Exhibit 99.1
CIMAREX ENERGY ANNOUNCES FIRST-QUARTER 2005 EARNINGS OF $1.00 PER SHARE
DENVER, May 4 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today
reported first-quarter 2005 net income of $43.4 million, or $1.00 per diluted
share. This compares to first-quarter 2004 earnings of $29.9 million, or $0.70
per diluted share.
Revenues from oil and gas sales in the first quarter of 2005 were $137.4
million, compared to $95.5 million in the same period of 2004. Cash flow from
operations for the first quarter of 2005 was $101.1 million, versus $69.5
million in the same period of 2004(1). First-quarter 2005 financial results were
positively impacted by a 22 percent increase in production volumes, 40 percent
higher oil prices and 14 percent higher gas prices.
Total daily production volumes averaged 240.4 million cubic feet (MMcf)
equivalent during the first quarter of 2005 versus 196.6 MMcf equivalent a year
earlier. Fourth-quarter 2004 production was 231.0 MMcf equivalent per day. The
increase is attributable to continued positive drilling results in the Mid
Continent, Permian Basin and Gulf Coast areas of operations. The accompanying
tables detail quarterly volumes and prices.
Exploration and development expenditures during the first quarter of 2005
totaled $92.7 million, up from $68.6 million for the first quarter 2004.
Increased capital expenditures reflect expansion of our drilling program. In the
first quarter of 2005, we participated in drilling 59 gross wells, with an
overall success rate of 81 percent. On a net basis, 27 of 35 wells drilled
during the first quarter were successful.
(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.
Conference call and web cast
A conference call with management has been scheduled for 11 a.m. Mountain
Time (1 p.m. Eastern), Wednesday, May 4, 2005. Interested parties 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.
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.
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's and Magnum Hunter's 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.
In connection with the proposed merger, Cimarex and Magnum Hunter have filed
with the SEC a Registration Statement on Form S-4 (Registration Number
333-123019) that contains the joint proxy statement/prospectus on Form S-4 that
discloses important information about the merger. Investors and security holders
of Cimarex and Magnum Hunter are urged to read the joint proxy
statement/prospectus filed with the SEC, and any other relevant materials filed
by Cimarex or Magnum Hunter, as well as any amendments or supplements to those
documents, because they 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 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 Magnum Hunter and
their respective ownership of Cimarex and Magnum Hunter common stock is set
forth in the joint proxy statement/prospectus, which was filed with the SEC on
May 2, 2005. 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
March 31,
---------------------------
2005 2004
------------ ------------
Gas Production:
Total production - Mcf 17,636,397 14,130,125
Gas volume - Mcf per day 195,960 155,276
Gas price - per Mcf $ 6.00 $ 5.26
Oil Production (including NGL):
Total production - barrels 666,354 626,617
Oil volume - barrels per day 7,404 6,886
Oil price - per barrel $ 47.28 $ 33.80
CAPITALIZED COSTS INCURRED
For the Three Months Ended
March 31,
---------------------------
2005 2004
------------ ------------
(in thousands)
Exploration and development $ 92,737 $ 68,619
Acquisitions of proved properties 243 9
Oil and gas expenditures 92,980 68,628
Sale Proceeds (14) (35)
$ 92,966 $ 68,593
RECONCILIATION OF CASH FLOW FROM OPERATIONS
For the Three Months Ended
March 31,
---------------------------
2005 2004
------------ ------------
(in thousands)
Net cash provided by operating
activities $ 96,428 $ 63,047
Increase in operating
assets and liabilities 4,641 6,405
Cash flow from operations $ 101,069 $ 69,452
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 Ended
March 31,
---------------------------
2005 2004
------------ ------------
(In thousands, except per
share data)
Revenues:
Gas sales $ 105,874 $ 74,332
Oil sales 31,508 21,178
Marketing sales 53,736 36,761
Other, net 589 3,648
191,707 135,919
Costs and expenses:
Depreciation, depletion and
amortization 38,085 26,338
Asset retirement obligation
accretion 385 290
Transportation 2,474 2,355
Production 10,171 9,469
Taxes other than income 10,895 8,365
Marketing purchases 53,227 36,300
General and administrative 7,892 4,509
Stock compensation 1,225 468
Financing costs --
Interest expense 188 296
Interest income (652) (87)
123,890 88,303
Income before income tax expense 67,817 47,616
Income tax expense 24,452 17,751
Net income $ 43,365 $ 29,865
Earnings per share:
Basic $ 1.04 $ 0.72
Diluted $ 1.00 $ 0.70
Weighted average shares
outstanding:
Basic 41,749 41,305
Diluted 43,218 42,615
CASH FLOW STATEMENTS (unaudited)
For the Three Months Ended
March 31,
---------------------------
2005 2004
------------ ------------
(in thousands)
Cash flows from operating activities:
Net income $ 43,365 $ 29,865
Adjustment to reconcile net income
to net cash
provided by operating activities:
Depreciation, depletion and
amortization 38,085 26,338
Asset retirement obligation
accretion 385 290
Deferred income taxes 17,312 10,924
Stock compensation 1,225 468
Other 697 1,567
Changes in operating assets and liabilities:
(Increase) decrease in
receivables, net 7,871 (13,435)
(Increase) in inventories (4,292) (2,677)
(Increase) decrease in other
current assets (3,122) 1,837
Increase in accounts payable 1,910 9,354
(Decrease) in accrued
liabilities (6,925) (1,511)
Increase (decrease) in other
non-current liabilities (83) 27
Net cash provided by
operating activities 96,428 63,047
Cash flows from investing activities:
Oil and gas expenditures (96,473) (67,376)
Acquisition of oil and gas
properties (243) (9)
Proceeds from sale of assets 37 113
Other expenditures (3,093) (1,952)
Net cash used by investing
activities (99,772) (69,224)
Cash flows from financing activities:
Common stock reacquired and retired (67) (121)
Proceeds from issuance of common
stock 690 4,371
Net cash provided by
financing activities 623 4,250
Net change in cash and cash
equivalents (2,721) (1,927)
Cash and cash equivalents at
beginning of period 115,746 40,420
Cash and cash equivalents at
end of period $ 113,025 $ 38,493
BALANCE SHEETS (unaudited)
March 31, December 31,
2005 2004
------------ ------------
(In thousands, except
share data)
Assets
Current assets:
Cash and cash equivalents $ 113,025 $ 115,746
Receivables, net 96,118 103,989
Inventories 14,034 9,742
Deferred income taxes 1,467 2,149
Other current assets 7,943 4,821
Total current assets 232,587 236,447
Oil and gas properties at cost, using
the full cost method of accounting:
Proved properties 1,699,528 1,596,704
Unproved properties and properties
under development,
not being amortized 63,030 72,249
1,762,558 1,668,953
Less - accumulated depreciation,
depletion and amortization (903,704) (866,660)
Net oil and gas properties 858,854 802,293
Fixed assets, net 17,483 16,109
Goodwill 44,967 44,967
Other assets, net 6,462 5,630
$ 1,160,353 $ 1,105,446
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 30,034 $ 26,511
Accrued liabilities 66,991 77,362
Revenue payable 37,516 39,129
Total current liabilities 134,541 143,002
Deferred income taxes 241,640 225,285
Other liabilities 38,561 36,447
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,
41,774,841 and 41,729,280 shares
issued and outstanding,
respectively 418 417
Paid-in capital 252,031 250,248
Unearned compensation (10,268) (10,072)
Retained earnings 503,396 460,031
Accumulated other comprehensive
income 34 88
745,611 700,712
$ 1,160,353 $ 1,105,446
SOURCE Cimarex Energy Co.
-0- 05/04/2005
/CONTACT: Paul Korus, Vice President & CFO, or Mark Burford, Director of
Capital Markets, both of Cimarex Energy Co., +1-303-295-3995/
/Web site: http://www.magnumhunter.com /
/Web site: http://www.cimarex.com /