Cimarex Reports Third Quarter 2015 Results

Company's First Meramec Long Lateral tests 16.0 MMcfe/day

Nov 03, 2015, 18:00 ET from Cimarex Energy Co.

DENVER, Nov. 3, 2015 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported a third quarter 2015 net loss of $763.3 million, or $8.21 per diluted share, including a non-cash impairment of oil and gas properties.  The adjusted third quarter net loss was $14.4 million, or $0.15 per diluted share.(1)  Third quarter 2015 adjusted cash flow from operations was $178.6 million versus $439.7 million a year ago.(1) 

Total company production averaged 979 million cubic feet equivalent (MMcfe) per day during the third quarter, a four percent increase from third quarter 2014. Year-over-year oil volumes grew 15 percent, natural gas volumes decreased one percent and natural gas liquids (NGL) volumes were up one percent.

Commodity prices impacted Cimarex's financial results for the quarter. Realized oil prices averaged $41.89 per barrel, down 52 percent versus a year ago and 17 percent sequentially. Natural gas prices were down 35 percent year-over-year and averaged $2.68 per thousand cubic feet (Mcf) compared to $4.10 per Mcf.  NGL prices averaged $12.19 per barrel, down 64 percent from the third quarter of 2014 and 17 percent sequentially.  (See table of Average Realized Price by Region below.)

Cimarex invested $184 million in exploration and development during the third quarter, which was primarily funded with cash flow from operations.  Total debt at September 30, 2015, remained at $1.5 billion of long-term notes.  Cimarex had no borrowings under its revolving credit facility and a cash balance of $899 million. Debt was 30 percent of total capitalization(2).  In October 2015, we entered into a new senior unsecured revolving credit facility which matures October 16, 2020.  The credit facility has aggregate commitments of $1.0 billion, no borrowing base and a single financial covenant of debt to capital ratio not to exceed 65 percent. 

Total company production for the fourth quarter 2015 is projected to average 980-1,010 MMcfe per day. Incorporating updated fourth quarter guidance, full year production is now estimated to average 983-991 MMcfe per day, a mid-point increase of 14 percent over 2014. Capital investment for exploration and development is estimated to be $900-$950 million in 2015, down from previous guidance of $1.0 billion.

Expenses per Mcfe of production for the remainder of 2015 are estimated to be:

Production expense

$0.77 -  $0.87

Transportation, processing and other expense

  0.45  -  0.55

DD&A and ARO accretion

  1.65  -  1.85

General and administrative expense*

  0.23  -  0.27

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

*Includes $0.05/Mcfe related to a charitable contribution commitment.

   5.5  -  6.0%

 

Operations Update Cimarex invested $184 million in exploration and development during the third quarter bringing the total for the first nine months of 2015 to $683 million.  Year-to-date, 59 percent has been invested in the Permian Basin and 40 percent in the Mid-Continent. We completed 56 gross (14 net) wells during the quarter.  At September 30, 60 gross (27 net) wells were awaiting completion.  Cimarex is currently operating seven drilling rigs.  

WELLS BROUGHT ON PRODUCTION BY REGION

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Gross wells

Permian Basin

4

36

72

117

Mid-Continent

52

30

82

106

Other

-

-

2

56

66

154

225

Net wells

Permian Basin

4

27

52

78

Mid-Continent

10

9

19

43

Other

-

-

1

14

36

71

122

Permian Region Production from the Permian region averaged 562.4 MMcfe per day in the third quarter, a 38 percent increase over third quarter 2014. Quarterly oil volumes increased 24 percent year-over-year to 42,367 barrels per day and accounted for 45 percent of the region's total production for the quarter.

Cimarex completed and brought on production four gross (four net) wells in the Permian region during the third quarter. On September 30, there were seven gross (five net) wells waiting on completion in the Delaware Basin.

Cimarex now has 13 long-lateral Wolfcamp D wells producing in Culberson County, Texas, up two from our last report.  These 10,000-foot laterals had an average 30-day initial gross peak production rate of 2,308 BOE per day (46 percent gas, 29 percent NGL, 25 percent oil). 

Mid-Continent Activity in the Mid-Continent region was focused in the Cana area in western Oklahoma, where 52 gross (ten net) wells were completed and brought on production during the third quarter. At the end of the quarter, 53 gross (22 net) wells were waiting on completion. Third quarter production from the Cana area averaged 321.6 MMcfe per day, representing 33 percent of total company production. Total Mid-Continent production averaged 405.3 MMcfe per day for the third quarter of 2015.

In the Meramec formation, Cimarex completed its first 10,000-foot lateral.  The Clayton 1HX had an average 30-day initial peak production rate of 16.0 MMcfe per day (57 percent gas, 28 percent NGL, 15 percent oil).   In addition, Cimarex now has eleven 5,000-foot Meramec wells on production which have an average 30-day initial gross peak production rate of 9.3 MMcfe per day (47 percent gas, 29 percent oil, 24 percent NGL). 

Average daily production and commodity price for Cimarex by region are summarized below:

DAILY PRODUCTION BY REGION

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Permian Basin

Gas (MMcf)

197.6

126.6

179.3

117.6

Oil (Bbls)

42,367

34,299

44,632

33,090

NGL (Bbls)

18,430

12,634

16,938

11,144

Total Equivalent (MMcfe)

562.4

408.1

548.7

383.0

Mid-Continent

Gas (MMcf)

260.8

333.3

272.6

284.9

Oil (Bbls)

6,981

8,158

7,197

7,166

NGL (Bbls)

17,093

22,604

17,823

18,475

Total Equivalent (MMcfe)

405.3

517.9

422.7

438.8

Total Company

Gas (MMcf)

464.3

468.4

458.9

411.7

Oil (Bbls)

49,951

43,376

52,480

41,450

NGL (Bbls)

35,815

35,627

35,056

30,151

Total Equivalent (MMcfe)

978.9

942.4

984.1

841.3

AVERAGE REALIZED PRICE BY REGION

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Permian Basin

Gas ($ per Mcf)

2.75

4.16

2.66

4.70

Oil ($ per Bbl)

42.04

85.43

45.31

89.47

NGL ($ per Bbl)

10.80

30.81

12.28

32.98

Mid-Continent

Gas ($ per Mcf)

2.63

4.07

2.63

4.59

Oil ($ per Bbl)

40.74

94.09

44.32

96.13

NGL ($ per Bbl)

13.66

35.93

15.88

38.04

Total Company

Gas ($ per Mcf)

2.68

4.10

2.65

4.62

Oil ($ per Bbl)

41.89

87.27

45.22

90.87

NGL ($ per Bbl)

12.19

34.08

14.13

36.10

Other The following table summarizes the company's current open hedge positions:

First

Second

Third

Fourth

Quarter

Quarter

Quarter

Quarter

Total

Gas:

2016

PEPL Collars (3)

Volume (MMBtu)

910,000

910,000

920,000

920,000

3,660,000

 Wtd Avg Floor 

$         2.70

$         2.70

$         2.70

$         2.70

$           2.70

 Wtd Avg Ceiling 

$         2.85

$         2.85

$         2.85

$         2.85

$           2.85

El Paso Perm Collars (3)

Volume (MMBtu)

1,820,000

1,210,000

920,000

920,000

4,870,000

 Wtd Avg Floor 

$         2.75

$         2.75

$         2.75

$         2.75

$           2.75

 Wtd Avg Ceiling 

$         3.12

$         3.09

$         3.06

$         3.06

$           3.09

2017

El Paso Perm Collars(3)

Volume (MMBtu)

900,000

910,000

-

-

1,810,000

 Wtd Avg Floor 

$         2.75

$         2.75

$            -

$            -

$           2.75

 Wtd Avg Ceiling 

$         3.36

$         3.36

$            -

$            -

$           3.36

First

Second

Third

Fourth

Oil:

Quarter

Quarter

Quarter

Quarter

Total

2016

WTI Oil Three-Way Collars (4)

Volume (Bbl)

273,000

273,000

276,000

276,000

1,098,000

Floor sold (put) $

$       40.00

$       40.00

$       40.00

$       40.00

$         40.00

Floor purchased (put) $

$       50.00

$       50.00

$       50.00

$       50.00

$         50.00

Ceiling sold (call) $

$       60.00

$       60.00

$       60.00

$       60.00

$         60.00

Conference call and webcast Cimarex will host a conference call Wednesday, November 4, at 11:00 a.m. EST. The call will be webcast and accessible on the company's website at www.cimarex.com. To participate in the live, interactive call, please dial 1-866-367-3053 ten minutes before the scheduled start time (international callers dial 1-412-902-4216).  A replay will be available for one week following the call by dialing 1-877-344-7529 (international callers dial 1-412-317-0088); conference I.D. 10073620.  The replay will also be available on the company's website or via the Cimarex App. 

Investor Presentation For more details on Cimarex's third quarter 2015 results, please refer to the company's investor presentation available at www.cimarex.com.  

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 press release contains forward-looking statements, including statements regarding projected results and future events. In particular, the company is providing a revised "2015 Outlook", which contains projections for certain 2015 operational and financial metrics.  These forward-looking statements are based on management's judgment as of the date of this press release and include certain risks and uncertainties.  Please refer to the company's Annual Report on Form 10-K/A for the year ended December 31, 2014, filed with the SEC, and other filings including our Current Reports on Form 8-K and Quarterly Reports on Form 10-Q, for a list of certain risk factors that may affect these forward-looking statements.

Actual results may differ materially from company projections and other forward-looking statements and can be affected by a variety of factors outside the control of the company including, among other things: oil, NGL and natural gas price volatility; declines in the values of our oil and gas properties resulting in impairments; the ability to receive drilling and other permits and rights-of-way in a timely manner; development drilling and testing results; the potential for production decline rates to be greater than expected; performance of acquired properties and newly drilled wells; costs and availability of third party facilities for gathering, processing, refining and transportation; regulatory approvals, including regulatory restrictions on federal lands; legislative or regulatory changes, including initiatives related to emissions and hydraulic fracturing; higher than expected costs and expenses, including the availability and cost of services and materials; unexpected future capital expenditures; economic and competitive conditions; the ability to obtain industry partners to jointly explore certain prospects, and the willingness and ability of those partners to meet capital obligations when requested; changes in estimates of proved reserves; compliance with environmental and other regulations; derivative and hedging activities; risks associated with operating in two major geographic areas; the success of the company's risk management activities; title to properties; litigation; environmental liabilities; the ability to complete property sales or other transactions; and other factors discussed in the company's reports filed with the SEC. Cimarex Energy Co. encourages readers to consider the risks and uncertainties associated with projections and other forward-looking statements. In addition, the company assumes no obligation to publicly revise or update any forward-looking statements based on future events or circumstances.

www.cimarex.com

__________________________________

(1)   Adjusted net income (loss) and adjusted cash flow from operations are non-GAAP financial measures.  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 $1.5 billion divided by long-term debt of $1.5 billion plus stockholders' equity of $3.4 billion.

(3)   PEPL refers to Panhandle Eastern Pipe Line Tex/OK Mid-Continent index and El Paso Perm is El Paso Permian Basin index both as quoted in Platt's Inside FERC.

(4)   WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange.

 

 

RECONCILIATION OF ADJUSTED NET INCOME (LOSS)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

(in thousands, net of tax, except per share data)

Net income (loss)

$

(763,284)

$

144,315

$

(1,778,440)

$

431,412

Impairment of oil and gas properties

750,185

1,748,024

Mark-to-market (gain) loss on open derivative positions

(1,260)

(5,938)

(1,260)

1,852

Gain on sale of midstream assets

(4,202)

(4,202)

Adjusted net income (loss)

$

(14,359)

$

134,175

$

(31,676)

$

429,062

Diluted earnings (loss) per share

$

(8.21)

$

1.65

$

(19.14)

$

4.94

Adjusted diluted earnings (loss) per share *

$

(0.15)

$

1.53

$

(0.35)

$

4.91

Diluted shares attributable to common stockholders and participating securities

92,969

**

87,393

92,969

**

87,402

Estimated tax rates utilized

36.5%

37.1%

36.5%

37.1%

Adjusted net income (loss) and adjusted diluted earnings (loss) per share excludes the noted item because management believes this item affects the comparability of operating results. The company discloses these non-GAAP financial measures as a useful adjunct to GAAP earnings because:

a) Management uses adjusted net income (loss) to evaluate the company's operational trends and performance relative to other oil and gas exploration and production companies.

b) Adjusted net income (loss) is more comparable to earnings estimates provided by research analysts.

*

Earnings (loss) per share are based on actual figures rather than the rounded figures presented

**

Participating securities and other dilutive shares are not included in the diluted share computation when a loss exists.

 

 

RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

(in thousands)

Net cash provided by operating activities

$

206,001

$

502,201

$

576,546

$

1,271,970

Change in operating assets and liabilities

(27,448)

(62,453)

41,310

19,782

Adjusted cash flow from operations

$

178,553

$

439,748

$

617,856

$

1,291,752

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 and dividends, 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.

 

OIL AND GAS CAPITALIZED EXPENDITURES

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

(in thousands)

Acquisitions:

Proved (*)

$

2

$

$

(2,226)

$

144,516

Unproved (*)

2,237

(5,511)

114,732

2,239

(7,737)

259,248

Exploration and development:

Land and Seismic

10,000

34,697

37,965

143,891

Exploration and development

174,270

424,861

644,796

1,280,036

184,270

459,558

682,761

1,423,927

Sale proceeds:

Proved

(24,031)

(271,954)

(26,336)

(272,177)

Unproved

(6,201)

(174,403)

(12,412)

(175,303)

(30,232)

(446,357)

(38,748)

(447,480)

$

156,277

$

13,201

$

636,276

$

1,235,695

*

The negative amounts in 2015 reflect purchase price adjustments related to an acquisition in second quarter 2014.

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

(in thousands, except per share data)

Revenues:

Oil sales

$

192,501

$

348,276

$

647,850

$

1,028,229

Gas sales

114,649

176,539

331,985

519,139

NGL sales

40,159

111,701

135,236

297,128

Gas gathering and other, net

8,746

13,224

26,269

41,129

356,055

649,740

1,141,340

1,885,625

Costs and expenses:

Impairment of oil and gas properties

1,180,649

2,751,535

Depreciation, depletion, amortization and accretion

188,269

220,779

626,276

596,567

Production

69,334

89,084

222,145

250,310

Transportation, processing, and other operating

46,290

54,573

129,645

145,299

Gas gathering and other

8,429

8,588

28,599

27,413

Taxes other than income

19,717

33,510

67,678

99,454

General and administrative

20,413

20,240

50,405

57,523

Stock compensation

4,737

3,603

14,880

10,875

(Gain) loss on derivative instruments, net

(1,968)

(9,229)

(1,968)

8,960

Other operating (income) expense, net

60

(181)

844

34

1,535,930

420,967

3,890,039

1,196,435

Operating income (loss)

(1,179,875)

228,773

(2,748,699)

689,190

Other (income) and expense:

Interest expense 

20,313

19,751

60,636

48,524

Amortization of deferred financing costs

1,103

1,128

3,333

3,121

Capitalized interest

(7,100)

(10,005)

(25,087)

(25,870)

Other, net

(2,375)

(11,123)

(9,814)

(22,207)

Income (loss) before income tax

(1,191,816)

229,022

(2,777,767)

685,622

Income tax expense (benefit)

(428,532)

84,707

(999,327)

254,210

Net income (loss)

$

(763,284)

$

144,315

$

(1,778,440)

$

431,412

Earnings (loss) per share to common stockholders:

Basic 

$

(8.21)

$

1.65

$

(19.14)

$

4.94

Diluted

$

(8.21)

$

1.65

$

(19.14)

$

4.94

Dividends per share

$

0.16

$

0.16

$

0.48

$

0.48

Shares attributable to common stockholders:

Unrestricted common shares outstanding

92,969

85,643

92,969

85,643

Diluted common shares

92,969

85,779

92,969

85,788

Shares attributable to common stockholders and participating securities:

Basic shares outstanding

N/A*

87,257

N/A*

87,257

Fully diluted shares 

N/A*

87,393

N/A*

87,402

Comprehensive income (loss):

Net income (loss)

$

(763,284)

$

144,315

$

(1,778,440)

$

431,412

Other comprehensive income (loss):

Change in fair value of investments, net of tax 

(609)

(123)

(800)

(139)

Total comprehensive income (loss)

$

(763,893)

$

144,192

$

(1,779,240)

$

431,273

*

Due to the net loss, shares of 94,568, which include participating securities, are not considered in the loss per share calculation

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

(in thousands)

Cash flows from operating activities:

Net income (loss)

$

(763,284)

$

144,315

$

(1,778,440)

$

431,412

Adjustment to reconcile net income (loss) to net cash provided by operating activities:

Impairment of oil and gas properties

1,180,649

2,751,535

Depreciation, depletion, amortization and accretion

188,269

220,779

626,276

596,567

Deferred income taxes

(443,469)

84,707

(1,014,264)

254,210

Stock compensation

4,737

3,603

14,880

10,875

(Gain) loss on derivative instruments

(1,968)

(9,229)

(1,968)

8,960

Settlements on derivative instruments

(211)

(6,015)

Changes in non-current assets and liabilities

13,401

563

16,343

(1,873)

Amortization of deferred financing costs and other, net

218

(4,779)

3,494

(2,384)

Changes in operating assets and liabilities:

Receivables, net

59,310

18,611

151,783

(63,091)

Other current assets

13,513

(6,928)

29,634

(26,110)

Accounts payable and other current liabilities

(45,375)

50,770

(222,727)

69,419

Net cash provided by operating activities

206,001

502,201

576,546

1,271,970

Cash flows from investing activities:

Oil and gas expenditures

(171,807)

(492,390)

(771,029)

(1,630,929)

Sales of oil and gas assets

29,827

450,587

38,343

451,710

Sales of other assets

340

7,927

1,057

8,178

Other capital expenditures

(22,203)

(25,383)

(58,085)

(76,784)

Net cash used by investing activities

(163,843)

(59,259)

(789,714)

(1,247,825)

Cash flows from financing activities:

Net bank debt borrowings

(174,000)

Proceeds from other long-term debt

750,000

Proceeds from sale of common stock

752,100

Financing and underwriting fees

(100)

(398)

(22,663)

(11,616)

Dividends paid

(15,082)

(13,910)

(43,211)

(39,932)

Proceeds from exercise of stock options and other

15,456

6,468

20,392

10,529

Net cash provided by (used in) financing activities

274

(7,840)

706,618

534,981

Net change in cash and cash equivalents

42,432

435,102

493,450

559,126

Cash and cash equivalents at beginning of period

856,880

128,555

405,862

4,531

Cash and cash equivalents at end of period

$

899,312

$

563,657

$

899,312

$

563,657

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

September 30,

December 31,

2015

2014

Assets

(in thousands, except share data)

Current assets:

Cash and cash equivalents

$

899,312

$

405,862

Receivables, net

260,060

412,108

Oil and gas well equipment and supplies

65,096

89,780

Deferred income taxes

6,863

13,475

Derivative instruments

1,501

Other current assets

5,629

10,579

Total current assets

1,238,461

931,804

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

Proved properties

15,206,618

14,402,064

Unproved properties and properties under development, not being amortized

584,799

759,149

15,791,417

15,161,213

Less – accumulated depreciation, depletion, amortization and impairment

(11,597,715)

(8,257,502)

Net oil and gas properties

4,193,702

6,903,711

Fixed assets, net

229,136

211,031

Goodwill

620,232

620,232

Derivative instruments

467

Other assets, net

54,364

58,515

$

6,336,362

$

8,725,293

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

71,620

$

138,051

Accrued liabilities

286,760

447,384

Revenue payable

122,728

190,892

Total current liabilities

481,108

776,327

Long-term debt

1,500,000

1,500,000

Deferred income taxes

733,371

1,754,706

Other liabilities 

187,916

193,628

Total liabilities

2,902,395

4,224,661

Commitments and contingencies

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, 94,559,630 and 87,592,535 shares issued, respectively

946

876

Paid-in capital

2,753,768

1,997,080

Retained earnings

678,950

2,501,574

Accumulated other comprehensive income

303

1,102

3,433,967

4,500,632

$

6,336,362

$

8,725,293

 

SOURCE Cimarex Energy Co.



RELATED LINKS

http://www.cimarex.com