Net income included a pre-tax property impairment charge of $35.4 million for the first quarter of 2009, compared to a $4.5 million pre-tax property impairment charge for the first quarter of 2008. Apart from the $35.4 million charge, Continental Resources’ net loss was $4.6 million, or $0.03 per diluted share, for the first quarter of 2009.
The 2009 impairment charge incorporated $9.4 million for impairment of non-producing properties and $26 million for impairment of developed oil and gas properties. Of the latter amount, $14.1 million related to uneconomic drilling results in two exploratory wells completed in the first quarter of 2009 in western Oklahoma and the Texas panhandle. The rest of the $26 million charge primarily related to uneconomic wells in Texas and non-Bakken Montana properties.
Continental Resources carried to raise crude oil and natural gas production in the first quarter of 2009. Average daily production was 36,808 Boepd (barrels of oil equivalent per day) for the quarter, up 22% over the first quarter of 2008 and a two% increase over the fourth quarter of 2008. Total production for the first quarter of 2009 was 3.3 MMBoe, compared to 2.8 MMBoe for the first quarter of 2008. Production grew despite the continued reduction in drilling activity. Continental Resources is currently operating four drilling rigs, compared with 32 operated rigs in October 2008 and 13 at the beginning of the first quarter of 2009.
We are conserving cash and preserving the strength of our balance sheet, said Harold Hamm, chairman and chief executive officer. We are also focused on reducing operating costs. Industry service costs have declined due to the drastic cuts in U.S. drilling activity in the past six months. In the first quarter, we reduced production expense by 13% to $7.24 per Boe, compared with $8.33 in the first quarter of 2008. In addition, we expect further reductions in drilling and completion costs.
Continental Resources’ average sales price per barrel of oil equivalent was $29.90 for the first quarter of 2009, 63% lower than the average sales price of $81.35 per Boe for the first quarter of 2008. The average price for the company’s crude oil fell to $34.99 per barrel in the first quarter of 2009, compared to $90.55 for the first quarter 2008. The company’s average natural gas price was $2.98 per Mcf for the first quarter of 2009, compared to $7.55 in the first quarter of 2008.
Crude oil price differentials averaged $8.32 per barrel for the first quarter of 2009, compared to $14.45 per barrel for the fourth quarter of 2008 and $7.41 in the first quarter last year. The company’s average crude oil price differential for March 2009 was $4.43.
Despite increased production, total oil and natural gas sales fell to $92.6 million for the first quarter of 2009, a reduction of 59% from oil and gas sales of $225.4 million for the first quarter of 2008. Anticipating stronger crude oil prices, Continental Resources stored 216 MBbls of crude oil in the first quarter of 2009. In the first quarter of 2008, the company sold 19 MBbls of crude oil more than it produced, selling oil out of storage.
EBITDAX was $57.7 million for the first quarter of 2009, compared to $184 million for the first quarter 2008. For the company’s definition and reconciliation of EBITDAX to net income, the most comparable figure calculated pursuant to generally accepted accounting principles.
Capital expenditures were $153.1 million for the first quarter of 2009. Continental Resources intends to manage its drilling and completion activity through the remainder of 2009 to keep full-year capital expenditures in line with its $275 million budget. Continental Resources has only one operated drilling rig with a contract term beyond August 2009.
