Continental Energy CEO Harold Hamm. Image courtesy of David Morris/Youtube.

Continental Energy CEO Harold Hamm is betting that slumping oil prices will rebound and has sold off $433 million of the company’s hedges.

The move comes just a few days after Saudi Arabia, OPEC’s largest producer, cut its Arab Light to U.S. Gulf Coast benchmark by 45 cents per barrel.

Saudi Arabia also increased discounts for medium and heavy grade crude for the fourth month in a row.

While crude prices have fallen about 25 percent in recent months Hamm said Continental is well positioned to reap the rewards if prices rebound.

Continental did not consult with credit-rating agencies before scrapping its contracts but board members support the decision, Hamm said.

Although many analysts are forecasting further price dips Hamm believes prices will bounce back to at least $85 per barrel in the near term.

“We believe the recent pullback in oil prices will ultimately prove to be beneficial to Continental,” he said.

While Saudi Arabia has remained mute on its decision to cut its benchmark price observers believe the country is trying to combat the current crude supply glut by squeezing North American shale producers.

“We see OPEC worried about that and want to slow down what we’re doing,” Hamm said said.

Continental, whose stock has tumbled 30 percent since June, is keeping its hedges on natural gas.

Hamm trimmed Continental’s 2015 capital expenditure budget by $600 million and will not deploy more drilling rigs until prices recover.

Oklahoma-based Continental, the largest producer in the Bakken play, also revised its estimated 2015 output growth down to 23 to 29 percent from previous forecast of 26 to 32 percent.

The company currently has 22 drilling rigs in North Dakota but will drop its rig count down to 19 next year.


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