Cimarex Reports Third-Quarter 2010 Net Income of $128.2 Million
DENVER, Nov. 3, 2010 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported third-quarter 2010 net income of $128.2 million, or $1.50 per diluted share. This compares to third-quarter 2009 earnings of $38.7 million, or $0.46 per diluted share.
Revenues from gas, oil and natural gas liquids (NGLs) sales in the third quarter of 2010 were $366.6 million, a 54% increase compared to $238.3 million in the same period of 2009. Third-quarter 2010 cash flow from operations totaled $296.8 million versus $181.7 million a year ago(1).
The increase in third-quarter 2010 revenues is a result of higher realized commodity prices and greater production. Third-quarter 2010 gas prices increased 18% to $4.48 per thousand cubic feet (Mcf) and oil improved 14% to $73.20 per barrel as compared to the same period of 2009.
Third-quarter 2010 production volumes averaged 600.0 million cubic feet equivalent per day (59% gas and 41% natural gas liquids and oil). Average daily equivalent production was comprised of 352.5 million cubic feet of gas, 14,843 barrels of natural gas liquids and 26,407 barrels of oil.
Third-quarter 2010 production grew 36% from the third-quarter 2009 average of 441.5 MMcfe/d. The year-over-year production increase reflects solid drilling results in western Oklahoma Cana-Woodford shale, Permian Basin and southeast Texas Gulf Coast.
For the nine month period ended September 30, 2010, net income totaled $457.2 million, or $5.33 per diluted share, as compared to a loss of $416.6 million, or $5.10 per share, for the first nine months of 2009. The 2009 period was impacted by a $502 million ($6.15 per share) after-tax full-cost ceiling test write-down.
Year-to-date September 30, 2010 cash flow from operations totaled $869.9 million versus $472.4 million in the same period of 2009
(1).
Outlook
Fourth-quarter 2010 production is projected to be in the range of 580-610 MMcfe/d, resulting in full-year 2010 volumes of 590-597 Mcfe/d.
Expenses for fourth-quarter 2010 are expected to fall within the following ranges:
Expenses ($/Mcfe): |
|||
Production expense |
$0.90 - $1.10 |
||
Transportation expense |
0.19 - 0.24 |
||
DD&A and ARO accretion |
1.35 - 1.55 |
||
General and administrative expense |
0.22 - 0.28 |
||
Taxes other than income (% of oil and gas revenue) |
7.5% - 8.5% |
||
Exploration and Development (E&D) Capital
Third-quarter 2010 E&D capital investment totaled $295.9 million, as compared to $126.2 million in the third quarter of 2009. For the first nine months of 2010 E&D capital totaled $725.5 million versus $366.9 million in the comparable period of 2009.
Cimarex drilled and completed 152 gross (91.9 net) wells in the first nine months of 2010, of which 143 gross (85.7 net) were successful. At quarter-end 42 gross (22.1 net) wells were in the process of being completed or were awaiting completion.
Full-year 2010 E&D capital investment is projected to be approximately $1 billion, which we expect to be less than 2010 operating cash flow.
Other
Cimarex has oil and natural gas contracts for October 2010 through December 2011. The following tables summarize the current commodity hedge position:
Natural Gas Contracts |
|||||||||||||||||
Weighted Average Price |
|||||||||||||||||
Period |
Type |
Volume (2) |
Index(3) |
Floor |
Ceiling |
Swap |
|||||||||||
Oct 10 - Dec 10 |
Collar |
100,000 |
PEPL |
$ |
5.00 |
$ |
6.62 |
$ |
- |
||||||||
Oct 10 - Dec 10 |
Swap |
40,000 |
PEPL |
$ |
- |
$ |
- |
$ |
5.18 |
||||||||
Oct 10 - Dec 10 |
Collar |
20,000 |
HSC |
$ |
5.00 |
$ |
6.85 |
$ |
- |
||||||||
160,000 |
|||||||||||||||||
Jan 11 – Dec 11 |
Swap |
20,000 |
PEPL |
$ |
- |
$ |
- |
$ |
5.05 |
||||||||
Oil Contracts |
||||||||||||||||
Weighted Average Price |
||||||||||||||||
Period |
Type |
Volume (2) |
Index(3) |
Floor |
Ceiling |
Put |
||||||||||
Oct 10 – Dec 10 |
Collar |
10,000 |
WTI |
$ |
60.03 |
$ |
92.07 |
$ |
- |
|||||||
Oct 10 – Dec 10 |
Put/Floor |
1,000 |
WTI |
$ |
- |
$ |
- |
$ |
60.00 |
|||||||
11,000 |
||||||||||||||||
Jan 11 – Dec 11 |
Collar |
12,000 |
WTI |
$ |
65.00 |
$ |
105.44 |
$ |
- |
|||||||
Cimarex accounts for these commodity contracts using the mark-to-market (through income) accounting method. Third-quarter 2010 net cash settlements for natural gas hedge contracts were $14.6 million. There were no settlements for oil.
Long-term debt at September 30, 2010 was $350 million. Debt to total capitalization ratio at quarter-end was 12% (4).
Conference call and web cast
Cimarex will also host a conference call today at 11:00 a.m. Mountain Time (1:00 p.m. Eastern Time). To access the live, interactive call, please dial (877) 789-9039 and reference call ID # 16382644 ten minutes before the scheduled start time. A digital replay will be available for one week following the live broadcast at (800) 642-1687 and by using the conference ID # 16382644. The listen-only web cast of the call will be accessible via 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, Permian Basin and Gulf Coast 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) Gas volume in MMBtu per day and oil volume in barrels per day.
(3) PEPL refers to Panhandle Eastern Pipe Line, Tex/Ok Mid-Continent index and HSC stands for Houston Ship Channel Gulf Coast index both as quoted in Platt's Inside FERC. WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange.
(4) Reconciliation of debt to total capitalization, which is a non-GAAP measure, is: long-term debt of $350 million divided by long-term debt of $350 million plus stockholders' equity of $2502.3 million.
RECONCILIATION OF CASH FLOW FROM OPERATIONS |
||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||
September 30, |
September 30, |
|||||||||
2010 |
2009 |
2010 |
2009 |
|||||||
(in thousands) |
||||||||||
Net cash provided by operating activities |
$ |
314,408 |
$ |
271,300 |
$ |
886,668 |
$ |
465,646 |
||
Change in operating assets |
||||||||||
and liabilities |
(17,628) |
(89,620) |
(16,787) |
6,788 |
||||||
Cash flow from operations |
$ |
296,780 |
$ |
181,680 |
$ |
869,881 |
$ |
472,434 |
||
Management believes that the non-GAAP measure of 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. 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 |
For the Nine Months Ended |
|||||||||
September 30, |
September 30, |
|||||||||
2010 |
2009 |
2010 |
2009 |
|||||||
Total gas production - Mcf |
32,427,382 |
28,229,461 |
101,395,114 |
87,604,619 |
||||||
Gas volume - Mcf per day |
352,472 |
306,842 |
371,411 |
320,896 |
||||||
Gas price - per Mcf |
$4.48 |
$3.80 |
$5.15 |
$3.70 |
||||||
Total oil production - barrels |
2,429,407 |
2,008,011 |
7,347,108 |
6,226,045 |
||||||
Oil volume - barrels per day |
26,407 |
21,826 |
26,912 |
22,806 |
||||||
Oil price - per barrel |
$73.20 |
$64.22 |
$74.87 |
$51.26 |
||||||
Total NGL production - barrels |
1,365,581 |
56,389 |
2,735,823 |
162,291 |
||||||
NGL volume - barrels per day |
14,843 |
613 |
10,021 |
594 |
||||||
NGL price - per barrel |
$31.73 |
$37.53 |
$33.41 |
$33.05 |
||||||
* Increases in our 2010 production volumes primarily reflect positive drilling results in our western Oklahoma Cana-Woodford shale play, our Permian Basin oil programs and our Yegua/Cook Mountain play in southeast Texas. A portion of the changes also result from contractual terms whereby NGL volumes are recorded based on where title transfer occurs. As a consequence, reported gas and NGL volumes and prices between periods may not be comparable. |
||||||||||
OIL AND GAS CAPITALIZED EXPENDITURES |
||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||
September 30, |
September 30, |
|||||||||
2010 |
2009 |
2010 |
2009 |
|||||||
(in thousands) |
||||||||||
Acquisitions: |
||||||||||
Proved |
$ |
19 |
$ |
350 |
$ |
13,805 |
$ |
474 |
||
Unproved |
978 |
(10,315) |
21,497 |
(10,315) |
||||||
997 |
(9,965) |
35,302 |
(9,841) |
|||||||
Exploration and development: |
||||||||||
Land and Seismic |
49,368 |
7,036 |
112,076 |
34,072 |
||||||
Exploration and development |
246,501 |
119,144 |
613,387 |
332,844 |
||||||
295,869 |
126,180 |
725,463 |
366,916 |
|||||||
Sale proceeds: |
||||||||||
Proved* |
807 |
(9,877) |
(24,054) |
(25,271) |
||||||
Unproved |
— |
— |
(3,917) |
(3,034) |
||||||
807 |
(9,877) |
(27,971) |
(28,305) |
|||||||
$ |
297,673 |
$ |
106,338 |
$ |
732,794 |
$ |
328,770 |
|||
* The positive amount in the third-quarter 2010 proved sales proceeds reflects purchase price adjustments related to a disposition in the second quarter of 2010. |
||||||||||
CONDENSED STATEMENTS OF OPERATIONS (unaudited) |
|||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2010 |
2009 |
2010 |
2009 |
||||||||||||
(In thousands, except per share data) |
|||||||||||||||
Revenues: |
|||||||||||||||
Gas sales |
$ |
145,396 |
$ |
107,275 |
$ |
522,408 |
$ |
324,438 |
|||||||
Oil sales |
177,834 |
128,957 |
550,058 |
319,144 |
|||||||||||
NGL sales |
43,331 |
2,116 |
91,391 |
5,363 |
|||||||||||
Gas gathering, processing and other, net |
12,022 |
10,786 |
41,797 |
32,053 |
|||||||||||
378,583 |
249,134 |
1,205,654 |
680,998 |
||||||||||||
Costs and expenses: |
|||||||||||||||
Impairment of oil and gas properties |
— |
— |
— |
791,137 |
|||||||||||
Depreciation, depletion, amortization and accretion |
79,906 |
63,264 |
227,047 |
214,456 |
|||||||||||
Production |
52,010 |
42,682 |
139,349 |
139,127 |
|||||||||||
Transportation |
13,084 |
8,760 |
35,076 |
25,233 |
|||||||||||
Gas gathering and processing |
4,577 |
4,830 |
17,182 |
14,347 |
|||||||||||
Taxes other than income |
28,094 |
19,728 |
88,862 |
50,525 |
|||||||||||
General and administrative |
11,274 |
12,522 |
36,136 |
29,803 |
|||||||||||
Stock compensation, net |
3,241 |
2,477 |
9,012 |
6,831 |
|||||||||||
(Gain) loss on derivative instruments, net |
(15,028) |
17,357 |
(70,914) |
17,613 |
|||||||||||
Other operating, net |
2,291 |
2,911 |
2,321 |
19,094 |
|||||||||||
179,449 |
174,531 |
484,071 |
1,308,166 |
||||||||||||
Operating income (loss) |
199,134 |
74,603 |
721,583 |
(627,168) |
|||||||||||
Other (income) and expense: |
|||||||||||||||
Interest expense |
7,349 |
8,902 |
22,481 |
26,677 |
|||||||||||
Amortization of deferred financing costs |
1,710 |
1,721 |
5,141 |
3,467 |
|||||||||||
Capitalized interest |
(7,259) |
(5,295) |
(21,968) |
(16,230) |
|||||||||||
Gain on early extinguishment of debt |
(3,776) |
— |
(3,776) |
— |
|||||||||||
Other, net |
(2,711) |
3,737 |
(2,790) |
11,627 |
|||||||||||
Income (loss) before income tax |
203,821 |
65,538 |
722,495 |
(652,709) |
|||||||||||
Income tax expense (benefit) |
75,605 |
26,833 |
265,298 |
(236,121) |
|||||||||||
Net income (loss) |
$ |
128,216 |
$ |
38,705 |
$ |
457,197 |
$ |
(416,588) |
|||||||
Earnings (loss) per share to common stockholders: |
|||||||||||||||
Basic |
$ |
1.50 |
$ |
0.46 |
$ |
5.36 |
$ |
(5.10) |
|||||||
Diluted |
$ |
1.50 |
$ |
0.46 |
$ |
5.33 |
$ |
(5.10) |
|||||||
Dividends per share |
$ |
0.08 |
$ |
0.06 |
$ |
0.24 |
$ |
0.18 |
|||||||
Shares attributable to common stockholders: |
|||||||||||||||
Unrestricted Common shares outstanding |
82,806 |
81,792 |
82,806 |
81,792 |
|||||||||||
Diluted common shares |
83,217 |
82,177 |
83,265 |
81,792 |
|||||||||||
Shares attributable to common stockholders and participating securities: |
|||||||||||||||
Basic shares outstanding |
85,348 |
84,162 |
85,348 |
84,162 |
|||||||||||
Fully diluted shares |
85,759 |
84,547 |
85,807 |
84,162 |
|||||||||||
CONDENSED CASH FLOW STATEMENTS (unaudited) |
||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2010 |
2009 |
2010 |
2009 |
|||||||||||||
(In thousands) |
||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net income (loss) |
$ |
128,216 |
$ |
38,705 |
$ |
457,197 |
$ |
(416,588) |
||||||||
Adjustment to reconcile net income (loss) to net cash |
||||||||||||||||
provided by operating activities: |
||||||||||||||||
Impairments and other valuation losses |
— |
2,910 |
— |
804,815 |
||||||||||||
Depreciation, depletion, amortization and accretion |
79,906 |
63,264 |
227,047 |
214,456 |
||||||||||||
Deferred income taxes |
88,375 |
13,528 |
213,678 |
(220,592) |
||||||||||||
Stock compensation, net |
3,241 |
2,477 |
9,012 |
6,831 |
||||||||||||
Derivative instruments, net |
(881) |
17,532 |
(39,656) |
21,157 |
||||||||||||
Changes in non-current assets and liabilities |
4,893 |
42,794 |
10,507 |
48,673 |
||||||||||||
Amortization of deferred financing costs |
||||||||||||||||
and other, net |
(6,970) |
470 |
(7,904) |
13,682 |
||||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
(Increase) decrease in receivables, net |
(14,413) |
7,738 |
(4,364) |
84,044 |
||||||||||||
(Increase) decrease in other current assets |
(16,556) |
43,404 |
31 |
17,404 |
||||||||||||
Increase (decrease) in accounts payable and |
||||||||||||||||
other current liabilities |
48,597 |
38,478 |
21,120 |
(108,236) |
||||||||||||
Net cash provided by operating activities |
314,408 |
271,300 |
886,668 |
465,646 |
||||||||||||
Cash flows from investing activities: |
||||||||||||||||
Oil and gas expenditures |
(264,595) |
(97,366) |
(691,536) |
(390,108) |
||||||||||||
Sales of oil and gas and other assets |
4,741 |
19,993 |
33,646 |
38,556 |
||||||||||||
Sales of short-term investments |
— |
2,098 |
— |
3,328 |
||||||||||||
Other expenditures |
(24,133) |
(10,404) |
(38,941) |
(21,131) |
||||||||||||
Net cash used in investing activities |
(283,987) |
(85,679) |
(696,831) |
(369,355) |
||||||||||||
Cash flows from financing activities: |
||||||||||||||||
Net decrease in bank debt |
— |
(183,000) |
(25,000) |
(64,000) |
||||||||||||
Decrease in other long-term debt |
(19,450) |
— |
(19,450) |
— |
||||||||||||
Financing costs incurred |
(1) |
(34) |
(101) |
(17,995) |
||||||||||||
Dividends paid |
(6,827) |
(5,047) |
(18,662) |
(15,123) |
||||||||||||
Issuance of common stock and other |
1,896 |
2,462 |
18,928 |
2,576 |
||||||||||||
Net cash used in |
||||||||||||||||
financing activities |
(24,382) |
(185,619) |
(44,285) |
(94,542) |
||||||||||||
Net change in cash and cash equivalents |
6,039 |
2 |
145,552 |
1,749 |
||||||||||||
Cash and cash equivalents at beginning of period |
142,057 |
2,960 |
2,544 |
1,213 |
||||||||||||
Cash and cash equivalents at end of period |
$ |
148,096 |
$ |
2,962 |
$ |
148,096 |
$ |
2,962 |
||||||||
BALANCE SHEETS (unaudited) |
|||||||||||
September 30, |
December 31, |
||||||||||
Assets |
2010 |
2009 |
|||||||||
(In thousands, except share data) |
|||||||||||
Current assets: |
|||||||||||
Cash and cash equivalents |
$ |
148,096 |
$ |
2,544 |
|||||||
Restricted cash |
659 |
593 |
|||||||||
Receivables, net |
232,235 |
227,896 |
|||||||||
Oil and gas well equipment and supplies |
99,998 |
145,153 |
|||||||||
Deferred income taxes |
— |
15,837 |
|||||||||
Derivative instruments |
25,735 |
1,238 |
|||||||||
Other current assets |
60,459 |
13,997 |
|||||||||
Total current assets |
567,182 |
407,258 |
|||||||||
Oil and gas properties at cost, using the full cost method of accounting: |
|||||||||||
Proved properties |
8,163,420 |
7,549,861 |
|||||||||
Unproved properties and properties under development, |
|||||||||||
not being amortized |
519,489 |
399,724 |
|||||||||
8,682,909 |
7,949,585 |
||||||||||
Less – accumulated depreciation, depletion and amortization |
(5,969,974) |
(5,764,669) |
|||||||||
Net oil and gas properties |
2,712,935 |
2,184,916 |
|||||||||
Fixed assets, net |
149,673 |
127,237 |
|||||||||
Goodwill |
691,432 |
691,432 |
|||||||||
Other assets, net |
28,472 |
33,694 |
|||||||||
$ |
4,149,694 |
$ |
3,444,537 |
||||||||
Liabilities and Stockholders’ Equity |
|||||||||||
Current liabilities: |
|||||||||||
Accounts payable |
52,626 |
30,214 |
|||||||||
Accrued liabilities |
323,496 |
235,815 |
|||||||||
Derivative instruments |
438 |
13,902 |
|||||||||
Revenue payable |
117,061 |
108,832 |
|||||||||
Total current liabilities |
493,621 |
388,763 |
|||||||||
Long-term debt |
350,000 |
392,793 |
|||||||||
Deferred income taxes |
531,587 |
348,897 |
|||||||||
Other liabilities |
272,227 |
275,978 |
|||||||||
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, |
|||||||||||
84,700,678 and 83,541,995 shares issued, respectively |
847 |
835 |
|||||||||
Paid-in capital |
1,886,414 |
1,859,255 |
|||||||||
Retained earnings |
614,901 |
178,035 |
|||||||||
Accumulated other comprehensive income (loss) |
97 |
(19) |
|||||||||
2,502,259 |
2,038,106 |
||||||||||
$ |
4,149,694 |
$ |
3,444,537 |
||||||||
SOURCE Cimarex Energy Co.
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