Exhibit 99.1
CIMAREX ENERGY REPORTS SECOND-QUARTER 2006 EARNINGS OF $0.98 PER SHARE
DENVER, Aug. 2 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC)
today reported second-quarter 2006 net income of $82.9 million, or $0.98 per
diluted share. This compares to second-quarter 2005 earnings of $52.5 million,
or $0.98 per diluted share.
Revenues from oil and gas sales in the second quarter of 2006 were
$300.5 million, compared to $185.0 million in the same period of 2005.
Second-quarter 2006 cash flow from operations totaled $235.9 million versus
$132.7 million in the same period of 2005(1).
The increases in revenues, earnings and cash flow are due to higher
production volumes and higher oil prices.
Second-quarter 2006 oil and gas production averaged 448 million cubic feet
equivalent per day (MMcfe/d), a 52% increase over the same period a year
earlier. Gas production rose 46% to 338.7 million cubic feet per day and oil
volumes increased 75% to 18,213 barrels per day. Current quarter production
volumes reflect a full three months of output from the properties acquired in
the Magnum Hunter merger on June 7, 2005.
Second-quarter 2006 gas prices decreased 4% to $6.22 thousand cubic feet
(Mcf) and oil rose 30% to $65.67 per barrel.
For the six month period ended June 30, 2006, Cimarex reported net income
of $193.0 million, or $2.27 per diluted share, up from the $95.8 million, or
$1.98 per diluted share for the comparable period of 2005. First-half 2006
cash flow from operations totaled $463.0 million versus $233.4 million in the
same period of 2005(1).
Capital
Second-quarter 2006 exploration and development (E&D) expenditures totaled
$281.7 million, up from $141.0 million in the second quarter of 2005. In the
second quarter of 2006, we participated in drilling 134 gross (80.1 net)
wells, with an overall success rate of 89%. We expect full-year 2006
exploration and development expenditures to approximate $1 billion.
Hedging
Cimarex has entered into natural gas collars for calendar 2007 and 2008
for 70,000 and 40,000 MMBtu per day, respectively. The floor price protects
our return on capital invested in the Mid-Continent drilling program while
still allowing participation in potential price increases up to the ceiling.
The collars have been executed to settle against regional delivery points that
correspond with Mid-Continent production and have been designated as hedges
under SFAS No. 133, Accounting for Derivative Instruments and Hedging
activities. The prices in the table below are at the Mid-Continent delivery
point.
Mid-Continent
Weighted Average Price
----------------------
Period Commodity Volume/Day Settlement Floor Ceiling
- ------ --------- ------------ ------------- --------- ----------
2007 Gas 70,000 MMBtu Mid-Continent $ 7.00 $ 10.05
2008 Gas 40,000 MMBtu Mid-Continent $ 7.00 $ 9.90
Oil and gas collars, assumed as part of the Magnum Hunter acquisition,
also remain in place. These contracts have not been designated for hedge
accounting treatment. The following table summarizes the open contracts as of
June 30, 2006:
NYMEX
Weighted Average Price
----------------------
Period Commodity Volume/Day Settlement Floor Ceiling
- ---------------- --------- ------------ ---------- --------- ----------
July 06 - Dec 06 Gas 20,000 MMBtu NYMEX $ 5.25 $ 6.30
July 06 - Dec 06 Oil 1,000 Bbl NYMEX $ 30.00 $ 35.85
Outlook
The following statements provide a summary of production and certain
expense projections for the full-year 2006.
With the contribution from several high-rate Gulf Coast wells, continued
active drilling programs in the Mid-Continent and Permian Basin, and numerous
other factors we estimate that second-half 2006 production volumes will range
between 455-475 MMcfe/d, resulting in full-year 2006 volumes of
455-465 MMcfe/d.
Expenses for the remainder of 2006 are expected to fall within the
following ranges:
Expenses ($/Mcfe):
Production expense $ 1.00 - $ 1.10
Transportation expense 0.11 - 0.14
Depreciation, depletion and amortization 2.35 - 2.45
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 follow-up conference call today at 11:00 a.m. Mountain
Time (1:00 p.m. Eastern Time). To access the live, interactive conference
call, please dial 888-459-5609 and reference call ID # 7617046 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 # 7617046. 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
June 30,
---------------------------
2006 2005
------------ ------------
Gas Production:
Total production - Mcf 30,818,316 21,142,547
Gas volume - Mcf per day 338,663 232,336
Gas price - per Mcf $ 6.22 $ 6.49
Oil Production (including NGL):
Total production - barrels 1,657,375 946,584
Oil volume - barrels per day 18,213 10,402
Oil price - per barrel $ 65.67 $ 50.56
For the Six Months Ended
June 30,
---------------------------
2006 2005
------------ ------------
Gas Production:
Total production - Mcf 63,332,782 38,778,944
Gas volume - Mcf per day 349,905 214,248
Gas price - per Mcf $ 6.72 $ 6.27
Oil Production (including NGL):
Total production - barrels 3,139,136 1,612,938
Oil volume - barrels per day 17,343 8,911
Oil price - per barrel $ 62.79 $ 49.21
OIL AND GAS CAPITALIZED COSTS INCURRED
For the Three Months Ended
June 30,
---------------------------
2006 2005
------------ ------------
(in thousands)
Exploration and development $ 281,650 $ 140,971
Acquisitions 4,282 1,836,385
------------ ------------
Oil and gas expenditures 285,932 1,977,356
Sale proceeds -- (333)
------------ ------------
$ 285,932 $ 1,977,023
============ ============
For the Six Months Ended
June 30,
---------------------------
2006 2005
------------ ------------
(in thousands)
Exploration and development $ 554,881 $ 233,708
Acquisitions 7,144 1,836,628
------------ ------------
Oil and gas expenditures 562,025 2,070,336
Sale proceeds -- (347)
------------ ------------
$ 562,025 $ 2,069,989
============ ============
RECONCILIATION OF CASH FLOW FROM OPERATIONS
For the Three Months Ended
June 30,
---------------------------
2006 2005
---------------------------
(in thousands)
Net cash provided by operating
activities $ 233,769 $ 103,229
Increase in operating assets
and liabilities 2,092 29,511
------------ ------------
Cash flow from operations $ 235,861 $ 132,740
============ ============
For the Six Months Ended
June 30,
---------------------------
2006 2005
------------ ------------
(in thousands)
Net cash provided by operating
activities $ 461,784 $ 199,206
Increase in operating assets
and liabilities 1,194 34,152
------------ ------------
Cash flow from operations $ 462,978 $ 233,358
============ ============
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 For the Six Months
Ended Ended
June 30, June 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(In thousands, except per share data)
Revenues:
Gas sales $ 191,658 $ 137,159 $ 425,381 $ 243,033
Oil sales 108,838 47,862 197,110 79,370
Gas gathering,
processing, and net
marketing 12,885 3,037 26,140 3,599
---------- ---------- ---------- ----------
313,381 188,058 648,631 326,002
---------- ---------- ---------- ----------
Costs and expenses:
Depreciation,
depletion and
amortization 94,773 51,582 185,401 89,667
Asset retirement
obligation
accretion 1,493 550 2,941 935
Production 43,804 17,412 85,576 27,583
Transportation 5,483 3,608 9,791 6,082
Gas gathering and
processing 6,386 1,809 12,939 1,862
Taxes other than
income 21,934 13,600 45,480 24,495
General and
administrative 9,990 7,657 20,875 15,549
Stock compensation, net 2,096 1,213 4,064 2,438
Expenses related to
merger (92) 6,685 (61) 6,685
(Gain) Loss on
derivative instruments (3,249) 2,030 (18,816) 2,030
---------- ---------- ---------- ----------
182,618 106,146 348,190 177,326
---------- ---------- ---------- ----------
Operating income 130,763 81,912 300,441 148,676
Other income and expense:
Interest expense 7,397 3,771 13,887 3,959
Amortization of fair
value of debt (946) (416) (1,891) (416)
Capitalized interest (5,610) (1,179) (11,829) (1,179)
Other, net (2,036) (2,915) (5,378) (4,156)
---------- ---------- ---------- ----------
Income before income
tax expense 131,958 82,651 305,652 150,468
Income tax expense 49,092 30,174 112,635 54,626
---------- ---------- ---------- ----------
Net income $ 82,866 $ 52,477 $ 193,017 $ 95,842
========== ========== ========== ==========
Earnings per share:
Basic $ 1.01 $ 1.01 $ 2.35 $ 2.04
========== ========== ========== ==========
Diluted $ 0.98 $ 0.98 $ 2.27 $ 1.98
========== ========== ========== ==========
Weighted average
shares outstanding:
Basic 82,046 51,967 82,067 46,886
========== ========== ========== ==========
Diluted 84,861 53,655 84,886 48,427
========== ========== ========== ==========
CONDENSED CASH FLOW STATEMENTS (unaudited)
For the Three Months Ended
June 30,
---------------------------
2006 2005
------------ ------------
Cash flows from operating activities:
Net income $ 82,866 $ 52,477
Adjustment to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 94,773 51,582
Asset retirement obligation
accretion 1,493 550
Deferred income taxes 61,636 18,807
Stock compensation, net 2,096 1,213
Derivative instruments (7,537) 1,411
Other 534 6,700
Changes in operating assets and
liabilities:
Decrease in receivables, net 26,520 9,470
Decrease (increase) in other
current assets 3,724 (4,548)
(Decrease) in accounts payable
and accrued liabilities (32,404) (34,117)
Increase (decrease) in other
non-current liabilities 68 (316)
------------ ------------
Net cash provided by
operating activities 233,769 103,229
------------ ------------
Cash flows from investing activities:
Oil and gas expenditures (322,824) (107,955)
Acquisition of oil and gas
properties (1,879) (1,705)
Merger related costs 30 (11,134)
Cash received in connection with
acquisition of MHR -- 33,407
Proceeds from sale of assets 5,540 368
Other expenditures (8,915) (14,269)
------------ ------------
Net cash used by investing
activities (328,048) (101,288)
------------ ------------
Cash flows from financing activities:
Borrowings (payments) on long-term
debt, net 53,000 (60,064)
Treasury stock acquired (735) --
Dividends paid (3,334) --
Proceeds from issuance of common
stock and other 62 2,403
------------ ------------
Net cash (used in)
provided by financing
activities 48,993 (57,661)
------------ ------------
Net change in cash and cash
equivalents (45,286) (55,720)
Cash and cash equivalents at
beginning of period 50,675 113,025
------------ ------------
Cash and cash equivalents at end of
period $ 5,389 $ 57,305
============ ============
For the Six Months Ended
June 30,
---------------------------
2006 2005
------------ ------------
Cash flows from operating activities:
Net income $ 193,017 $ 95,842
Adjustment to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 185,401 89,667
Asset retirement obligation
accretion 2,941 935
Deferred income taxes 108,317 36,119
Stock compensation 4,064 2,438
Derivative instruments (30,456) 1,411
Other (306) 6,946
Changes in operating assets and
liabilities:
Decrease in receivables, net 55,045 17,341
Decrease (increase) in other
current assets (10,724) (11,962)
(Decrease) in accounts payable
and accrued liabilities (45,945) (39,132)
Increase (decrease) in other
non-current liabilities 430 (399)
------------ ------------
Net cash provided by
operating activities 461,784 199,206
------------ ------------
Cash flows from investing activities:
Oil and gas expenditures (541,787) (204,428)
Acquisition of oil and gas
properties (4,741) (1,948)
Merger related costs (439) (11,134)
Cash received in connection with
acquisition of MHR -- 33,407
Proceeds from sale of assets 5,600 405
Other expenditures (14,644) (17,362)
------------ ------------
Net cash used by investing
activities (556,011) (201,060)
------------ ------------
Cash flows from financing activities:
Borrowings (payments) on long-term
debt, net 53,000 (60,064)
Treasury stock acquired (11,016) --
Dividends paid (6,661) --
Proceeds from issuance of common
stock and other 2,646 3,477
------------ ------------
Net cash (used in)
provided by financing
activities 37,969 (56,587)
------------ ------------
Net change in cash and cash
equivalents (56,258) (58,441)
Cash and cash equivalents at
beginning of period 61,647 115,746
------------ ------------
Cash and cash equivalents at
end of period $ 5,389 $ 57,305
============ ============
BALANCE SHEETS (unaudited)
June 30, December 31
2006 2005
------------ ------------
(In thousands, except
share data)
Assets
Current assets:
Cash and cash equivalents $ 5,389 $ 61,647
Receivables, net 251,005 289,184
Inventories 43,754 34,784
Deferred income taxes 11,105 17,959
Other current assets 16,996 25,454
------------ ------------
Total current assets 328,249 429,028
------------ ------------
Oil and gas properties at cost, using
the full cost method of accounting:
Proved properties 4,043,220 3,602,797
Unproved properties and properties
under development, not being amortized 518,154 388,839
------------ ------------
4,561,374 3,991,636
Less - accumulated depreciation,
depletion and amortization (1,292,031) (1,114,677)
------------ ------------
Net oil and gas properties 3,269,343 2,876,959
------------ ------------
Fixed assets, net 89,419 86,916
Goodwill 691,432 717,391
Other assets, net 76,839 70,041
------------ ------------
$ 4,455,282 $ 4,180,335
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 52,897 $ 81,947
Accrued liabilities 178,830 179,076
Derivative fair value 11,470 41,926
Revenue payable 97,931 94,469
------------ ------------
Total current liabilities 341,128 397,418
------------ ------------
Long-term debt 403,560 352,451
------------ ------------
Deferred income taxes 800,047 717,790
------------ ------------
Other liabilities 118,027 117,223
------------ ------------
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,
83,793,761 and 83,524,285 shares
issued, respectively 838 835
Treasury stock, at cost, 1,078,822
and 1,146,822 shares held, respectively (40,628) (43,554)
Paid-in capital 1,860,820 1,865,597
Unearned compensation -- (15,862)
Retained earnings 971,376 788,356
Accumulated other comprehensive income 114 81
------------ ------------
2,792,520 2,595,453
------------ ------------
$ 4,455,282 $ 4,180,335
============ ============
SOURCE Cimarex Energy Co.
-0- 08/02/2006
/CONTACT: Mark Burford, Director of Capital Markets of Cimarex Energy
Co., +1-303-295-3995/
/Web site: http://www.cimarex.com /