Cimarex Energy Reports Third-Quarter 2012 Results
Cimarex Energy Reports Third-Quarter 2012 Results
PR Newswire
DENVER, Nov. 2, 2012
DENVER, Nov. 2, 2012 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today
reported third-quarter 2012 net income of $84.3 million, or $0.97 per diluted
share. This compares to third-quarter 2011 earnings of $128.2 million, or
$1.49 per diluted share.
Third-quarter 2012 net income includes an unrealized non-cash loss on
derivative instruments associated with 2012 oil hedges of $5.3 million, or
$0.04 per share after-tax. Third-quarter 2011 net income had an unrealized
non-cash gain on derivative instruments associated with 2011 oil and gas
hedges of $5.4 million, or $0.04 per share after-tax.
Third-quarter 2012 production volumes averaged an all-time high 635.1 million
cubic feet equivalent (MMcfe), per day, a 7% increase as compared to
third-quarter 2011 output of 592.0 MMcfe per day. Oil production grew 23% to
a record 32,456 barrels per day. Permian Basin oil production grew 42% to
25,000 barrels per day. Combined Permian and Mid-Continent third-quarter
volumes averaged 598.8 MMcfe per day, growing 18% over the same period in
2011. Total third-quarter 2012 production volumes were 51% gas, 31% oil and
18% natural gas liquids (NGL).
Oil, gas and NGL revenue in the third quarter of 2012 totaled $397.4 million
as compared to $419.7 million in the same period of 2011. Third-quarter 2012
adjusted cash flow from operations was $291.2 million versus $356.8 million a
year ago(1).
The decrease in third-quarter revenues and cash flow is primarily a result of
lower gas and NGL prices, partially offset by higher liquids production.
Third-quarter 2012 realized gas price fell 39% to $2.79 per thousand cubic
feet (Mcf) and NGL prices dropped 34% to $28.55 per barrel, as compared to a
year ago. Oil prices for the third quarter of 2012 averaged $88.18 per barrel
flat with the third-quarter 2011 average price of $87.64 per barrel.
For the nine months ended September 30, 2012, net income totaled $254.7
million, or $2.93 per diluted share, as compared to $413.1 million, or $4.79
per diluted share, for the first nine months of 2011. Year-to-date through
September 30, 2012 adjusted cash flow from operations totaled $834.6 million
versus $1.0 billion for 2011(1).
2012 Outlook
Total Company fourth-quarter 2012 volumes are estimated to average 652-677
MMcfe/d, an 8-13% increase over fourth-quarter 2011. Fourth-quarter 2012
Permian Basin and Mid-Continent (PB/MC) production is expected to average
622-642 MMcfe/d, an increase of 17-21% over fourth-quarter 2011. Gulf Coast
volumes are estimated to average 30-35 MMcfe/d for fourth-quarter 2012.
The resulting full-year 2012, total Company volumes are projected to average
620-626 MMcfe/d, 5-6% growth over 2011. PB/MC 2012 production volumes are
projected to average 581-585 MMcfe/d, growing 19-20% over 2011. Gulf Coast
volumes are expected to average 39-41 MMcfe/d for 2012.
Full-year 2012 exploration and development (E&D) capital investment is
expected to be approximately $1.6 billion. E&D capital for the first nine
months of 2011 totaled $1.2 billion.
Expenses for 2012 are expected to fall within the following ranges:
Expenses ($/Mcfe):
Production expense $1.11 - $1.16
Transportation expense 0.25 - 0.30
DD&A and ARO accretion 2.35 - 2.45
General and administrative expense 0.25 - 0.30
Taxes other than income (% of oil and gas revenue) 6.0% - 6.5%
Other
Long-term debt at September 30, 2012 was $830 million, comprised of $750
million 5.875% Senior Notes due in 2022 and $80 million of borrowings under
its senior unsecured revolving credit facility. Debt to total capitalization
ratio at quarter-end was 20% ^(4).
Cimarex's hedge position is unchanged covering approximately 14,000 barrels of
oil per day for the balance of 2012. The following table summarizes the open
hedge positions:
Oil Contracts Weighted Average Price
Period Type Daily Index^(3) Floor Ceiling
Volume^(2)
Months of Oct.-Dec. 12 Collar 14,000 WTI $ 80.00 $ 119.35
Cimarex accounts for commodity contracts using the mark-to-market (through
income) accounting method. Third-quarter 2012 had a non-cash mark-to-market
loss of $5.3 million and no cash settlements.
Exploration and Development Activity
Cimarex's drilling activities are conducted within two main areas: Permian
Basin and Mid-Continent. Permian activity is primarily directed to the
Delaware Basin of southeast New Mexico and West Texas. The majority of our
Mid-Continent drilling is in the western Oklahoma Cana-Woodford shale.
Cimarex drilled 253 gross (138 net) wells during the first nine months of
2012, completing 97% as producers. Exploration and development capital for
the year has totaled $1.2 billion. Of total expenditures, 52% were invested
in projects located in the Permian Basin; 44% in the Mid-Continent area; and
4% in the Gulf Coast and other.
Wells Drilled and Completed by Region
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2012 2011 2012 2011
Gross wells
Permian Basin 37 35 131 106
Mid-Continent 55 42 119 128
Gulf Coast/Other 1 5 3 8
93 82 253 242
Net wells
Permian Basin 24 23 88 79
Mid-Continent 23 20 49 52
Gulf Coast/Other 0 5 1 7
47 48 138 138
% Gross wells completed as 99% 94% 97% 95%
producers
At quarter-end 39 net wells were drilled and awaiting completion: 28
Mid-Continent and 11 Permian Basin. Cimarex currently has 19 operated rigs
running; 14 in the Permian Basin and five in the Mid-Continent.
Permian Basin
Cimarex drilled and completed 131 gross (88 net) Permian Basin wells during
the first nine months of 2012, completing 96% as producers. At quarter-end,
18 gross (11 net) wells were awaiting completion. Drilling principally
occurred in the Delaware Basin of Texas and southeast New Mexico, mainly
targeting Bone Spring, Paddock and Wolfcamp formations. Third-quarter 2012
Permian production averaged 274.5 MMcfe/d, an increase of 33% over
third-quarter 2011, which included 42% growth in oil volumes to 25,000 barrels
per day.
Year-to-date 2012 New Mexico Bone Spring wells drilled and completed totaled
48 gross (24 net). Per-well 30-day gross production from the 2012 New Mexico
Bone Spring wells averaged over 630 barrels equivalent (Boe) per day (86%
oil). Texas Third Bone Spring drilling totaled 28 gross (18 net) wells, which
had per-well 30-day average gross production rates of over 1,000 barrels
equivalent per day (80% oil).
Cimarex continues to evaluate the Wolfcamp shale in the Delaware Basin,
primarily in southern Eddy County New Mexico (White City) and northern
Culberson County Texas. Year-to-date Cimarex has drilled and completed 11
gross (10 net) horizontal Wolfcamp wells, bringing total wells in the play to
29 gross (27 net). Per well first-30 day production rates on all the wells
drilled to date have averaged 6.4 MMcfe/d, comprised of 2.8 MMcf/d gas, 275
barrels per day of oil and 330 barrels per day of NGLs (assuming full NGL
recovery), or 43% gas, 26% oil and 31% NGL.
Mid-Continent
In the first nine months of 2012 Cimarex drilled and completed 119 gross (49
net) Mid-Continent wells. At quarter-end, 64 gross (28 net) wells were
awaiting completion. Mid-Continent production averaged 324.3 MMcfe/d for the
third quarter of 2012, a 7% increase over third-quarter 2011 average of 303.1
MMcfe/d.
Essentially all this year's drilling activity has been in the Anadarko Basin,
Cana-Woodford shale play, where Cimarex has drilled and completed 113 gross
(47 net) wells. At September 30, 2012 there were 54 gross (24 net) Cana wells
being completed or awaiting completion. At year-end 2011 there were 13 gross
(4.9 net) wells waiting on completion in Cana. The increase in wells waiting
on completion as compared to year-end is a result of commencing infill
development drilling in 2012.
Since the Cana play began in late 2007, Cimarex has drilled or participated in
464 gross (177 net) wells. Third-quarter 2012 net Cana production averaged
184.3 MMcfe/d, a 32% increase versus the third-quarter 2011 average of 139.2
MMcfe/d.
Gulf Coast
Cimarex participated in three gross (0.8 net) outside operated Yegua/Cook
Mountain wells in 2012, of which one gross well was successful. Gulf Coast
production averaged 35.1 MMcfe/d for the third quarter of 2012, a 57% decrease
as compared to the third-quarter 2011 average of 81.8 MMcfe/d. The decreased
output is a result of natural decline in highly-productive wells drilled near
Beaumont, Texas.
Production by Region
Cimarex's average daily production by commodity and region is summarized
below:
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Gas (Mcf per day)
Permian Basin 79,502 76,872 78,007 72,150
Mid-Continent 224,009 209,459 218,411 197,688
Gulf Coast/Other 20,735 43,334 24,110 57,513
324,246 329,665 320,528 327,351
Oil (Barrels per day)
Permian Basin 25,000 17,578 22,839 15,977
Mid-Continent 6,120 5,720 5,802 5,641
Gulf Coast/Other 1,336 2,986 1,602 4,954
32,456 26,284 30,243 26,572
NGL (Barrels per day)
Permian Basin 7,501 3,921 6,523 3,231
Mid-Continent 10,598 9,885 9,934 8,866
Gulf Coast/Other 1,261 3,632 1,487 4,981
19,360 17,438 17,944 17,078
Total Equivalent (Mcfe
per day)
Permian Basin 274,508 205,866 254,179 187,398
Mid-Continent 324,317 303,089 312,827 284,730
Gulf Coast/Other 36,318 83,045 42,644 117,127
635,143 592,000 609,650 589,255
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 # 37850869 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
# 37850869. 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 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) Adjusted cash flow from operations is a non-GAAP financial measure. See
below for a reconciliation of the related amounts.
(2) Average daily volume in barrels per day.
(3) WTI refers to West Texas Intermediate oil price as quoted on the New York
Mercantile Exchange.
(4) Reconciliation of pro forma debt to total capitalization, which is a
non-GAAP measure, is: pro forma long-term debt of $830 million divided by
long-term debt of $830 million plus stockholders' equity of $3,377.9 million.
RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
(in thousands)
Net cash provided by $ 261,216 $ 332,432 $ 836,148 $ 971,523
operating activities
Change in
operating assets
and 29,957 24,372 (1,509) 33,264
liabilities
Adjusted cash flow $ 291,173 $ 356,804 $ 834,639 $ 1,004,787
from operations
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 Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Total gas 29,830,627 30,329,145 87,824,541 89,366,754
production - Mcf
Gas volume - Mcf 324,246 329,665 320,528 327,351
per day
Gas price - per $2.79 $4.57 $2.71 $4.59
Mcf
Total oil
production - 2,985,956 2,418,141 8,286,503 7,254,247
barrels
Oil volume - 32,456 26,284 30,243 26,572
barrels per day
Oil price - per $88.18 $87.64 $91.67 $93.08
barrel
Total NGL
production - 1,781,139 1,604,337 4,916,753 4,662,376
barrels
NGL volume - 19,360 17,438 17,944 17,078
barrels per day
NGL price - per $28.55 $43.11 $31.35 $42.99
barrel
OIL AND GAS CAPITALIZED EXPENDITURES
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
(in thousands)
Acquisitions:
Proved $ — $ 12,439 $ — $ 21,604
Unproved 4,636 8,380 11,349 20,427
4,636 20,819 11,349 42,031
Exploration and
development:
Land and Seismic 28,226 61,907 86,613 146,832
Exploration and 389,989 360,733 1,120,740 1,032,794
development
418,215 422,640 1,207,353 1,179,626
Sale proceeds:
Proved (10,894) (83,709) (11,079) (102,192)
Unproved — (150) (1,088) (1,971)
(10,894) (83,859) (12,167) (104,163)
$ 411,957 $ 359,600 $ 1,206,535 $ 1,117,494
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)
For the Three Months Ended For the Nine Months
Ended
September 30, September 30,
2012 2011 2012 2011
(In thousands, except per share data)
Revenues:
Gas sales $ 83,208 $ 138,631 $ 238,102 $ 410,331
Oil sales 263,315 211,928 759,609 675,239
NGL sales 50,860 69,169 154,160 200,428
Gas gathering, processing 9,529 14,081 31,199 41,620
and other, net
406,912 433,809 1,183,070 1,327,618
Costs and expenses:
Depreciation, depletion, 139,499 108,259 384,964 287,777
amortization and accretion
Production 62,699 62,333 192,818 181,558
Transportation 14,481 13,754 40,966 41,559
Gas gathering and 5,496 6,263 15,302 17,472
processing
Taxes other than income 24,095 30,533 72,738 98,625
General and administrative 14,742 9,390 41,523 34,734
Stock compensation, net 8,301 4,595 17,519 13,962
(Gain) loss on derivative 5,329 (7,120) (661) (11,353)
instruments, net
Other operating, net 2,236 2,379 7,295 8,095
276,878 230,386 772,464 672,429
Operating income 130,034 203,423 410,606 655,189
Other (income) and expense:
Interest expense 12,191 7,278 32,852 22,192
Amortization of deferred 1,032 2,001 2,718 5,407
financing costs
Capitalized interest (9,231) (7,253) (26,154) (21,830)
Loss on early — — 16,214 —
extinguishment of debt
Other, net (6,159) (3,604) (18,714) (7,226)
Income before income tax 132,201 205,001 403,690 656,646
Income tax expense 47,939 76,849 149,019 243,583
Net income $ 84,262 $ 128,152 $ 254,671 $ 413,063
Earnings per share to common
stockholders:
Basic $ 0.97 $ 1.49 $ 2.94 $ 4.81
Diluted $ 0.97 $ 1.49 $ 2.93 $ 4.79
Dividends per share $ 0.12 $ 0.10 $ 0.36 $ 0.30
Shares attributable to common
stockholders:
Unrestricted common shares 84,681 83,736 84,681 83,736
outstanding
Diluted common shares 84,997 84,115 85,021 84,151
Shares attributable to common
stockholders and
participating securities:
Basic shares outstanding 86,589 85,806 86,589 85,806
Fully diluted shares 86,905 86,185 86,929 86,221
Comprehensive income:
Net income $ 84,262 $ 128,152 $ 254,671 $ 413,063
Other comprehensive income:
Change in fair value
of investments, net 238 (585) 502 (417)
of tax
Total comprehensive income $ 84,500 $ 127,567 $ 255,173 $ 412,646
CONDENSED CASH FLOW STATEMENTS (unaudited)
For the Three Months For the Nine Months Ended
Ended
September 30, September 30,
2012 2011 2012 2011
(In thousands)
Cash flows from operating
activities:
Net income $ 84,262 $ 128,152 $ 254,671 $ 413,063
Adjustment to reconcile net
income to net cash
provided by operating
activities:
Depreciation, depletion, 139,499 108,259 384,964 287,777
amortization and accretion
Deferred income taxes 49,568 120,930 150,648 288,986
Stock compensation, net 8,301 4,595 17,519 13,962
Derivative instruments, net 5,329 (5,373) (661) (7,536)
Loss on early — — 16,214 —
extinguishment of debt
Changes in non-current 2,815 (840) 7,930 3,719
assets and liabilities
Amortization of deferred
financing costs and other, 1,399 1,081 3,354 4,816
net
Changes in operating assets
and liabilities:
(Increase) decrease in (83,436) (49,778) 24,398 (32,229)
receivables, net
Decrease in other current 13,673 40,430 8,763 30,736
assets
Increase (decrease) in
accounts payable and 39,806 (15,024) (31,652) (31,771)
accrued liabilities
Net cash provided by 261,216 332,432 836,148 971,523
operating activities
Cash flows from investing
activities:
Oil and gas expenditures (423,134) (453,375) (1,181,742) (1,152,676)
Sales of oil and gas assets 10,894 83,859 12,167 104,163
Sales of other assets 142 111,495 550 111,837
Other expenditures (16,826) (17,161) (42,913) (70,050)
Net cash used by (428,924) (275,182) (1,211,938) (1,006,726)
investing activities
Cash flows from financing
activities:
Net increase in bank debt 80,000 — 25,000 —
Increase in other long-term — — 750,000 —
debt
Decrease in other long-term — — (363,595) —
debt
Financing costs incurred (1,129) (7,248) (13,821) (7,348)
Dividends paid (10,330) (8,583) (29,199) (23,998)
Issuance of common stock and 7,646 2,591 10,410 9,583
other
Net cash provided by (used 76,187 (13,240) 378,795 (21,763)
in) financing activities
Net change in cash and cash (91,521) 44,010 3,005 (56,966)
equivalents
Cash and cash equivalents at 96,932 13,150 2,406 114,126
beginning of period
Cash and cash equivalents at $ 5,411 $ 57,160 $ 5,411 $ 57,160
end of period
CONDENSED BALANCE SHEETS (unaudited)
September 30, December 31,
Assets 2012 2011
(In thousands, except share data)
Current assets:
Cash and cash equivalents $ 5,411 $ 2,406
Receivables, net 335,011 359,409
Oil and gas well equipment and 77,879 85,141
supplies
Deferred income taxes 2,126 2,723
Derivative instruments 416 —
Other current assets 6,715 8,216
Total current assets 427,558 457,895
Oil and gas properties at cost, using the
full cost method of accounting:
Proved properties 11,116,783 9,933,517
Unproved properties and properties
under development,
not being amortized 661,626 607,219
11,778,409 10,540,736
Less – accumulated depreciation, (6,767,943) (6,414,528)
depletion and amortization
Net oil and gas properties 5,010,466 4,126,208
Fixed assets, net 134,776 118,215
Goodwill 691,432 691,432
Other assets, net 49,023 34,827
$ 6,313,255 $ 5,428,577
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 64,988 $ 79,788
Accrued liabilities 434,966 385,651
Derivative instruments — 245
Revenue payable 151,798 150,655
Total current liabilities 651,752 616,339
Long-term debt 830,000 405,000
Deferred income taxes 1,128,642 974,932
Other liabilities 324,914 301,693
Total liabilities 2,935,308 2,297,964
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,
86,540,753 and 85,774,084 shares 865 858
issued, respectively
Paid-in capital 1,931,583 1,908,506
Retained earnings 1,445,011 1,221,263
Accumulated other comprehensive income 488 (14)
(loss)
3,377,947 3,130,613
$ 6,313,255 $ 5,428,577
SOURCE Cimarex Energy Co.
Website: http://www.cimarex.com
Contact: Cimarex Energy Co., Mark Burford, Vice President - Capital Markets
and Planning, +1-303-295-3995, www.cimarex.com
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