Exhibit 99.1
CIMAREX ENERGY ANNOUNCES FOURTH-QUARTER 2004 EARNINGS OF $1.12 PER SHARE
DENVER, Feb. 16 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC)
today reported fourth-quarter 2004 net income of $48.1 million, or
$1.12 per diluted share. This compares to fourth-quarter 2003 net income of
$18.3 million, or $0.43 per diluted share.
Revenues from oil and gas sales in the fourth quarter of 2004 were $141.9
million, compared to $77.1 million in the same period of 2003. Cash flow from
operations for the fourth quarter of 2004 was $110.1 million, versus $50.5
million in the same period of 2003*. Fourth-quarter 2004 financial results were
positively impacted by a 24 percent increase in production volumes, 46 percent
higher gas prices and 59 percent higher oil prices.
Total daily production volumes averaged 231 million cubic feet (MMcf)
equivalent during the fourth quarter of 2004 versus 187 MMcf equivalent a year
earlier. The increase is attributable to positive drilling results in the
Mid-Continent, Permian Basin and Gulf Coast areas of operations. The
accompanying tables detail fourth quarter and full-year volumes and prices.
Exploration and development expenditures during the fourth quarter of 2004
totaled $87.3 million, up from $58.5 million for the fourth quarter 2003.
Increased capital expenditures reflect expansion of the Company's drilling
program in the Mid-Continent, Gulf Coast and Permian Basin areas of the U.S. In
the fourth quarter of 2004, there were 41 gross (17 net) wells drilled.
Full-year 2004
For the full-year 2004, Cimarex reported net income of $153.6 million, or
$3.59 per diluted share. This compares to net income for 2003 of $94.6 million,
or $2.22 per share.
Oil and gas sales during 2004 totaled $472.4 million. For 2003, oil and gas
sales were $324.1 million. Cash flow from operations for 2004 increased to
$353.5 million from $217.0 million in 2003 (1). The increases reflect 21 percent
higher production volumes, 16 percent higher gas prices and 37 percent higher
oil prices.
Year-end 2004 proved oil and gas reserves increased by 6 percent to 449
billion cubic feet (Bcf) equivalent and were comprised of 364.6 Bcf of gas and
14.1 million barrels of oil. Of total proved reserves, 99.1 percent were proved
developed.
Capital expenditures for exploration and development during 2004 were $296.1
million, up from $160.6 million during 2003. Of 2004 exploration and development
expenditures, approximately $172 million were incurred in the Mid Continent
region and $97 million was directed toward Gulf Coast projects. Overall, we
drilled 221 gross (104 net) wells during 2004, realizing a success rate of 84
percent.
* 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.
Conference call and web cast
A conference call with management has been scheduled for 11 a.m. Mountain
Time (1 p.m. Eastern), Wednesday, February 16, 2005. Interested parties in the
U.S. and Canada may access the call by dialing (800) 938-0653 and requesting the
Cimarex Energy Co. teleconference. In addition, a listen-only web cast of the
call will be provided at www.cimarex.com. Please go to the website at least ten
minutes early to register and to download any necessary audio software.
Expectations for 2005
Management is currently projecting that 2005 production volumes will range
between 235-245 MMcf equivalent per day. First-quarter 2005 volumes are expected
to average 230-235 MMcf equivalent per day.
Growth in 2005 production will be highly dependent on the amount and success
of the company's capital investments, including the outcome of wells that have
not yet been drilled. The production and sale of oil and gas also involves many
other complex processes that are subject to numerous uncertainties, including
reservoir risk, mechanical failure, market conditions, transportation issues,
human error and weather.
Capital investment plans for 2005 contemplate exploration and development
expenditures of $350-380 million, including $170-175 million in the Mid
Continent region and $140-145 million in the Gulf Coast area. Capital investment
plans may be modified during the year due to market conditions, exploration
success or failure, rig availability and other variables.
On January 26, 2005, Cimarex and Magnum Hunter Resources, Inc. (NYSE: MHR)
jointly announced that their boards of directors had approved an agreement and
plan of merger that provides for the acquisition by Cimarex of Magnum Hunter.
Closing of this transaction is subject to, among other things, favorable
shareholder votes. At the present time, management expects that consummation of
the merger will occur before the end of the second quarter of 2005.
Production forecasts and capital investment will be materially altered,
pending outcome of completion of the proposed merger transaction.
About Cimarex Energy
Cimarex Energy Co., headquartered in Denver, CO, is an independent oil and
gas exploration and production company with operations focused in the
Mid-Continent, Permian Basin and Gulf Coast areas of the U.S. Its principal
regional operations offices are located in Tulsa, New Orleans and Houston.
About Magnum Hunter Resources, Inc.
Magnum Hunter Resources, Inc., located in Irving, TX, is an independent oil
and gas exploration and production company engaged in three principal
activities: (1) the exploration, development and production of crude oil,
condensate and natural gas; (2) the gathering, transmission and marketing of
natural gas; and (3) the managing and operating of producing oil and natural gas
properties for interest owners. Its operations are concentrated in the Permian
Basin of West Texas and New Mexico, the Gulf of Mexico and in the Mid-Continent
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 Cimarex Energy Co. and Magnum Hunter
Resources, Inc. 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.
Risks, uncertainties and assumptions include 1) the possibility that the
companies may be unable to obtain stockholder or regulatory approvals required
for the acquisition; 2) the possibility that problems may arise in successfully
integrating the businesses of the two companies; 3) the possibility that the
acquisition may involve unexpected costs; 4) the possibility that the combined
company may be unable to achieve cost-cutting synergies; 5) the possibility that
the businesses may suffer as a result of uncertainty surrounding the
acquisition; 6) the possibility that the industry may be subject to future
regulatory or legislative actions; 7) the volatility in commodity prices for oil
and gas; 8) the presence or recoverability of estimated reserves; 9) the ability
to replace reserves; 10) environmental risks; 11) drilling and operating risks;
12) exploration and development risks; 13) competition; 14) the ability of
management to execute its plans to meet its goals and other risks that are
described in SEC reports filed by Cimarex and Magnum Hunter. Because
forward-looking statements involve risks and uncertainties, actual results and
events may differ materially from results and events currently expected by
Cimarex and Magnum Hunter. Cimarex and Magnum Hunter assume no obligation and
expressly disclaim any duty to update the information contained herein except as
required by law.
Additional Information About the Acquisition and Where to Find It:
In connection with the proposed acquisition, Cimarex and Magnum Hunter
will file relevant materials with the SEC, including one or more registration
statement(s) that contain a prospectus and a joint proxy statement. Investors
and security holders of Cimarex and Magnum Hunter are urged to read these
documents (if and when they become available) and any other relevant documents
filed with the SEC, as well as any amendments or supplements to those documents,
because they will contain important information about Cimarex, Magnum Hunter and
the merger. Investors and security holders may obtain these documents (and any
other documents filed by Cimarex and Magnum Hunter with the SEC) free of charge
at the SEC's website at www.sec.gov. In addition, the documents filed with the
SEC may be obtained free of charge (i) at www.cimarex.com or
www.magnumhunter.com or (ii) by directing a request to Mary Kay Rohrer,
Assistant Corporate Secretary, Cimarex Energy Co., phone: 303-295-3995, fax:
303-295-3494; or Morgan F. Johnston, Corporate Secretary, Magnum Hunter
Resources, Inc., phone: 972-401-0752, fax: 972-443-6487. Investors and security
holders are urged to read the joint proxy statement/prospectus and the other
relevant materials when they become available before making any voting or
investment decision with respect to the proposed acquisition.
Cimarex, Magnum Hunter and their respective executive officers and directors
may be deemed to be participants in the solicitation of proxies from the
stockholders of Cimarex and Magnum Hunter in favor of the merger. Information
about the executive officers and directors of Cimarex and their ownership of
Cimarex common stock is set forth in the proxy statement for its 2004 Annual
Meeting of Stockholders, which was filed with the SEC in April 2004. Information
about the executive officers and directors of Magnum Hunter and their ownership
of Magnum Hunter common stock is set forth in the proxy statement for their 2004
Annual Meeting of Stockholders, which was filed with the SEC in August 2004.
Investors and security holders may obtain more detailed information regarding
the direct and indirect interests of Cimarex, Magnum Hunter and their respective
executive officers and directors in the merger by reading the joint proxy
statement/prospectus when it becomes available.
PRICE AND PRODUCTION DATA
For the Three Months Ended For the Year Ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Gas Production:
Total production
- Mcf 17,172,891 13,352,012 63,610,533 50,552,207
Gas volume -
Mcf per day 186,662 145,131 173,799 138,499
Gas price -
per Mcf $ 6.39 $ 4.36 $ 5.76 $ 4.96
Oil Production (including NGL):
Total production
- barrels 683,364 637,922 2,640,645 2,503,584
Oil volume -
barrels per day 7,428 6,934 7,215 6,859
Oil price -
per barrel $ 47.12 $ 29.60 $ 40.19 $ 29.30
Oil,
Condensate
and NGLs Gas Total
PROVED RESERVES (MBbls) (MMcf) (MMcfe)
-------------------------------------- ------------ ------------ ------------
December 31, 2003 14,137 337,344 422,167
Revisions of previous estimates 1,154 20,068 26,993
Extensions and discoveries 1,443 70,748 79,406
Production (2,641) (63,611) (79,454)
Purchases 2 134 145
Sales (32) (42) (237)
December 31, 2004 14,063 364,641 449,020
Proved Developed - December 31, 2004 13,372 364,566 444,798
Oil,
Condensate
and NGLs Gas Total
PROVED RESERVES BY REGION (MBbls) (MMcf) (MMcfe)
-------------------------------------- ------------ ------------ ------------
Mid-Continent 2,583 194,350 209,848
Kansas 2,635 73,811 89,621
Permian Basin 3,684 39,939 62,045
Gulf Coast 2,126 40,269 53,022
Western 3,035 16,272 34,484
14,063 364,641 449,020
CAPITALIZED COSTS INCURRED
For the Year Ended
December 31,
-------------------------
2004 2003
----------- -----------
(in thousands)
Acquisitions of Properties
Proved $ 324 $ 2,032
Unproved 17,177 9,330
Exploration 57,370 50,350
Development 221,500 100,915
Oil and gas expenditures 296,371 162,627
Sale Proceeds (662) (694)
$ 295,709 $ 161,933
RECONCILIATION OF CASH FLOW FROM OPERATIONS
For the Three Months For the Year
Ended Ended
December 31, December 31,
----------------------- -----------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
(in thousands) (in thousands)
Net cash provided by
operating activities $ 102,207 $ 35,153 $ 360,658 $ 206,313
Increase (decrease) in
operating assets and
liabilities 7,879 15,311 (7,165) 10,638
Cash flow from operations $ 110,086 $ 50,464 $ 353,493 $ 216,951
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.
INCOME STATEMENTS (unaudited)
For the Three Months For the Year
Ended Ended
December 31, December 31,
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
(In thousands, except per share data)
Revenues:
Gas sales $ 109,731 $ 58,205 $ 366,260 $ 250,764
Oil sales 32,202 18,884 106,129 73,355
Marketing sales 55,895 28,697 195,816 130,156
Other, net 716 (165) 6,724 (63)
198,544 105,621 674,929 454,212
Costs and expenses:
Depreciation, depletion and
amortization 35,031 24,098 124,251 88,774
Asset retirement obligation
accretion 328 272 1,241 1,009
Transportation 2,459 2,262 10,003 7,472
Production 9,940 8,294 37,476 31,801
Taxes other than income 10,196 8,036 37,761 27,485
Marketing purchases 55,244 28,619 193,325 129,503
General and administrative 7,443 5,206 22,483 17,526
Stock compensation 503 474 1,957 1,824
Financing costs -
Interest expense 209 287 1,075 1,285
Capitalized interest -- -- -- (304)
Interest income (540) (127) (961) (332)
120,813 77,421 428,611 306,043
Income before income tax
expense and cumulative effect
of a change in accounting
principle 77,731 28,200 246,318 148,169
Income tax expense 29,656 9,896 92,726 55,141
Income before cumulative
effect of a change in
accounting principle 48,075 18,304 153,592 93,028
Cumulative effect of a change
in accounting principle,
net of tax -- -- -- 1,605
Net income $ 48,075 $ 18,304 $ 153,592 $ 94,633
Earnings per share:
Basic -
Income before cumulative
effect of a change in
accounting principle $ 1.15 $ 0.44 $ 3.70 $ 2.24
Cumulative effect of a change
in accounting principle, net
of tax -- -- -- 0.04
Net income $ 1.15 $ 0.44 $ 3.70 $ 2.28
Diluted -
Income before cumulative
effect of change in
accounting principle $ 1.12 $ 0.43 $ 3.59 $ 2.18
Cumulative effect of change
in accounting principle,
net of tax -- -- -- 0.04
Net income $ 1.12 $ 0.43 $ 3.59 $ 2.22
Weighted average shares
outstanding:
Basic 41,666 41,441 41,466 41,521
Diluted 43,112 42,668 42,763 42,640
CASH FLOW STATEMENTS (unaudited)
For the Three Months For the Year
Ended Ended
December 31, December 31,
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
(In thousands)
Cash flows from operating activities:
Net income $ 48,075 $ 18,304 $ 153,592 $ 94,633
Adjustment to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion and
amortization 35,031 24,098 124,251 88,774
Amortization of restricted
stock compensation 503 498 1,957 1,914
Cumulative effect of a
change in accounting
principle, net of tax -- -- -- (1,605)
Deferred income taxes 23,950 6,453 66,849 30,590
Asset retirement obligation
accretion 328 272 1,241 1,009
Income tax benefit related
to stock options exercised 1,460 642 4,805 1,203
Other 739 197 798 433
Changes in operating assets and
liabilities:
(Increase) in receivables,
net (22,774) (11,744) (35,696) (10,123)
(Increase) decrease in
inventories 1,580 44 (3,042) (2,714)
(Increase) decrease in
other current assets (836) (2,627) 1,339 (3,242)
Increase (decrease) in
accounts payable 7,045 (3,570) 28,470 (9,310)
Increase in accrued
liabilities 6,790 3,318 14,448 15,626
Increase (decrease) in
other non-current
liabilities 316 (732) 1,646 (875)
Net cash provided by
operating activities 102,207 35,153 360,658 206,313
Cash flows from investing
activities:
Oil and gas expenditures (75,482) (52,605) (281,407) (150,501)
Acquisition of oil and
gas properties (222) 499 (324) (2,032)
Proceeds from sale of
assets 160 810 926 1,041
Other expenditures (4,218) (1,458) (12,296) (8,149)
Net cash used by
investing activities (79,762) (52,754) (293,101) (159,641)
Cash flows from financing
activities:
Payments on long-term
debt, net -- -- -- (32,000)
Common stock reacquired
and retired (540) -- (1,254) (8)
Proceeds from issuance of
common stock 1,644 1,163 9,023 3,429
Net cash provided (used)
by financing activities 1,104 1,163 7,769 (28,579)
Net change in cash and cash
equivalents 23,549 (16,438) 75,326 18,093
Cash and cash equivalents at
beginning of period 92,197 56,858 40,420 22,327
Cash and cash equivalents at
end of period $ 115,746 $ 40,420 $ 115,746 $ 40,420
BALANCE SHEETS (unaudited)
December 31, December 31,
Assets 2004 2003
--------------------------------------------- --------------- ---------------
(In thousands, except share data)
Current assets:
Cash and cash equivalents $ 115,746 $ 40,420
Receivables, net 103,989 68,293
Inventories 9,742 6,700
Deferred income taxes 2,149 1,631
Other current assets 4,821 6,160
Total current assets 236,447 123,204
Oil and gas properties at cost, using the
full cost method of accounting:
Proved properties 1,596,704 1,331,095
Unproved properties and properties
under development, not being amortized 72,249 39,370
1,668,953 1,370,465
Less - accumulated depreciation,
depletion and amortization (866,660) (746,161)
Net oil and gas properties 802,293 624,304
Fixed assets, net 16,109 12,092
Goodwill 44,967 44,967
Other assets, net 5,630 941
$ 1,105,446 $ 805,508
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 26,511 $ 18,394
Accrued liabilities 77,362 48,339
Revenue payable 39,129 18,776
Total current liabilities 143,002 85,509
Deferred income taxes 225,285 155,293
Other liabilities 36,447 29,966
Stockholders' equity:
Preferred stock, $0.01 par value,
15,000,000 shares authorized, no
shares issued -- --
Common stock, $0.01 par value,
100,000,000 shares authorized,
41,729,280 and 41,063,653 shares
issued and outstanding, respectively 417 411
Paid-in capital 250,248 237,430
Unearned compensation (10,072) (9,540)
Retained earnings 460,031 306,439
Accumulated other comprehensive
income 88 --
700,712 534,740
$ 1,105,446 $ 805,508
SOURCE Cimarex Energy Co.
-0- 02/16/2005
/CONTACT: Paul Korus, Vice President & CFO of Cimarex Energy Co.,
+1-303-295-3995/
/Web site: http://www.cimarex.com /