Exhibit 99.1
CIMAREX ENERGY CO.
1700 Lincoln Street, Suite 1800
Denver, CO 80203
Phone: (303) 295-3995
CIMAREX ENERGY REPORTS FOURTH-QUARTER 2005 EARNINGS OF $1.98 PER SHARE
DENVER, February 15, 2006 - Cimarex Energy Co. (NYSE: XEC) today announced that
fourth- quarter 2005 earnings rose 77 percent to $1.98 per diluted share. This
compares to fourth-quarter 2004 earnings of $1.12 per diluted share. Net income
for the fourth quarter of 2005 totaled $168.4 million, up from $48.1 million in
2004.
Full-year 2005 net income totaled $328.3 million, or $4.90 per diluted share, up
from 2004 net income of $153.6 million, or $3.59 per diluted share. Overall 2005
financial results include results of operations from Magnum Hunter Resources,
Inc. beginning with the June 7, 2005 date of acquisition.
Revenues from oil and gas sales rose 187% in the fourth quarter of 2005 to a
record $406.6 million, compared to $141.9 million in the same period of 2004.
Fourth-quarter 2005 cash flow from operations also reached a new all-time high,
totaling $274.2 million versus $108.6 million in the same period of 2004(1).
Oil and gas sales for 2005 totaled $1.1 billion, up from $472.4 million during
2004. Cash flow from operations for 2005 increased to $724.6 million versus
$348.7 million during 2004(1).
The increases in revenues, earnings and cash flow are due to higher production
and prices. Fourth-quarter 2005 gas prices increased 64 percent to $10.49 per
thousand cubic feet (Mcf) and oil rose 21 percent to $57.06 per barrel. For all
of 2005, gas averaged $8.05 per Mcf versus $5.76 per Mcf in 2004 and oil
increased to $55.25 per barrel from $40.19 per barrel.
Fourth-quarter 2005 oil and gas production volumes increased 87 percent over the
same period a year earlier to 431 million cubic feet equivalent per day
(MMcfe/d). Gas production rose 77 percent to 331 MMcf/d and oil volumes
increased 125 percent to 16,686 barrels per day. Full-year 2005 production
volumes increased 63 percent over 2004 to 354 MMcfe/d. Gas production grew 58
percent to 275 MMcf/d and oil volumes increased 82 percent to 13,162 barrels per
day.
- ----------
(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.
The increase in production is attributable to the addition of Magnum Hunter
operations in June 2005 and continued positive drilling results, partially
offset by hurricane related production disruptions in the Gulf of Mexico and
Gulf Coast regions. Hurricane and other storm related activity is estimated to
have negatively impacted fourth-quarter 2005 production by 41-45 MMcfe/d and
full-year volumes by 17-20 MMcfe/d.
Fourth-quarter 2005 net income includes a $16.2 million pre-tax gain on
derivative instruments associated with swaps and collars assumed as part of the
Magnum Hunter acquisition which do not qualify for hedge accounting. The
full-year 2005 results include a $67.8 million loss on derivative instruments.
Fourth-quarter and full-year 2005 cash payments on these derivative instruments
totaled $48.7 and $64.3 million, respectively.
PROVED RESERVES
- ---------------
Year-end 2005 proved reserves totaled 1.393 trillion cubic feet equivalent
(Tcfe), a 210 percent increase over year-end 2004. Proved reserves are 72
percent gas and 81 percent proved developed. Excluded from year-end 2005
reserves are 35.0 billion cubic feet equivalent (Bcfe) classified as equity
investments and 62.5 Bcfe associated with divestitures.
Reserves added from the Magnum Hunter acquisition and other transactions totaled
887.6 Bcfe. Reserves added by drilling and revisions totaled 247.8 Bcfe and
replaced 192 percent of production.
PROPERTY SALES
- --------------
Cimarex received $61 million in the fourth-quarter 2005 from the sale of certain
West Texas properties. Full-year 2005 proceeds from sales of non-core properties
totaled $149 million. Proved reserves and production associated with these
properties totaled 62.5 billion cubic feet equivalent and 13 MMcfe/d,
respectively.
OUTLOOK
- -------
The following statements provide a summary of production and expense projections
for the first-quarter and full-year 2006.
Capital investment for E&D during 2006 is projected to be $1 billion, with
approximately 60 percent directed to the Mid-Continent and Permian Basin regions
and 40 percent to the Gulf Coast, Gulf of Mexico and other areas.
Non-operated Gulf of Mexico production of 20-25 MMcfe/d was shut in at year-end
2005 because of hurricane damage. The majority of this output is expected to be
restored during the first quarter of 2006.
Based on planned capital spending, resumption of Gulf of Mexico production and
numerous other factors related to production forecasts, 2006 volumes are
expected to range from 470-480 MMcfe/d during the first quarter and 485-505
MMcfe/d for the full year.
Expenses for 2006 are expected to fall within the following ranges:
EXPENSES ($/Mcfe):
- --------------------------------------------------
Production expense $0.95 - $1.05
Transportation expense 0.12 - 0.14
Depreciation, depletion and amortization 2.20 - 2.30
General and administrative expense 0.20 - 0.25
Production taxes (% of oil and gas revenue) 6.5% - 7.0%
CONFERENCE CALL AND WEB CAST
A conference call and web cast has been scheduled for today, Wednesday, February
15, 2006 at 11 a.m. Mountain Time (1:00 p.m. Eastern Time). To access the live,
interactive conference call, please dial 800-322-0079 ten minutes before the
scheduled start time. 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, Gulf Coast,
Permian Basin of West Texas and New Mexico and Gulf of Mexico 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. A number of factors could cause actual results to differ materially
from the projections, anticipated results or other expectations expressed in
this release and other risks that are described in SEC reports filed by Cimarex.
While Cimarex makes these forward-looking statements in good faith, neither
Cimarex nor its management can guarantee that the 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.
FOR FURTHER INFORMATION CONTACT
Cimarex Energy Co.
Mark Burford, Director of Capital Markets
303-295-3995
www.cimarex.com
PRICE AND PRODUCTION DATA
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
DECEMBER 31 DECEMBER 31
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Gas Production:
Total production - Mcf 30,417,802 17,172,891 100,271,538 63,610,533
Gas volume - Mcf per day 330,628 186,662 274,717 173,799
Gas price - per Mcf $ 10.49 $ 6.39 $ 8.05 $ 5.76
Oil Production (including NGL):
Total production - barrels 1,535,110 683,364 4,804,242 2,640,645
Oil volume - barrels per day 16,686 7,428 13,162 7,215
Oil price - per barrel $ 57.06 $ 47.12 $ 55.25 $ 40.19
PROVED RESERVES
GAS OIL, TOTAL
(MMcf) (MBbls) (MMcfe)
------------ ------------ ------------
December 31, 2004 364,641 14,063 449,019
Revisions of previous estimates 9,534 270 11,154
Extensions, discoveries, and improved recovery 209,758 4,477 236,620
Purchase of reserves 531,862 59,288 887,590
Production (100,272) (4,804) (129,096)
Sale of properties (11,041) (8,584) (62,545)
------------ ------------ ------------
December 31, 2005 1,004,482 64,710 1,392,742
============ ============ ============
Proved developed - December 31, 2005 820,244 51,521 1,129,370
============ ============ ============
Equity investment proved reserves not included in above (1) 16,914 3,012 34,986
============ ============ ============
(1) The Financial Accounting Standards Board (FASB) pronouncement EITF No. 04-5
"Determining Whether a General Partner, or the General Partners as a Group,
Controls a Limited Partnership or Similar Entity When the Limited Partners
Have Certain Rights" was effective in June 2005. This pronouncement
resulted in certain entities acquired as part of the Magnum Hunter merger
not being consolidated.
PROVED RESERVES BY REGION
GAS OIL TOTAL
(MMcf) (MBbls) (MMcfe)
------------ ------------ ------------
Permian Basin 348,012 43,960 611,772
Mid-Continent 454,986 14,074 539,430
Gulf Coast 94,628 3,872 117,860
Gulf of Mexico 46,126 1,566 55,522
Other 60,730 1,238 68,158
------------ ------------ ------------
1,004,482 64,710 1,392,742
============ ============ ============
OIL AND GAS CAPITALIZED COSTS INCURRED
FOR THE YEAR ENDED
DECEMBER 31
----------------------------
2005 2004
------------ ------------
(in thousands)
Acquisition of Magnum Hunter:
Proved $ 1,521,383 $ --
Unproved 297,692 --
Acquisitions of other properties:
Proved 1,973 324
Unproved 40,865 17,177
Exploration and development 600,913 278,870
------------ ------------
Total oil and gas expenditures 2,462,826 296,371
Sale proceeds (149,262) (662)
------------ ------------
$ 2,313,564 $ 295,709
============ ============
RECONCILIATION OF CASH FLOW FROM OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
DECEMBER 31 DECEMBER 31
---------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(in thousands) (in thousands)
Net cash provided by operating activities $ 287,259 $ 100,747 $ 704,734 $ 355,853
Increase in operating assets
and liabilities (13,043) 7,879 19,873 (7,165)
------------ ------------ ------------ ------------
Cash flow from operations $ 274,216 $ 108,626 $ 724,607 $ 348,688
============ ============ ============ ============
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.
CONDENSED INCOME STATEMENTS (unaudited)
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
DECEMBER 31 DECEMBER 31
---------------------------- ----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(In thousands, except per share data)
Revenues:
Gas sales $ 318,964 $ 109,731 $ 807,007 $ 366,260
Oil sales 87,586 32,202 265,415 106,129
Gas gathering, processing, and net
marketing 22,976 714 46,200 2,785
------------ ------------ ------------ ------------
429,526 142,647 1,118,622 475,174
------------ ------------ ------------ ------------
Costs and expenses:
Depreciation, depletion and amortization 85,794 35,031 258,287 124,251
Asset retirement obligation accretion 1,553 328 3,819 1,241
Production 36,011 9,940 104,067 37,476
Transportation 5,019 2,459 15,338 10,003
Gas gathering and processing 16,278 63 31,890 294
Taxes other than income 27,447 10,196 73,360 37,761
General and administrative 9,530 7,443 33,497 22,483
Stock compensation 1,296 503 4,959 1,957
Expenses related to merger 1,335 -- 9,422 --
(Gain) Loss on derivative instruments (16,176) -- 67,800 --
------------ ------------ ------------ ------------
168,087 65,963 602,439 235,466
------------ ------------ ------------ ------------
Operating income 261,439 76,684 516,183 239,708
Other income and expense:
Interest expense 7,368 209 19,607 1,075
Amortization of fair value of debt (945) -- (2,132) --
Capitalized interest (5,529) -- (11,686) --
Other, net (5,361) (1,256) (6,061) (7,685)
------------ ------------ ------------ ------------
Income before income tax expense 265,906 77,731 516,455 246,318
Income tax expense 97,498 29,656 188,130 92,726
------------ ------------ ------------ ------------
Net income $ 168,408 $ 48,075 $ 328,325 $ 153,592
============ ============ ============ ============
Earnings per share:
Basic $ 2.04 $ 1.15 $ 5.07 $ 3.70
============ ============ ============ ============
Diluted $ 1.98 $ 1.12 $ 4.90 $ 3.59
============ ============ ============ ============
Weighted average shares outstanding:
Basic 82,404 41,666 64,761 41,466
============ ============ ============ ============
Diluted 85,145 43,112 67,000 42,763
============ ============ ============ ============
CASH FLOW STATEMENTS (unaudited)
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
DECEMBER 31 DECEMBER 31
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
(In thousands)
Cash flows from operating activities:
Net income $ 168,408 $ 48,075 $ 328,325 $ 153,592
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 85,794 35,031 258,287 124,251
Asset retirement obligation accretion 1,553 328 3,819 1,241
Deferred income taxes 80,246 23,950 112,890 66,849
Stock compensation 1,296 503 4,959 1,957
Derivative instruments (63,055) -- 3,483 --
Other (26) 739 12,844 798
Changes in operating assets and liabilities, net of
effects of the acquisition of Magnum Hunter:
(Increase) decrease in receivables, net (22,022) (22,774) (45,787) (35,696)
(Increase) decrease in other current assets (2,873) 744 (27,293) (1,703)
Increase in accounts payable and
accrued liabilities 37,407 13,835 52,488 42,918
Increase in other non-current liabilities 531 316 719 1,646
------------ ------------ ------------ ------------
Net cash provided by operating activities 287,259 100,747 704,734 355,853
------------ ------------ ------------ ------------
Cash flows from investing activities:
Oil and gas expenditures (233,358) (75,482) (631,549) (281,407)
Acquisition of oil and gas properties -- (222) (1,973) (324)
Merger related costs (1,335) -- (13,740) --
Cash received in connection with acquisition of MHR -- -- 33,407 --
Proceeds from sale of assets 71,266 160 141,842 926
Other expenditures (5,642) (4,218) (25,440) (12,296)
------------ ------------ ------------ ------------
Net cash used by investing activities (169,069) (79,762) (497,453) (293,101)
------------ ------------ ------------ ------------
Cash flows from financing activities:
Borrowings (payments) on long-term debt, net (85,079) -- (273,501) --
Financing costs (102) -- (1,516) --
Common stock reacquired and retired -- (540) (2,130) (1,254)
Proceeds from issuance of common stock 1,165 3,104 15,767 13,828
------------ ------------ ------------ ------------
Net cash (used in) provided by
financing activities (84,016) 2,564 (261,380) 12,574
------------ ------------ ------------ ------------
Net change in cash and cash equivalents 34,174 23,549 (54,099) 75,326
Cash and cash equivalents at beginning of period 27,473 92,197 115,746 40,420
------------ ------------ ------------ ------------
Cash and cash equivalents at end of period $ 61,647 $ 115,746 $ 61,647 $ 115,746
============ ============ ============ ============
BALANCE SHEETS (unaudited)
DECEMBER 31 DECEMBER 31
2005 2004
---------------- ----------------
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents $ 61,647 $ 115,746
Receivables, net 289,184 103,989
Inventories 34,784 9,742
Deferred income taxes 17,959 2,149
Other current assets 25,454 4,821
---------------- ----------------
Total current assets 429,028 236,447
---------------- ----------------
Oil and gas properties at cost, using the full cost method of accounting:
Proved properties 3,602,797 1,596,704
Unproved properties and properties under development,
not being amortized 388,839 72,249
---------------- ----------------
3,991,636 1,668,953
Less - accumulated depreciation, depletion and amortization (1,114,677) (866,660)
---------------- ----------------
Net oil and gas properties 2,876,959 802,293
---------------- ----------------
Fixed assets, net 86,916 16,109
Goodwill 717,391 44,967
Other assets, net 70,041 5,630
---------------- ----------------
$ 4,180,335 $ 1,105,446
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 81,947 $ 26,511
Accrued liabilities 179,076 77,362
Derivative fair value 41,926 --
Revenue payable 94,469 39,129
---------------- ----------------
Total current liabilities 397,418 143,002
---------------- ----------------
Long-term debt 352,451 --
---------------- ----------------
Deferred income taxes 717,790 225,285
---------------- ----------------
Other liabilities 117,223 36,447
---------------- ----------------
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,
83,524,285 and 41,729,280 shares issued, respectively 835 417
Treasury stock, at cost, 1,146,822 shares held (43,554) --
Paid-in capital 1,865,597 250,248
Unearned compensation (15,862) (10,072)
Retained earnings 788,356 460,031
Accumulated other comprehensive income 81 88
---------------- ----------------
2,595,453 700,712
---------------- ----------------
$ 4,180,335 $ 1,105,446
================ ================