
Essential Facts:
| 1. | 2Q09 production in the Red River Units was 14,092 Boepd, compared with 13,551 Boepd in the second quarter of 2008. |
| 2. | Red River Units production in 2Q09 accounted for 38% of Continental’s production. |
| 3. | The Red River Units accounted for 37% of year-end 2008 proved reserves, or 59.4 MMBoe. |
| 4. | At year-end 2008, Continental leased acreage in the Red River Units totaled 147,235 gross acres (131,320 net), all of which is developed. |
| 5. | Continental continues to convert producing wells to injector wells as part of its water-flood, secondary recovery program in the Units. Under this program, the Company expects production in the Units to peak in 2010. |
| 6. | As of August 2009, the Company had no drilling rigs operating in the Red River Units. |
| 7. | Under our $390 million capital expenditure budget for 2009, Continental plans to spend $50 million in the Red River Units. |
Red River Units Production History (Boepd)
| 2007 | 2008 | 2009 | ||||
| 1Q | 12,506 | 13,620 | 14,162 | |||
| 2Q | 12,615 | 13,551 | 14,092 | |||
| 3Q | 13,531 | 13,375 | 13.942 | |||
| 4Q | 14,086 | 14,058 |
The Red River Units are located in Montana and the Dakotas, with the majority of the property spanning across the southwestern corner of North Dakota. The Red River Units are comprised of the Cedar Hills Units, Medicine Pole Hills Units, Buffalo Units and Haley Prospect. They are located along the Cedar Hills Anticline and produce crude oil and natural gas from the Red River “B” formation, a thin, continuous, dolomite formation at depths of 8,000 to 9,500 feet.
The Red River Units are a portion of the Cedar Hills Field, which the U.S. Energy Information Administration listed in 2007 as the sixth largest onshore oil field in the Lower 48 states, ranked by liquid proved reserves.
Continental’s Cedar Hills Units are comprised of the CH North and CH West. CH North is located in Bowman and Slope counties, North Dakota, while CH West is located to the west in Fallon County, Montana. The Company drilled its initial well in CH North, the Ponderosa 1-15, in April 1995. The Cedar Hill Units were originally developed by Continental Resources and Burlington Resources, which was subsequently acquired by ConocoPhillips, Inc.
As of year-end 2008, Continental had drilled 225 horizontal wells within the 49,700-acre CH North Unit. Of these, 128 were producing wells and the remaining wells were injection wells.
At year-end 2008, the CH West Unit comprised 7,800-acres and contained 11 horizontal producing wells and 6 horizontal injection wells.
In January 2003, the Company commenced enhanced recovery in its acreage of the Cedar Hills Units, using a combination of high-pressure air injection (HPAI) and water injection. As of year-end 2008, average well density in the Cedar Hill Units was approximately 1 producing well per 420 acres. In 2009 the Company is increasing the density of both producing and injection wells.
The Medicine Pole Hills Units were acquired by Continental in 1995 and are located approximately five miles east of the southern portion of the CH North Unit.
At the time of acquisition, the 9,600-acre unit consisted of 18 vertical producing wellbores and 4 injection wellbores under HPAI, producing 525 net barrels of oil per day. The Company has since drilled 47 horizontal wellbores, extending production to the west with the formation of the 15,000-acre Medicine Pole Hills West Unit, and to the south with the 11,500-acre Medicine Pole Hills South Unit. All three units (Medicine Pole Hills Unit, MPH West and MPH South) are under HPAI, and Continental operates and owns an average 77% working interest in the three units.
Net production from the Medicine Pole Hills Units averaged 1,391 barrels of oil and 178 Mcf of natural gas per day during December 2008.
The three Buffalo Red River Units (Buffalo Unit, West Buffalo and South Buffalo) are located in Harding County, South Dakota, approximately 21 miles south of the Medicine Pole Hills Units. Continental purchased the Buffalo Red River Units in 1995, acquiring 73 vertical producing wellbores and 38 injection wellbores under HPAI that were producing approximately 1,906 net barrels of oil per day. The Company operates and owns an average working interest of 95% in the 32,900 acres comprising the three Buffalo Units. From 2005 through 2008, we re-entered 48 existing vertical wells and drilled horizontal laterals to increase production and sweep efficiency from the three units. Production for the month of December 2008 was 1,670 net barrels of oil per day.
