data Reflects More Marginal Wells Drilled / Wells Aging Graph by Author using data from CLR 10-Q,s and 10-Ks 2007-2015 Less Oil Available in the Future; the Best Fields have been Drilled