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 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