Cimarex Reports First-Quarter 2010 Net Income of $204.4 Million

News provided by

Cimarex Energy Co.

May 07, 2010, 06:00 ET

DENVER, May 7 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported first-quarter 2010 net income of $204.4 million, or $2.39 per diluted share.  A year ago, Cimarex had a first-quarter loss of $494.1 million, or $6.05 per share.  First-quarter 2010 results include a $33 million ($0.39 per share) after-tax net gain on derivative instruments. First-quarter 2009 was impacted by a $502 million ($6.15 per share) after-tax full-cost ceiling test write-down.

Revenues from oil and gas sales in the first quarter of 2010 were $432.4 million, a 119% increase compared to $197.2 million in the same period of 2009.  First-quarter 2010 cash flow from operations totaled $313.2 million versus $137.6 million in the same period of 2009(1).  

The increase in first-quarter 2010 revenues is a result of higher commodity prices and increasing production.  First-quarter 2010 gas prices increased 67% to $6.41 per thousand cubic feet (Mcf) and oil improved 112% to $76.11 per barrel as compared to the same period of 2009.  

First-quarter 2010 oil and gas production averaged 584.5 million cubic feet equivalent per day (MMcfe/d), comprised of 390.8 million cubic feet of gas, 27,967 barrels of oil and 4,313 barrels of natural gas liquids (NGL).

First-quarter 2010 production grew 25% sequentially from the fourth-quarter 2009 average of 467.6 MMcfe/d and 20% as compared to the first-quarter 2009 average of 489.0 MMcfe/d.  Production increases reflect successful Gulf Coast exploration and strong Cana-Woodford results.

Outlook

Second-quarter 2010 production is projected to be in the range of 570-600 MMcfe/d.    Full-year 2010 production is now projected to be in the range of 570-595 MMcfe/d, or a 23-29% increase over 2009.

Expenses for 2010 are expected to fall within the following ranges:

Expenses ($/Mcfe):

Production expense

$0.80 -  $1.00

Transportation expense

 0.19  -  0.24

DD&A and ARO accretion

 1.40  -  1.70

General and administrative expense

 0.24  -  0.30

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

7.5%  -  8.5%

Full-year 2010 exploration and development (E&D) capital investment, based on current market conditions, is still expected to be within the range of $700-$900 million.  

Capital

First-quarter 2010 E&D capital totaled $192.6 million, up from $142.0 million in the first quarter of 2009.  Cimarex drilled and completed 37 gross (23.1 net) wells in the first quarter of 2010. In addition, at quarter-end 29 gross (18.5 net) wells were drilled and not yet completed.  First-quarter 2009 wells drilled and completed totaled 25 gross (15.2 net), and another 16 gross (8.4 net) wells were drilled and awaiting completion at period end.  

Other

Cimarex has oil and natural gas contracts for April 2010 through December 2011.  Oil collars covering 6,000 barrels per day for calendar 2011 were entered into during 2010. Calendar 2010 hedges are unchanged covering on average 11,000 barrels of oil per day and 160,000 MMBtu of gas per day. The following tables summarize the current commodity hedge position:

Natural Gas Contracts








Weighted Average Price

Period

Type

Volume (2)

Index (3)

Floor

Ceiling

Swap

Apr 10 - Dec 10

Collar

100,000

PEPL

$

5.00

$

6.62


$

-

Apr 10 - Dec 10

Swap

 40,000

PEPL

$

-

$

-

$

5.18

Apr 10 - Dec 10

Collar

 20,000

HSC

$

5.00

$

6.85

$

-




160,000











Oil Contracts








Weighted Average Price

Period

Type

Volume (2)

Index (3)

Floor

Ceiling

Put

Apr 10 – Dec 10

Collar

10,000

WTI

$

60.03

$

92.07

$

-

Apr 10 – Dec 10

Put/Floor

1,000

WTI

$

-

$

-

$

60.00




11,000


























Jan 11 – Dec 11

Collar

6,000

WTI

$

65.00

$

106.20

$

-

















Cimarex accounts for these commodity contracts using the mark-to-market (through income) accounting method.  

Long-term debt at March 31, 2010 was $367.8 million. Debt to total capitalization ratio at quarter-end was 14%(4).  

Cimarex's bank group, as part of the regularly scheduled spring review, reaffirmed the Company's $1.0 billion borrowing base related to its credit facility maturing in April 2012.  Bank group commitments of $800 million also remain unchanged.  As of March 31, 2010, Cimarex had no borrowings outstanding under its bank credit facility.

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 (800) 921-0061 and reference call ID # 70153168 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 # 70153168.  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 $367.8 million divided by long-term debt of $367.8 million plus stockholders' equity of $2,238 million.

RECONCILIATION OF CASH FLOW FROM OPERATIONS



For the Three Months Ended



March 31,



2010

2009



(in thousands)

Net cash provided by operating activities

$

299,107

$

82,556

Change in operating assets




   and liabilities

14,100

55,090

Cash flow from operations

$

313,207

$

137,646






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



March 31,



2010

2009

Total gas production - Mcf


35,174,920

30,465,337

Gas volume - Mcf per day


390,832

338,504

Gas price - per Mcf  

$6.41

$3.83







Total oil production - barrels


2,517,040

2,212,359

Oil volume - barrels per day


27,967

24,582

Oil price - per barrel


$76.11

$35.86







Total NGL production - barrels


388,202

45,358

NGL volume - barrels per day *


4,313

504

NGL price - per barrel


$39.18

$27.96






*

NGL production volumes are recorded based on where title transfer occurs. The first-quarter 2010 increase of 3.8 thousand barrels per day of NGL production compared to the same period of 2009 relates primarily to our Anadarko Basin, Cana-Woodford shale play.

OIL AND GAS CAPITALIZED EXPENDITURES



For the Three Months Ended



March 31,



2010

2009



(in thousands)

Acquisitions:




Proved

$

7,156  

$

75  


Unproved

16,044  


—  




23,200  


75  


Exploration and development:




Land and Seismic

24,903  


16,279  


Exploration and development

167,686  


125,752  




192,589  


142,031  


Sale proceeds:




Proved


—  


(730)  

Unproved

—  


(3,034)  



—  


(3,764)  


$

215,789  

$

138,342  

CONDENSED STATEMENTS OF OPERATIONS (unaudited)









For the Three Months Ended



March 31,



2010

2009



(In thousands, except per share data)






Revenues:




Gas sales

$

225,637

$

116,624

Oil sales

191,560

79,337

NGL sales

15,209

1,268

Gas gathering, processing and other

15,850

11,070

Gas marketing, net

314

880



448,570

209,179

Costs and expenses:




Impairment of oil and gas properties

—

791,137

Depreciation, depletion, amortization and accretion

72,354

92,211

Production

41,983

50,414

Transportation

11,167

8,709

Gas gathering and processing

6,505

5,106

Taxes other than income

32,358

15,545

General and administrative

13,045

7,762

Stock compensation, net

2,778

2,257

Gain on derivative instruments, net

(52,597)

(102)

Other operating, net

(1,846)

10,092



125,747

983,131






Operating income (loss)

322,823

(773,952)






Other (income) and expense:




Interest expense


7,706

7,955

Amortization of deferred financing costs

1,756

312

Capitalized interest

(7,424)

(5,513)

Other, net

(1,930)

2,355






Income (loss) before income tax

322,715

(779,061)

Income tax expense (benefit)

118,354

(284,961)






Net income (loss)

$

204,361

$

(494,100)






Earnings (loss) per share to common stockholders:




Basic

$

2.42

$

(6.05)

Diluted

$

2.39

$

(6.05)






Dividends per share

$

0.08

$

0.06






Shares attributable to common stockholders:




Unrestricted Common shares outstanding

82,023

81,684

Diluted common shares


82,870

81,684






Shares attributable to common stockholders and participating securities:




Basic shares outstanding

84,531

81,684

Fully diluted shares


85,378

81,684

CONDENSED CASH FLOW STATEMENTS (unaudited)







For the Three Months Ended


March 31,


2010

2009


(In thousands)





Cash flows from operating activities:




Net income (loss)

$

204,361

$

(494,100)

Adjustment to reconcile net income (loss) to net cash







provided by operating activities:






Impairments and other valuation losses

—

795,562



Depreciation, depletion, amortization and accretion

72,354

92,211



Deferred income taxes

84,990

(269,752)



Stock compensation, net

2,778

2,257



Derivative instruments, net

(52,056)

(102)



Changes in non-current assets and liabilities

3,101

4,426



Amortization of deferred financing costs







and other, net

(2,321)

7,144

Changes in operating assets and liabilities:






(Increase) decrease in receivables, net

(39,495)

87,231



(Increase) decrease in other current assets

18,495

(23,744)



Increase (decrease) in accounts payable and









accrued liabilities

6,900

(118,577)





Net cash provided by operating activities

299,107

82,556

Cash flows from investing activities:




Oil and gas expenditures

(203,682)

(197,549)

Sales of oil and gas and other assets

55

3,824

Sales of short-term investments

—

923

Other expenditures

(7,822)

(7,967)





Net cash used by investing activities

(211,449)

(200,769)

Cash flows from financing activities:




Net increase (decrease) in bank debt

(25,000)

125,000

Financing costs incurred

—

(2)

Dividends paid

(5,069)

(5,040)

Issuance of common stock and other

2,409

—





Net cash provided by (used in)











financing activities

(27,660)

119,958

Net change in cash and cash equivalents

59,998

1,745

Cash and cash equivalents at beginning of period

2,544

1,213

Cash and cash equivalents at end of period

$

62,542

$

2,958

BALANCE SHEETS (unaudited)





March 31,

December 31,

Assets

2010

2009




(In thousands, except share data)

Current assets:




Cash and cash equivalents

$

62,542

$

2,544

Restricted cash

593

593

Receivables, net

267,366

227,896

Oil and gas well equipment and supplies

128,207

145,153

Deferred income taxes

—

15,837

Derivative instruments

47,497

1,238

Other current assets

12,890

13,997


Total current assets

519,095

407,258

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




Proved properties

7,730,333

7,549,861

Unproved properties and properties under development,





not being amortized

435,379

399,724




8,165,712

7,949,585

Less – accumulated depreciation, depletion and amortization

(5,828,786)

(5,764,669)


Net oil and gas properties

2,336,926

2,184,916

Fixed assets, net

129,395

127,237

Goodwill

691,432

691,432

Other assets, net

31,272

33,694



$

3,708,120

$

3,444,537

Liabilities and Stockholders’ Equity



Current liabilities:




Accounts payable

$

44,471

$

30,214

Accrued liabilities

232,622

235,815

Derivative instruments

7,171

13,902

Revenue payable

132,910

108,832


Total current liabilities

417,174

388,763

Long-term debt

367,832

392,793

Deferred income taxes

407,166

348,897

Other liabilities


277,886

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,





83,883,540 and 83,541,995 shares issued, respectively

839

835

Paid-in capital

1,861,417

1,859,255

Retained earnings

375,726

178,035

Accumulated other comprehensive income (loss)

80

(19)




2,238,062

2,038,106



$

3,708,120

$

3,444,537









SOURCE Cimarex Energy Co.

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

icon3
440k+
Newsrooms &
Influencers
icon1
9k+
Digital Media
Outlets
icon2
270k+
Journalists
Opted In
GET STARTED