Continental Resources (CLR), mcap=$23.6bn, price $65.09 vs $65.00

Arb pitch:
– Controlling shareholders offered to take CLR private at $70/shr.
– Owns 83% or 90.5% with related parties.
– Special Committee currently evaluating the proposal.
– Negotiated price likely to be in $75-80/shr range, supported by company’s valuation.
– 9% upside to the current offer and 15% to potentially improved one.

– A blend of 3 approaches results in an $80/share target:
(1) 4xEBITDA=$82/share, in line with peers $FANG (4x), $PXD (4.7x), $HES (5.5x), $MRO (3.6x), $COP (3.8x).
(2) NVP of reserves = $77/share.
(3) DCF model = $81/share.

Exp. gain: +15% to $75/share

Full $CLR write-up (free guest account required):

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