Cimarex Reports Third Quarter 2017 Results

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 7/14/2026

1. IBM
2. JPM
3. TREX
4. BAC
5. SPCX
6. SPY
7. WFC
8. ERAS
9. SPRO
10. TSCO

- Daily Production averaged 1,143 MMcfe (190.5 MBOE) - 4Q17 oil production expected to grow 32 - 37% from 4Q16 levels - Full-year 2017 production guidance raised to 1,134 - 1,147 MMcfe; up 5% from original forecast made in February - 2017 E&D capital expected to be $1.2bn - Woodford results in Lone Rock area released

November 7, 2017 4:05 PM EST

DENVER, Nov. 7, 2017 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported third quarter 2017 net income of $91.4 million, or $0.96 per share, compared to a net loss of $10.7 million, or $0.12 per share, in the same period a year ago.  Third quarter adjusted net income (non-GAAP) was $103.6 million, or $1.09 per share, compared to third quarter 2016 adjusted net income (non-GAAP) of $50.3 million, or $0.53 per share.1  Net cash provided by operating activities was $251.0 million in the third quarter of 2017 compared to $223.0 million in the same period a year ago.  Adjusted cash flow from operations (non-GAAP) was $283.9 million in the third quarter of 2017 compared to $181.9 million in the third quarter a year ago1. 

Cimarex Energy Co. (PRNewsFoto/Cimarex Energy Co.) (PRNewsfoto/Cimarex Energy Co.)

Total company production for the quarter came in slightly above the high end of our forecast, averaging 1,143 million cubic feet equivalent (MMcfe) per day (190.5 thousand barrels of oil equivalent (MBoe) per day).  Oil production averaged 56,687 barrels per day, in line with the company's estimate.  Natural gas production exceeded previous estimates due to timing of completions in our Woodford downspacing pilot.

Realized oil prices averaged $44.38 per barrel versus $40.54 per barrel in the third quarter of 2016.  Realized natural gas prices averaged $2.65 per thousand cubic feet (Mcf) versus the third quarter 2016 average of $2.66 per Mcf.  NGL prices were up 53 percent and averaged $21.63 per barrel from the $14.14 per barrel received in the same period of 2016 (see table of Average Realized Price by Region below).

Cimarex invested $335 million in exploration and development (E&D) during the third quarter, of which $280 million is attributable to drilling and completion activities.  This brings year-to-date E&D expenditures to $937 million.  Third quarter investments were funded with cash flow from operations and cash on hand.  Total debt at September 30, 2017 consisted of $1.5 billion of long-term notes.  Cimarex had no borrowings under its revolving credit facility and a cash balance of $423 million.  Debt was 38 percent of total capitalization2. 

2017 OutlookFourth quarter 2017 production volumes are expected to average 1,175 - 1,225 MMcfe (195.8 - 204.2 Mboe) per day, up 3 – 7 percent from third quarter volumes, as a result of the increase in well completions late in the third quarter.  Oil production is expected to grow 32 - 37 percent in fourth quarter 2017 versus fourth quarter 2016.  Total daily production volumes for full year 2017 are now estimated to average 1,134 – 1,147 MMcfe (189.0 – 191.2 Mboe), up 18 percent from 2016 levels at the midpoint.  Since giving 2017 production guidance in February, Cimarex has increased its midpoint 2017 daily production forecast by five percent.

Cimarex estimates full-year E&D capital investment will be approximately $1.2 billion, compared to its previous forecast of $1.1 – 1.2 billion.  This capital investment is allocated 61 percent to the Permian and 37 percent to the Mid-Continent.  

Expenses per Mcfe of production for the remainder of 2017 are estimated to be:

Production expense

$0.60 -  0.70

Transportation, processing and other expense

  0.50  -  0.60

DD&A and ARO accretion

  1.05  -  1.15

General and administrative expense

  0.20  -  0.25

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

   5.0  -  5.5%

Operations UpdateCimarex invested $335 million in E&D during the third quarter, 60 percent in the Permian Basin and 39 percent in the Mid-Continent.  Cimarex completed 77 gross (30 net) wells during the quarter.  At September 30, 131 gross (32 net) wells were waiting on completion.  Cimarex currently is operating 14 drilling rigs.

WELLS COMPLETED BY REGION

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Gross wells

Permian Basin

29

17

65

37

Mid-Continent

48

25

133

61

77

42

198

98

Net wells

Permian Basin

16

10

42

22

Mid-Continent

14

7

32

14

30

17

74

36

Permian RegionProduction from the Permian region averaged 628.2 MMcfe per day in the third quarter, a 21 percent increase from third quarter 2016. Oil volumes averaged 43,735 barrels per day and represented 42 percent of the region's total equivalent production.

Cimarex completed 29 gross (16 net) wells in the Permian region during the third quarter.  There were 42 gross (16 net) wells waiting on completion at September 30.  Cimarex currently operates nine rigs in the Permian region.

Mid-ContinentProduction from the Mid-Continent averaged 512.7 MMcfe per day for the third quarter, up 20 percent versus third quarter 2016. Sequentially, crude oil volumes were up eight percent.

During the third quarter, Cimarex completed 48 gross (14 net) wells in the Mid-Continent region.  At the end of the quarter, 89 gross (16 net) wells were waiting on completion.  Cimarex currently is operating five rigs in the region.

Of note, Cimarex is announcing drilling results from several Woodford shale wells in its Lone Rock area.  These wells were brought on production over the past several quarters and show some of the best returns the company has seen to date in the Woodford shale.  Cimarex has approximately 16,000 net acres in the Lone Rock area and has completed seven wells in 2017 including the Hines Federal #1H, the company's best well to date in the area.  The Hines had 30-day average peak production of 15.2 MMcfe per day (40% oil, 23% NGL, 37% gas).  Additional drilling, including a downspacing test, is underway.  

Also during the third quarter, Cimarex began producing from eight Woodford shale wells drilled as part of an increased density pilot.  The project tested both 16- and 20-well spacing per section.  Preliminary results show no significant difference in well performance between the two spacing tests, indicating that Woodford wells can be drilled closer together in future infill projects than they have been historically.  More information is available in our most recent corporate presentation, which is available on our website at www.cimarex.com.

 Production by Region

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

DAILY PRODUCTION BY REGION

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Permian Basin

Gas (MMcf)

217.9

178.4

212.9

177.7

Oil (Bbls)

43,735

35,930

43,544

35,939

NGL (Bbls)

24,659

20,549

23,771

17,952

Total Equivalent (Mmcfe)

628.2

517.2

616.8

501.1

Total Equivalent (Boe)

104,703

86,212

102,798

83,508

Mid-Continent

Gas (MMcf)

296.8

266.7

292.4

281.3

Oil (Bbls)

12,846

8,486

11,937

8,889

NGL (Bbls)

23,142

18,194

22,999

21,009

Total Equivalent (Mmcfe)

512.7

426.8

502.1

460.7

Total Equivalent (Boe)

85,451

71,130

83,676

76,784

Total Company

Gas (MMcf)

515.9

446.7

506.7

460.5

Oil (Bbls)

56,687

44,532

55,596

45,020

NGL (Bbls)

47,840

38,786

46,806

39,002

Total Equivalent (Mmcfe)

1,143.1

946.6

1,121.1

964.6

Total Equivalent (Boe)

190,518

157,768

186,858

160,765

AVERAGE REALIZED PRICE BY REGION

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Permian Basin

Gas ($ per Mcf)

2.70

2.69

2.78

2.18

Oil ($ per Bbl)

44.14

40.65

45.33

36.32

NGL ($ per Bbl)

20.58

12.49

18.50

11.11

Mid-Continent

Gas ($ per Mcf)

2.61

2.63

2.85

2.10

Oil ($ per Bbl)

45.21

40.07

45.33

35.31

NGL ($ per Bbl)

22.75

16.00

21.70

14.07

Total Company

Gas ($ per Mcf)

2.65

2.66

2.82

2.13

Oil ($ per Bbl)

44.38

40.54

45.33

36.13

NGL ($ per Bbl)

21.63

14.14

20.07

12.70

Other

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

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

Gas Collars:

PEPL(3)

Volume (MMBtu/d)

120,000

120,000

90,000

60,000

30,000

20,000

20,000

Wtd Avg Floor

2.65

2.58

2.48

2.43

2.43

2.40

2.40

Wtd Avg Ceiling

3.07

2.94

2.82

2.66

2.64

2.64

2.64

El Paso Perm(3)

Volume (MMBtu/d)

80,000

80,000

60,000

40,000

20,000

10,000

10,000

Wtd Avg Floor

2.64

2.55

2.40

2.35

2.35

2.30

2.30

Wtd Avg Ceiling

3.04

2.88

2.69

2.52

2.50

2.42

2.42

Oil Collars:

WTI(4)

Volume (Bbl/d)

21,000

28,000

22,000

18,000

12,000

6,000

6,000

Wtd Avg Floor

46.29

47.25

47.23

46.61

48.00

48.00

48.00

Wtd Avg Ceiling

56.64

56.15

55.35

54.55

54.58

55.21

55.21

Oil Basis Swaps:

WTI Midland(5)

Volume (Bbl/d)

5,000

13,000

13,000

13,000

8,000

5,000

5,000

Weighted Avg Differential(6)

0.94

0.72

0.72

0.72

0.58

0.47

0.47

Conference call and webcast Cimarex will host a conference call tomorrow at 11:00 a.m. EDT (9:00 a.m. MDT). The call will be webcast and accessible on the Cimarex website at www.cimarex.com. To join the live, interactive call, please dial 866-367-3053 ten minutes before the scheduled start time (callers in Canada dial 855-669-9657 and international callers dial 412-902-4216). 

A replay will be available on the company's website. 

Investor PresentationFor more details on Cimarex's third quarter 2017 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 "2017 Outlook" contains projections for certain 2017 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, 2016, 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 levels and volatility; higher than expected costs and expenses, including the availability and cost of services and materials; compliance with environmental and other regulations; risks associated with operating in one major geographic area; environmental liabilities; the ability to receive drilling and other permits and rights-of-way in a timely manner; development drilling and testing results; declines in the values of our oil and gas properties resulting in impairments; 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 hydraulic fracturing, emissions and disposal of produced water; unexpected future capital expenditures; economic and competitive conditions; the availability and cost of capital; 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; derivative and hedging activities; the success of the company's risk management activities; title to properties; litigation; the ability to complete property sales or other transactions; the effectiveness of controls over financial reporting; 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.                          

1

Adjusted net income and adjusted cash flow from operations are non-GAAP financial measures.  See below for reconciliations of the related GAAP amounts.

2

Debt to total capitalization is calculated by dividing long-term debt ($1.5 billion) by long-term debt ($1.5 billion) plus stockholders' equity ($2.4 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.

5

Index price on basis swaps is WTI Midland as quoted by Argus Americas Crude.

6

Index price on basis swaps is WTI NYMEX less the weighted average differential shown in table.

 

RECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

The following table provides a reconciliation from generally accepted accounting principles (GAAP) measures of net income (loss) and earnings (loss) per share to adjusted net income and adjusted earnings per share (non-GAAP) for the periods indicated.

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(in thousands, except per share data)

Net income (loss)

$

91,399

$

(10,673)

$

319,633

$

(456,586)

Impairment of oil and gas properties

—

105,593

—

757,670

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

19,085

(8,967)

(53,003)

32,769

Loss on early extinguishment of debt

—

—

28,169

—

Tax impact

(6,851)

(35,612)

9,213

(288,108)

Adjusted net income

$

103,633

$

50,341

$

304,012

$

45,745

Diluted earnings (loss) per share*

$

0.96

$

(0.12)

$

3.36

$

(4.90)

Adjusted diluted earnings per share*

$

1.09

$

0.53

$

3.19

$

0.48

Diluted shares attributable to common stockholders and participating securities

95,320

95,018

95,222

95,018

Adjusted net income and adjusted diluted earnings per share excludes the noted items because management believes these items affect 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 to evaluate the company's operating performance between periods and to compare the company's performance to other oil and gas exploration and production companies.

b) Adjusted net income 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.

 

RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS

The following table provides a reconciliation from generally accepted accounting principles (GAAP) measures of net cash provided by operating activities to adjusted cash flows from operations (non-GAAP) for the periods indicated.

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(in thousands)

Net cash provided by operating activities

$

251,005

$

223,002

$

755,805

$

440,788

Change in operating assets and liabilities

32,901

(41,059)

72,728

(30,390)

Adjusted cash flow from operations

$

283,906

$

181,943

$

828,533

$

410,398

Management uses the non-GAAP financial measure of adjusted cash flow from operations as a means of measuring our ability to fund our capital program and dividends, without fluctuations caused by changes in current assets and liabilities, which are included in the GAAP measure of net cash provided by operating activities.  Management believes this non-GAAP financial measure provides useful information to investors for the same reason, and that 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,

2017

2016

2017

2016

(in thousands)

Acquisitions:

Proved

$

—

$

—

$

260

$

2,618

Unproved

438

3,200

4,263

11,546

438

3,200

4,523

14,164

Exploration and development:

Land and seismic

12,872

16,974

123,359

45,610

Exploration and development

322,651

157,571

813,693

443,279

335,523

174,545

937,052

488,889

Sale proceeds:

Proved

1,807

(376)

(85)

(12,605)

Unproved

(780)

(9,207)

(8,051)

(9,608)

1,027

(9,583)

(8,136)

(22,213)

$

336,988

$

168,162

$

933,439

$

480,840

 

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

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(in thousands, except per share data)

Revenues:

Oil sales

$

231,441

$

166,079

$

687,960

$

445,657

Gas sales

125,707

109,278

390,126

268,501

NGL sales

95,191

50,464

256,503

135,755

Gas gathering and other, net

11,342

9,896

32,720

25,277

463,681

335,717

1,367,309

875,190

Costs and expenses:

Impairment of oil and gas properties

—

105,593

—

757,670

Depreciation, depletion, amortization, and accretion

112,893

92,310

319,173

309,080

Production

65,410

52,976

190,409

180,891

Transportation, processing, and other operating

58,387

48,706

172,034

139,585

Gas gathering and other

8,856

7,905

25,930

23,477

Taxes other than income

24,314

15,974

63,104

43,879

General and administrative

21,039

20,118

58,835

55,439

Stock compensation

7,038

5,764

19,619

18,782

(Gain) loss on derivative instruments, net

16,109

(9,758)

(50,261)

23,050

Other operating expense, net

95

179

977

293

314,141

339,767

799,820

1,552,146

Operating income (loss)

149,540

(4,050)

567,489

(676,956)

Other (income) and expense:

Interest expense 

16,838

20,931

57,985

62,560

Capitalized interest

(5,373)

(5,421)

(17,456)

(15,958)

Loss on early extinguishment of debt

—

—

28,169

—

Other, net

(4,563)

(3,828)

(9,004)

(7,489)

Income (loss) before income tax

142,638

(15,732)

507,795

(716,069)

Income tax expense (benefit)

51,239

(5,059)

188,162

(259,483)

Net income (loss)

$

91,399

$

(10,673)

$

319,633

$

(456,586)

Earnings (loss) per share to common stockholders:

Basic 

$

0.96

$

(0.12)

$

3.36

$

(4.90)

Diluted

$

0.96

$

(0.12)

$

3.36

$

(4.90)

Dividends declared per share

$

0.08

$

0.08

$

0.24

$

0.24

Shares attributable to common stockholders:

Unrestricted common shares outstanding

93,501

93,221

93,431

93,221

Diluted common shares

93,531

93,221

93,465

93,221

Shares attributable to common stockholders and participating securities:

Basic shares outstanding

95,290

N/A*

95,188

N/A*

Fully diluted shares 

95,320

N/A*

95,222

N/A*

Comprehensive income (loss):

Net income (loss)

$

91,399

$

(10,673)

$

319,633

$

(456,586)

Other comprehensive income:

Change in fair value of investments, net of tax 

234

287

860

567

Total comprehensive income (loss)

$

91,633

$

(10,386)

$

320,493

$

(456,019)

*

Due to the net loss in the period ended September 30, 2016, shares of 94,973, which include participating securities, are not considered in the loss per share calculations.

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

(in thousands)

Cash flows from operating activities:

Net income (loss)

$

91,399

$

(10,673)

$

319,633

$

(456,586)

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Impairment of oil and gas properties

—

105,593

—

757,670

Depreciation, depletion, amortization, and accretion

112,893

92,310

319,173

309,080

Deferred income taxes

51,239

(3,944)

188,168

(258,368)

Stock compensation

7,038

5,764

19,619

18,782

(Gain) loss on derivative instruments, net

16,109

(9,758)

(50,261)

23,050

Settlements on derivative instruments

2,975

791

(2,742)

9,718

Loss on early extinguishment of debt

—

—

28,169

—

Changes in non-current assets and liabilities

1,068

1,573

2,144

4,121

Other, net

1,185

287

4,630

2,931

Changes in operating assets and liabilities:

Receivables

(67,776)

2,604

(128,921)

(1,723)

Other current assets

(8,268)

5,706

(19,372)

23,034

Accounts payable and other current liabilities

43,143

32,749

75,565

9,079

Net cash provided by operating activities

251,005

223,002

755,805

440,788

Cash flows from investing activities:

Oil and gas capital expenditures

(319,777)

(160,056)

(901,949)

(485,114)

Sales of oil and gas assets

(1,027)

6,383

8,136

19,013

Sales of other assets

116

5,494

510

5,718

Other capital expenditures

(13,123)

(6,239)

(31,332)

(24,013)

Net cash used by investing activities

(333,811)

(154,418)

(924,635)

(484,396)

Cash flows from financing activities:

Borrowings of long-term debt

—

—

748,110

—

Repayments of long-term debt

—

—

(750,000)

—

Call premium, financing, and underwriting fees

(159)

—

(29,194)

(1)

Dividends paid

(7,590)

(7,588)

(22,743)

(30,243)

Employee withholding taxes paid upon the net settlement of equity-classified stock awards

(6,422)

(7,375)

(7,637)

(11,457)

Proceeds from exercise of stock options

190

3,336

226

4,623

Net cash used by financing activities

(13,981)

(11,627)

(61,238)

(37,078)

Net change in cash and cash equivalents

(96,787)

56,957

(230,068)

(80,686)

Cash and cash equivalents at beginning of period

519,595

641,739

652,876

779,382

Cash and cash equivalents at end of period

$

422,808

$

698,696

$

422,808

$

698,696

 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

September 30,

December 31,

2017

2016

Assets

(in thousands, except share data)

Current assets:

Cash and cash equivalents

$

422,808

$

652,876

Receivables, net of allowance

403,197

274,597

Oil and gas well equipment and supplies

54,545

33,342

Derivative instruments

6,924

—

Other current assets

6,658

8,489

Total current assets

894,132

969,304

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

Proved properties

17,071,532

16,225,495

Unproved properties and properties under development,

not being amortized

572,651

478,277

17,644,183

16,703,772

Less – accumulated depreciation, depletion, amortization, and impairment

(14,629,884)

(14,349,505)

Net oil and gas properties

3,014,299

2,354,267

Fixed assets, net of accumulated depreciation

208,320

205,465

Goodwill

620,232

620,232

Derivative instruments

129

—

Deferred income taxes

—

55,835

Other assets

31,942

32,621

$

4,769,054

$

4,237,724

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

88,888

$

74,486

Accrued liabilities

343,381

278,781

Derivative instruments

5,778

49,370

Revenue payable

154,578

119,715

Total current liabilities

592,625

522,352

Long-term debt:

Principal

1,500,000

1,500,000

Less – unamortized debt issuance costs and discount

(13,491)

(12,061)

Long-term debt, net

1,486,509

1,487,939

Deferred income taxes

99,695

—

Other liabilities 

188,162

184,444

Total liabilities

2,366,991

2,194,735

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, 95,260,701 and 95,123,525 shares issued, respectively

953

951

Additional paid-in capital

2,773,260

2,763,452

Retained earnings (accumulated deficit)

(373,955)

(722,359)

Accumulated other comprehensive income

1,805

945

Total stockholders' equity

2,402,063

2,042,989

$

4,769,054

$

4,237,724

 

View original content with multimedia:http://www.prnewswire.com/news-releases/cimarex-reports-third-quarter-2017-results-300551206.html

SOURCE Cimarex Energy Co.


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Press Releases

Related Entities

Argus, Dividend, Crude Oil, Earnings