Exhibit 99.1
CIMAREX ENERGY REPORTS FIRST-QUARTER 2006 EARNINGS OF $1.29 PER SHARE
DENVER, May 5 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today
reported first-quarter 2006 net income of $110.2 million, or $1.29 per share.
This compares to first-quarter 2005 earnings of $43.4 million, or $1.00 per
diluted share.
Revenues from oil and gas sales in the first quarter of 2006 were $322.0
million, compared to $137.4 million in the same period of 2005. First-quarter
2006 cash flow from operations totaled $227.1 million versus $101.1 million in
the same period of 2005(1).
The increases in revenues, earnings and cash flow are due to higher
production and prices.
First-quarter 2006 oil and gas production averaged 460.1 million cubic feet
equivalent per day (MMcfe/d), a 91 percent increase over the 240.4 MMcfe/d in
the same period a year earlier. Gas production rose 84 percent to 361.3 million
cubic feet per day and oil volumes increased 122 percent to 16,464 barrels per
day.
The increase in production is attributable to the addition of Magnum Hunter
operations in June 2005 and continued positive drilling results. Partially
offsetting these gains were hurricane-related disruptions (18 MMcfe/d) and
property divestitures (13 MMcfe/d).
First-quarter 2006 gas prices increased 20 percent to $7.19 thousand cubic
feet (Mcf) and oil rose 26 percent to $59.57 per barrel.
First quarter of 2006 includes a $15.6 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. First-quarter 2006
payments on these derivative instruments totaled $7.4 million.
Capital
First-quarter 2006 exploration and development (E&D) expenditures totaled
$273.2 million, up from $92.7 million in the first quarter of 2005. In the first
quarter of 2006, we participated in drilling 170 gross (108.8 net) wells, with
an overall success rate of 89 percent. We expect full-year 2006 exploration and
development expenditures to approximate $1 billion.
Outlook
The following statements provide a summary of production and certain expense
projections for the full-year 2006.
Non-operated Gulf of Mexico production of 16 MMcfe/d was shut in at end of
the first quarter of 2006 because of hurricane damage. The majority of this
output is expected to be restored by the end of the second quarter of 2006.
Based on planned capital spending, resumption of Gulf of Mexico volumes and
numerous other factors related to production forecasts, full-year 2006 volumes
are expected to range from 475-495 MMcfe/d.
Expenses for 2006 are expected to fall within the following ranges
summarized below:
Expenses ($/Mcfe):
Production expense $0.95 - $1.05
Transportation expense 0.11 - 0.14
Depreciation, depletion and amortization 2.20 - 2.25
General and administrative expense 0.25 - 0.28
Production taxes (% of oil and gas revenue) 6.5% - 7.5%
Conference call and web cast
Cimarex will host a conference call on Friday May 5, 2006 at 11:00 a.m.
Mountain Time (1:00 p.m. Eastern Time). To access the live, interactive
conference call, please dial 866-406-5369 and reference call ID # 7257494 ten
minutes before the scheduled start time. A digital replay will be available for
one week following the live broadcast at 877-519-4471 by using the conference ID
# 7257494. 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. 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.
PRICE AND PRODUCTION DATA
For the Three Months Ended
March 31
---------------------------
2006 2005
------------ ------------
Gas Production:
Total production - Mcf 32,514,466 17,636,397
Gas volume - Mcf per day 361,272 195,960
Gas price - per Mcf $ 7.19 $ 6.00
Oil Production (including NGL):
Total production - barrels 1,481,761 666,354
Oil volume - barrels per day 16,464 7,404
Oil price - per barrel $ 59.57 $ 47.28
OIL AND GAS CAPITALIZED COSTS INCURRED
For the Three Months Ended
March 31
---------------------------
2006 2005
------------ ------------
(in thousands)
Exploration and development $ 273,231 $ 92,737
Acquisitions of other properties 2,862 243
Oil and gas expenditures 276,093 92,980
Sale proceeds -- (14)
$ 276,093 $ 92,966
RECONCILIATION OF CASH FLOW FROM OPERATIONS
For the Three Months Ended
March 31
---------------------------
2006 2005
------------ ------------
(in thousands)
Net cash provided by operating activities $ 228,015 $ 96,428
Increase in operating assets
and liabilities (898) 4,641
Cash flow from operations $ 227,117 $ 101,069
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
March 31
---------------------------
2006 2005
------------ ------------
(In thousands, except per
share data)
Revenues:
Gas sales $ 233,723 $ 105,874
Oil sales 88,272 31,508
Gas gathering, processing, and net marketing 13,255 562
335,250 137,944
Costs and expenses:
Depreciation, depletion and amortization 90,628 38,085
Asset retirement obligation accretion 1,448 385
Production 41,772 10,171
Transportation 4,308 2,474
Gas gathering and processing 6,553 53
Taxes other than income 23,546 10,895
General and administrative 10,885 7,892
Stock compensation 1,968 1,225
Expenses related to merger 31 --
Gain on derivative instruments (15,567) --
165,572 71,180
Operating income 169,678 66,764
Other income and expense:
Interest expense 6,490 188
Capitalized interest (6,219) --
Other, net (4,287) (1,241)
Income before income tax expense 173,694 67,817
Income tax expense 63,543 24,452
Net income $ 110,151 $ 43,365
Earnings per share:
Basic $ 1.33 $ 1.04
Diluted $ 1.29 $ 1.00
Weighted average shares outstanding:
Basic 82,633 41,749
Diluted 85,242 43,218
CONDENSED CASH FLOW STATEMENTS (unaudited)
For the Three Months Ended
March 31
---------------------------
2006 2005
------------ ------------
(In thousands)
Cash flows from operating activities:
Net income $ 110,151 $ 43,365
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 90,628 38,085
Asset retirement obligation accretion 1,448 385
Deferred income taxes 46,681 17,312
Stock compensation 1,968 1,225
Derivative instruments (22,919) --
Other (840) 697
Changes in operating assets and liabilities:
Decrease in receivables, net 28,525 7,871
(Increase) in other current assets (14,448) (7,414)
(Decrease) in accounts payable
and accrued liabilities (13,541) (5,015)
Increase (decrease)in other non-current
liabilities 362 (83)
Net cash provided by operating activities 228,015 96,428
Cash flows from investing activities:
Oil and gas expenditures (218,963) (96,473)
Acquisition of oil and gas properties (2,862) (243)
Merger related costs (469) --
Proceeds from sale of assets 60 37
Other expenditures (5,729) (3,093)
Net cash used by investing
activities (227,963) (99,772)
Cash flows from financing activities:
Borrowings (payments) on long-term debt, net -- --
Treasury stock acquired (10,281) --
Dividends paid (3,327) --
Proceeds from issuance of common stock and other 2,584 623
Net cash (used in) provided by
financing activities (11,024) 623
Net change in cash and cash equivalents (10,972) (2,721)
Cash and cash equivalents at beginning of period 61,647 115,746
Cash and cash equivalents at end of period $ 50,675 $ 113,025
BALANCE SHEETS (unaudited)
March 31 December 31
2006 2005
------------ ------------
(In thousands, except
share data)
Assets
Current assets:
Cash and cash equivalents $ 50,675 $ 61,647
Receivables, net 261,003 289,184
Inventories 41,100 34,784
Deferred income taxes 15,248 17,959
Other current assets 23,641 25,454
Total current assets 391,667 429,028
Oil and gas properties at cost, using the full
cost method of accounting:
Proved properties 3,793,939 3,602,797
Unproved properties and properties
under development, not being amortized 474,897 388,839
4,268,836 3,991,636
Less -- accumulated depreciation,
depletion and amortization (1,201,390) (1,114,677)
Net oil and gas properties 3,067,446 2,876,959
Fixed assets, net 87,062 86,916
Goodwill 716,988 717,391
Other assets, net 75,320 70,041
$ 4,338,483 $ 4,180,335
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 69,093 $ 81,947
Accrued liabilities 223,992 179,076
Derivative fair value 19,007 41,926
Revenue payable 96,137 94,469
Total current liabilities 408,229 397,418
Long-term debt 351,506 352,451
Deferred income taxes 761,760 717,790
Other liabilities 106,968 117,223
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,
83,691,390 and 83,524,285 shares
issued, respectively 837 835
Treasury stock, at cost, 1,095,722
and 1,146,822 shares held,
respectively (41,363) (43,554)
Paid-in capital 1,858,617 1,865,597
Unearned compensation -- (15,862)
Retained earnings 891,848 788,356
Accumulated other comprehensive income 81 81
2,710,020 2,595,453
$ 4,338,483 $ 4,180,335
SOURCE Cimarex Energy Co.
-0- 05/05/2006
/CONTACT: Mark Burford, Director of Capital Markets of Cimarex Energy
Co., +1-303-295-3995/
/Web site: http://www.cimarex.com /
(XEC)