2014

Cimarex Reports 2013 First Quarter Results - Production Up 10% Year-over-Year

- Expanding Opportunity in Multi-pay Delaware Basin

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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