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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