Cimarex Reports Fourth-Quarter 2007 Earnings of $1.54 Per Share
DENVER, Feb. 20 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC)
today reported fourth-quarter 2007 net income of $130.0 million, or $1.54 per
diluted share. This compares to fourth-quarter 2006 earnings of $58.7 million,
or $0.70 per diluted share.
Revenues from oil and gas sales in the fourth quarter of 2007 were $417.6
million, compared to $283.7 million in the same period of 2006. Fourth-quarter
2007 cash flow from operations totaled $298.7 million versus $213.1 million in
the same period of 2006(1).
The increase in fourth-quarter 2007 revenues, earnings and cash flow is
primarily a result of higher production and oil and gas prices. Fourth-quarter
2007 gas prices increased 24% to $7.71 per thousand cubic feet (Mcf) and oil
rose 58% to $88.07 per barrel from the same period of 2006.
Fourth-quarter 2007 oil and gas production averaged 471 million cubic feet
equivalent per day (MMcfe/d), a 7% increase over the same period a year earlier.
The latest quarter's daily production was comprised of 341.1 million cubic feet
of gas and 21,680 barrels of oil.
For the year-ended December 31, 2007, Cimarex reported net income of $346.5
million, or $4.09 per diluted share. In 2006, net income totaled $345.7 million,
or $4.11 per diluted share. Cash flow from operations for 2007 totaled $985.7
million versus $917.7 million in 2006(1).
In 2007, exploration and development (E&D) expenditures totaled $983
million, as compared to $1,049 million in 2006. E&D expenditures during the
fourth quarter of 2007 totaled $266.0 million.
Proved Reserves
Year-end 2007 proved reserves totaled 1.472 trillion cubic feet equivalent
(Tcfe) as compared to 1.449 Tcfe at year-end 2006. After adjusting for 123
billion cubic feet equivalent (Bcfe) of properties sold in 2007 proved reserves
increased 11% over year-end 2006. Of total proved reserves, 76% are gas and 79%
are classified as proved developed.
Reserves additions totaled 311 Bcfe and replaced 189% of 2007 production.
Reserves added by drilling and revisions totaled 300 Bcfe and replaced 182% of
production.
2008 Guidance
Cimarex's exploration and development (E&D) capital expenditures for 2008
are projected to range from $1.1-$1.3 billion. The actual amount invested will
be highly dependent on commodity prices and rig rates. Mid-point 2008 projection
and actual 2007 E&D investment by region are as follows:
($ in millions) 2008 2007
Mid-Continent $520 43 % $385 39 %
Permian 450 38 % 368 37 %
Gulf Coast/GOM 190 16 % 225 23 %
Western/Other 40 3 % 5 1 %
$1,200 100 % $983 100 %
First-quarter 2008 production is projected to range between 458-468
MMcfe/d which excludes 11 MMcfe/d for the Spraberry and the Gulf of Mexico Main
Pass property sales. Full-year 2008 production is projected to be in the range
of 465-485 MMcfe/d, or a 5-10% increase over 2007 after adjusting for property
sales.
Expenses for 2008 are expected to fall within the following ranges:
Expenses ($/Mcfe):
Production expense $1.20 - $1.30
Transportation expense 0.16 - 0.18
DD&A and ARO accretion 2.85 - 3.00
General and administrative expense 0.28 - 0.32
Production taxes (% of oil and gas revenue) 6.5% - 7.5%
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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 # 31106767 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 # 31106767.
The listen-only web cast of the call will be accessible via
http://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.
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PRICE AND PRODUCTION DATA
For the Three Months Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
Gas Production:
Total
production
- Mcf 31,377,310 30,303,817 119,937,142 124,732,789
Gas volume -
Mcf per day 341,058 329,389 328,595 341,734
Gas price -
per Mcf
(before
hedge
effect) $7.46 $6.21 $6.82 $6.50
Effect of
hedges $0.25 - $0.23 -
Gas price -
per Mcf
(after hedge
effect) $7.71 $6.21 $7.05 $6.50
Oil Production
(including
NGL):
Total
production
- barrels 1,994,542 1,710,016 7,445,453 6,528,622
Oil volume -
barrels per
day 21,680 18,587 20,399 17,887
Oil price -
per barrel $88.07 $55.91 $69.71 $61.96
PROVED RESERVES
Gas Oil Total
(Bcf) (MBbls) (Bcfe)
December 31, 2006 1,090.4 59,797 1,449.2
Revisions of previous estimates 50.0 1,251 57.5
Extensions, discoveries, and
improved recovery 162.1 13,361 242.3
Purchase of reserves 10.6 99 11.2
Production (119.9) (7,446) (164.6)
Sale of properties (70.5) (8,812) (123.4)
December 31, 2007 1,122.7 58,250 1,472.2
Proved developed - December 31, 2007 848.0 51,497 1,157.0
PROVED RESERVES BY REGION
Gas Oil Total
(Bcf) (MBbls) (Bcfe)
Mid-Continent 562.0 9,166 617.0
Permian Basin 269.0 43,122 527.7
Gulf Coast 73.3 4,615 101.0
Gulf of Mexico 19.8 820 24.7
Western/Other 198.6 527 201.8
1,122.7 58,250 1,472.2
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OIL AND GAS CAPITALIZED EXPENDITURES
For the Three Months Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
(in thousands) (in thousands)
Acquisition of properties $ - $18,260 $40,914 $26,483
Exploration and
development 265,733 244,104 982,520 1,048,190
Total oil and gas
expenditures 265,733 262,364 1,023,434 1,074,673
Sale proceeds (153,954) (9) (176,659) (4,459)
$111,779 $262,355 $846,775 $1,070,214
RECONCILIATION OF CASH FLOW FROM OPERATIONS
For the Three Months Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
(in thousands) (in thousands)
Net cash provided
by operating
activities $301,511 $201,283 $994,680 $878,419
Increase in
operating assets
and liabilities (2,798) 11,800 (9,010) 39,323
Cash flow from
operations $298,713 $213,083 $985,670 $917,742
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 Year Ended
December 31, December 31,
2007 2006 2007 2006
(In thousands, except per share data)
Revenues:
Gas sales $241,981 $188,053 $845,631 $810,894
Oil sales 175,662 95,606 518,991 404,517
Gas gathering,
processing, and
net marketing 20,811 11,972 66,544 51,733
438,454 295,631 1,431,166 1,267,144
Costs and expenses:
Depreciation,
depletion and
amortization 122,476 106,089 461,791 396,394
Asset retirement
obligation 1,823 2,100 8,937 7,018
Production 49,646 48,633 201,512 176,833
Transportation 7,251 5,521 26,361 21,157
Gas gathering
and processing 8,518 7,146 30,513 27,410
Taxes other than
income 26,804 22,674 93,630 91,066
General and
administrative 13,729 10,609 49,260 42,288
Stock compensation,
net 2,704 1,914 10,772 8,243
(Gain) Loss on
derivative
instruments - 628 - (22,970)
Other operating,
net 455 2,125 6,637 2,064
233,406 207,439 889,413 749,503
Operating income 205,048 88,192 541,753 517,641
Other (income)
and expense:
Interest expense 9,230 7,939 37,966 29,940
Capitalized
interest (4,701) (5,693) (19,680) (24,248)
Amortization of
fair value of debt (190) (946) (1,908) (3,784)
Gain on early
extinguishment
of debt - - (5,099) -
Other, net (1,929) (3,076) (14,151) (28,591)
Income before
income tax
expense 202,638 89,968 544,625 544,324
Income tax
expense 72,660 31,223 198,156 198,605
Net income $129,978 $58,745 $346,469 $345,719
Earnings per
share:
Basic $1.60 $0.72 $4.23 $4.21
Diluted $1.54 $0.70 $4.09 $4.11
Weighted average
shares
outstanding:
Basic 81,218 82,077 81,819 82,066
Diluted 84,188 84,102 84,632 84,090
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CONDENSED CASH FLOW STATEMENTS (unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
(In thousands)
Cash flows from
operating
activities:
Net income $ 129,978 $ 58,745 $ 346,469 $ 345,719
Adjustment to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation,
depletion and
amortization 122,476 106,089 461,791 396,394
Asset retirement
obligation 1,823 2,100 8,937 7,018
Deferred income
taxes 42,011 45,937 167,507 220,539
Stock
compensation,
net 2,704 1,914 10,772 8,243
Derivative
instruments - (2,726) - (41,926)
Gain on
liquidation
of equity
investees - (1,463) (3,015) (19,785)
Other (279) 2,487 (6,791) 1,540
Changes in
operating
assets and
liabilities:
(Increase) in
receivables, net (27,420) (60,878) (7,777) (9,811)
(Increase) in
other current
assets (27,729) (2,358) (32,180) (11,812)
Increase
(decrease) in
accounts payable
and accrued
liabilities 56,691 51,043 55,436 (18,293)
Increase
(decrease) in
other non-current
liabilities 1,256 393 (6,469) 593
Net cash
provided by
operating
activities 301,511 201,283 994,680 878,419
Cash flows from
investing activities:
Oil and gas
expenditures (267,965) (246,896) (1,021,456) (1,054,581)
Merger related costs - - - (439)
Proceeds from sale
of assets 153,999 46 177,195 10,705
Distributions
received from
equity investees - 1,538 3,015 59,823
Purchases of
short-term
investments (16,000) - (16,000) -
Sales of short-term
investments 1,424 - 1,424 -
Other expenditures (8,583) (2,098) (19,574) (25,310)
Net cash used
by investing
activities (137,125) (247,410) (875,396) (1,009,802)
Cash flows from
financing activities:
Net increase
(decrease) in
bank debt (39,000) 45,000 (95,000) 95,000
Increase in other
long-term debt - - 350,000 -
Decrease in other
long-term debt - - (204,360) -
Financing costs
incurred (14) (79) (6,113) (153)
Treasury stock
acquired - - (42,266) (11,016)
Dividends paid (3,334) (3,352) (13,429) (13,358)
Proceeds from
issuance of
common stock
and other 989 1,522 9,886 4,311
Net cash
provided
by (used in)
financing
activities (41,359) 43,091 (1,282) 74,784
Net change in cash
and cash equivalents 123,027 (3,036) 118,002 (56,599)
Cash and cash
equivalents at
beginning of period 23 8,084 5,048 61,647
Cash and cash
equivalents at end
of period $ 123,050 $ 5,048 $ 123,050 $ 5,048
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BALANCE SHEETS (unaudited)
December 31, December 31,
Assets 2007 2006
(In thousands, except share data)
Current assets:
Cash and cash equivalents $123,050 $5,048
Short-term investments 14,391 -
Receivables, net 315,327 306,458
Inventories 29,642 39,397
Deferred income taxes 5,697 1,498
Derivative instruments 12,124 41,945
Other current assets 64,346 22,411
Total current assets 564,577 416,757
Oil and gas properties at cost, using
the full cost method of accounting:
Proved properties 5,545,977 4,656,854
Unproved properties and properties
under development,
not being amortized 364,618 425,173
5,910,595 5,082,027
Less - accumulated depreciation,
depletion and amortization (1,938,863) (1,494,317)
Net oil and gas properties 3,971,732 3,587,710
Fixed assets, net 90,584 88,924
Goodwill 691,432 691,432
Derivative instruments - 7,051
Other assets, net 44,469 37,876
$5,362,794 $4,829,750
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $52,671 $56,241
Accrued liabilities 240,387 202,163
Revenue payable 131,513 96,184
Total current liabilities 424,571 354,588
Long-term debt 487,159 443,667
Deferred income taxes 1,076,223 921,665
Other liabilities 115,554 133,687
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,
83,620,480 and 83,962,132 shares
issued, respectively 836 840
Treasury stock, at cost, 1,078,822
shares held (40,628) (40,628)
Paid-in capital 1,842,690 1,867,448
Retained earnings 1,448,763 1,117,402
Accumulated other comprehensive
income 7,626 31,081
3,259,287 2,976,143
$5,362,794 $4,829,750
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