CIMAREX ENERGY CO. DENVER, Aug. 4, 2015 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported a second quarter 2015 net loss of $600.2 million, or $6.47 per diluted share, including a non-cash impairment of oil and gas properties. The adjusted second quarter net income was $14.4 million, or $0.15 per diluted share((1)). Second quarter 2015 adjusted cash flow from operations was $252.4 million versus $443.1 million a year ago((1)).
Total company production averaged 1.0 billion cubic feet equivalent (Bcfe) per day during the second quarter, a 22 percent increase from second quarter 2014. Year-over-year natural gas volumes increased 14 percent, oil volumes grew 35 percent and NGL volumes were up 25 percent.
Commodity prices impacted Cimarex's financial results for the quarter. Realized oil prices averaged $50.66 per barrel, down 46 percent versus a year ago but up 19 percent sequentially. Natural gas prices were down 46 percent year-over-year and averaged $2.51 per Mcf compared to $4.62 per Mcf. NGL prices averaged $14.67 per barrel, down 59 percent from the second quarter of 2014 and seven percent sequentially. (See table of Average Realized Price by Region below.)
Cimarex invested $190 million in exploration and development during the second quarter, which was funded with cash flow from operations. Total debt at June 30, 2015, remained at $1.5 billion of long-term notes. Cimarex had no borrowings under its revolving credit facility and a cash balance of $857 million. Debt was 26 percent of total capitalization((2)).
Cimarex Chairman, President and CEO, Tom Jorden, said, "In May, Cimarex issued 6.9 million shares of common stock to increase drilling in our exceptional portfolio of projects in the Delaware Basin and Mid-Continent region. These projects continue to provide highly attractive returns despite the negative commodity price backdrop." He went on to say, "We received $730 million of net offering proceeds that will supplement our exploration and development activities in 2015/16 including infill development in the Woodford Shale, our first infill development in the Wolfcamp D in the Delaware Basin, as well as continued activity in the Bone Spring and emerging Meramec plays." Cimarex plans to invest $100 million of the capital from the equity offering in the second half of 2015 with the remainder to be invested as part of the 2016 capital program.
Cimarex now estimates total production volumes for 2015 to average 960-980 MMcfe per day, a midpoint increase of 12 percent over 2014 volumes. Oil volumes are expected to grow 17-19 percent and gas volumes 6-8 percent. Total company production for the third quarter 2015 is projected to average 920-940 MMcfe per day which includes a reduction of 20 MMcfe per day for facilities maintenance. Capital investment for exploration and development is estimated to be $1.0 billion in 2015, which includes an additional $100 million of drilling and completion capital to be funded from the May equity offering.
Expenses per Mcfe of production for the remainder of 2015 are estimated to be:
Production expense $0.90 - $1.05
Transportation, processing and other
expense 0.47 - 0.57
DD&A and ARO accretion* 2.00 - 2.10
General and administrative expense 0.18 - 0.22
Taxes other than income (% of oil
and gas revenue) 6.0 - 6.5%
*Excludes the potential impact of
any future ceiling test writedown.
Operations Update
Cimarex invested $190 million in exploration and development during the second quarter, bringing the total for the first half of 2015 to $498 million. Year-to-date, 66 percent has been invested in the Permian Basin and 33 percent in the Mid-Continent. We completed 45 gross (24 net) wells during the quarter. At June 30, 61 gross (24 net) wells were awaiting completion. Cimarex is currently operating seven drilling rigs.
WELLS BROUGHT ON PRODUCTION BY REGION
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Gross wells
Permian Basin 26 47 68 81
Mid-Continent 19 37 30 76
Other - 1 - 2
45 85 98 159
Net wells
Permian Basin 18 30 48 51
Mid-Continent 6 21 9 35
Other - - - 1
24 51 57 87
Permian Region
Production from the Permian region averaged 595.1 MMcfe per day in the second quarter, a 51 percent increase over second quarter 2014. Quarterly oil volumes increased 45 percent year-over-year to 48,448 barrels per day and accounted for 49 percent of the region's total production for the quarter.
Cimarex completed and brought on production 26 gross (18 net) wells in the Permian region during the second quarter. The 26 gross wells completed include five Second Bone Spring wells and 20 Wolfcamp wells (12 in Culberson area and eight in Reeves County). On June 30, there were three gross (two net) wells waiting on completion in the Delaware Basin.
Cimarex now has 11 long-lateral Wolfcamp D wells producing in the Culberson County, Texas. These wells were completed using 10,000-foot laterals and had an average 30-day initial gross peak production rate of 2,255 BOE per day (25 percent oil, 45 percent gas, 30 percent NGL). Also in the Culberson area, Cimarex completed a 7,000-foot lateral in the Bone Spring sand, which had an average 30-day initial gross peak production rate of 2,753 BOE per day including 1,870 barrels of oil per day.
In Reeves County, Texas, Cimarex has now completed seven long lateral (10,000-foot) Wolfcamp A wells. These wells had an average 30-day initial gross peak production rate of 1,646 BOE per day (50 percent oil, 28 percent gas, 22 percent NGL). Of note in this group is the recently completed Big Timber 57-25 Unit#1-H, which was completed in the upper Wolfcamp A and had an average 30-day initial gross peak production rate of 3,309 BOE per day (49 percent oil, 30 percent gas, 21 percent NGL).
Mid-Continent
Activity in the Mid-Continent region was focused in the Cana area in western Oklahoma, where 18 gross (five net) Cimarex wells were completed and brought on production during the second quarter. At the end of the quarter, 58 gross (22 net) wells were waiting on completion. Second quarter production from the Cana area averaged 333.5 MMcfe per day, representing 33 percent of total company production. Total Mid-Continent production averaged 419.1 MMcfe per day for the second quarter of 2015.
Cimarex completed three additional Meramec wells in the second quarter bringing the total Meramec wells on production to ten. Average 30-day initial gross peak production from these ten wells was 9.3 MMcfe per day, with oil yields ranging from 15 barrels per MMcf to over 330 barrels per MMcf. Cimarex is currently flowing back its first 10,000-foot long lateral in the Meramec formation and has commenced drilling a second long lateral Meramec test.
Average daily production and commodity price for Cimarex by region are summarized below:
DAILY PRODUCTION BY REGION
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Permian Basin
Gas (MMcf) 189.4 123.6 170.0 113.1
Oil (Bbls) 48,448 33,317 45,783 32,475
NGL (Bbls) 19,169 11,633 16,180 10,386
Total
Equivalent
(MMcfe) 595.1 393.3 541.8 370.3
Mid-Continent
Gas (MMcf) 270.2 276.6 278.6 260.3
Oil (Bbls) 7,181 7,259 7,308 6,662
NGL (Bbls) 17,633 17,543 18,194 16,376
Total
Equivalent
(MMcfe) 419.1 425.5 431.6 398.5
Total Company
Gas (MMcf) 466.3 410.1 456.1 382.8
Oil (Bbls) 56,261 41,759 53,765 40,471
NGL (Bbls) 37,070 29,680 34,670 27,367
Total
Equivalent
(MMcfe) 1,026.2 838.7 986.7 789.9
AVERAGE REALIZED PRICE BY REGION
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Permian Basin
Gas ($ per
Mcf) 2.50 4.82 2.61 5.00
Oil ($ per Bbl) 50.69 91.73 46.85 91.64
NGL ($ per
Bbl) 12.88 32.21 13.13 34.32
Mid-Continent
Gas ($ per
Mcf) 2.51 4.53 2.64 4.93
Oil ($ per Bbl) 49.98 99.78 46.06 97.41
NGL ($ per
Bbl) 16.60 37.47 16.94 39.52
Total Company
Gas ($ per
Mcf) 2.51 4.62 2.63 4.94
Oil ($ per Bbl) 50.66 93.39 46.79 92.82
NGL ($ per
Bbl) 14.67 35.35 15.15 37.43
Other
The following table summarizes the company's current open hedge positions:
Gas Contracts
Weighted Avg. Price
-------------------
Period Type MMBTU/day Index(3) Floor Ceiling
------ ---- --------- ------- ----- -------
Jan
16
-
Dec
16 Collar 10,000 PEPL $2.70 $2.85
Conference call and webcast
Cimarex will host a conference call Wednesday, August 5, at 11:00 a.m. EDT. The call will be webcast and accessible on the company's website at www.cimarex.com. To participate in the live, interactive call, please dial 866-367-3053 five minutes before the scheduled start time (international callers dial 1-412-902-4216). A replay will be available for one week following the call by dialing 877-344-7529 (international callers dial 1-412-317-0088); conference I.D. 10068474. The replay will also be available on the company's website or via the Cimarex App.
Investor Presentation
For more details on Cimarex's second quarter 2015 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 company is providing revised "2015 Outlook", which contains projections for certain 2015 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, 2014, 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 volatility; declines in the values of our oil and gas properties resulting in impairments; the ability to receive drilling and other permits and rights-of-way in a timely manner; development drilling and testing results; 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; higher than expected costs and expenses, including the availability and cost of services and materials; unexpected future capital expenditures; economic and competitive conditions; 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; compliance with environmental and other regulations; derivative and hedging activities; risks associated with operating in one major geographic area; the success of the company's risk management activities; title to properties; litigation; environmental liabilities; the ability to complete property sales or other transactions; 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 (loss) and
adjusted cash flow from
operations are non-GAAP
financial measures. See below
for a reconciliation of the
related amounts.
(2) Reconciliation of debt to total
capitalization, which is a non-
GAAP measure, is: long-term
debt of $1.5 billion divided by
long-term debt of $1.5 billion
plus stockholders' equity of $4.2
billion.
(3) PEPL refers to Panhandle Eastern
Pipe Line Tex/OK Mid-Continent
index.
RECONCILIATION OF ADJUSTED NET INCOME (LOSS)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
(in thousands, net of tax, except per share data)
Net income (loss) $(600,215) $148,640 $(1,015,156) $287,097
Impairment of oil and gas
properties 614,614 - 997,839 -
Mark-to-market loss on
open derivative positions - 904 - 7,790
Adjusted net income
(loss) $14,399 $149,544 $(17,317) $294,887
======= ======== ======== ========
Diluted earnings (loss)
per share $(6.47) $1.70 $(10.94) $3.29
====== ===== ======= =====
Adjusted diluted
earnings (loss) per
share * $0.15 $1.71 $(0.19) $3.38
===== ===== ====== =====
Diluted shares attributable to
common stockholders and
participating securities 92,831 ** 87,188 92,831 ** 87,178
====== ====== ====== ======
Estimated tax rates utilized 36.5% 37.1% 36.5% 37.1%
==== ==== ==== ====
Adjusted net income (loss) and adjusted diluted earnings (loss) per share excludes the noted item because management believes this item affects 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 (loss) to evaluate the company's operational trends
and performance relative to other oil and gas exploration and production companies.
b) Adjusted net income (loss) 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
** Participating securities and other dilutive shares are not included in the diluted share
computation when a loss exists.
RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
(in thousands)
Net cash provided by
operating activities $257,372 $421,745 $370,545 $769,769
Change in operating assets
and liabilities (5,014) 21,367 68,758 82,235
Adjusted cash flow from
operations $252,358 $443,112 $439,303 $852,004
======== ======== ======== ========
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.
OIL AND GAS CAPITALIZED EXPENDITURES
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
(in thousands)
Acquisitions:
Proved (*) $(2,258) $144,516 $(2,228) $144,516
Unproved (*) (9,617) 114,732 (7,748) 114,732
-------
(11,875) 259,248 (9,976) 259,248
Exploration and development:
Land and Seismic 5,275 43,869 27,965 109,194
Exploration and development 184,999 453,714 470,526 855,175
------- -------
190,274 497,583 498,491 964,369
Sale proceeds:
Proved (1,160) (464) (2,305) (223)
Unproved (6,211) (900) (6,211) (900)
------ ----
(7,371) (1,364) (8,516) (1,123)
$171,028 $755,467 $479,999 $1,222,494
======== ======== ======== ==========
* The negative amounts in 2015 reflect purchase price adjustments related to an
acquisition in second quarter 2014.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
(in thousands, except per share data)
Revenues:
Oil sales $259,344 $354,882 $455,349 $679,953
Gas sales 106,374 172,503 217,336 342,600
NGL sales 49,477 95,470 95,077 185,427
Gas gathering and
other, net 9,088 13,814 17,523 27,905
424,283 636,669 785,285 1,235,885
------- ------- ------- ---------
Costs and expenses:
Impairment of oil
and gas properties 967,287 - 1,570,886 -
Depreciation,
depletion,
amortization and
accretion 219,493 198,639 438,007 375,788
Production 70,600 86,085 152,811 161,226
Transportation,
processing, and
other operating 43,713 46,478 83,355 90,726
Gas gathering and
other 11,306 10,041 20,170 18,825
Taxes other than
income 25,980 32,323 47,961 65,944
General and
administrative 14,054 16,571 29,992 37,283
Stock compensation 4,988 3,548 10,143 7,272
(Gain) loss on
derivative
instruments, net - 2,454 - 18,189
Other operating,
net 260 112 784 215
1,357,681 396,251 2,354,109 775,468
--------- ------- --------- -------
Operating income (loss) (933,398) 240,418 (1,568,824) 460,417
Other (income) and expense:
Interest expense 20,186 15,729 40,323 28,773
Amortization of
deferred financing
costs 1,111 995 2,230 1,993
Capitalized
interest (8,570) (8,575) (17,987) (15,865)
Other, net (3,854) (4,129) (7,439) (11,084)
Income (loss) before income tax (942,271) 236,398 (1,585,951) 456,600
Income tax expense (benefit) (342,056) 87,758 (570,795) 169,503
-------- ------ -------- -------
Net income (loss) $(600,215) $148,640 $(1,015,156) $287,097
========= ======== =========== ========
Earnings (loss) per share to common
stockholders:
Basic $(6.47) $1.71 $(10.94) $3.30
Diluted $(6.47) $1.70 $(10.94) $3.29
Dividends per share $0.16 $0.16 $0.32 $0.32
===== ===== ===== =====
Shares attributable to common
stockholders:
Unrestricted common
shares outstanding 92,831 85,532 92,831 85,532
Diluted common
shares 92,831 85,689 92,831 85,679
Shares attributable to common
stockholders and participating
securities:
Basic shares
outstanding N/A* 87,031 N/A* 87,031
Fully diluted
shares N/A* 87,188 N/A* 87,178
Comprehensive income (loss):
Net income (loss) $(600,215) $148,640 $(1,015,156) $287,097
Other comprehensive
income (loss):
Change in fair
value of
investments,
net of tax (292) (56) (190) (16)
Total comprehensive
income (loss) $(600,507) $148,584 $(1,015,346) $287,081
* Due to the net loss, shares of 94,465, which include participating securities, are not
considered in the loss per share calculation
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
(in thousands)
Cash flows from operating activities:
Net income (loss) $(600,215) $148,640 $(1,015,156) $287,097
Adjustment to reconcile
net income (loss) to
net cash
provided by
operating
activities:
Impairment of oil
and gas
properties 967,287 - 1,570,886 -
Depreciation,
depletion,
amortization and
accretion 219,493 198,639 438,007 375,788
Deferred income
taxes (342,056) 87,758 (570,795) 169,503
Stock
compensation 4,988 3,548 10,143 7,272
(Gain) loss on
derivative
instruments - 2,454 - 18,189
Settlements on
derivative
instruments - (1,017) - (5,804)
Changes in non-
current assets
and liabilities 1,896 1,771 2,942 (2,436)
Amortization of
deferred
financing costs
and other,
net 965 1,319 3,276 2,395
Changes in operating
assets and
liabilities:
Receivables, net 20,076 (46,173) 92,473 (81,702)
Other current
assets 6,227 (2,410) 16,121 (19,182)
Accounts payable
and other
current
liabilities (21,289) 27,216 (177,352) 18,649
Net cash
provided
by
operating
activities 257,372 421,745 370,545 769,769
------- ------- ------- -------
Cash flows from investing activities:
Oil and gas
expenditures (228,116) (718,740) (599,222) (1,138,539)
Sales of oil and gas
assets and other
assets 8,053 1,511 9,233 1,374
Other capital
expenditures (17,034) (31,547) (35,882) (51,401)
Net cash
used by
investing
activities (237,097) (748,776) (625,871) (1,188,566)
-------- -------- -------- ----------
Cash flows from financing activities:
Net bank debt
borrowings - (275,000) - (174,000)
Proceeds from other
long-term debt - 750,000 - 750,000
Proceeds from sale of
common stock 752,100 - 752,100 -
Financing and
underwriting costs
incurred (22,563) (11,218) (22,563) (11,218)
Dividends
paid (14,182) (13,879) (28,129) (26,022)
Proceeds from exercise
of stock options and
other 318 1,153 4,936 4,061
Net cash
provided
by
financing
activities 715,673 451,056 706,344 542,821
------- ------- ------- -------
Net change in cash and cash equivalents 735,948 124,025 451,018 124,024
Cash and cash equivalents at beginning of period 120,932 4,530 405,862 4,531
------- ----- ------- -----
Cash and cash equivalents at end of period $856,880 $128,555 $856,880 $128,555
-------- -------- -------- --------
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
June 30, December 31,
2015 2014
---- ----
Assets (in thousands, except share data)
Current assets:
Cash and cash
equivalents $856,880 $405,862
Receivables, net 319,370 412,108
Oil and gas well
equipment and
supplies 75,165 89,780
Deferred income
taxes 6,961 13,475
Other current
assets 9,073 10,579
Total current
assets 1,267,449 931,804
--------- -------
Oil and gas properties at cost, using
the full cost method of accounting:
Proved properties 15,043,625 14,402,064
Unproved properties
and properties
under development,
not being
amortized 599,654 759,149
------- -------
15,643,279 15,161,213
Less - accumulated
depreciation,
depletion,
amortization and
impairment (10,242,417) (8,257,502)
Net oil and gas
properties 5,400,862 6,903,711
--------- ---------
Fixed assets, net 223,646 211,031
Goodwill 620,232 620,232
Other assets, net 56,315 58,515
------ ------
$7,568,504 $8,725,293
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $71,486 $138,051
Accrued liabilities 262,727 447,384
Revenue payable 164,671 190,892
Total current
liabilities 498,884 776,327
------- -------
Long-term debt 1,500,000 1,500,000
Deferred income taxes 1,177,289 1,754,706
Other liabilities 196,168 193,628
Total
liabilities 3,372,341 4,224,661
--------- ---------
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,
94,456,420 and
87,592,535
shares issued,
respectively 945 876
Paid-in capital 2,737,008 1,997,080
Retained earnings 1,457,298 2,501,574
Accumulated other
comprehensive
income 912 1,102
4,196,163 4,500,632
--------- ---------
$7,568,504 $8,725,293
========== ==========
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SOURCE Cimarex Energy Co.
