Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Thousands | Sep. 30, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $2,962 | $1,213 |
Restricted cash | 593 | 502 |
Short-term investments | 2,502 | |
Receivables, net | 173,914 | 259,082 |
Oil and gas well equipment and supplies | 166,021 | 186,062 |
Deferred income taxes | 8,566 | 2,435 |
Derivative instruments | 3,150 | |
Other current assets | 26,303 | 63,148 |
Total current assets | 381,509 | 514,944 |
Oil and gas properties at cost, using the full cost method of accounting: | ||
Proved properties | 7,476,167 | 7,052,464 |
Unproved properties and properties under development, not being amortized | 385,321 | 465,638 |
Total oil and gas properties at gross | 7,861,488 | 7,518,102 |
Less - accumulated depreciation, depletion and amortization | (5,696,671) | (4,709,597) |
Net oil and gas properties | 2,164,817 | 2,808,505 |
Fixed assets, net | 122,984 | 119,616 |
Goodwill | 691,432 | 691,432 |
Other assets, net | 35,420 | 30,436 |
Total assets | 3,396,162 | 4,164,933 |
Current liabilities: | ||
Accounts payable | 19,646 | 101,157 |
Accrued liabilities | 202,544 | 263,994 |
Derivative instruments | 12,645 | |
Revenue payable | 90,027 | 104,438 |
Total current liabilities | 324,862 | 469,589 |
Long-term debt | 523,753 | 587,630 |
Deferred income taxes | 327,653 | 500,945 |
Other liabilities | 286,711 | 255,122 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued | 0 | 0 |
Common stock, $0.01 par value, 200,000,000 shares authorized, 83,511,991 and 84,144,024 shares issued, respectively | 835 | 841 |
Treasury stock, at cost, zero and 885,392 shares held, respectively | (33,344) | |
Paid-in capital | 1,853,876 | 1,874,834 |
Retained earnings | 78,546 | 510,271 |
Accumulated other comprehensive loss | (74) | (955) |
Total stockholders' equity | 1,933,183 | 2,351,647 |
Total liabilities and stockholders' equity | $3,396,162 | $4,164,933 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | ||
Sep. 30, 2009
| Dec. 31, 2008
| |
Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | 0.01 | 0.01 |
Preferred stock, authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | 0.01 | 0.01 |
Common stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, issued (in shares) | 83,511,991 | 84,144,024 |
Treasury stock held (in shares) | 0 | 885,392 |
Consolidated Statements of Oper
Consolidated Statements of Operations (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Revenues: | ||||
Gas sales | $107,275 | $313,523 | $324,438 | $912,443 |
Oil sales | 131,073 | 238,918 | 324,507 | 683,109 |
Gas gathering, processing and other | 10,732 | 24,163 | 31,165 | 73,734 |
Gas marketing, net | 54 | 654 | 888 | 2,225 |
Total revenues | 249,134 | 577,258 | 680,998 | 1,671,511 |
Costs and expenses: | ||||
Impairment of oil and gas properties | 657,146 | 791,137 | 657,146 | |
Depreciation, depletion and amortization | 59,240 | 147,432 | 205,791 | 406,189 |
Asset retirement obligation | 4,024 | 1,978 | 8,665 | 5,434 |
Production | 42,682 | 55,362 | 139,127 | 156,506 |
Transportation | 8,760 | 10,621 | 25,233 | 29,551 |
Gas gathering and processing | 4,830 | 12,591 | 14,347 | 35,787 |
Taxes other than income | 19,728 | 39,097 | 50,525 | 109,453 |
General and administrative | 12,522 | 12,377 | 29,803 | 37,837 |
Stock compensation, net | 2,477 | 2,791 | 6,831 | 7,432 |
Loss on derivative instruments, net | 17,357 | 17,613 | ||
Other operating, net | 2,911 | 11,871 | 19,094 | 12,992 |
Total costs and expenses | 174,531 | 951,266 | 1,308,166 | 1,458,327 |
Operating income (loss) | 74,603 | (374,008) | (627,168) | 213,184 |
Other (income) and expense: | ||||
Interest expense | 10,623 | 8,066 | 30,144 | 24,785 |
Capitalized interest | (5,295) | (5,671) | (16,230) | (14,930) |
Other, net | 3,737 | (8,086) | 11,627 | (16,610) |
Income (loss) before income tax | 65,538 | (368,317) | (652,709) | 219,939 |
Income tax expense (benefit) | 26,833 | (135,894) | (236,121) | 73,811 |
Net income (loss) | $38,705 | ($232,423) | ($416,588) | $146,128 |
Basic | ||||
Distributed (in dollars per share) | 0.06 | 0.06 | 0.18 | 0.18 |
Undistributed (in dollars per share) | 0.4 | -2.91 | -5.28 | 1.56 |
Total basic (in dollars per share) | 0.46 | -2.85 | -5.1 | 1.74 |
Diluted | ||||
Distributed (in dollars per share) | 0.06 | 0.06 | 0.18 | 0.18 |
Undistributed (in dollars per share) | 0.4 | -2.91 | -5.28 | 1.53 |
Total diluted (in dollars per share) | 0.46 | -2.85 | -5.1 | 1.71 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Cash flows from operating activities: | ||
Net income (loss) | ($416,588) | $146,128 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Impairments | 804,815 | 657,146 |
Depreciation, depletion and amortization | 205,791 | 406,189 |
Asset retirement obligation | 8,665 | 5,434 |
Deferred income taxes | (220,592) | (38,840) |
Stock compensation, net | 6,831 | 7,432 |
Derivative instruments, net | 21,157 | |
Changes in non-current assets and liabilities | 48,673 | (94) |
Other, net | 13,682 | 1,019 |
Changes in operating assets and liabilities: | ||
(Increase) decrease in receivables, net | 84,044 | (20,762) |
(Increase) decrease in other current assets | 17,404 | (59,669) |
Increase (decrease) in accounts payable and accrued liabilities | (108,236) | 36,726 |
Net cash provided by operating activities | 465,646 | 1,140,709 |
Cash flows from investing activities: | ||
Oil and gas expenditures | (390,108) | (1,026,719) |
Sales of oil and gas and other assets | 38,556 | 434 |
Sales of short-term investments | 3,328 | 9,288 |
Other expenditures | (21,131) | (43,253) |
Net cash used by investing activities | (369,355) | (1,060,250) |
Cash flows from financing activities: | ||
Net increase (decrease) in bank debt | (64,000) | |
Financing costs incurred | (17,995) | (50) |
Dividends paid | (15,123) | (15,007) |
Issuance of common stock and other | 2,576 | 12,931 |
Net cash used in financing activities | (94,542) | (2,126) |
Net change in cash and cash equivalents | 1,749 | 78,333 |
Cash and cash equivalents at beginning of period | 1,213 | 123,050 |
Cash and cash equivalents at end of period | $2,962 | $201,383 |
Basis of Presentation
Basis of Presentation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited financial statements have been prepared by Cimarex Energy Co. pursuant to rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain disclosures required by accounting principles generally accepted in the United States and normally included in annual reports on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with the financial statements, summary of significant accounting policies, and footnotes included in our 2008 Annual Report on Form 10-K, as amended by the Current Report on Form 8-K filed July 17, 2009 with the SEC. In the opinion of management, the accompanying financial statements reflect all adjustments necessary to present fairly our financial position, results of operations, and cash flows for the periods shown. Full Cost Accounting Method and Ceiling Limitation We use the full cost method of accounting for our oil and gas operations. All costs associated with property acquisition, exploration, and development activities are capitalized. Exploration and development costs include dry hole costs, geological and geophysical costs, direct overhead related to exploration and development activities, and other costs incurred for the purpose of finding oil and gas reserves. Salaries and benefits paid to employees directly involved in the exploration and development of properties, as well as other internal costs that can be directly identified with acquisition, exploration, and development activities, are also capitalized. Under the full cost method of accounting, no gain or loss is recognized upon the disposition of oil and gas properties unless such disposition would significantly alter the relationship between capitalized costs and proved reserves. At the end of each quarter we make a full cost ceiling limitation calculation whereby net capitalized costs related to proved properties less associated deferred income taxes may not exceed the amount of the present value discounted at ten percent of estimated future net revenues from proved reserves less estimated future production and development costs and related income tax expense. Future net revenues used in the calculation of the full cost ceiling limitation are determined based on current oil and gas prices and are adjusted for designated cash flow hedges, if any. Changes in proved reserve estimates (whether based upon quantity revisions or oil and gas prices) will cause corresponding changes to the full cost ceiling limitation. If net capitalized costs subject to amortization exceed this limit, the excess would be charged to expense. However, if commodity prices increase after period end and before issuance of the financial statements, these higher commodity prices may be used to determine if the capital costs are in fact impaired as of the end of the period. Any recorded impairment of oil and gas properties is not reversible at a later date. Due to the significant decrease in natural gas prices during the first quarter of 2009, our March 31, 2009 ceiling limi |
Derivative Instruments and Hedg
Derivative Instruments and Hedging | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Derivative Instruments and Hedging | 2. Derivative Instruments/Hedging We periodically enter into derivative instruments to mitigate a portion of our potential exposure to a decline in commodity prices and the corresponding negative impact on cash flow available for reinvestment. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. On January 1, 2009, we adopted provisions set forth by the FASB which requires qualitative and quantitative disclosures about objectives and strategies for using derivatives, how such derivatives are accounted for and how the derivative instruments affect an entitys financial position, results of operations, and cash flows. At September 30, 2009, we had the following outstanding contracts relative to our future production. We have elected not to account for these derivatives as cash flow hedges. Natural Gas Contracts Weighted Average Price Fair Value Period Type Volume/Day Index(1) Floor Ceiling Swap (000s) Oct 09 - Dec 09 Collar 143,370 MMBtu PEPL $ 3.00 $ 5.00 $ (4,762 ) Jan 10 - Dec 10 Collar 100,000 MMBtu PEPL $ 5.00 $ 6.62 $ (4,556 ) Jan 10 - Dec 10 Swap 40,000 MMBtu PEPL $ 5.18 $ (8,787 ) Jan 10 - Dec 10 Collar 20,000 MMBtu HSC $ 5.00 $ 6.85 $ (2,347 ) Oil Contracts Weighted Average Price Fair Value Period Type Volume/Day Index(1) Floor Ceiling (000s) Jan 10 - Dec 10 Collar 10,000 Bbls WTI $ 60.03 $ 92.07 $ 1,612 Jan 10 - Dec 10 Put/Floor 1,000 Bbls WTI $ 60.00 $ 1,621 (1) PEPL refers to Panhandle Eastern Pipe Line Company price and HSC refers to Houston Ship Channel price, both as quoted in Platts Inside FERC on the first business day of each month. WTI refers to West Texas Intermediate price as quoted on the New York Mercantile Exchange. The gas contracts that expire in 2009 represent approximately 47% of our total projected gas production (approximately 32% of our equivalent oil and gas production) for the remainder of 2009. We do not anticipate entering into further contracts related to our 2009 or 2010 production. Under a collar agreement, we receive the difference between the published index price and a floor price if the index price is below the floor. We pay the difference between the ceiling price and the index price only if the index price is above the contracted ceiling price. No amounts are paid or received if the index price is between the floor and ceiling prices. Under a floor contract, if the settlement price for a settlement period is below the floor price, we receive the difference between the settlement price and the floor price. We are not required to make any payments in connection with the settlement of a floor contract. For a swa |
Fair Value Measurements
Fair Value Measurements | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Fair Value Measurements | 3. Fair Value Measurements Our short-term investments are reported at fair value in the accompanying balance sheets. The FASB has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for an asset or liability. The following tables provide fair value measurement information for certain assets and liabilities as of September 30, 2009 and December 31, 2008. September 30, 2009: Carrying Amount Fair Value (In thousands) Financial Assets (Liabilities): Derivative instruments $ 3,543 $ 3,543 Derivative instruments $ (20,761 ) $ (20,761 ) 7.125% Notes due 2017 $ (350,000 ) $ (338,625 ) Bank debt $ (156,000 ) $ (156,000 ) Floating rate convertible notes due 2023 $ (17,753 ) $ (19,450 ) December 31, 2008: Carrying Amount Fair Value (In thousands) Financial Assets (Liabilities): Short-term investments $ 2,502 $ 2,502 7.125% Notes due 2017 $ (350,000 ) $ (267,750 ) Bank debt $ (220,000 ) $ (220,000 ) Floating rate convertible notes due 2023 $ (17,630 ) $ (19,450 ) Assessing the significance of a particular input to the fair value measurement requires judgment, considering factors specific to the asset or liability. The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the table above. Short-term Investments (Level 2) In the fourth quarter of 2007, we invested $16 million in an asset-backed securities fund, which was liquidated in the third quarter of 2009. The investments were classified as available-for-sale, and at the end of each period, changes in the fair value of the investments were recorded in other comprehensive income. The fair values of these investments were based on a net asset valuation provided by the fund manager. During the nine months ended September 30, 2009, we liquidated the remaining investments for $3.3 million, with a realized gain of $280 thousand, which was included in earnings for the period. Bank Debt and Notes Debt The fair value of our bank debt is estimated to approximate the carrying amount because we recently entered into a new revolving credit facility. Interest on the facility is a floating rate based on either (a) a London Interbank Offered Rate (LIBOR) plus 2 to 3 percent, based on borrowing base usage, or (b) the higher of (i) a prime rate, (ii) the federal funds effective rate plus 0.50 percent, or (iii) adjusted LIBOR, in each case, plus an additional 1.125 to 2.125 percent, based on borrowing base usage. Each of the floating rate in |
Capital Stock
Capital Stock | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Capital Stock | 4. Capital Stock A summary of our common stock activity for the nine months ended September 30, 2009, follows: Number of Shares (in thousands) Issued Treasury Outstanding December 31, 2008 84,144 (885) 83,259 Restricted shares issued under compensation plans, net of cancellations 159 159 Option exercises, net of cancellations 94 94 Treasury shares cancelled (885) 885 September 30, 2009 83,512 83,512 Stock-based Compensation Our 2002 Stock Incentive Plan was approved by stockholders in May 2003 and is effective until October 1, 2012. The plan provides for grants of stock options, restricted stock and restricted stock units to non-employee directors, officers and other eligible employees. A total of 12.7 million shares of common stock may be issued under the Plan. Restricted Stock and Units During the nine months ended September 30, 2009, we issued a total of 366,090 restricted shares to non-employee directors, officers, and other employees. Included in that amount are 228,000 shares issued to certain executives that are subject to market condition-based vesting determined by our stock price performance relative to a defined peer groups stock price performance. After three years of continued service, an executive will be entitled to vest in 50% to 100% of the award. The material terms of performance goals applicable to these awards were approved by stockholders in May 2006. The other shares granted in 2009 have service-based vesting schedules of three to five years. The following table presents restricted stock as of September 30, 2009, and changes during the year: Outstanding as of January 1, 2009 1,672,245 Vested (166,725 ) Granted 366,090 Canceled (151,360 ) Outstanding as of September 30, 2009 1,720,250 The following table presents restricted units as of September 30, 2009 and changes during the year: Outstanding as of January 1, 2009 655,205 Converted to Stock (5,362 ) Granted Canceled Outstanding as of September 30, 2009 649,843 Vested included in outstanding 605,559 Vesting of restricted stock and units granted in years before 2006 is exclusively related to continued service of the grantee for one to five years. In certain cases, a three-year required holding period following vesting also applies. A restricted unit represents a right to an unrestricted share of common stock upon completion of defined vesting and holding periods. The restricted stock and stock unit agreements provide that grantees are entitled to receive dividends on unvested shares. Compensation expense for service-based vesting restricted shares or units is based upon amortization of the grant-date market value of the award. The fair value of the market condition-based restricted stock awards is based on the grant-date market value of the award utilizing a Monte Carlo simulation model to estimate the percentage of awards that will vest at the end of a three-year period. Compensation expense related to the restricted stock and unit award |
Asset Retirement Obligations
Asset Retirement Obligations | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Asset Retirement Obligations | 5. Asset Retirement Obligations We recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred, if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Oil and gas producing companies incur this liability which includes costs related to the plugging of wells, the removal of facilities and equipment, and site restorations, upon acquiring or drilling a successful well. Subsequent to initial measurement, the asset retirement liability is required to be accreted each period. If the fair value of a recorded asset retirement obligation changes, a revision is recorded to both the asset retirement obligation and the asset retirement capitalized cost. Capitalized costs are depleted as a component of the full cost pool. The following table reflects the components of the change in the carrying amount of the asset retirement obligation for the nine months ended September 30, 2009 (in thousands): Asset retirement obligation at January 1, 2009 $ 139,948 Liabilities incurred 2,978 Liability settlements and disposals (6,648 ) Accretion expense 5,823 Revisions of estimated liabilities 13,714 Asset retirement obligation at September 30, 2009 155,815 Less current obligation (21,306 ) Long-term asset retirement obligation $ 134,509 |
Long-Term Debt
Long-Term Debt | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Long-Term Debt | 6. Long-Term Debt Debt at September 30, 2009 and December 31, 2008 consisted of the following (in thousands): September 30, December 31, 2009 2008 Bank debt $ 156,000 $ 220,000 7.125% Notes due 2017 350,000 350,000 Floating rate convertible notes due 2023 (face value $19,450) 17,753 17,630 Total long-term debt $ 523,753 $ 587,630 Bank Debt In April 2009, we entered into a new three-year senior secured revolving credit facility (credit facility). The new credit facility increases bank commitments from $500 million to $800 million, with a borrowing base of $1 billion. The credit facility is provided by a syndicate of banks led by JP Morgan Chase Bank, N.A., matures on April 14, 2012 and is secured by mortgages on certain of our oil and gas properties and the stock of certain wholly-owned operating subsidiaries. The borrowing base under the credit agreement is determined at the discretion of the lenders, based on the collateral value of our proved reserves, and is subject to potential special and regular semi-annual redeterminations. The credit facility contains covenants and restrictive provisions which may limit our ability to incur additional indebtedness, make investments or loans and create liens. The credit facility requires us to maintain a current ratio greater than 1 to 1 and a leverage ratio not to exceed 3.5 to 1. As of September 30, 2009, we were in compliance with all of the financial and non-financial covenants. At Cimarexs option, borrowings under the credit facility may bear interest at either (a) a London Interbank Offered Rate (LIBOR) plus 2 to 3 percent, based on borrowing base usage, or (b) the higher of (i) a prime rate, (ii) the federal funds effective rate plus 0.50 percent, or (iii) adjusted LIBOR, in each case, plus an additional 1.125 to 2.125 percent, based on borrowing base usage. At September 30, 2009, there was $156 million of borrowings outstanding under the credit facility at a weighted average interest rate of approximately 3.1%. We also had letters of credit outstanding of $17.7 million leaving an unused borrowing availability of $626.3 million. 7.125% Notes due 2017 In May, 2007, we issued $350 million of 7.125% senior unsecured notes that mature May 1, 2017 at par. Interest on the notes is payable May 1 and November 1 of each year. The notes are governed by an indenture containing covenants that could limit our ability to incur additional indebtedness; pay dividends or repurchase our common stock; make investments and other restricted payments; incur liens; enter into sale/leaseback transactions; engage in transactions with affiliates; sell assets; and consolidate, merge or transfer assets. The notes are redeemable at our option, in whole or in part, at any time on and after May 1, 2012 at the following redemption prices (expressed as percentages of the principal amount) plus accrued interest, if any, thereon to the date of redemption. Year Percentage 2012 103.6 % 2013 102.4 % 2014 101.2 % 2015 and thereafter 100.0 % |
Income Taxes
Income Taxes | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Income Taxes | 7. Income Taxes The components of our provision for income taxes are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Current provision (benefits) $ 13,305 $ 27,068 $ (15,529 ) $ 112,651 Deferred tax (benefit) 13,528 (162,962 ) (220,592 ) (38,840 ) $ 26,833 $ (135,894 ) $ (236,121 ) $ 73,811 We account for uncertainty in our income tax provisions in accordance with rules promulgated by the FASB. At September 30, 2009 we have no unrecognized tax benefits that would impact our effective rate and we have made no provisions for interest or penalties related to uncertain tax positions. The tax years 2005 2008 remain open to examination by the Internal Revenue Service of the United States. We file tax returns with various state taxing authorities which remain open for tax years 2004 2008 for examination. Our provision for income taxes differed from the U.S. statutory rate of 35% primarily due to state income taxes, non-deductible expenses, and special deductions. The effective income tax rates for the nine months ended September 30, 2009 and September 30, 2008 was 36.2% and 33.6%, respectively. |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information (in thousands) | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Supplemental Disclosure of Cash Flow Information (in thousands): | 8. Supplemental Disclosure of Cash Flow Information (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Cash paid during the period for: Interest expense (net of amounts capitalized) $ (2,499 ) $ (4,390 ) $ 3,916 $ 2,263 Interest capitalized 5,295 5,671 16,230 14,930 Income taxes 1,457 1,670 128,318 Cash received for income taxes 49,936 2,121 91,918 4,185 |
Earnings
Earnings (Loss) per Share and Comprehensive Income | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Earnings (Loss) per Share and Comprehensive Income | 9. Earnings (Loss) per Share and Comprehensive Income Earnings (Loss) per Share In 2008, the FASB issued new guidance which holds that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities (as defined as securities that may participate in undistributed earnings with common stock, whether that participation is conditioned upon the occurrence of a specified event or not, regardless of the form of participation), and therefore should be included in computing earnings per share using the two-class earnings allocation method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The guidance became effective for financial statements issued in fiscal years beginning after December 15, 2008, and for interim periods within those years. The requirements are to be applied by recasting previously reported earnings per share data. Under this guidance, our unvested share based payment awards, consisting of restricted stock and restricted stock units, qualify as participating securities. We adopted this guidance in the first quarter of 2009. The calculations of basic and diluted net earnings (loss) per common share under the two-class method are presented below (in thousands, except per share data): Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2009 2008 2009 2008 Net income (loss) $ 38,705 $ (232,423 ) $ (416,588 ) $ 146,128 Less distributed earnings (dividends declared during the period) (5,050 ) (5,035 ) (15,127 ) (15,073 ) Undistributed earnings (loss) for the period $ 33,655 $ (237,458 ) $ (431,715 ) $ 131,055 Allocation of undistributed earnings(loss): Basic allocation to unrestricted common stockholders $ 32,707 $ (237,458 ) $ (431,715 ) $ 127,384 Basic allocation to participating securities $ 948 $ (2) $ (2) $ 3,671 Diluted allocation to unrestricted common stockholders $ 32,712 $ (237,458 ) $ (431,715 ) $ 127,457 Diluted allocation to participating securities $ 943 $ (2) $ (2) $ 3,598 Basic Shares Outstanding Unrestricted outstanding common shares 81,792 81,576 81,792 81,576 Add Participating securities: Restricted stock outstanding 1,720 1,696 1,720 1,696 Restricted stock units outstanding 650 655 650 655 Total participating securities 2,370 2,351 2,370 2,351 Total Basic Shares Outstanding 84,162 83,927 84,162 83,927 Fully Diluted Shares Unrestricted outstanding common shares 81,792 81,576 81,792 81,576 Incremental shares from assumed exercise of s |
Commitments and Contingencies
Commitments and Contingencies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Commitments and Contingencies | 10. Commitments and Contingencies Litigation In January 2009, the Tulsa County District Court issued a judgment in the H.B. Krug, et al versus Helmerich Payne, Inc. (HP) case. This lawsuit was originally filed in 1998 and addressed HPs conduct pertaining to a 1989 take-or-pay settlement, along with potential drainage issues and other related matters. Damages of $6.9 million, plus $119.5 million for disgorgement of HPs estimated potential compounded profit since 1989 resulting from the noted damages, were awarded to plaintiff royalty owners for a total of $126.4million. This amount was subsequently adjusted by the court to a total of $119.6million. Pursuant to the 2002 spin-off transaction to shareholders of HP by which Cimarex became a publicly traded entity, Cimarex assumed the assets and liabilities of HPs exploration and production business. In 2008 we had accrued litigation expense of $119.6 million for this lawsuit. During the nine months ended September30, 2009, we have accrued an additional $7.6 million. We have appealed the District Courts judgments, but do not expect this matter to be resolved in 2009. In the normal course of business, we have other various litigation related matters. We assess the probability of estimable amounts related to litigation matters in accordance with guidance established by the FASB and adjust our accruals accordingly. Though some of the related claims may be significant, the resolution of them we believe, individually or in the aggregate, would not have a material adverse effect on our financial condition or results of operations. Other We have a large development project in Sublette County, Wyoming where we are developing the deep Madison gas formation and constructing a gas processing plant. At September30, 2009, we had commitments of $163.1million relating to construction of the gas processing plant of which $102.6million is subject to a construction contract. The total cost of the project will approximate $354million. Pursuant to the terms of our operating agreement with our partners in this project, we will be reimbursed by them for 42.5% of the costs. The gas processing plant is subject to a delivery commitment agreement over a 20 year period, commencing December, 2011. If no deliveries were made, the maximum amount that would be payable under the agreement would be approximately $43 million. We have drilling commitments of approximately $69.1million consisting of obligations to complete drilling wells in progress at September30, 2009. We also have minimum expenditure contractual commitments of $46.8million to secure the use of drilling rigs. At September30, 2009, we had firm sales contracts to deliver approximately 5.6 Bcf of natural gas over the next six months. If this gas is not delivered, our financial commitment would be approximately $19.6million. This commitment will fluctuate due to price volatility and actual volumes delivered. However, we believe no significant financial commitment will be due based on our reserves and current production levels. In connection with a gas gathering and processing agreement, we have commitments to deliver 58.5 Bcf of ga |
Property Sales
Property Sales | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Notes to Consolidated Financial Statements | |
Property Sales | 11. Property Sales Various interests in oil and gas properties were sold during the first nine months of 2009 for $28.3 million. These were recorded as a reduction to oil and gas properties. In October2009, we completed the sale of our interest in a Texas secondary recovery oil field for approximately $81 million. |
Document and Entity Information
Document and Entity Information (USD $) | ||
9 Months Ended
Sep. 30, 2009 | Jun. 30, 2008
| |
Document and Entity Information | ||
Entity Registrant Name | CIMAREX ENERGY CO. | |
Entity Central Index Key | 0001168054 | |
Document Type | 10-Q | |
Document Period End Date | 2009-09-30 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $5,701,925,730 | |
Entity Common Stock, Shares Outstanding | 83,511,991 |