XEC - Earnings call transcript Q1 2021

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Operator

Good morning and welcome to the Cimarex First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please now Megan Hays, would like Relations. to to over conference the Vice turn I President Investor of Please go ahead.

Megan Hays

us XXXX. Participants Thank you today's call results everyone Hello non-GAAP on the today financial discuss joining measures. for of you, Cimarex's to quarter and first may discuss Operator. for thank

reminder, we metrics call, our comparable release which press directly most and website. find statements our to I forward-looking in other forward-looking and will as financial call statements also measures are conference release that and expectations. appropriate available provide presentation. in on during current reconciliations on You'll GAAP to based statements Also a those your today's provided the GAAP attention earnings is disclaimers the cautionary

call Jorden; be CEO, Burford; will and Blake of Mark Officer, today's our Financial our President Tom Vice and President Sirgo. Operations, Cimarex us Joining Chief on

prepared Following one take yourself and Please questions. question call their to one the that, remarks, to we'll turn over With limit follow-up. your I'll Tom.

Tom Jorden

and Megan, all have us thank to you, Thank who this of joined morning. you you

on generate net allowed payment Adjusting million to in quarter quarter income $X.XX from $XXX We of at after cash our was hand GAAP million, $XXX dividend. the As us first exceeded million cash in $X.XX expenditures a net solid billion. for debt or came with We share. ended Adjusted cash to and the we’re of net full-year and over our $X.X flow on per Cimarex non-cash track which significantly in million of income mark-to-market $XXX.X capital had quarter hedge flow see our $XXX free meet share. generated million release, per our you for adjusted and $XX.X targets. or losses, $XXX.X million

averaged volumes per during XX.X quarter. first oil thousand day Our the barrels

we from relaxed strong momentum projects. will oil spacing, thus our far enhance our number on the half latter of going significant through our forward. year, results to development We're expect production seeing the capital bring efficiency see as a We in of which

oil As previously The be guided, impacted we above XX% expect XXXX for XXXX by rate. was reduced XXXX. our our exit rate significantly exit production to rate activity in XXXX exit

full-year guidance at million. to $XXX million Our $XXX capital unchanged is

our nicely guidance length, total depth, $XXX We tracking variability cost operate and for within $XXX foot and a range Delaware water is project our per differences Permian to this production include range in impose per Basin, development programs These costs. cut, within can of wide geographic costs. lateral in our the Our pressure, facility foot.

average $X,XXX average program per projects we vary And development costs foot this all costs, will detail when as we this. $XXX more provide costs, individual Blake Although the within facility, on well-connect quote we and include flowback. completion, between and quote per drilling, foot. always,

for consequence in fuel and charges, the costs high operating Winter to Uri, Our led which came of electricity mostly labor. transportation a as lease Storm and quarter increases in

events in the Importantly, impacts guide costs normalize we Uri will remains for higher in more the expect our this detail. QX. is operating second annual into And Mark for slightly to Storm the like transitory while Winter unchanged, lease lease to our operating importantly, transportation quarter. comment to on transportation guide account and on in I'd Cimarex. dive and

The of have our temperatures. worked describes online. our of order of regional In by on the to the Uri be in think field our production these keep midst In storm relentlessly generation can that and word mobilized all or of many electricity efforts response staff preparation, personnel field and valiant. ready. additional spite field and challenges, best the of impacted freezing our our operations We read coming heard stories equipment were and best to saw the oil on directly the We delivery. field impact both it I is of and

Our field safety an unwavering gave staff on and never kept up. focus

to humbling on outstanding organization It the team. of but a from be Uri Storm Winter dedication such Kudos very they short-lived. to was severe operational As demonstrated. Cimarex part for production is the an entire our result, impact drive and

not XXXX, we on focus excellence emissions As detailed and analytics offenders. our sales, excited designs, enhanced our any thus innovative wellhead through the stream to eliminating footprint, strong accelerating facility particularly point and comprehensive vexing dissect our in at I'm throttle to some field about do from chronic our which emission with have and engagement production into the environmental of engineering, data tanks is employees. most

our project, to products like Culberson also improvements include design in initiatives in powered we County. these is update facilities King safely This new reduce on order our long-term I'd significantly We're Our Together our fracking of electrification an Burgoo the facility cleanly. multi-year our which our a transition deliver will XXXX. on to to evolution and this provide will first approach us expect thinking reflects in and our leverage plans. emissions. also grid compression. the across and to to utilizing embarking design emissions footprint project allow latest all project this electric and an design of and And financial reduce

to strategy our commodity cyclic is have been two, sustainability. and are difficult good a This models advanced. of debating this and the of senior have to we discussed, high goal core in price oil, XXXX. with recent the that in of us. carefully improved have retire to notes various achieve our competitors impact a XXXX. gas, return asset in what? We're that watching in the environment. We $XXX goal to dividend dampens assets exposure discussed very natural predictability; competitive to gas quality cash As Then on and single pleased the variable We're mix our Fundamental is to previously in believe one, capital a that As million our of hand a we interesting expect have calls, our commodity With are to commodity. is order we recovery performance swings prior is in callable pricing, and any advantage that liquids. concept is in

taught approach. dividend on Our And experience color pays run. in has the will our that any diversity view variable long us this thinking

the our price end natural commodity base sheet. swings and our a will we the want balance protecting and liquids will modeling oil, you, predictability. Shale gas, business prices, adopt dynamic and for gas while is This We accounts ultimate owners and our strategy X.X, that of of permutations challenge

to Finally, and has level the We to permitting state regulatory call. At changed through level, us, in on find allow much and since Mexico. we're the that constructive engaging are proposals national that policy. our me the some quite things directly environments. frankly associations federal policy we're comment see macro dialogue New our resume hope trade At will last the public sound read from and and drive and some we in things that Washington glad concern workable

effort As reporting. need credibility we come. an persist This turn Mark. of many women earn proud affordable is and will men the decades I'll worth through global and for believe industry an our to to many products engaging that With call and of proud our that, bar. who raise We to industry, footprint our in, economy. demand transparent to powers is the environmental need our we the We're over reduce abundant, for domestic energy provide

Mark Burford

on key address some in morning, our everyone. our XXXX Tom. results and quarter first items outlook. financial the I'll you, Good color Thank give

relative all a realizations, were strong production in results impact in from volumes electricity quarter and the Beginning price addition commodities, as quarter the on storm. up lower rates, which higher to this winter February due drove also of especially gas price which costs elevated to realizations of winter Our result were year. remainder storm, benefited to the in the fuel costs severe the

wells unchanged for XXXX, of weather except As our flow operations to impact flow for $XXX coming guidance cash drilling quarter $XXX remains full-year million, transportation for in up, Total completion dividend. quarter online per we generating or cost expect capital the of million flow million and $XXX incorporating including of teams free Adjusted capital. QX unit the cash after $XXX million and normalize for cash from free cash was XXXX totaled picks investment first $XXX therefore million costs. full-year our winter

a year approximately As a a priority from of to the maintaining the We're With We're to our history, value allocation in for of capital translates expect the $XXX Also, From our in year our net order to of on continues our focused Blake. that, a on quarter, $XXX disciplined property million our generating from flow remain to close not done decrease described. program, notes, free We we've to incremental turn as increasing result solid second providing will position, base, with the executing and cash this and capital a are of this in our debt flow return which our billion, our repay flow. and the debt increasing we we be we free cash which year-end maximize sales free returns hand XXXX. surveying cash shareholders. towards means the we're cash I'll the price call through for strategy cap proceeds an million quarter instituting strong shareholders. Tom that perspective, as XXXX non-core environment, directly into we pruning spending which cash $XXX incremental work exited capital million. improving the financial quarter in on a objectives our over to path believe $X.X meet higher assets

Blake Sirgo

a start to XXXX factories had running the and running Permian Anadarko. five strong two in and We with Mark. in rig one Thanks rigs the

of in strong able we efforts, to quarter to do impacting and of below outages, on in were strong quickly of what and in early operations. also results We cost challenged the equation. sides operations did Our drilling and earlier the production the operations focused side and were Dixieland cost. our challenge. quarter. we're a operational in Permian temperatures spoke our the Big while able first the productivity to productivity seeing regain Uri and significant We're online, rose the of storm our performance mitigating multiple our delivered Sky always Because winter strong portion with seeing rolling efficiency operations both Anadarko. power keep frac days recent impacts about some teams cadence Despite of on our freezing and Tom of and volumes with the these development. We're they equation, to the our were capital quickly

just labor, costs guidance. completion are tracked costs for rise. first steel levels across our low-end quarter the Permian, XXXX and With and higher of the activity the on drilling the below Our of fuel horsepower,

our offset However, are teams with inflation hard gains. working to continued efficiency

example, we which per the represents achieved the quarter a day, during past drilled four feet XX% over X,XXX quarters. increase on For average,

XH translating for two feet Culberson than days depth X.X includes day. in performance lateral spectacular Our County, X,XXX leading-edge mile in more the Bid total reached which to per

is which cost performance, operations in inflation in keeping check. Our to continue teams make strides

reaffirming we're such, of cost As guidance per to foot. $XXX $XXX our full-year

we're running our movers oilfield directly first As from emissions each fuel grids Tom leverage grid. continue emissions, in our to rigs drilling a how to at to look the means and and reduce we drop is operations XX% our to to rig. seriously completions costs of rigs as and electrify power building a drilling our footprint. believe mentioned, powered Taking seen to We're two we lifting. we power areas. have associated from power future reduction and well research These as drop currently new operating XX% the We in technology expanding have emissions our

grid. to high more believe efficiencies And to with we're lower translate These power there we emissions, we costs. electricity, are take expand our move times, of operations our will opportunities return any better to that, questions. run happy now greater and lower opportunities to As

Operator

session. the now We'll begin Instructions]. question-and-answer [Operator

will Jayaram from question Arun first go come ahead. of JPMorgan. our So Please

Arun Jayaram

if who of two kind your see could board's of some and on expand of a type We've Pioneer you Devon to approaches on wanted out from I Tom. peers, some the formulaic approach. thoughts seen your there maybe dividends. thoughts, Hey, variable of have

about got commodities. balanced talked has You to Cimarex the three leverage

how and variable Devon So do board the you what talk relative dividend and in you if just to And see and such I of to out this see with some have could playing did approach. migrate thus wondering cons about the was you approach, far if communicated? you that Pioneer the pros

Tom Jorden

go Well, into you Mark that let Arun. I'll for question, tee up thank it detail. and then

oil on much, dividend this percent is our hot that board. rather any year. and what said to commodity with high, of ongoing we're will what But to We We in our goal then commitment way we the than have sustainable decide the then low both owners. owners. evidenced our blow flow that distribution model notes, say medium with cash and sustainable discuss cash Our by flow that have like think of is the will an a as it, we And comment model first priority here say And that, estimate I And an of very cash discussion done. probably of the that I'll probably will in current to those gas returned we our that we act remarks, have at will is. bias our we looks look an is board, our as don't want quarterly at us. the we dislike dividend think I through flow our XXXX. our as what our the fact model. annual we by competitors but But model opening will cash to our calling going with pricing of swings to, we end board come we looks on returning feels be in up since a celebrates pay specifics to think what

why think you second clarity gaps. I specific that But on the So a us Mark, fill with don't approach. year, half the see by in going you're provide to certainly the of

Mark Burford

the could Arun add I that in Sure, have with certainly property discuss this is we fact probably small Tom. quarter could and Yes, a first year, also exiting only million. the so of cash thing $XXX $XXX we'll the million

year plus be our sheet. excess increasing on as our end to like, have how cash emphasis described; and first want the to that, that those that stress have And very the continuing what balance also the of good monitoring, for that at at we the will some objective, be quarter for cash flow notes, test regular year, our by the dividend. this add scenarios. very we meet cash we And expect we've look purposes, in a you monitor will continue So have for to dividend, our the you diligent dividend regular process we we're look we're for free going increasing liquidity have cash of position sufficient from year, to our XXXX which we'll regular done in balance that we of and on Tom

probably to of more a a is year, that probably variable some element a that, we're mechanics looks be year, able to our second dividend. bias on this towards. start on further is cadence half which Tom to we have variable year the where good working get will able latter to Now a start granularity a at debt in on look dividend, described, a be But we position you this expect communicate that also that. more And will we cadence on in anticipating it regular would the quarterly be on one to the half to preference mechanics a out would instituting XXXX having like of how chance more better we to have and a objectives calculate

Arun Jayaram

if more the also your know which sounds Big could a near-term. And been believe is little as spacing at did some of performance my for detail us count on feature thoughts of that looking on wondering give us give intriguing. I the follow-up the was market bit you I some coming project, relaxed Sky very Great, has initial fleet, some which is I we

thoughts thoughts spacing some these of mean on on us this wider So terms give And could productivity maybe in maybe patterns. gains. some just to this migration what

Tom Jorden

increased efficiency room John? question, saying by prior underpinned feel tell answer Arun, in really, that the capital what we discussions to are going greatly I'm Yes, of by I'll encouraged let just is Lambuth be you going are that to solid confident and and our results. John we're the really upfront him

John Lambuth

Yes, we developments have actually production. upsize three Arun, developments, on now

of We those. have between months three production on to five

two of are them in Reeves is One Lea other the County; County. in

wells as per we've right one Reeves said, the with in them performance as have very Both we Tom those wells, what eight those wells two is are going acre even on in as were per ultimate that seen as to say same the which project X,XXX oil eight we fact, is for believe so forecast are we about production very, section those or In achieve wells EUR most the over we far. and the the last XX our And we pleased County. recoverable year, are about of Reeves now, section. achieving, we

by and phenomenal the to in course essence, project less drilling oil going So then with of we're wells, four EUR recovery, returns get efficiency. which leads to same

Tom at on more early, how and looking performing are and those pleased as much them confidence more are forward of we're them it still So said, on. months what see. say of I wells gaining we five very we one but coming to on must is

Arun Jayaram

What some of three are those And want those. the I to names get I have, details just on more all projects? that's

John Lambuth

the Yes, Red is Hills. are Big one and then Dixieland County projects and Sky in Lea

Arun Jayaram

Great. Thanks a guys. lot

Tom Jorden

of go this any than we've capital do not business, capital we assets. is about our It's we really business capital done You just about sustainable. talking free about discussion that our flow slightly cash know, and production the at we into John us program. better to our grow our and really efficiency a feel efficient never felt that portion cash our we the allows really with really look work our we've But flow probably to variable our or And underpin of flow a cash is ability quality now. this our only highly our dividend when we because before free have with where maintain efficiency, solid about ties reduced on,

Operator

The of go Wai Barclays. comes Jeanine from Please next question ahead.

Jeanine Wai

Hi, good morning.

A&D, accelerated in of billion to to market the other on given, that your any recent there have cash balances definitely the minimum your nice. you like And the you've now Tom which appears for year? the assets timing be ensure looks goal are And what may return there Tom, on is predictability to over a at to that or sustainability divestiture And the cash sellers' sale of of free question be think that for this and could us cash update on Mark; is you're the capital? end track and banking it any I right earmarked for year. of for XXXX First you want for be achieving mentioned a

Mark Burford

we asset potential now, range discussed asset on in for first part $XXX TSAs we assets, second we quarter. drawing beside what sales don't expect the of additional in other Jeanine, the close Sure, board Right to the on your have signed sales. anything have that question million for

As far is And as think the from to the year. flow right, outlook free proceeds balance cash cash that very the probably a million cash a sales the would we be would of reasonable balance dollars additional position, of and minimum you're billion the with $XXX $XXX of cash for kind million, a working what our we anticipate would of as position some be as the minimum be. entering mind time, for cash which would the kind of capital we into a swings should those factors portion of capital could contemplate on think in and program we period cover some

Jeanine Wai

and dial we can Great you. Thank in. that

on our just maybe operations, question, So second XXXX.

maybe return lower have to to flat lower got year-over-year, assets that for to state the put in next which you XXXX. is thinking So And goal sets stay hold that similar up a within actual to high you're commentary like is will year. preference double-digit just really operations XQ steady to growth for momentum or how exit it of about Is back efficiency well, CapEx at you the the a rate us efficiencies, pull XQ revisit and still XXXX? going XX% looks or range capital stands to I nice because wanted operational great you've

Tom Jorden

options. And capital long what absolute the last supply XXXX, detail. past, that up has in set Mark to increased enter a Well, the like, the have pleased years. we're few strip, said allocation, go as demand XXXX want see way either going to the make in we we've a XXXX strip away. level think be like, on the that picture past just quite and But We decision Jeanine, looks unwilling as we've and an for from function with relative said I'll very flexibility let calls, is we're over been the frankly, of really any we looks a a once to are our mirage, which into level we're chase or to tremendous macro. But what capital highly

So Mark, what you have?

Mark Burford

efficiencies Jeanine, operate couple always on think to to a look cadence, and I efficient have an including that element we as that focused crews, crews, key being really how drilling efficiency, the efficiency of and with that, it be efficiency on a macro thinking teams frac at allows period, capital to to XXXX. rigs drilling programs. we're an you the and maximize what resources Yes, is and commodity we And elements backdrop good as we're how capital with Tom there obviously would the a completion we of that the have further any the return that, of prices, wanted about the maximize capital capital drilling there's cadence those there's us discussed those element programs, and and consistent good

of we our focus really XXXX. in. and those on how to be As will Jeanine Tom a now we dial think But said, points, have proceeding between into that time lot XXXX about

Operator

go question Michael Stifel. The ahead. Please comes of next from Scialla

Unidentified Analyst

guys. is Hey, This Jared good for Mike. morning

Tom Jorden

Hey, Jared.

Unidentified Analyst

Hey.

you'd So an We was going if gas year. outlook with strong quarter, was see curious looking and just for Obviously but drill price how NGL at have winter of storm year? we're were to you the the the rest for wondering of just I rest pricing realizations for gas. on the the NGLs high the

Mark Burford

bake the realization, strong WTI year. that gas the duct $X.XX and going $X.XX the into realization then when the NYMEX quarter, we're we quarter, we're balance back of and as easing XX% we El see differentials prices into Waha, kind nice, of to first year in the as for Permian you the The the natural of for was curves the first Yes, gas prices NGL hi that Jared. still NGL in very the prices probably from differentials. during the in probably for at Permian, far And balance low-XXs the Paso, see and going four and

Unidentified Analyst

Perfect. you Thanks. any see any inflation Are And follow-up. anywhere And then services? signs to guys opportunities helps. That a efficiencies? of improve you Thanks. seeing in quick do

Blake Sirgo

Yes, this Blake. is

been We mild really partners in cost expected to the is the in have inflation surprise. which per some Really Those our on we wasn't pickup with QX, leads we with see, what reduce to service which downtime. is lower Permian, it we're focus foot, working a across just activity maximize efficiency what after. and ultimately

we're that driving I So see. can. any offset we that believe hard as keep going we to might inflation as And will firmly

Operator

Doug Bank Leggate Your next go ahead. from comes question Please of America. of

John Abbott

morning. is Abbott John on Good Doug for This Leggate.

Tom Jorden

John. Hi,

John Abbott

it, Mexico seeing of long, sort question on seeing, that federal New long it about any depending mentioned you you're sense -- regulations potentially just I point in that what that is how way. looking quickly, you about you're activity potentially at it's how you're activity? at make time? another what Just XXXX. think Just more to for and this still When does step-up thoughts this But looking about of more early, you keep towards lands. at recognize sort were the thinking

Tom Jorden

And we're have permitting, sundries. a the certainly that option that a right of is getting Mexico. getting be Mexico New the an new New in us. would ours. on did a We're of shelf loosening in aways, for we're Well, great talked have accelerating we that. getting past plan permits, we're seeing And for the we still asset do We've

peers also We competitor scan and know we saying likewise are our activity permits.

any Mexico, we're better threat around feeling have answer prudently of your not doesn't can restrictions. act permit that pretty the take extraordinary a So and word, comfortable, New perhaps action that just But confident is to we question.

now. surprised Some we a not greater be our I Mexico. a environment. best target I be permit drive do XXXX. but of That's that's issue. think program rich factors It's our reaction returns at of those as look very again, to we It'll a than But on And we're we returns if And have don't New and proportion that, a are you of for we in Mexico XXXX, of activity driven haven't best have New midstream. just a configuration. it'll to a tremendous it. But made in driven capital. portfolio on delighted lot is a by part be Mexico New should decisions mean,

John Abbott

what you. follow-up and sustaining is And latest just then on your over Thank capital multi-year thoughts potential can are question a oil a basis long-term breakeven? your

Mark Burford

type but capital the of kind million John near-term sustainability. kind excuse type savings $XXX little somewhere range resumption of that We around terms steady as would or our -- million terms in year the of we the oil thinking say capital XX,XXX varied, of this in base, activities, estimate the our seeing oil in of that per equivalent establish basis sustain oil to range to level. sustaining Yes, to more of on think a $XXX with mid-XXs, me barrels volume of day. we oil forecast, mid-XXs a be with capital And

Operator

Caroline from Please go The next Goldman comes Shavel question ahead. Sachs. of

Caroline Shavel

quarter taking Caroline question. your coming you're to, that I start my remarks, in the in Hi, for wanted to It with on just light oil fact growth ramp be comfortable might people fourth and or fourth for exit XX% through walk the other maybe quarter? coming the able on rate? get factors that with the us you Mehta. you guide. I This good is you you Neil you're feel for that where was production but more XQ little confident Thank with year-over-year just think prepared the of going as to morning. relative that online timing expectations wells still execute track on as were Can a mentioned to

Mark Burford

Sure. Yes.

the guide for quarter that some second our the again we wealth by quarter-end is year, described. rate really strong will exit weighted, we've the then have second forecast. of see that within the quarter quarter And fourth bearing that's being cadence full So more contributing will that on quarter which a the you cadence having quarter, be impacted in third

that and we'll our So activities, confident that year-end that and the that production cadence hit achieve we established. we've activity cadence of very in, forecasts feel

Caroline Shavel

I end mean is and And by you. focus for key of the And in but my year, considerations assets mentioned what the have around to -- for Permian further what more fit next be -- is strategic the don't Cimarex get I Mid-Con the this for this Thank capital any know you saw able to thoughts the terms haven't the but zero the of given you in broadly month, pieces the have rigs I forward. there sales, didn't be moving attract of the market in Mid-Con plan that Mid-Con you wanted potential then at A&D. sold understanding what that asset of some to you'll your with sales in the see already you've to then need non-core the obviously to necessarily you question area are further just recently it. you quarter,

Tom Jorden

in seminal is a of in returning rigs see the that as going it portfolio. and got reason that the cash we're geographic Well I'll key finish on fill We've sustainability our diversity. we've We We to owners. But We our remarks, of to And one commodity we next. company. diversity the be we and chosen some market sustaining in Mid-Continent a that our then completions we the up of back We portfolio with project zero a part our element my that conclusion new demands are ideas, wholly like commodity before really about, I of like diversity. some and reasoning. with never a see we'd to new test and that a as X.X like excited talked Mid-Continent Shale the up ongoing a about diversity. flowback the finishing the one like the particularly introductory what decide watch to really of base we're is

have We heads that of a to up portfolio Delaware return opportunities strong the Mid-Continent basin. with compete on basis a

don't John, enthusiasm. you anything So, rig want about misinterpret count to for say that?

John Lambuth

core give have in Anadarko follow-up working position I of that what best The we to in really to we been returns. our diligently the consolidate only terms would is consider

deploy flowback, development for working our like going looking Tom want make which interests currently And more frankly, we that, on. and initial argument that forward One of on, Rock, the of do been see to where we've is have we capital absolutely right, direction. we're come is capital then those enhancing there, this number quite in drilling and more monitors Lone a areas to when but

Operator

Levy The comes next Jordan of Please ahead. from go Truist. question

Jordan Levy

all. like on morning current just XQ; This first Neal is the online for It Culberson at weighted allocation of toward will Levy on presentation. Jordan a looking looks you My Dingmann. Good Slide X question projects out. have your all based kind coming in the be is laid of lot

should we Reeves back and of think year around barring nothing trending if allocation the activity Just gets in kind toward Permian about later wondering framework. moved asset the

Tom Jorden

when do tilted of you even year, total have between we our frac Jordan, balanced balanced weighting there that and Culberson the weighted quarter. towards are the same with count. crews yes, a the running to second overall little mix that's expect Permian get the be towards towards, full Reeves little and so Reeves more end as was a We are a That Yes. But, back little a program well currently. is day it'll out. to the the and for

So counts it for -- that, just where of the in it quarter. second most coming says that now are

Jordan Levy

benefits point that I'm reach of of the about continuing curious; to sides have question, all And testing discussion of been I'm average a just range. XX,XXX some of just you both quick sort And done correctly, to see you're laterals the in whether the think if in returns. length lot just second that of conversation how foot curious increase on on or remember to I diminishing XX,XXX Perfect. a thinking a you you kind past. of there's the going the lateral you

John Lambuth

But two very I Blake And we that to even Well, our in add have this. We're longer even land allows us will off excitement fact, areas in want go we're longer in that intending to we're that our there soon. much the the And first two in looking parts we do which and that. that. for where confident add John and three that is call than and than actually know foot aware are likewise, Reeves, miles several But development let a accomplish from where our am would affords believe I us receive it. Blake the this the to to XX,XXX we we more tracks, to incremental land three-mile on at said, in uplift do to I'll doing miles we here Anadarko, where do going that. Culberson expectation. with is go we in mile associated great beneficial cost go performance river

Blake Sirgo

big have lot of see as year. And three on mile miles. course, standpoint, put to much for blessed can We in we wells really see they schedule look mile acreage land three foot three hard some later with drilled We're do value units two-and-a-half from many of we've how at work, the a and units, this teams trying as positions yes, a together. mile the Sure, we our per cost fantastic.

of So those to look into adding the forward more portfolio.

Operator

Advisors. from comes Please ahead. of question Heikkinen next The Heikkinen Energy David go

David Heikkinen

Heikkinen will for thanks taking but be Dave my pronounceable, question.

thinking DC, on the As can taxes the going to fact, moves in and to that or then your return because in thinking we're you address. in cash fit moves you variable about factor long-term really would and Washington to shareholders your thinking, about us have talked about of just into how that DC cash refresh

Tom Jorden

certainly tax cash current Right until when situation certainly tax bearing a going business. it'd XX% us there's the certainly are which lot XX% a current latter approximately part different there's of tax tax we the versus could rate, tax versus on XXXX current Yes, have rate tax items having taxes do cash our rate, from that'll billion changing corporate into for preventing landscape, payable our XX% NOLs, be David. a be XX% do $X to become from of If the see now, with post effective taxes. we Yes, increased XXXX. -- and will

So it doesn't that of accelerate it. timing

elements could timing the for other us of obviously it's lot cause And of That by NOL of industry. comp for The or item drilling to and But is year over as or how has they'll deductions a a being would cost an to then depends capitalized utilization are years faster much you deductions been they it time, an discussed eliminated the they'll be the out that that the intangible the years our two. they being on and to being accelerate that of put rules on prior than it balance neutralize deduction from start industry. each those get that start those around IDCs years bearing the and of companies capitalization other.

certainly industry that tax be of Washington, on specifically and it reasons of oil were So you to more for a to but could when into all are burden a available there's gas, and what return putting factored expect the lot all shareholders. we

Operator

Please The KeyBanc. of ahead. go from question Dechert comes Steven

Steven Dechert

to want Hey cadence get CapEx guys color could see we the on Thanks. for some just quarterly XXXX. if

Tom Jorden

sure. Yes,

in quarters. our it's our weighted kind -- third calls previous welcome a of described cadence that towards wealth we somewhat As cadence second the mirrors bit the capital and and online

And -- so cadences in we bit our bit third a little quarter, a mirrors quarters a the would capital as into the it online expect but and fourth well. more and tailing again, second closely little of fairly off

Operator

ahead. Nitin from Kumar comes Please question of next Fargo. The Wells go

Nitin Kumar

one, I of morning philosophical I thanks little production this hedged. think and start year, oil is want bit XX% good Tom, under a my a on Hi, bit taking of a your just to for questions.

leverage starts it paying market. Cimarex the that debt, year and hedging what's with X.X? the approaching goal I'm little dropping sheet, a Shale historically role off the in less for than the of hedge off the balance curious Next of participated you've meeting bit one times

Tom Jorden

question. we great level. hedge A And, number of to the board that debate years a ago, one at policy. that's we instituted need that's Well, our

layer of future we production our every in quarter. layer As you know, every anticipated quarter; XX% about in we

our might without the shock if debt structure pricing, having long-term With execute pricing, inordinate six viewed five typically certainly an not to but I as single as of probably had we've them never go bet We quarters have it flow, that, of goal on Having would swings on in still outguess out subjected other comment some capital but off that any hedged. commodity we've of sudden able our roughly that attempt that we anything Mark to back don't absorber such than the goal hedges. the not production that. that XX% a or to be it feather market, I'll lower But invite interruption. we'd rethought plans of degree a our does also have we we hedging, with more think would be viewed in, on on cash XX%. Yes, we never than commodity let

Mark Burford

saying is. would Tom was I knitting they're what Yes, just echo

take of commodity million on maintaining our factored; practice into if XXXX we that's But out what a months had cash starting to at fact risk our period. XXXX hedge right that we a those reach reflects we kind million our liquidity shock XX% our at practice looking and right, into hedge that to to positions -- getting the $XXX to in what look tolerance for balance to mark-to-market would time exposure. have also that hedged and for sheet forward be to we We maintain pay-off of is Tom of the just have And capital. but on have nearly absolutely XX have absolutely absorber $XXX on we account is have it's of notes, that we when we're

a continue have discuss. balance getting down So leverage. we're something further to get down to conservative we'll as on, what we it's levels sheet we very or to is And our think

Tom Jorden

really would been and and the philosophical in think Nitin but just if I you we're number career. with appreciate players, I will And question, XXXX our cycles long-term share about of when a these the question, of through I in hedges. April over guard of XXXX, we've rubber no problem say. me a the our heard In answer mallet. of where with April we that XXXX, on has head Tom question Great, me can be now, hitting we May guy lower

it's hard to not long-term really intoxicated by discipline. view do for joy have So like get us a and to though have we even short-term

are We in this. we going think to about disciplined how be

Nitin Kumar

or there Tom. But of this what you've about call. which not for hoping tough perhaps are capital. from as X.X something regulations sense exactly and two, steward a just right talked a a on acreage federal long-term, some coming alluded I not know, hear other that's to of bit that taxes now, And Because, My Washington word. made We've to much. of was few as out and a is it's quarter follow-up a doing question, it's I that you're Shale

what Beyond that What us walk is make following regulatory you're there the the a dialogue, not if things to are rulemaking? few you doing you doing? curve sure could the that and operationally, You through are to? industry know, of ahead business

Tom Jorden

should wastewater of that huge we very recycling initiatives a water amounts use recycling. and is We're on of we're huge length comment Across from focus we're in We've I've strategy our there. some out. standpoint. our left spoken engaged initiatives We're that's fly, some a technology, operationally, and Well, at got across handling. number have water. about We've already probably about in do. mission We're evaporative -- corporate and want we do of that, and emissions footprint. ours, We looking tremendous any it to focus in looking redirect, a innovative produce on there's reps out environmental really We're when certainly more innovative There of spills. a platform. engineering at of also engineering disposal certainly than Blake, times talking you proud exploring be amount our at rather tremendous of where technologies water. assets, heavily alternatives we technology focused on we're the of to a

Blake Sirgo

-- we're and way operations We pushing every it leading what cost, for can going And edge what of it. throughout being chain. working do we the our and that team just shares a limit fight obviously, something productivity we're [indiscernible] emissions value are keep that's says. and and like beyond core whole we to for and on any design like metric. possible We're trying No, we ones above is to the our on emission

Operator

the question-and-answer over our closing like concludes turn conference would session. back This I for Jorden any remarks. Tom to to

Tom Jorden

on We us forward for morning. deliver year updating the to track on. we progress year joining We're Well, confident look this as I goes to to our everybody want the and thank feel very you promised.

thank you. So

Operator

attending presentation disconnect. and now may Thank today's has for conference concluded. now The you you

Cimarex Energy (CIMXP) 6 May 212021 Q1 Earnings call transcript