Cimarex Reports 2013 First Quarter Results

- Production Up 10% Year-over-Year

- Expanding Opportunity in Multi-pay Delaware Basin

May 07, 2013, 06:00 ET from Cimarex Energy Co.

DENVER, May 7, 2013 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported 2013 first quarter net income of $89.9 million, or $1.04 per diluted share which included a non-cash hedging loss of $2.3 million, or $0.02 per share.  First quarter 2012, net income was $106.1 million, or $1.23 per diluted share and included a hedging loss of $2.6 million, or $0.03 per share.

First quarter production grew ten percent to 661.1 million cubic feet equivalent (MMcfe) per day compared to 2012 first quarter output of 603.5 MMcfe per day.  Oil production grew 12% (20% when adjusted for asset sales) and averaged 33,154 barrels per day.  Current quarter volumes were comprised of 50% gas, 30% oil and 20% NGLs. 

Natural gas prices increased 16% to $3.38 per Mcf in the first quarter of 2013.  Realized oil prices averaged $86.31 per barrel and natural gas liquids (NGL) prices averaged $29.31 per barrel, decreases of 13% and 20%, respectively. 

Revenues from the sale of oil, gas and NGLs totaled $415.5 million versus $411.3 million for the same period in 2012.  Adjusted cash flow from operations was $292.4 million versus $303.0 million a year ago(1).    

Cimarex invested $409 million on exploration and development in the first quarter.  Of these expenditures, 64% were on Permian Basin projects and 34% on projects in the Mid-Continent.

At March 31, 2013, long-term debt was $870 million, comprised of $750 million of senior unsecured notes and $120 million of bank debt. Debt to total capitalization was 20%(2).  

2013 Outlook Production volume guidance for 2013 remains unchanged and is projected to average 675-705 MMcfe per day, an increase of 8-13% over 2012.  Mid-Continent and Permian production volumes are projected to grow 11-15% over 2012, averaging between 652-673 MMcfe per day. 

Total volumes for the second quarter of 2013 are projected to average 667-692 MMcfe per day, a 13-17% increase over 2012. Second quarter 2013 Mid-Continent and Permian production volumes are projected to increase 18-22%, to within a range of 647-667 MMcfe per day.

Full-year 2013 capital expenditures are expected to be approximately $1.5 billion.  Nearly all the 2013 capital is directed towards drilling oil and liquids-rich gas wells in the Permian and Cana-Woodford. 

Expenses for 2013 are expected to fall within the following ranges:

Expenses ($/Mcfe):

Production expense

$1.10 -  $1.22

Transportation expense

  0.27  -  0.32

DD&A and ARO accretion

  2.40  -  2.55

General and administrative expense

  0.22  -  0.28

Taxes other than income (% of oil and gas revenue)

6.0%  -  6.5%

Permian Basin Update First quarter 2013 production from the Permian Basin averaged 275.2 MMcfe per day, an increase of 15% over first quarter 2012.  Oil volumes increased 18% to 25,832 barrels per day.

Cimarex drilled and completed 35 gross (27 net) Permian Basin wells during the first quarter.  All were completed as producers.  At March 31, 20 gross (13 net) wells were awaiting completion.  Drilling took place mainly in the Delaware Basin of Texas and southeast New Mexico, targeting the Bone Spring and Wolfcamp formations. 

In Culberson County, Texas, Cimarex is drilling both horizontal Wolfcamp and Bone Spring wells.  The company has now successfully drilled Wolfcamp C & D and Bone Spring wells and sees the potential for two additional intervals to be productive.  Year-to-date, three gross (three net) Bone Spring wells have been drilled and completed.  Total Bone Spring wells drilled to date in Culberson County have had per well 30-day average gross production of over 900 Boe per day (59% oil).   Cimarex also drilled three gross (three net) horizontal Wolfcamp wells in Culberson County in the first quarter, bringing total Wolfcamp wells in the area to 34 gross (32 net).  Per well first-30 day production rates on all of the Wolfcamp wells drilled in the area have averaged 6.4 MMcfe per day, comprised of 43% gas, 27% oil and 30% NGL (assuming full NGL recovery). 

First quarter 2013 New Mexico Bone Spring wells drilled and completed totaled 18 gross (11 net).  Per-well 30-day gross production from these wells averaged over 650 Boe per day (89% oil).  Ward County, Texas Third Bone Spring drilling totaled 7 gross (6.5 net) wells and had per-well 30-day average gross production rates of over 970 Boe per day (77% oil).

Mid-Continent Update Mid-Continent production averaged 360.6 MMcfe per day for the first quarter of 2013, a 15% increase over the first quarter 2012 average of 313.9 MMcfe per day.  Cana-Woodford represented 229.3 MMcfe per day of the first quarter 2013 total, a 42% increase versus the same period last year.  During the first quarter Cimarex drilled and completed 52 gross (20 net) wells, essentially all of which were in the Cana-Woodford shale play.  All were completed as producers.  At March 31, 42 gross (15 net) wells were awaiting completion. 

Wells Drilled and Completed by Region

For the Three Months

Ended March 31,

2013

2012

Gross wells

Permian Basin

35

39

Mid-Continent

52

33

Gulf Coast/Other

-

1

87

73

Net wells

Permian Basin

27

27

Mid-Continent

20

12

Gulf Coast/Other

-

1

47

40

% Gross wells completed as producers

100%

95%

Cimarex's average daily production by commodity and region is summarized below:

For the Three Months Ended

March 31,

2013

2012

Gas (Mcf per day)

Permian Basin

82,766

75,094

Mid-Continent

236,220

216,825

Gulf Coast/Other

13,815

28,052

332,801

319,971

Oil (Barrels per day)

Permian Basin

25,832

21,800

Mid-Continent

6,291

5,891

Gulf Coast/Other

1,031

1,871

33,154

29,562

NGL (Barrels per day)

Permian Basin

6,239

5,742

Mid-Continent

14,443

10,283

Gulf Coast/Other

880

1,662

21,562

17,687

Total Equivalent (Mcfe per day)

Permian Basin

275,192

240,346

Mid-Continent

360,624

313,869

Gulf Coast/Other

25,279

49,251

661,095

603,466

Other The company's bank group, as part of their regular annual review, increased the credit facility borrowing base from $2.0 billion to $2.25 billion.  Credit facility commitments remain unchanged at $1 billion

Cimarex has oil swaps and collars covering 12,000 barrels per day through December 31, 2013.  Mid-Continent natural gas collars on 80,000 MMBTU per day have recently been added.  The following table summarizes the current open hedge positions:

 

               Oil Contracts

Weighted Average Price

Period

Type

 Barrels/day

Index(3)

Floor

Ceiling

Swap

Apr.-Dec. 13

Swaps

6,000

WTI

NA

NA

$

96.13

Apr.-Dec. 13

Collar

6,000

WTI

$

85.00

$

102.31

$

NA

12,000

 

               Gas Contracts

Weighted Average Price

Period

Type

MMBTU/day

Index(2)

Floor

Ceiling

May – Jun. 13

Collar

30,000

PEPL

3.50

4.50

Jul. 13  – Dec. 14

Collar

80,000

PEPL

$

3.51

$

4.57

Cimarex accounts for commodity contracts using the mark-to-market (through income) accounting method.  First quarter 2013 had a realized gain of $0.7 million in cash received from oil swaps.

Conference call and webcast Cimarex will host a conference call and webcast today at 11:00 a.m. Mountain Time (1:00 p.m. Eastern Time).  The webcast is available at www.cimarex.com.  To access the live, interactive call, please dial (877) 789-9039 and reference call ID # 34840688 ten minutes before the scheduled start time.  A digital replay will be available for one week following the live broadcast at (855) 859-2056 and by using the conference ID # 34840688. 

About Cimarex Energy Denver-based Cimarex Energy Co. is an independent oil and gas exploration and production company with principal operations in the Mid-Continent and Permian Basin areas of the U.S.

This communication contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are more fully described in SEC reports filed by Cimarex. While Cimarex makes these forward-looking statements in good faith, management cannot guarantee that anticipated future results will be achieved. Cimarex assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law. 

(1)

Cash flow from operations is a non-GAAP financial measure.  See below for a reconciliation of the related amounts.

(2)

Reconciliation of debt to total capitalization, which is a non-GAAP measure, is:  long-term debt of $870 million divided by long-term debt of $870 million plus stockholders' equity of $3,554.6 million.

(3)

WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange.  PEPL refers to Panhandle Eastern Pipe Line, Tex/Ok Mid-Continent index as quoted in Platt's Inside FERC.

 

RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS

For the Three Months Ended

March 31,

2013

2012

(in thousands)

Net cash provided by operating activities

$

247,078

$

251,892

Change in operating assets

    and liabilities

45,343

51,064

Adjusted cash flow from operations

$

292,421

$

302,956

Management believes that the non-GAAP measure of adjusted cash flow from operations is useful information for investors because it is used internally and is accepted by the investment community as a means of measuring the company's ability to fund its capital program, without fluctuations caused by changes in current assets and liabilities, which are included in the GAAP measure of cash flow from operating activities.  It is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.

 

 

PRICE AND PRODUCTION DATA

For the Three Months Ended

March 31,

2013

2012

 Gas  - MMcf 

29,952

29,117

 Gas  - Mcf per day 

332,801

319,971

 Gas price - per Mcf  

$3.38

$2.92

 Oil  - thousand barrels 

2,984

2,690

 Oil  - barrels per day 

33,154

29,562

 Oil price - per barrel 

$86.31

$99.28

 NGL  - thousand barrels 

1,941

1,610

 NGL  - barrels per day  

21,562

17,687

 NGL price - per barrel 

$29.31

$36.66

OIL AND GAS CAPITALIZED EXPENDITURES

For the Three Months Ended

March 31,

2013

2012

(in thousands)

Acquisitions:

Proved

$

$

51

Unproved

250

1,922

250

1,973

Exploration and development:

Land and Seismic

31,310

37,212

Exploration and development

377,297

365,359

408,607

402,571

Sale proceeds:

Proved

(818)

(171)

Unproved

(81)

(942)

(899)

(1,113)

$

407,958

$

403,431

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited)

For the Three Months Ended

March 31,

2013

2012

(In thousands, except per share data)

Revenues:

Gas sales

$

101,121

$

85,153

Oil sales

257,532

267,084

NGL sales

56,875

59,014

Gas gathering, processing and other, net

10,828

11,785

426,356

423,036

Costs and expenses:

Depreciation, depletion, amortization and accretion

138,837

121,787

Production

69,386

67,625

Transportation

18,634

13,316

Gas gathering and processing

6,156

4,851

Taxes other than income

25,128

25,160

General and administrative

15,577

14,147

Stock compensation

3,605

4,534

Loss on derivative instruments, net

1,603

4,088

Other operating, net

2,932

2,340

281,858

257,848

Operating income

144,498

165,188

Other (income) and expense:

Interest expense 

12,186

7,959

Amortization of deferred financing costs

1,020

709

Capitalized interest

(9,195)

(7,804)

Other, net

(2,616)

(4,726)

Income before income tax

143,103

169,050

Income tax expense

53,176

62,943

Net income

$

89,927

$

106,107

Earnings per share to common stockholders:

Basic 

$

1.04

$

1.24

Diluted

$

1.04

$

1.23

Dividends per share

$

0.14

$

0.12

Shares attributable to common stockholders:

Unrestricted common shares outstanding

84,920

83,937

Diluted common shares

85,016

84,307

Shares attributable to common stockholders and participating securities:

Basic shares outstanding

86,459

85,777

Fully diluted shares 

86,555

86,147

Comprehensive income:

Net income

$

89,927

$

106,107

Other comprehensive income:

Change in fair value of investments, net of tax 

80

399

Total comprehensive income

$

90,007

$

106,506

CONDENSED CASH FLOW STATEMENTS (unaudited)

For the Three Months Ended

March 31,

2013

2012

(In thousands)

Cash flows from operating activities:

Net income

$

89,927

$

106,107

Adjustment to reconcile net income to net cash 

provided by operating activities:

Depreciation, depletion, amortization and accretion

138,837

121,787

Deferred income taxes

53,176

62,943

Stock compensation

3,605

4,534

Derivative instruments, net

2,329

4,088

Changes in non-current assets and liabilities

3,374

2,239

Amortization of deferred financing costs

and other, net

1,173

1,258

Changes in operating assets and liabilities:

Increase in receivables, net

(30,576)

(2,144)

Decrease in other current assets

9,143

69

Decrease in accounts payable and 

accrued liabilities

(23,910)

(48,989)

Net cash provided by operating activities

247,078

251,892

Cash flows from investing activities:

Oil and gas expenditures

(390,669)

(400,963)

Sales of oil and gas assets and other assets

975

1,322

Other expenditures

(19,523)

(10,300)

Net cash used by investing activities

(409,217)

(409,941)

Cash flows from financing activities:

Net increase in bank debt

120,000

167,000

Dividends paid

(10,356)

(8,576)

Issuance of common stock and other

1,489

1,625

Net cash provided by financing activities

111,133

160,049

Net change in cash and cash equivalents

(51,006)

2,000

Cash and cash equivalents at beginning of period

69,538

2,406

Cash and cash equivalents at end of period

$

18,532

$

4,406

CONDENSED BALANCE SHEETS (unaudited)

March 31,

December 31,

Assets

2013

2012

(In thousands, except share data)

Current assets:

Cash and cash equivalents

$

18,532

$

69,538

Receivables, net

333,550

302,974

Oil and gas well equipment and supplies

73,035

81,029

Deferred income taxes

12,122

8,477

Derivative instruments

288

Other current assets

6,970

8,119

Total current assets

444,497

470,137

Oil and gas properties at cost, using the full cost method of accounting:

Proved properties

11,733,247

11,258,748

Unproved properties and properties under development,

not being amortized

579,927

645,078

12,313,174

11,903,826

Less – accumulated depreciation, depletion and amortization

(7,027,421)

(6,899,057)

Net oil and gas properties

5,285,753

5,004,769

Fixed assets, net

164,727

152,605

Goodwill

620,232

620,232

Other assets, net

54,740

57,409

$

6,569,949

$

6,305,152

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

83,274

$

103,653

Accrued liabilities

411,789

392,909

Derivative instruments

2,617

Revenue payable

147,945

149,300

Total current liabilities

645,625

645,862

Long-term debt

870,000

750,000

Deferred income taxes

1,178,221

1,121,353

Other liabilities 

321,510

313,201

Total liabilities

3,015,356

2,830,416

Stockholders' equity:

Preferred stock, $0.01 par value, 15,000,000 shares

authorized, no shares issued

Common stock, $0.01 par value, 200,000,000 shares authorized,

86,449,746 and 86,595,976 shares issued, respectively

864

866

Paid-in capital

1,941,443

1,939,628

Retained earnings

1,611,732

1,533,768

Accumulated other comprehensive income

554

474

3,554,593

3,474,736

$

6,569,949

$

6,305,152

SOURCE Cimarex Energy Co.



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