Cimarex Reports First-Quarter 2010 Net Income of $204.4 Million
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.
- Cash flow from operations is a non-GAAP financial measure. See below for a reconciliation of the related amounts.
- Gas volume in MMBtu per day and oil volume in barrels per day.
- 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.
- 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.
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