CONTINENTAL RESOURCES, INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The following discussion and analysis should be read in conjunction with the
unaudited condensed consolidated financial statements and notes thereto included
elsewhere in this report and our historical consolidated financial statements
and notes included in our Form 10-K for the year ended December 31, 2021.

The following discussion and analysis includes forward-looking statements and
should be read in conjunction with the risk factors described in Part II,
Item 1A. Risk Factors included in this report, if any, and in our Form 10-K for
the year ended December 31, 2021, along with Cautionary Statement for the
Purpose of the "Safe Harbor" Provisions of the Private Securities Litigation
Reform Act of 1995 at the beginning of this report, for information about the
risks and uncertainties that could cause our actual results to be materially
different than our forward-looking statements.

Insight

We are an independent crude oil and natural gas company engaged in the
exploration, development, management, and production of crude oil and natural
gas and associated products with properties primarily located in four leading
basins in the United States - the Bakken field of North Dakota and Montana, the
Anadarko Basin of Oklahoma, the Permian Basin of Texas, and the Powder River
Basin of Wyoming. Additionally, we pursue the acquisition and management of
perpetually owned minerals located in certain of our key operating areas. We
derive the majority of our operating income and cash flows from the sale of
crude oil, natural gas, and natural gas liquids and expect this to continue in
the future. Our common stock trades on the New York Stock Exchange under the
symbol "CLR" and our corporate internet website is www.clr.com.

First Quarter 2022 Highlights

Financial and operational highlights for the first quarter of 2022 are summarized below.

• Generated $1.5 billion operating cash flow in the first quarter of 2022, an increase of $464 millioni.e. 45%, compared to the first quarter of 2021.

• Strategic acquisition finalized to further expand our business in the Powder River Basin for a cash consideration of $403 million.

•Increase of our quarterly fixed dividend by 15% for $0.23 per common share paid on March 4, 2022.

• Increase in the size of our share buyback program by $1.0 billion for $1.5 billionincluding cumulative amounts redeemed to date.

•Repurchased 1.84 million shares at an aggregate cost of $100 million in the
2022 first quarter, bringing cumulative repurchases to 18.81 million shares at
an aggregate cost of $541 million.

•Announced $250 million strategic investment in Summit Carbon Solutions to fund
development of carbon capture and sequestration infrastructure; funded $62.5
million of our commitment in the 2022 first quarter.

• Reduction of outstanding debt by $265 million in the first quarter of 2022.

Financial and operational measures

Commodity prices have increased significantly in 2022 compared to 2021 levels
resulting from the ongoing rebalancing of crude oil and natural gas supply and
demand fundamentals coupled with the disruption of global hydrocarbon markets
prompted by the outbreak of military conflict between Russia and Ukraine. The
increase in commodity prices contributed to improved operating results and cash
flows in the first quarter of 2022 compared to the first quarter of 2021.
Commodity prices remain volatile and unpredictable and our operating results for
the 2022 first quarter may not be indicative of future results. Given the
uncertainty surrounding the Russia/Ukraine conflict and ongoing volatility in
commodity prices, we are unable to predict the extent to which the conflict or
other factors will have on the Company's performance during the remainder of
2022 and beyond.

The following table contains financial and operating measures for the periods presented. Average net selling prices exclude any effects of derivative transactions. Unit charges were calculated using sales volumes.

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Three months completed March, 31st,

                                                                                 2022                   2021
Average daily production:
Crude oil (Bbl per day)                                                          194,767               151,852
Natural gas (Mcf per day) (1)                                                  1,074,255               936,540
Crude oil equivalents (Boe per day)                                              373,810               307,942
Average net sales prices (2):
Crude oil ($/Bbl)                                                         $        90.83           $     53.09
Natural gas ($/Mcf) (1)                                                   $         6.34           $      5.56
Crude oil equivalents ($/Boe)                                             $        65.51           $     43.11
Crude oil net sales price discount to NYMEX ($/Bbl)                       $        (3.47)          $     (4.52)
Natural gas net sales price premium to NYMEX ($/Mcf) (1)                  $         1.43           $      2.87
Production expenses ($/Boe)                                               $         4.09           $      3.35

Production and ad valorem taxes (% of net sales of crude oil and natural gas)

                                                                               7.2   %               7.0  %
Depreciation, depletion, amortization and accretion ($/Boe)               $        13.67           $     18.35
Total general and administrative expenses ($/Boe)                         $         2.23           $      1.90


 (1)   Natural gas production volumes, sales volumes, and net sales prices
presented throughout management's discussion and analysis reflect the combined
value for natural gas and natural gas liquids.
(2)  See the subsequent section titled Non-GAAP Financial Measures for a
discussion and calculation of net sales prices, which are non-GAAP measures.

Three months completed March 31, 2022 compared to the three months ended March 31, 2021

Results of Operations

The following table presents selected financial and operational information for the periods presented.

                                                                                 Three months ended March 31,
In thousands                                                                      2022                      2021
Crude oil, natural gas, and natural gas liquids sales                    $     2,274,261               $ 1,247,533
Loss on derivative instruments, net                                             (475,938)                  (43,507)
Crude oil and natural gas service operations                                      17,915                    11,789
Total revenues                                                                 1,816,238                 1,215,815
Operating costs and expenses                                                    (950,021)                 (810,117)
Other expenses, net                                                              (73,782)                  (64,895)
Income before income taxes                                                       792,435                   340,803
Provision for income taxes                                                      (191,084)                  (80,528)
Net income                                                                       601,351                   260,275
Net income attributable to noncontrolling interests                                3,594                       633
Net income attributable to Continental Resources                         $       597,757               $   259,642
Production volumes:
Crude oil (MBbl)                                                                  17,529                    13,667
Natural gas (MMcf)                                                                96,683                    84,289
Crude oil equivalents (MBoe)                                                      33,643                    27,715
Sales volumes:
Crude oil (MBbl)                                                                  17,461                    13,726
Natural gas (MMcf)                                                                96,683                    84,289
Crude oil equivalents (MBoe)                                                      33,575                    27,774




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Production

The following table summarizes the changes in our average daily Boe production
by major operating area for the first quarter period.
Boe production per day           1Q 2022          1Q 2021        % Change
Bakken                         171,401          160,577               7  %
Anadarko Basin                 143,963          138,386               4  %
Powder River Basin              11,653            2,464             373  %
Permian Basin                   40,248                -               -  %
All other                        6,545            6,515               -  %
Total                          373,810          307,942              21  %


The following table summarizes the changes in our production by product for the
first quarter period.

                                                                 Three months ended March 31,                                                             Volume
                                                       2022                                        2021                            Volume                percent
                                            Volume               Percent                Volume               Percent              increase               increase
Crude oil (MBbl)                              17,529                   52  %              13,667                   49  %            3,862                       28  %
Natural gas (MMcf)                            96,683                   48  %              84,289                   51  %           12,394                       15  %
Total (MBoe)                                  33,643                  100  %              27,715                  100  %            5,928                       21  %


The 28% increase in crude oil production in the 2022 first quarter was primarily
driven by our property acquisitions in the Permian Basin and Powder River Basin
over the past year, which increased our 2022 first quarter production by 2,807
MBbls and 657 MBbls, respectively, compared to the 2021 first quarter.
Additionally, crude oil production in the Bakken increased 581 MBbls, or 6%,
compared to the 2021 first quarter due to new well completions over the past
year.

The 15% increase in natural gas production in the 2022 first quarter was due in
part to the previously described property acquisitions over the past year.
Properties acquired in the Permian Basin increased our 2022 first quarter
production by 4,887 MMcf while properties acquired in the Powder River Basin
increased our production by 1,022 MMcf compared to the 2021 first quarter.
Additionally, natural gas production in the Anadarko Basin increased 4,055 MMcf,
or 7%, and production in the Bakken increased 2,359 MMcf, or 8%, over the 2021
first quarter due to new well completions over the past year.

Revenue

Net crude oil, natural gas, and natural gas liquids sales and related net sales
prices presented below are non-GAAP measures. See the subsequent section titled
Non-GAAP Financial Measures for a discussion and calculation of these measures.

Net crude oil, natural gas, and natural gas liquids sales. Net sales totaled
$2.20 billion for the first quarter of 2022, an 84% increase compared to net
sales of $1.20 billion for the 2021 first quarter due to significant increases
in net sales prices and sales volumes as discussed below.

Total sales volumes for the first quarter of 2022 increased 5,801 MBoe, or 21%,
compared to the 2021 first quarter primarily due to new wells added from our
previously described property acquisitions over the past year. For the first
quarter of 2022, our crude oil sales volumes increased 27% and our natural gas
sales volumes increased 15% compared to the 2021 first quarter.

Our crude oil net sales prices averaged $90.83 per barrel in the 2022 first
quarter compared to $53.09 per barrel for the 2021 first quarter due to the
previously described increase in market prices along with improved price
differentials. The differential between NYMEX West Texas Intermediate calendar
month prices and our realized crude oil net sales prices improved to an average
of $3.47 per barrel for the 2022 first quarter compared to $4.52 per barrel for
the 2021 first quarter, reflecting strong price realizations across our assets.

Our natural gas net sales prices averaged $6.34 per Mcf for the 2022 first
quarter compared to $5.56 per Mcf for the 2021 first quarter due to the
previously described increase in market prices. The difference between our net
sales prices and NYMEX Henry Hub calendar month natural gas prices was a premium
of $1.43 per Mcf for the 2022 first quarter compared to a premium of $2.87 per
Mcf for the 2021 first quarter. In February 2021, severe winter weather and
freezing temperatures in the southern United States led to a period of increased
spot prices for residue natural gas that resulted in a significant improvement
in our price realizations compared to benchmark prices in the 2021 first quarter
with no similar impact in the 2022 first quarter.
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Derivatives. The significant improvement in commodity prices during the first
quarter of 2022 had a significant unfavorable impact on the fair value of our
derivatives, which resulted in negative revenue adjustments of $475.9 million
for the period, representing $22.2 million of cash losses and $453.7 million of
unsettled non-cash losses. For the 2021 first quarter, we recognized negative
revenue adjustments associated with our derivatives totaling $43.5 million
resulting from changes in market prices that had an unfavorable impact on the
fair value of our derivatives.

Crude oil and natural gas service operations. Our crude oil and natural gas
service operations consist primarily of revenues associated with water
gathering, recycling, and disposal activities, which are impacted by our
production volumes and the timing and extent of our drilling and completion
projects. Revenues associated with such activities increased $6.1 million, or
52%, from $11.8 million for the first quarter of 2021 to $17.9 million for the
first quarter of 2022 due to increased water handling activities resulting from
the previously described increase in production volumes compared to the 2021
first quarter, which also produced a corresponding increase in service-related
operating expenses in the current period.

Operating costs and expenses

Production Expenses. Production expenses increased $44.2 million, or 48%, to
$137.3 million for the first quarter of 2022 compared to $93.1 million for the
first quarter of 2021 due to an increase in the number of producing wells, the
associated 21% increase in total sales volumes, and higher workover-related
activities aimed at enhancing production from producing properties prompted by
the favorable commodity price environment. Production expenses on a per-Boe
basis averaged $4.09 per Boe for the 2022 first quarter compared to $3.35 per
Boe for the 2021 first quarter, the increase of which primarily reflects higher
workover-related activities.

Production and Ad Valorem Taxes. Production and ad valorem taxes increased $74.4
million, or 89%, to $158.4 million for the first quarter of 2022 compared to
$84.0 million for the first quarter of 2021 due to the previously described
increase in sales. Our production taxes as a percentage of net sales averaged
7.2% for the first quarter of 2022, consistent with 7.0% for the first quarter
of 2021.

Exploration Expenses. Exploration expenses, which consist primarily of
exploratory geological and geophysical costs and dry hole costs that are
expensed as incurred, increased $8.4 million to $13.0 million for the first
quarter of 2022 compared to $4.6 million for the first quarter of 2021. The 2022
first quarter includes $10.4 million of dry hole costs associated with an
unsuccessful exploratory well with no comparable dry hole costs incurred in the
prior year period.

Depreciation, Depletion, Amortization and Accretion. Total DD&A decreased $50.6
million, or 10%, to $459.0 million for the first quarter of 2022 compared to
$509.6 million for the first quarter of 2021 primarily due to a decrease in our
DD&A rate per Boe as further discussed below, partially offset by the previously
described 21% increase in total sales volumes. The following table shows the
components of our DD&A on a unit of sales basis for the periods presented.

                                                                             Three months ended March 31,
$/Boe                                                                         2022                   2021
Crude oil and natural gas                                               $        13.37          $     18.03
Other equipment                                                                   0.21                 0.22
Asset retirement obligation accretion                                             0.09                 0.10
Depreciation, depletion, amortization and accretion                     $   

13.67 $18.35


Estimated proved reserves are a key component in our computation of DD&A
expense. Proved reserves are determined using the unweighted arithmetic average
of the first-day-of-the-month commodity prices for the preceding twelve months
as required by SEC rules. Holding all other factors constant, if proved reserves
are revised downward due to commodity price declines or other reasons, the rate
at which we record DD&A expense increases. Conversely, if proved reserves are
revised upward, the rate at which we record DD&A expense decreases.

Upward revisions of proved reserves at year-end 2021 prompted by a significant
increase in average commodity prices and other factors resulted in a decrease in
our DD&A rate for crude oil and natural gas properties in the first quarter of
2022 compared to the first quarter of 2021.

Property Impairments. Total property impairments increased $12.8 million to
$24.2 million for the first quarter of 2022 compared to $11.4 million for the
first quarter of 2021, reflecting an $11.8 million proved property impairment
recognized in the current period on a property in an emerging play with no
proved property impairments being recognized in the prior period.

General and Administrative Expenses. Total G&A expenses increased $22.0 million,
or 42%, to $74.8 million for the first quarter of 2022 compared to $52.8 million
for the first quarter of 2021.
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Total G&A expenses include non-cash charges for equity compensation of $29.3
million and $16.9 million for the first quarters of 2022 and 2021, respectively.
This increase was primarily driven by approximately $10 million of incremental
expenses recognized on restricted stock awards whose vesting terms were modified
and accelerated in the 2022 first quarter upon the retirement of certain
management personnel from the Company.

G&A expenses other than equity compensation totaled $45.5 million for the 2022
first quarter, an increase of $9.6 million compared to $35.9 million for the
2021 first quarter primarily due to an increase in payroll costs and employee
benefits.

The following table shows the components of G&A expenses on a sales unit basis for the periods presented.

                                                       Three months ended March 31,
$/Boe                                                        2022           

2021

General and administrative expenses            $          1.36                      $ 1.29
Non-cash equity compensation                              0.87              

0.61

Total general and administrative expenses      $          2.23              

$1.90


Interest Expense. Interest expense increased $7.6 million, or 12%, to $72.6
million for the first quarter of 2022 compared to $65.0 million for the first
quarter of 2021 due to an increase in our weighted average outstanding debt
balance from $5.5 billion for the first quarter of 2021 to $6.8 billion for the
first quarter of 2022. This increase was driven by debt incurred in the fourth
quarter of 2021 to fund a portion of our December 2021 acquisition of properties
in the Permian Basin.

Income Taxes. For the first quarters of 2022 and 2021 we provided for income
taxes at a combined federal and state tax rate of 24.5% of our pre-tax income.
We recorded an income tax provision of $191.1 million for the 2022 first quarter
and an income tax provision of $80.5 million for the 2021 first quarter, which
resulted in effective tax rates of 24.1% and 23.6%, respectively, after taking
into account statutory tax rates, permanent taxable differences, tax effects
from equity compensation, changes in valuation allowances, and other items. See
Notes to Unaudited Condensed Consolidated Financial Statements-Note 12. Income
Taxes for a summary of the sources and tax effects of items comprising our
effective tax rates.

Cash and capital resources

Our primary sources of liquidity have historically been cash flows generated
from operating activities, financing provided by our credit facility and the
issuance of debt securities. Additionally, asset dispositions and joint
development arrangements have provided a source of cash flow for use in reducing
debt and enhancing liquidity. We are committed to operating in a responsible
manner to preserve financial flexibility, liquidity, and the strength of our
balance sheet.

At April 30, 2022, we had $55 million in outstanding borrowings and
$1.94 billion of borrowing availability under our credit facility, which
represents a $180 million increase in availability compared to March 31, 2022.
Our credit facility, which is unsecured and has no borrowing base subject to
redetermination, does not mature until October 2026.

Based on our planned capital spending, our forecasted cash flows and projected
levels of indebtedness, we expect to maintain compliance with the covenants
under our credit facility and senior note indentures. Further, based on current
market indications, we expect to meet our contractual cash commitments to third
parties as of March 31, 2022, including those subsequently described under the
heading Future Capital Requirements, recognizing we may be required to meet such
commitments even if our business plan assumptions were to change. We monitor our
capital spending closely based on actual and projected cash flows and have the
ability to reduce spending or dispose of assets if needed to preserve liquidity
and financial flexibility to fund our operations.

Cash flow

Cash flow from operating activities

Net cash provided by operating activities increased $464 million, or 45%, to
$1.50 billion for the first quarter of 2022 compared to $1.04 billion for the
first quarter of 2021 driven by a $1.0 billion increase in crude oil, natural
gas, and NGL revenues due to the previously described increases in commodity
prices and sales volumes in the current period. This increase was partially
offset by a $74.0 million increase in production and ad valorem taxes associated
with higher revenues and increases in certain other cash operating expenses
primarily due to an increase in sales volumes and growth of our Company over the
past year, which included a $44.2 million increase in production expenses and a
$24.6 million increase in transportation, gathering, processing, and compression
expenses.
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Cash flow from investing activities

Net cash used in investing activities increased $613 million to $1.04 billion
for the first quarter of 2022 compared to $428 million for the first quarter of
2021, reflecting our planned increase in budgeted spending and an increase in
the magnitude of property acquisitions in the 2022 first quarter.
Non-acquisition capital expenditures attributable to us for full year 2022 are
budgeted to be between $2.6 billion and $2.7 billion compared to $1.54 billion
of non-acquisition capital spending for full year 2021. Our investing cash flows
for first quarter 2022 include $403 million paid to acquire properties in the
Powder River Basin as discussed in Note 3. Property Acquisitions and
$62.5 million paid for the new strategic investment described in Note 13. Equity
Investment in Notes to Unaudited Condensed Consolidated Financial Statements.

Cash flow from financing activities

Net cash used in financing activities for the first quarter of 2022 totaled
$480.2 million, primarily consisting of $265 million of net repayments on our
credit facility, $83 million of cash dividends paid on common stock, and $100
million of cash used to repurchase shares of our common stock.

Net cash used in financing activities for the first quarter of 2021 totaled
$564.6 million, primarily consisting of $400 million of cash used to redeem a
portion of our then-outstanding 2022 Notes in January 2021 and $160 million of
net repayments on our credit facility.

Future funding sources

Although we cannot provide any assurance, we believe funds from operating cash
flows, our cash balance, and availability under our credit facility should be
sufficient to meet our normal operating needs, debt service obligations,
budgeted capital expenditures, cash payments for income taxes, and dividend
payments for at least the next 12 months and to meet our contractual cash
commitments to third parties beyond 12 months.

Based on current market indications, our budgeted capital spending plans for
2022 are expected to be funded from operating cash flows. Any deficiencies in
operating cash flows relative to budgeted spending are expected to be funded by
borrowings under our credit facility. If cash flows are materially impacted by
declines in commodity prices, we have the ability to reduce our capital
expenditures or utilize the availability of our credit facility if needed to
fund our operations and business plans. We may choose to access banking or
capital markets for additional financing or capital to fund our operations or
take advantage of business opportunities that may arise. Further, we may sell
assets or enter into strategic joint development opportunities in order to
obtain funding if such transactions can be executed on satisfactory terms.
However, no assurance can be given that such transactions will occur.

Credit facility

We have an unsecured credit facility, maturing in October 2026, with aggregate
lender commitments totaling $2.0 billion. The commitments are from a syndicate
of 12 banks and financial institutions. We believe each member of the current
syndicate has the capability to fund its commitment. As of April 30, 2022, we
had $1.94 billion of borrowing availability on our credit facility after
considering outstanding borrowings and letters of credit.

The commitments under our credit facility are not dependent on a borrowing base
calculation subject to periodic redetermination based on changes in commodity
prices and proved reserves. Additionally, downgrades or other negative rating
actions with respect to our credit rating do not trigger a reduction in our
current credit facility commitments, nor do such actions trigger a security
requirement or change in covenants. Downgrades of our credit rating will,
however, trigger increases in our credit facility's interest rates and
commitment fees paid on unused borrowing availability under certain
circumstances.

Our credit facility contains restrictive covenants that may limit our ability
to, among other things, incur additional indebtedness, incur liens, engage in
sale and leaseback transactions, or merge, consolidate or sell all or
substantially all of our assets. Our credit facility also contains a requirement
that we maintain a consolidated net debt to total capitalization ratio of no
greater than 0.65 to 1.00. See Notes to Unaudited Condensed Consolidated
Financial Statements-Note 8. Long-Term Debt for a discussion of how this ratio
is calculated pursuant to our credit agreement.

We were in compliance with our credit facility covenants at March 31, 2022 and
expect to maintain such compliance. At March 31, 2022, our consolidated net debt
to total capitalization ratio was 0.41. We do not believe the credit facility
covenants are reasonably likely to limit our ability to undertake additional
debt financing if needed to support our business.
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Future capital needs

Our material future cash requirements are summarized below. Based on current
market indications, we expect to meet our contractual cash commitments to third
parties as of March 31, 2022, recognizing we may be required to meet such
commitments even if our business plan assumptions were to change.

Senior ratings

Our debt includes outstanding senior note obligations totaling $6.36 billion at
March 31, 2022, exclusive of interest payment obligations thereon. Our senior
notes are not subject to any mandatory redemption or sinking fund requirements.
The earliest scheduled senior note maturity is our $649.6 million of 2023 Notes
due in April 2023. We expect to be able to generate or obtain sufficient funds
necessary to fully redeem our 2023 Notes prior to maturity. For further
information on the face values, maturity dates, semi-annual interest payment
dates, optional redemption periods and covenant restrictions related to our
senior notes, refer to Note 8. Long-Term Debt in Notes to Unaudited Condensed
Consolidated Financial Statements.

We were in compliance with our senior note covenants at March 31, 2022 and
expect to maintain such compliance. We do not believe the senior note covenants
will materially limit our ability to undertake additional debt financing.
Downgrades or other negative rating actions with respect to the credit ratings
assigned to our senior unsecured debt do not trigger additional senior note
covenants.

Borrowings from credit facility

As of April 30, 2022, we had $55 million of outstanding borrowings on our credit
facility, which represents a decrease of $180 million compared to $235 million
outstanding at March 31, 2022. Our credit facility matures in October 2026.

Transportation, collection and treatment commitments

We have entered into transportation, gathering, and processing commitments to
guarantee capacity on crude oil and natural gas pipelines and natural gas
processing facilities that require us to pay per-unit charges regardless of the
amount of capacity used. Future commitments remaining as of March 31, 2022 under
the arrangements amount to approximately $1.25 billion. See Note 9. Commitments
and Contingencies in Notes to Unaudited Condensed Consolidated Financial
Statements for additional information.

Capital expenditure

Our capital expenditures budget for 2022 is expected to be $2.6 billion to $2.7
billion. Costs of acquisitions and investments, such as those described in Note
3. Property Acquisitions and Note 13. Equity Investment in Notes to Unaudited
Condensed Consolidated Financial Statements, are not budgeted, with the
exception of planned levels of spending for mineral acquisitions.

For the three months ended March 31, 2022, we invested $523.9 million in our
capital program excluding $443.1 million of unbudgeted acquisitions, excluding
$1.9 million of mineral acquisitions attributable to Franco-Nevada, and
including $11.0 million of capital costs associated with increased accruals for
capital expenditures as compared to December 31, 2021. Our 2022 first quarter
capital expenditures were allocated as shown in the table below.

In millions                                                                     1Q 2022
Exploration and development drilling                                       $         426.2
Land costs                                                                  

24.3

Mineral acquisitions attributable to Continental                                       0.5

Fixed assets, refurbishments, hydraulic infrastructures and other company assets

72.3

Seismic                                                                                0.6

Capital expenditures attributable to Continental, excluding unbudgeted acquisitions

523.9

Acquisitions of crude oil and natural gas properties                        

443.1

Total unbudgeted acquisitions                                               

443.1

Total capital expenditures attributable to Continental                     $         967.0
Mineral acquisitions attributable to Franco-Nevada                                     1.9
Total capital expenditures                                                 $         968.9


Our drilling and completion activities and the actual amount and timing of our
capital expenditures may differ materially from our budget as a result of, among
other things, available cash flows, unbudgeted acquisitions, actual drilling and
completion results, operational process improvements, the availability of
drilling and completion rigs and other services and equipment,
                                       26
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cost inflation, the availability of transportation, gathering and processing
capacity, changes in commodity prices, and regulatory, technological and
competitive developments. We monitor our capital spending closely based on
actual and projected cash flows and may adjust our spending should commodity
prices materially change from current levels. We expect to continue
participating as a buyer of properties when and if we have the ability to
increase our position in strategic plays at attractive terms.

April 2022 Property acquisition

On March 3, 2022, we executed a definitive agreement to acquire oil and gas
properties in the Permian Basin of Texas for cash consideration of $200 million,
subject to customary closing price adjustments. Closing of the acquisition
occurred on April 15, 2022, at which time we paid $177.0 million, which reflects
customary adjustments made pursuant to the agreement and was in addition to a
$20.0 million deposit paid at signing in March.

Strategic investment

See Note 13. Equity Investment in Notes to Unaudited Condensed Consolidated
Financial Statements for discussion of future spending commitments associated
with a new strategic investment made by the Company with Summit Carbon Solutions
in the first quarter of 2022.

Cash payments for income taxes

On April 14, 2022, we made a quarterly estimated payment for 2022 U.S. federal
income taxes of $125 million based on an estimate of federal taxable income for
the year. Significant judgment is involved in estimating future taxable income
as we are required to make assumptions about future commodity prices, projected
production, development activities, capital spending, profitability, and general
economic conditions, all of which are subject to material revision in future
periods as better information becomes available. As of April 30, 2022, the
publicly available forward commodity strip prices for the remainder of 2022
averaged $97.88 per barrel for crude oil and $7.33 per Mcf for natural gas. If
commodity prices remain at these levels for the remainder of the year, we expect
to utilize the full amount of our federal net operating loss carryforwards and
certain state net operating loss carryforwards and generate significant taxable
income in 2022, which would result in us making estimated cash payments for
income taxes each quarter in the upcoming year in amounts that could approximate
the $125 million quarterly payment made in April 2022. Because of the
significant uncertainty inherent in numerous factors utilized in projecting
taxable income, we cannot predict the amount of future income tax payments with
certainty.

Dividend Declaration

On April 27, 2022, the Company declared a quarterly cash dividend of $0.28 per
share on its outstanding common stock, which will be paid on May 23, 2022 to
shareholders of record as of May 9, 2022.

Share buyback program

In May 2019 our Board of Directors approved the initiation of a share repurchase
program to acquire up to $1 billion of our common stock beginning in June 2019.
On February 8, 2022, our Board of Directors approved an increase in the size of
the share repurchase program to $1.5 billion. As of the date of this filing, we
have repurchased and retired a cumulative total of approximately 18.81 million
shares under the program at an aggregate cost of $540.9 million, leaving
$959.1 million of authorized repurchasing capacity under the modified program.
The timing and amount of the Company's share repurchases are subject to market
conditions and management discretion. The share repurchase program does not
require the Company to repurchase a specific number of shares and may be
modified, suspended, or terminated by the Board of Directors at any time.

Repayments and Redemptions of Senior Notes

In recent periods we have redeemed or repurchased a portion of our outstanding
senior notes. From time to time, we expect to execute additional redemptions or
repurchases of our senior notes for cash in open market transactions, privately
negotiated transactions, or otherwise. Such redemptions or repurchases will
depend on prevailing market conditions, our liquidity and prospects for future
access to capital, and other factors. The amounts involved in any such
transactions, individually or in the aggregate, may be material.

Dakota Access Pipeline

In response to a July 2020 U.S. District Court decision vacating the U.S. Army
Corps of Engineers ("Corps") grant of an easement to the Dakota Access Pipeline
("DAPL") and issuance of an order requiring the Corps to conduct an
environmental impact statement for the pipeline, the Corps is currently
conducting the court-ordered environmental review to determine whether DAPL
poses a threat to the drinking water supply of the Standing Rock Sioux
Reservation. DAPL currently remains in
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operation. The owners of DAPL appealed the District Court decision to the U.S.
Supreme Court in September 2021, but the appeal was rejected on February 22,
2022. The Corps continues to conduct the review, which is estimated to be
completed no later than November 2022. Once the review is completed, the Corps
will determine whether DAPL is safe to operate or must be shut down. We are
unable to determine the outcome or the impact of this matter on DAPL in the
future.

We utilize DAPL to transport a portion of our Bakken crude oil production to
ultimate markets on the U.S. gulf coast. Our transportation commitment on the
pipeline totals 30,000 barrels per day which will continue through February 2026
at which time the commitment decreases to 26,450 barrels per day through July
2028.

If transportation capacity on DAPL becomes restricted or unavailable, we have
the ability to utilize other third party pipelines or rail facilities to
transport our Bakken crude oil production to market, although such alternatives
may be more costly. A restriction of DAPL's takeaway capacity may have an impact
on prices for Bakken-produced barrels and result in wider differentials relative
to WTI benchmark prices in the future, the amount of which is uncertain.

Legislative and regulatory developments

The crude oil and natural gas industry in the United States is subject to
various types of regulation at the federal, state and local levels. President
Biden, in pursuit of his regulatory agenda, has issued, and may continue to
issue, executive orders that result in more stringent and costly requirements
for the domestic crude oil and natural gas industry and there is the potential
for the revision of existing laws and regulations or the adoption of new
legislation that could adversely affect the oil and gas industry, including
those pertaining to the taxation of oil and gas exploration and production
activities. Such changes, if enacted, could have a material adverse effect on
our results of operations and cash flows. See Part I, Item 1.
Business-Regulation of the Crude Oil and Natural Gas Industry in our Form 10-K
for the year ended December 31, 2021 for a discussion of significant laws and
regulations that have been enacted or are currently being considered by
regulatory bodies that may affect us in the areas in which we operate.

SECOND proposal for a regulation on climate information

In March 2022, the SEC proposed rule amendments that would create a wide range
of new climate-related disclosure obligations for registrants. The proposed
rules would require registrants to include certain climate-related information
in registration statements and annual reports, including (i) climate-related
risks and their actual or likely material impacts on the registrant's business,
strategy, and outlook; (ii) the registrant's governance of climate-related risks
and relevant risk management processes; (iii) information on the registrant's
greenhouse gas emissions, which, for accelerated and large accelerated filers
and with respect to certain emissions, would be subject to assurance; (iv)
certain climate-related financial statement metrics and related disclosures in a
note to audited financial statements; and (v) information about climate-related
targets, goals, and transition plans. The proposed rules remain open to public
comment and may be subject to challenges and litigation. Thus, the ultimate
scope and impact of the proposed rules on our business remain uncertain. To the
extent new rules, if finalized, impose additional reporting obligations on us,
we could face increased costs.

Inflation

Certain drilling and completion costs and costs of oilfield services, equipment,
and materials decreased in recent years as service providers reduced their costs
in response to reduced demand arising from historically low crude oil prices.
However, inflationary pressures returned in 2021 and continue to persist in 2022
in conjunction with the significant increase in commodity prices over the past
year, labor shortages, and other factors. Additionally, supply chain disruptions
stemming from the COVID-19 pandemic have led to shortages of certain materials
and equipment and resulting increases in material and labor costs. Our capital
spending budget for 2022 includes an estimate for the impact of cost inflation
and, despite inflationary pressures, we expect to continue generating
significant amounts of free cash flow at current commodity price levels.

Significant Accounting Policies and Estimates

There have been no changes in our critical accounting policies and estimates from those disclosed in our 2021 Form 10-K.

Non-GAAP Financial Measures

Net sales of crude oil, natural gas and natural gas liquids and net selling prices

Revenues and transportation expenses associated with production from our
operated properties are reported separately as discussed in Notes to Unaudited
Condensed Consolidated Financial Statements-Note 5. Revenues. For non-operated
properties, we receive a net payment from the operator for our share of sales
proceeds which is net of costs incurred by the operator, if any. Such
non-operated revenues are recognized at the net amount of proceeds received. As
a result, the separate presentation of
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revenues and transportation expenses from our operated properties differs from
the net presentation from non-operated properties. This impacts the
comparability of certain operating metrics, such as per-unit sales prices, when
such metrics are prepared in accordance with U.S. GAAP using gross presentation
for some revenues and net presentation for others.

In order to provide metrics prepared in a manner consistent with how management
assesses the Company's operating results and to achieve comparability between
operated and non-operated revenues, we have presented crude oil, natural gas,
and natural gas liquids sales net of transportation expenses in Management's
Discussion and Analysis of Financial Condition and Results of Operations, which
we refer to as "net crude oil, natural gas, and natural gas liquids sales," a
non-GAAP measure. Average sales prices calculated using net sales are referred
to as "net sales prices," a non-GAAP measure, and are calculated by taking
revenues less transportation expenses divided by sales volumes. Management
believes presenting our revenues and sales prices net of transportation expenses
is useful because it normalizes the presentation differences between operated
and non-operated revenues and allows for a useful comparison of net realized
prices to NYMEX benchmark prices on a Company-wide basis.

The following tables present a reconciliation of crude oil, natural gas, and
natural gas liquids sales (GAAP) to net crude oil, natural gas, and natural gas
liquids sales and related net sales prices (non-GAAP) for the three months ended
March 31, 2022 and 2021.

                                                  Three months ended March 31, 2022                                 Three months ended March 31, 2021
                                                              Natural gas                                                        Natural gas
In thousands                             Crude oil              and NGLs              Total                Crude oil               and NGLs              Total
Crude oil, natural gas, and NGL
sales (GAAP)                          $   1,643,847          $   630,414          $ 2,274,261          $    768,768             $   478,765          $ 1,247,533
Less: Transportation expenses               (57,887)             (16,962)             (74,849)              (40,079)                (10,177)             (50,256)
Net crude oil, natural gas, and
NGL sales (non-GAAP)                  $   1,585,960          $   613,452          $ 2,199,412          $    728,689             $   468,588          $

1,197,277

Sales volumes (MBbl/MMcf/MBoe)               17,461               96,683               33,575                13,726                  84,289               27,774
Net sales price (non-GAAP)            $       90.83          $      6.34          $     65.51          $      53.09             $      5.56          $     43.11





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