Cimarex Energy Co. 1700 Lincoln Street, Suite 1800 Denver, CO 80203 Phone: (303) 295-3995 | ![]() |
Cimarex Reports Second-Quarter 2008 Earnings of $2.68 per Share
DENVER, August 5, 2008 - Cimarex Energy Co. (NYSE: XEC) today reported second-quarter 2008 net income of $229.3 million, or $2.68 per diluted share. This compares to second-quarter 2007 earnings of $78.7 million, or $0.93 per diluted share.
Revenues from oil and gas sales in the second quarter of 2008 were $588.7 million, compared to $325.8 million in the same period of 2007. Second-quarter 2008 cash flow from operations totaled $435.6 million versus $236.3 million in the same period of 2007(1).
The increase in second-quarter 2008 revenues, earnings and cash flow is primarily a result of higher production and oil and gas prices. Second-quarter 2008 gas prices increased 45% to $10.57 per thousand cubic feet (Mcf) and oil rose 98% to $121.64 per barrel from the same period of 2007.
Second-quarter 2008 daily oil and gas production grew 10% over last year’s second quarter. Gas production in the latest quarter averaged 353.5 million cubic feet per day, an increase of 9% over the second-quarter 2007 and oil production grew 13% to an average of 22,471 barrels per day. Growing production reflects strong results from drilling.
For the six month period ended June 30, 2008, net income totaled $379.1 million, or $4.44 per diluted share, as compared to $143.3 million, or $1.69 per diluted share, for the first six months of 2007. First-half 2008 cash flow from operations totaled $770.3 million versus $451.7 million in the same period of 2007(1).
Capital
Second-quarter 2008 exploration and development capital totaled $359.9 million as compared to $236.9 million in the second quarter of 2007. In the second quarter of 2008, Cimarex drilled 126 gross (82 net) wells, completing 94% as producers. Exploration and development capital investment for 2008 is projected to approximately $1.3 - $1.5 billion.
(1) | Cash Flow from Operations is a non-GAAP financial measure that represents Net Cash Provided By Operating Activities adjusted for the change in operating assets and liabilities. See below for a reconciliation of the related amounts. |
Outlook
Third-quarter 2008 oil and gas production volumes are projected to range between 485 - 495 million cubic feet equivalent per day (MMcfe/d). Full-year 2008 production is projected to be in the range of 480 - 495 MMcfe/d, or a 9-12% increase over 2007 after adjusting for property sales.
Expenses for the remainder of 2008 are expected to fall within the following ranges:
Expenses ($/Mcfe): | ||||
Production expense | $ | 1.15 - $1.25 | ||
Transportation expense | 0.20 - 0.25 | |||
DD&A and ARO accretion | 3.05 - 3.20 | |||
General and administrative expense | 0.30 - 0.34 | |||
Production taxes (% of oil and gas revenue) | 6.5% - 7.5 | % |
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 call, please dial (888) 603-6873 and reference call ID # 55614975 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 # 55614975. 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.
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FOR FURTHER INFORMATION CONTACT
Cimarex Energy Co.
Mark Burford, Director of Capital Markets
303-295-3995
www.cimarex.com
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For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
Gas Production: | |||||||||||||
Total production - Mcf | 32,172,121 | 29,462,142 | 63,081,660 | 58,638,779 | |||||||||
Gas volume - Mcf per day | 353,540 | 323,760 | 346,603 | 323,971 | |||||||||
Gas price - per Mcf (before hedge effect) | $ | 10.57 | $ | 7.19 | $ | 9.47 | $ | 6.87 | |||||
Effect of hedges | $ | 0.00 | $ | 0.11 | $ | 0.02 | $ | 0.14 | |||||
Gas price - per Mcf (after hedge effect) | $ | 10.57 | $ | 7.30 | $ | 9.49 | $ | 7.01 | |||||
Oil Production (including NGL): | |||||||||||||
Total production - barrels | 2,044,831 | 1,801,811 | 4,115,688 | 3,561,535 | |||||||||
Oil volume - barrels per day | 22,471 | 19,800 | 22,614 | 19,677 | |||||||||
Oil price - per barrel | $ | 121.64 | $ | 61.51 | $ | 107.93 | $ | 58.40 |
OIL AND GAS CAPITALIZED EXPENDITURES
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
(in thousands) | (in thousands) | ||||||||||||
Acquisition of properties | $ | 324 | $ | — | $ | 1,369 | $ | 23 | |||||
Exploration and development | 359,898 | 236,874 | 666,853 | 482,379 | |||||||||
Total oil and gas expenditures | 360,222 | 236,874 | 668,222 | 482,402 | |||||||||
Sale proceeds | — | (20,630 | ) | — | (20,880 | ) | |||||||
$ | 360,222 | $ | 216,244 | $ | 668,222 | $ | 461,522 |
RECONCILIATION OF CASH FLOW FROM OPERATIONS
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
(in thousands) | (in thousands) | ||||||||||||
Net cash provided by operating activities | $ | 382,307 | $ | 246,794 | $ | 697,552 | $ | 433,263 | |||||
Increase in operating assets and liabilities | 53,326 | (10,488 | ) | 72,781 | 18,441 | ||||||||
Cash flow from operations | $ | 435,633 | $ | 236,306 | $ | 770,333 | $ | 451,704 |
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.
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CONDENSED INCOME STATEMENTS (unaudited)
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
(In thousands, except per share data) | |||||||||||||
Revenues: | |||||||||||||
Gas sales | $ | 339,965 | $ | 214,937 | $ | 598,920 | $ | 411,227 | |||||
Oil sales | 248,741 | 110,830 | 444,191 | 207,994 | |||||||||
Gas gathering, processing and other | 26,610 | 15,013 | 47,981 | 27,652 | |||||||||
Gas marketing, net | 1,067 | 1,304 | 2,367 | 2,086 | |||||||||
616,383 | 342,084 | 1,093,459 | 648,959 | ||||||||||
Costs and expenses: | |||||||||||||
Depreciation, depletion and amortization | 133,201 | 112,797 | 258,757 | 221,681 | |||||||||
Asset retirement obligation | 1,862 | 2,399 | 3,456 | 4,990 | |||||||||
Production | 49,092 | 50,916 | 101,144 | 95,921 | |||||||||
Transportation | 10,621 | 6,294 | 18,930 | 12,228 | |||||||||
Gas gathering and processing | 12,361 | 7,825 | 22,402 | 15,136 | |||||||||
Taxes other than income | 39,749 | 23,802 | 70,356 | 44,429 | |||||||||
General and administrative | 13,876 | 11,958 | 25,460 | 24,609 | |||||||||
Stock compensation, net | 2,366 | 2,598 | 4,641 | 5,268 | |||||||||
Other operating, net | 85 | 2,586 | 1,121 | 2,315 | |||||||||
263,213 | 221,175 | 506,267 | 426,577 | ||||||||||
Operating income | 353,170 | 120,909 | 587,192 | 222,382 | |||||||||
Other (income) and expense: | |||||||||||||
Interest expense | 7,748 | 10,297 | 16,168 | 19,462 | |||||||||
Capitalized interest | (4,653 | ) | (4,898 | ) | (9,259 | ) | (9,989 | ) | |||||
Amortization of fair value of debt | (190 | ) | (580 | ) | (381 | ) | (1,527 | ) | |||||
Gain on early extinguishment of debt | — | (5,099 | ) | — | (5,099 | ) | |||||||
Other, net | (5,507 | ) | (3,457 | ) | (8,524 | ) | (6,906 | ) | |||||
Income before income tax expense | 355,772 | 124,646 | 589,188 | 226,441 | |||||||||
Income tax expense | 126,464 | 45,939 | 210,045 | 83,106 | |||||||||
Net income | $ | 229,308 | $ | 78,707 | $ | 379,143 | $ | 143,335 | |||||
Earnings per share: | |||||||||||||
Basic | $ | 2.81 | $ | 0.96 | $ | 4.66 | $ | 1.74 | |||||
Diluted | $ | 2.68 | $ | 0.93 | $ | 4.44 | $ | 1.69 | |||||
Weighted average shares outstanding: | |||||||||||||
Basic | 81,474 | 82,282 | 81,380 | 82,252 | |||||||||
Diluted | 85,589 | 84,836 | 85,482 | 84,745 |
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CONDENSED CASH FLOW STATEMENTS (unaudited)
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
(In thousands) | |||||||||||||
Cash flows from operating activities: | |||||||||||||
Net income | $ | 229,308 | $ | 78,707 | $ | 379,143 | $ | 143,335 | |||||
Adjustment to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation, depletion and amortization | 133,201 | 112,797 | 258,757 | 221,681 | |||||||||
Asset retirement obligation | 1,862 | 2,399 | 3,456 | 4,990 | |||||||||
Deferred income taxes | 68,799 | 45,939 | 124,462 | 83,106 | |||||||||
Stock compensation, net | 2,366 | 2,598 | 4,641 | 5,268 | |||||||||
Other | 97 | (6,134 | ) | (126 | ) | (6,676 | ) | ||||||
Changes in operating assets and liabilities: | |||||||||||||
(Increase) decrease in receivables, net | (62,488 | ) | 5,430 | (103,137 | ) | 11,741 | |||||||
Increase in other current assets | (39,610 | ) | (10,083 | ) | (46,047 | ) | (8,968 | ) | |||||
Increase (decrease) in accounts payable and accrued liabilities | 49,445 | 16,383 | 77,752 | (18,862 | ) | ||||||||
Decrease in other non-current liabilities | (673 | ) | (1,242 | ) | (1,349 | ) | (2,352 | ) | |||||
Net cash provided by operating activities | 382,307 | 246,794 | 697,552 | 433,263 | |||||||||
Cash flows from investing activities: | |||||||||||||
Oil and gas expenditures | (356,786 | ) | (220,858 | ) | (641,067 | ) | (473,229 | ) | |||||
Proceeds from sale of assets | 250 | 21,181 | 354 | 21,530 | |||||||||
Sales of short-term investments | 2,061 | — | 7,061 | — | |||||||||
Other expenditures | (12,092 | ) | (5,087 | ) | (21,086 | ) | (7,390 | ) | |||||
Net cash used by investing activities | (366,567 | ) | (204,764 | ) | (654,738 | ) | (459,089 | ) | |||||
Cash flows from financing activities: | |||||||||||||
Net decrease in bank debt | — | (161,000 | ) | — | (95,000 | ) | |||||||
Increase in other long-term debt | — | 350,000 | — | 350,000 | |||||||||
Decrease in other long-term debt | — | (204,360 | ) | — | (204,360 | ) | |||||||
Financing costs incurred | (50 | ) | (6,037 | ) | (50 | ) | (6,098 | ) | |||||
Treasury stock acquired | — | (5,623 | ) | — | (5,623 | ) | |||||||
Dividends paid | (5,021 | ) | (3,382 | ) | (9,974 | ) | (6,747 | ) | |||||
Proceeds from issuance of common stock and other | 10,845 | 432 | 12,961 | 8,017 | |||||||||
Net cash provided by (used in) financing activities | 5,774 | (29,970 | ) | 2,937 | 40,189 | ||||||||
Net change in cash and cash equivalents | 21,514 | 12,060 | 45,751 | 14,363 | |||||||||
Cash and cash equivalents at beginning of period | 147,287 | 7,351 | 123,050 | 5,048 | |||||||||
Cash and cash equivalents at end of period | $ | 168,801 | $ | 19,411 | $ | 168,801 | $ | 19,411 |
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June 30, | December 31, | ||||||
2008 | 2007 | ||||||
(In thousands, except share data) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 168,801 | $ | 123,050 | |||
Restricted cash | 685 | — | |||||
Short-term investments | 7,393 | 14,391 | |||||
Receivables, net | 418,464 | 315,327 | |||||
Inventories | 74,874 | 29,642 | |||||
Deferred income taxes | 365 | 5,697 | |||||
Derivative instruments | — | 12,124 | |||||
Other current assets | 24,671 | 64,346 | |||||
Total current assets | 695,253 | 564,577 | |||||
Oil and gas properties at cost, using the full cost method of accounting: | |||||||
Proved properties | 6,195,685 | 5,545,977 | |||||
Unproved properties and properties under development, not being amortized | 388,020 | 364,618 | |||||
6,583,705 | 5,910,595 | ||||||
Less - accumulated depreciation, depletion and amortization | (2,188,611 | ) | (1,938,863 | ) | |||
Net oil and gas properties | 4,395,094 | 3,971,732 | |||||
Fixed assets, net | 101,647 | 90,584 | |||||
Goodwill | 691,432 | 691,432 | |||||
Other assets, net | 85,846 | 44,469 | |||||
$ | 5,969,272 | $ | 5,362,794 | ||||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 107,697 | $ | 52,671 | |||
Accrued liabilities | 236,830 | 240,387 | |||||
Derivative instruments | 16,555 | — | |||||
Revenue payable | 184,819 | 131,513 | |||||
Total current liabilities | 545,901 | 424,571 | |||||
Long-term debt | 486,778 | 487,159 | |||||
Deferred income taxes | 1,178,369 | 1,076,223 | |||||
Other liabilities | 136,959 | 115,554 | |||||
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, 83,962,774 and 83,620,480 shares issued, respectively | 840 | 836 | |||||
Treasury stock, at cost, 885,392 and 1,078,822 shares held, respectively | (33,344 | ) | (40,628 | ) | |||
Paid-in capital | 1,846,365 | 1,842,690 | |||||
Retained earnings | 1,817,902 | 1,448,763 | |||||
Accumulated other comprehensive income | (10,498 | ) | 7,626 | ||||
3,621,265 | 3,259,287 | ||||||
$ | 5,969,272 | $ | 5,362,794 |
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