DENVER, CO -- 08/01/2007 -- Cimarex Energy Co. (NYSE: XEC) today reported second-quarter 2007 net income of $78.7 million, or $0.93 per share. This compares to second-quarter 2006 earnings of $82.9 million, or $0.98 per diluted share.
Revenues from oil and gas sales in the second quarter of 2007 were $325.8 million, up from $300.5 million in the same period of 2006. Second-quarter 2007 cash flow from operations totaled $236.3 million versus $235.9 million in the same period of 2006(1).
Second-quarter 2007 oil and gas production volumes averaged 442.6 million cubic feet equivalent per day (MMcfe/d) versus 447.9 MMcfe/d in the second quarter of 2006. The latest quarter's average daily production was comprised of 323.8 million cubic feet of gas and 19,800 barrels of oil. Second-quarter 2007 realized gas prices increased 17% to $7.30 per thousand cubic feet (Mcf) and oil prices decreased 6% to $61.51 per barrel.
For the six month period ended June 30, 2007, Cimarex reported net income of $143.3 million, or $1.69 per diluted share, as compared to $193.0 million, or $2.27 per diluted share, for the first six months of 2006. First-half 2007 cash flow from operations totaled $451.7 million versus $463.0 million in the same period of 2006(1).
Capital
Second-quarter 2007 exploration and development expenditures totaled $236.9 million as compared to $281.7 million in the second quarter of 2006. In the second quarter of 2007 Cimarex drilled 115 gross (75 net) wells, completing 89% as producers. Exploration and development capital investment for 2007 is projected to be approximately $1 billion.
Property Sales
Second-quarter 2007 property sales totaled $21 million. An additional $11 million in sales are pending. Total proved reserves associated with the closed and pending property sales approximates 9.8 billion cubic feet equivalent and related production is 3.5 MMcfe/d. The properties are located in South Texas, North Dakota and California.
Share Repurchases
In December 2005, the Board of Directors authorized the repurchase of up to four million shares of common stock. Second-quarter 2007 repurchases totaled 197,300 shares at an average price of $40.47. Cumulative purchases under the authorization through June 30, 2007 total 447,400 shares at an average price of $42.45.
Other
Second-quarter 2007 pre-tax income includes a $5.1 million ($0.04 per share after-tax) gain on early extinguishment of debt resulting from the redemption of $195 million (face value) of 9.6% senior notes that were assumed in the 2005 Magnum Hunter merger. The gain recognized is the difference between the book value (recorded at fair value at the time of the merger) and the redemption price of $204.4 million. The old 9.6% notes and amounts outstanding under the Company's revolving credit facility were repaid with proceeds from the May 1, 2007 issuance of $350 million of new 7.125% ten-year senior notes.
Second-quarter 2007 production expense includes $1.3 million ($0.01 per share after-tax) related to hurricanes Rita and Katrina repair costs in excess of insurance reimbursement.
Outlook
Including the impact of the asset sales, expected timing of Gulf of Mexico well-hookups and net risked exploration drilling potential, full-year 2007 production volumes are expected to average between 445-455 MMcfe/d. Third-quarter 2007 production volumes are also projected to average between 445-455 MMcfe/d.
Expenses for the remainder of 2007 are expected to fall within the following ranges:
Expenses ($/Mcfe): Production expense $1.20 - $1.25 Transportation expense 0.15 - 0.17 DD&A and ARO accretion 2.80 - 2.90 General and administrative expense 0.28 - 0.30 Production taxes (% of oil and gas revenue) 7.0% - 8.0%
Conference call and web cast
Cimarex will host a follow-up conference call today at 11:00 a.m. Mountain Time (1:00 p.m. Eastern Time). To access the live, interactive conference call, please dial 888-603-6873 and reference call ID # 8973059 ten minutes before the scheduled start time. A digital replay will be available for one week following the live broadcast at 877-519-4471 by using the conference ID # 8973059. 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 that represents Net Cash Provided By Operating Activities adjusted for the change in operating assets and liabilities. See below for a reconciliation of the related amounts.
PRICE AND PRODUCTION DATA
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Gas Production:
Total production - Mcf 29,462,142 30,818,316 58,638,779 63,332,782
Gas volume - Mcf per day 323,760 338,663 323,971 349,905
Gas price - per Mcf (before
hedge effect) $ 7.19 $ 6.22 $ 6.87 $ 6.72
Effect of hedges $ 0.11 -- $ 0.14 --
Gas price - per Mcf (after
hedge effect) $ 7.30 $ 6.22 $ 7.01 $ 6.72
Oil Production (including NGL):
Total production - barrels 1,801,811 1,657,375 3,561,535 3,139,136
Oil volume - barrels per
day 19,800 18,213 19,677 17,343
Oil price - per barrel $ 61.51 $ 65.67 $ 58.40 $ 62.79
OIL AND GAS CAPITALIZED COSTS INCURRED
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
------------------- --------------------
2007 2006 2007 2006
--------- ---------- --------- ----------
(in thousands) (in thousands)
Exploration and Development $ 236,874 $ 281,650 $ 482,379 $ 554,881
Acquisitions -- 4,282 23 7,144
--------- ---------- --------- ---------
Oil and gas expenditures 236,874 285,932 482,402 562,025
Sale proceeds (20,630) -- (20,880) --
--------- ---------- --------- ---------
$ 216,244 $ 285,932 $ 461,522 $ 562,025
========= ========== ========= =========
RECONCILIATION OF CASH FLOW FROM OPERATIONS
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
-------------------- --------------------
2007 2006 2007 2006
--------- ---------- --------- ----------
(in thousands) (in thousands)
Net cash provided by operating
activities $ 258,086 $ 233,769 $ 444,555 $ 461,784
Increase in operating assets
and liabilities (21,780) 2,092 7,149 1,194
--------- ---------- ---------- ---------
Cash flow from operations $ 236,306 $ 235,861 $ 451,704 $ 462,978
========= ========== ========== =========
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.
CONDENSED INCOME STATEMENTS (unaudited)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
----------------------- ----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
(In thousands, except per share data)
Revenues:
Gas sales $ 214,937 $ 191,658 $ 411,227 $ 425,381
Oil sales 110,830 108,838 207,994 197,110
Gas gathering,
processing, and net
marketing 16,317 12,885 29,738 26,140
----------- ----------- ----------- -----------
342,084 313,381 648,959 648,631
----------- ----------- ----------- -----------
Costs and expenses:
Depreciation, depletion
and amortization 112,797 94,773 221,681 185,401
Asset retirement
obligation accretion 2,399 1,493 4,990 2,941
Production 50,916 43,804 95,921 85,576
Transportation 6,294 5,483 12,228 9,791
Gas gathering and
processing 7,825 6,386 15,136 12,939
Taxes other than income 23,802 21,934 44,429 45,480
General and
administrative 11,958 9,990 24,609 20,875
Stock compensation, net 2,598 2,096 5,268 4,064
Gain on derivative
instruments -- (3,249) -- (18,816)
Other operating, net 2,586 (92) 2,315 (61)
----------- ----------- ----------- -----------
221,175 182,618 426,577 348,190
----------- ----------- ----------- -----------
Operating income 120,909 130,763 222,382 300,441
Other (income) and expense:
Interest expense net of
capitalized interest
of $4,898, $5,610,
$9,989 and $11,829
respectively 5,399 1,787 9,473 2,058
Amortization of fair
value of debt (580) (946) (1,527) (1,891)
Gain on early
extinguishment of debt (5,099) -- (5,099) --
Other, net (3,457) (2,036) (6,906) (5,378)
----------- ----------- ----------- -----------
Income before income tax
expense 124,646 131,958 226,441 305,652
Income tax expense 45,939 49,092 83,106 112,635
----------- ----------- ----------- -----------
Net income $ 78,707 $ 82,866 $ 143,335 $ 193,017
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.96 $ 1.01 $ 1.74 $ 2.35
=========== =========== =========== ===========
Diluted $ 0.93 $ 0.98 $ 1.69 $ 2.27
=========== =========== =========== ===========
Weighted average shares
outstanding:
Basic 82,282 82,046 82,252 82,067
=========== =========== =========== ===========
Diluted 84,836 84,861 84,745 84,886
=========== =========== =========== ===========
CONDENSED CASH FLOW STATEMENTS (unaudited)
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
----------------------- ----------------------
2007 2006 2007 2006
----------- ----------- ----------- ----------
(In thousands)
Cash flows from operating
activities:
Net income $ 78,707 $ 82,866 $ 143,335 $ 193,017
Adjustment to reconcile
net income to net cash
provided by operating
activities:
Depreciation,
depletion and
amortization 112,797 94,773 221,681 185,401
Asset retirement
obligation accretion 2,399 1,493 4,990 2,941
Deferred income taxes 45,939 61,636 83,106 108,317
Stock compensation, net 2,598 2,096 5,268 4,064
Derivative instruments -- (7,537) -- (30,456)
Other (6,134) 534 (6,676) (306)
Changes in operating
assets and liabilities:
Decrease in
receivables, net 5,430 26,520 11,741 55,045
(Increase) decrease
in other current
assets 1,209 3,724 2,324 (10,724)
Increase (decrease)
in accounts payable
and accrued
liabilities 16,383 (32,404) (18,862) (45,945)
Increase (decrease)
in other non-current
liabilities (1,242) 68 (2,352) 430
----------- ----------- ----------- ----------
Net cash provided
by operating
activities 258,086 233,769 444,555 461,784
----------- ----------- ----------- ----------
Cash flows from investing
activities:
Oil and gas expenditures (220,858) (322,824) (473,206) (541,787)
Acquisition of oil and
gas properties -- (1,879) (23) (4,741)
Merger related costs -- 30 -- (439)
Proceeds from sale of
assets 21,181 5,540 21,530 5,600
Other expenditures (16,379) (8,915) (18,682) (14,644)
----------- ----------- ----------- ----------
Net cash used by
investing
activities (216,056) (328,048) (470,381) (556,011)
----------- ----------- ----------- ----------
Cash flows from financing
activities:
Net increase (decrease)
in bank debt (161,000) 53,000 (95,000) 53,000
Borrowings on other
long-term debt 350,000 -- 350,000 --
Payments on other
long-term debt (204,360) -- (204,360) --
Financing costs incurred (6,037) (57) (6,098) (74)
Treasury stock acquired (5,623) (735) (5,623) (11,016)
Dividends paid (3,382) (3,334) (6,747) (6,661)
Proceeds from issuance of
common stock and other 432 119 8,017 2,720
----------- ----------- ----------- ----------
Net cash (used
in) provided by
financing
activities (29,970) 48,993 40,189 37,969
----------- ----------- ----------- ----------
Net change in cash and cash
equivalents 12,060 (45,286) 14,363 (56,258)
Cash and cash equivalents
at beginning of period 7,351 50,675 5,048 61,647
----------- ----------- ----------- ----------
Cash and cash equivalents
at end of period $ 19,411 $ 5,389 $ 19,411 $ 5,389
=========== =========== =========== ==========
BALANCE SHEETS (unaudited)
June 30, December 31,
Assets 2007 2006
--------------------------
(In thousands, except share
data)
Current assets:
Cash and cash equivalents $ 19,411 $ 5,048
Receivables, net 294,717 306,458
Inventories 40,358 39,397
Deferred income taxes 7,959 1,498
Derivative instruments 19,689 41,945
Other current assets 15,780 22,411
------------ ------------
Total current assets 397,914 416,757
------------ ------------
Oil and gas properties at cost, using the full
cost method of accounting:
Proved properties 5,153,278 4,656,854
Unproved properties and properties under
development, not being amortized 390,205 425,173
------------ ------------
5,543,483 5,082,027
Less - accumulated depreciation, depletion
and amortization (1,707,429) (1,494,317)
------------ ------------
Net oil and gas properties 3,836,054 3,587,710
------------ ------------
Fixed assets, net 98,566 88,924
Goodwill 691,432 691,432
Derivative instruments 1,958 7,051
Other assets, net 44,530 37,876
------------ ------------
$ 5,070,454 $ 4,829,750
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 52,887 $ 56,241
Accrued liabilities 199,620 202,163
Revenue payable 102,572 96,184
------------ ------------
Total current liabilities 355,079 354,588
------------ ------------
Long-term debt 487,540 443,667
------------ ------------
Deferred income taxes 997,833 921,665
------------ ------------
Other liabilities 133,663 133,687
------------ ------------
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, 84,372,300 and 83,962,132
shares issued, respectively 844 840
Treasury stock, at cost, 1,251,122 and
1,078,822 shares held, respectively (47,566) (40,628)
Paid-in capital 1,875,173 1,867,448
Retained earnings 1,253,973 1,117,402
Accumulated other comprehensive income 13,915 31,081
------------ ------------
3,096,339 2,976,143
------------ ------------
$ 5,070,454 $ 4,829,750
============ ============
FOR FURTHER INFORMATION CONTACT Cimarex Energy Co. Mark Burford Director of Capital Markets 303-295-3995 www.cimarex.com