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Press release from PR Newswire

Cimarex Reports Second Quarter 2013 Results

Wednesday, August 07, 2013

Cimarex Reports Second Quarter 2013 Results

06:00 EDT Wednesday, August 07, 2013

- Production Up 16 Percent Year-over-Year
- Reeves County Wolfcamp Wells have 30-day average IP of 925 BOE per day

DENVER, Aug. 7, 2013 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported 2013 second quarter net income of $129.6 million, or $1.49 per diluted share.  Current quarter net income includes a non-cash hedging gain of $12.6 million ($0.09 per share after tax) and a gain on the sale of midstream assets of $4.3 million ($0.03 per share after tax). This compares to net income of $64.3 million, or $0.74 per diluted share, reported in the second quarter of 2012.

Second quarter production grew 16 percent, averaging 686.8 million cubic feet equivalent (MMcfe) per day compared to 2012 second quarter output of 590.1 MMcfe per day.  Oil production grew 29 percent and averaged 36,878 barrels per day.  Current quarter volumes were comprised of 50 percent gas, 32 percent oil and 18 percent NGL. 

Natural gas prices increased 69 percent to an average $4.08 per Mcf in the second quarter of 2013.  Realized oil prices averaged $90.72 per barrel, up three percent over last year, and NGL prices averaged $27.76 per barrel, down four percent. 

Revenues from the sale of oil, gas and NGLs totaled $483.3 million in the second quarter versus $343.2 million for the same period in 2012.  Adjusted cash flow from operations for the quarter was $346.3 million versus $240.5 million a year ago(1).    

Cimarex invested $390 million on exploration and development in the second quarter of 2013, bringing total spending year to date to $799 million.  Second quarter expenditures were allocated 65 percent toward Permian Basin projects and 29 percent to projects in the Mid-Continent.

At June 30, 2013, long-term debt totaled $892 million and was comprised of $750 million of senior unsecured notes and $142 million of bank debt.  Debt was 20 percent of total capitalization on June 30(2).

2013 Outlook The midpoint of full year production guidance is unchanged at 690 MMcfe per day with a narrowed range of 680-700 MMcfe per day, an increase of 9 to 12 percent over 2012.  Factoring in estimated ethane rejection, third-quarter volumes are forecast between 675-700 MMcfe per day.

Permian and Mid-Continent volumes are projected to grow 12 to 15 percent over 2012, averaging 660-676 MMcfe per day.  Third quarter 2013 Permian and Mid-Continent volumes are forecasted to average 661-676 MMcfe/d.

Full year 2013 capital expenditures are expected to approximate $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:

 ($/Mcfe):

Production

$1.10 -  $1.22

Transportation and other operating

  0.30  -  0.35

DD&A and ARO accretion

  2.40  -  2.55

General and administrative

  0.25  -  0.30

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

6.0%  -  6.5%

Permian Basin UpdateProduction from the Permian Basin averaged 319.6 MMcfe per day for the second quarter, an increase of 29 percent over second quarter 2012.  Oil volumes increased 39 percent to 30,137 barrels per day.

Cimarex drilled and completed 55 gross (32 net) Permian Basin wells during the second quarter, bringing the total for 2013 to 90 gross wells (59 net).  All but one well drilled in the second quarter were completed as producers.  At June 30, 16 gross (8 net) wells were awaiting completion.  Drilling took place in the Delaware Basin of Texas and southeast New Mexico, mainly targeting the Bone Spring and Wolfcamp formations. 

Year-to-date, 42 gross (23 net) New Mexico Bone Spring wells have been drilled and completed.  Per well first 30-day gross production from these wells averaged approximately 650 barrels of oil equivalent (BOE) per day (85 percent oil).  Year-to-date Ward County, Texas, Third Bone Spring drilling totaled 21 gross (15 net) wells with  per well first 30-day average gross production rates of approximately 965 BOE per day (80 percent oil).

In the Culberson area, Cimarex is drilling both horizontal Bone Spring and Wolfcamp wells.  Year-to-date nine gross (six net) Bone Spring wells have been drilled and completed with per well first 30-day average gross production of 850 BOE per day (58 percent oil).   Cimarex has also drilled eight gross (six net) horizontal Wolfcamp wells in Culberson County in 2013, bringing total Wolfcamp wells in the area to 39 gross (35 net).  Per well first 30-day production rates on all of the Wolfcamp wells drilled-to-date in the area have averaged 6.2 MMcfe per day, comprised of 43 percent gas, 27 percent oil and 30 percent NGL (assuming full NGL recovery).  The company has seen improvement in its Wolfcamp results.  In particular, recent wells drilled to the Wolfcamp D in Culberson County have per well first-30 day production rates averaging 6.6 MMcfe per day.

In Reeves County, Texas, Cimarex has drilled and completed two gross (two net) Wolfcamp A tests with per well first 30-day production rates averaging 925 BOE per day (63 percent oil, 20 percent NGL and 17 percent gas).  Since December 31, 2012, Cimarex has increased its net acreage position in Reeves County from 35,000 to 40,000 acres with an average working interest of 84 percent.  Cimarex currently has one well drilling and one well waiting on completion.

Mid-Continent UpdateMid-Continent production averaged 343.2 MMcfe per day for the second quarter of 2013, a 14 percent increase over the second quarter 2012 average of 300.2 MMcfe per day.  Cana-Woodford represented 216.1 MMcfe per day of the second quarter 2013 total, a 38 percent increase versus the same period last year.  Year-to-date, Cimarex has drilled and completed 87 gross (35 net) wells, 74 gross (31 net) of which were in the Cana-Woodford shale play.  All were completed as producers.  At June 30, 67 gross (20 net) wells were awaiting completion.   

 

Wells Drilled and Completed by Region

For the Three Months

For the Six Months

Ended June 30,

Ended June 30,

2013

2012

2013

2012

Gross wells

    Permian Basin

55

55

90

94

    Mid-Continent

35

31

87

64

    Gulf Coast/Other

2

1

2

2

92

87

179

160

Net wells

    Permian Basin

32

37

59

64

    Mid-Continent

15

14

35

26

    Gulf Coast/Other

1

-

1

1

48

51

95

91

% Gross wells completed as producers

97%

97%

98%

96%

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

For the Three Months Ended

For the Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

Gas (Mcf per day)

   Permian Basin

96,306

79,409

89,573

77,252

   Mid-Continent

231,428

214,339

233,811

215,582

   Gulf Coast/Other

13,519

23,577

13,666

25,814

341,253

317,325

337,050

318,648

Oil (Barrels per day)

   Permian Basin

30,137

21,694

27,997

21,747

   Mid-Continent

5,745

5,392

6,017

5,642

   Gulf Coast/Other

996

1,600

1,012

1,735

36,878

28,686

35,026

29,124

NGL (Barrels per day)

   Permian Basin

7,079

6,317

6,661

6,029

   Mid-Continent

12,881

8,914

13,658

9,598

   Gulf Coast/Other

745

1,539

812

1,602

20,705

16,770

21,131

17,229

Total Equivalent (Mcfe per day)

   Permian Basin

319,602

247,475

297,521

243,908

   Mid-Continent

343,184

300,175

351,861

307,022

   Gulf Coast/Other

23,969

42,410

24,614

45,833

686,755

590,060

673,996

596,763

Other

General and administrative expense in the second quarter includes $7.0 million for university endowments established in honor of Cimarex founder, F.H. Merelli, and a $1.0 million contribution made for tornado relief in Oklahoma.

Cimarex has oil swaps and collars covering 12,000 barrels per day through December 2013 and Mid-Continent natural gas collars on 80,000 MMBTU per day through December 2014.  The following table summarizes the current open hedge positions:

Oil Contracts

Weighted Average Price

Period

Type

 Barrels/day

Index(3)

Floor

Ceiling

Swap

July-December 13

Swaps

6,000

WTI

NA

NA

$

96.13

July-December 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

July 13  ?December 14

Collar

80,000

PEPL

$

3.51

$

4.57

Cimarex accounts for commodity contracts using the mark-to-market (through income) accounting method.  Second quarter 2013 had a realized gain of $1.1 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 call will be webcast and accessible on the Cimarex website at www.cimarex.com. To participate in the live, interactive call, please dial 877-270-2148 ten minutes before the scheduled start time (international callers dial 1-412-902-6510).  A replay will be available for one week following the call and can be accessed by dialing 877-344-7529 (international callers dial 1-412-317-0088); conference I.D. 10031564. 

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 $892 million divided by long-term debt of $892 million plus stockholders' equity of $3,679 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

For the Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

(in thousands)

Net cash provided by operating activities

$

322,708

$

323,040

$

569,786

$

574,932

Change in operating assets and liabilities

23,601

(82,530)

68,944

(31,466)

Adjusted cash flow from operations

$

346,309

$

240,510

$

638,730

$

543,466

 

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

For the Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

 Total gas production - Mcf 

31,053,997

28,876,597

61,006,098

57,993,914

 Gas volume - Mcf per day 

341,253

317,325

337,050

318,648

 Gas price - per Mcf  

$4.08

$2.42

$3.73

$2.67

 Total oil production - barrels 

3,355,922

2,610,407

6,339,760

5,300,547

 Oil volume - barrels per day 

36,878

28,686

35,026

29,124

 Oil price - per barrel 

$90.72

$87.81

$88.65

$93.63

 Total NGL production - barrels 

1,884,189

1,526,067

3,824,763

3,135,614

 NGL volume - barrels per day  

20,705

16,770

21,131

17,229

 NGL price - per barrel 

$27.76

$29.02

$28.55

$32.94

 

OIL AND GAS CAPITALIZED EXPENDITURES

For the Three Months Ended

For the Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

(in thousands)

Acquisitions:

    Proved

$

923

$

240

$

923

$

291

    Unproved

3,415

4,791

3,665

6,713

4,338

5,031

4,588

7,004

Exploration and development:

    Land and Seismic

36,719

21,175

68,029

58,387

    Exploration and     development

353,594

365,101

730,891

730,460

390,313

386,276

798,920

788,847

Sale proceeds:

    Proved

(37,061)

(14)

(37,879)

(185)

    Unproved

(960)

(146)

(1,041)

(1,088)

(38,021)

(160)

(38,920)

(1,273)

$

356,630

$

391,147

$

764,588

$

794,578

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited)

For the Three Months Ended

For the Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

(in thousands, except per share data)

Revenues:

Gas sales

$

126,547

$

69,741

$

227,668

$

154,894

Oil sales

304,466

229,210

561,998

496,294

NGL sales

52,309

44,286

109,184

103,300

Gas gathering, processing and other, net

10,435

9,885

21,263

21,670

493,757

353,122

920,113

776,158

Costs and expenses:

Depreciation, depletion, amortization and accretion

150,115

123,678

288,952

245,465

Production

69,433

62,494

138,819

130,119

Transportation and other operating

22,022

13,169

40,656

26,485

Gas gathering and processing

5,184

4,955

11,340

9,806

Taxes other than income

27,807

23,483

52,935

48,643

General and administrative

22,836

12,634

38,413

26,781

Stock compensation

3,507

4,684

7,112

9,218

Gain on derivative instruments, net

(13,660)

(10,078)

(12,057)

(5,990)

Other operating, net

2,365

2,719

5,297

5,059

289,609

237,738

571,467

495,586

Operating income

204,148

115,384

348,646

280,572

Other (income) and expense:

Interest expense 

13,097

12,702

25,283

20,661

Amortization of deferred financing costs

1,015

977

2,035

1,686

Capitalized interest

(7,387)

(9,119)

(16,582)

(16,923)

Loss on early extinguishment of debt

?

16,214

?

16,214

Other, net

(8,758)

(7,829)

(11,374)

(12,555)

Income before income tax

206,181

102,439

349,284

271,489

Income tax expense

76,616

38,137

129,792

101,080

Net income

$

129,565

$

64,302

$

219,492

$

170,409

Earnings per share to common stockholders:

Basic 

$

1.50

$

0.75

$

2.54

$

1.98

Diluted

$

1.49

$

0.74

$

2.53

$

1.97

Dividends per share

$

0.14

$

0.12

$

0.28

$

0.24

Shares attributable to common stockholders:

Unrestricted common shares outstanding

84,942

83,984

84,942

83,984

Diluted common shares

85,054

84,319

85,043

84,337

Shares attributable to common stockholders and participating securities:

Basic shares outstanding

86,512

86,046

86,512

86,046

Fully diluted shares 

86,624

86,381

86,613

86,399

Comprehensive income:

Net income

$

129,565

$

64,302

$

219,492

$

170,409

Other comprehensive income:

Change in fair value of investments, net of tax 

19

(135)

99

264

Total comprehensive income

$

129,584

$

64,167

$

219,591

$

170,673

 

CONDENSED CASH FLOW STATEMENTS (unaudited)

For the Three Months Ended

For the Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

(in thousands)

Cash flows from operating activities:

    Net income

$

129,565

$

64,302

$

219,492

$

170,409

    Adjustment to reconcile net income to net cash provided by operating activities:

            Depreciation, depletion, amortization and accretion

150,115

123,678

288,952

245,465

            Deferred income taxes

76,616

38,137

129,792

101,080

            Stock compensation

3,507

4,684

7,112

9,218

            Derivative instruments, net

(12,621)

(10,078)

(10,292)

(5,990)

            Loss on early extinguishment of debt

16,214

?

16,214

            Changes in non-current assets and liabilities

2,416

2,876

5,790

5,115

            Amortization of deferred financing costs and other, net

(3,289)

697

(2,116)

1,955

    Changes in operating assets and liabilities:

            (Increase) decrease in receivables, net

(24,484)

109,978

(55,060)

107,834

            (Increase) decrease in other current assets

5,697

(4,979)

14,840

(4,910)

            (Decrease) in accounts payable and accrued liabilities

(4,814)

(22,469)

(28,724)

(71,458)

                     Net cash provided by operating activities

322,708

323,040

569,786

574,932

Cash flows from investing activities:

    Oil and gas expenditures

(385,469)

(357,645)

(776,138)

(758,608)

    Sales of oil and gas assets

13,508

160

14,407

1,273

    Sales of other assets

31,081

199

31,157

408

    Other expenditures

(5,952)

(15,787)

(25,475)

(26,087)

                     Net cash used by investing activities

(346,832)

(373,073)

(756,049)

(783,014)

Cash flows from financing activities:

    Net increase (decrease) in bank debt

22,000

(222,000)

142,000

(55,000)

    Increase in other long-term debt

?

750,000

?

750,000

    Decrease in other long-term debt

?

(363,595)

?

(363,595)

    Financing costs incurred

?

(12,200)

?

(12,692)

    Dividends paid

(12,092)

(10,293)

(22,448)

(18,869)

    Issuance of common stock and other

216

647

1,705

2,764

                    Net cash provided by financing activities

10,124

142,559

121,257

302,608

Net change in cash and cash equivalents

(14,000)

92,526

(65,006)

94,526

Cash and cash equivalents at beginning of period

18,532

4,406

69,538

2,406

Cash and cash equivalents at end of period

$

4,532

$

96,932

$

4,532

$

96,932

 

CONDENSED BALANCE SHEETS (unaudited)

June 30,

December 31,

Assets

2013

2012

(in thousands, except share data)

Current assets:

Cash and cash equivalents

$

4,532

$

69,538

Receivables, net

381,634

302,974

Oil and gas well equipment and supplies

66,902

81,029

Deferred income taxes

18,111

8,477

Derivative instruments

7,956

?

Other current assets

7,406

8,119

Total current assets

486,541

470,137

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

Proved properties

12,097,102

11,258,748

Unproved properties and properties under development, not being amortized

567,178

645,078

12,664,280

11,903,826

Less ? accumulated depreciation, depletion and amortization

(7,166,038)

(6,899,057)

Net oil and gas properties

5,498,242

5,004,769

Fixed assets, net

135,367

152,605

Goodwill

620,232

620,232

Other assets, net

55,988

57,409

$

6,796,370

$

6,305,152

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

82,690

$

103,653

Accrued liabilities

416,111

392,909

Derivative instruments

59

?

Revenue payable

172,956

149,300

Total current liabilities

671,816

645,862

Long-term debt

892,000

750,000

Deferred income taxes

1,260,836

1,121,353

Other liabilities 

292,721

313,201

Total liabilities

3,117,373

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,

86,503,109 and 86,595,976 shares issued, respectively

865

866

Paid-in capital

1,948,381

1,939,628

Retained earnings

1,729,178

1,533,768

Accumulated other comprehensive income

573

474

3,678,997

3,474,736

$

6,796,370

$

6,305,152

 

SOURCE Cimarex Energy Co.

For further information: Cimarex Energy Co., 303-295-3995, www.cimarex.com: or Mark Burford, Vice President - Capital Markets and Planning; or Karen Acierno, Director - Investor Relations

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