- Record quarterly production of 950 MMcfe per day
- Five New Wolfcamp D Long Laterals average 2,236 BOE/day
- Meramec tests average 10.2 MMcfe/day
DENVER, Feb. 17, 2015 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported fourth quarter 2014 net income of $75.8 million, or $0.86 per diluted share. Adjusted fourth quarter net income was $76.4 million, or $0.87 per diluted share, compared to fourth-quarter 2013 adjusted net income of $117.6 million, or $1.35 per diluted share(1). For the year, net income totaled $507.2 million, or $5.78 per diluted share. Adjusted net income for the full year was $5.76 per share(1). Adjusted cash flow from operations grew 18 percent in 2014 to $1.63 billion(1). Strong growth in production resulted in record revenues of $2.4 billion in 2014, up 21 percent from 2013.
Total company production volumes reached a record 949.5 million cubic feet equivalent (MMcfe) per day in the fourth quarter, up 35 percent from a year ago. Despite weather and pipeline disruptions that impacted Permian operations early in the quarter, Permian oil production increased 12 percent sequentially and averaged 38,246 barrels per day in the fourth quarter. For the full year, daily production volumes averaged a record 869 MMcfe per day, up 25 percent over 2013 average daily output of 693 MMcfe per day.
In 2014 Cimarex invested $2.2 billion including exploration and development expenditures of $1.9 billion and property acquisitions of $250 million. These investments were largely funded with cash flow and the proceeds from property sales.
Proved reserves at December 31, 2014 were 3.1 trillion cubic feet equivalent (Tcfe), up 25 percent year over year. Reserves added from extensions and discoveries totaled 814 billion cubic feet equivalent (Bcfe) and when combined with upward revisions of 105 Bcfe, replaced 290 percent of production. Proved reserves are 77 percent proved developed. (See table of Proved Reserves below.)
Sharp declines in oil prices impacted the company's financial results for both the fourth quarter and full year. Realized oil prices averaged $64.94 per barrel in the fourth quarter and $83.70 for the full year, down 30 and 10 percent versus the respective periods a year ago. In the fourth quarter, natural gas prices averaged $3.95 per Mcf and NGL prices averaged $25.32 per barrel compared to $3.85 and $31.68, respectively, in the fourth quarter of 2013. (See table of Price and Production Data below.)
Total debt at December 31, 2014, consisted of $1.5 billion of long-term notes. Cimarex had no borrowings under its revolving credit facility and had a cash balance of $406 million. Debt was 25 percent of total capitalization(2).
Operations Update
During 2014, Cimarex participated in the drilling and completion of 312 gross (175 net) wells, 185 of which we operated. Total exploration and development investment was $1.88 billion. Of the total, 73 percent was invested in Permian projects and 25 percent in the Mid-Continent.
At year-end, 54 gross (32 net) wells were drilled and awaiting completion — 39 gross (27 net) in the Permian and 15 gross (5 net) in the Mid-Continent.
WELLS DRILLED AND COMPLETED BY REGION
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2014
2013
2014
2013
Gross wells
Permian Basin
54
43
171
175
Mid-Continent
33
29
139
183
Other
-
2
2
7
87
74
312
365
Net wells
Permian Basin
39
28
117
115
Mid-Continent
14
9
57
65
Other
-
1
1
5
53
38
175
185
% Gross wells completed as producers
100%
99%
99%
99%
Permian Basin Production from the Permian Basin averaged 446.4 MMcfe per day in the fourth quarter, a 34 percent increase over fourth-quarter 2013 and 9 percent sequentially. Quarterly oil volumes increased 29 percent year-over-year to 38,246 barrels per day and accounted for 51 percent of the region's total production for the quarter.
Cimarex drilled and completed 54 gross (39 net) Permian Basin wells during the fourth quarter, bringing the total for 2014 to 171 gross (117 net) wells.
Cimarex participated in the drilling and completion of 48 gross (27 net) New Mexico Bone Spring wells during 2014. Average 30-day gross peak production from the Cimarex-operated wells was 930 barrels of oil equivalent (BOE) per day (79 percent oil). Ward County, Texas Third Bone Spring drilling totaled 13 gross (seven net) wells with average 30-day gross peak production rates of approximately 937 BOE per day (79 percent oil) from Cimarex-operated wells. Culberson County Bone Spring wells totaled 16 gross (nine net) with average 30-day gross peak production rates of approximately 1,065 BOE per day (64 percent oil) from Cimarex-operated wells. Cimarex also drilled and completed 14 gross (14 net) horizontal Avalon shale wells in 2014. The Cimarex-operated Avalon wells had an average 30-day gross production rate per well of approximately 797 BOE per day (67 percent oil).
Of note, Cimarex recently completed several long lateral Wolfcamp wells in the Delaware Basin, including five 10,000-foot Wolfcamp D wells in Culberson County, Texas. These wells had an average 30-day gross peak production rate of 2,236 BOE per day (26 percent oil, 45 percent gas, 29 percent NGL). Cimarex also completed its first Wolfcamp A long lateral in Culberson County. The Gato de Sol 34 Unit #1H was completed on a 7,500-foot lateral with a 30-stage completion and had an average 30-day peak production rate 1,491 BOE per day (50 percent oil, 30 percent gas, 20 percent NGL).
Mid-Continent The majority of Mid-Continent activity was in the Cana-Woodford shale play in western Oklahoma, where Cimarex drilled and completed 94 gross (42 net) wells in 2014. Fourth-quarter 2014 net production from Cana-Woodford averaged 384.3 MMcfe per day and was 40 percent of Cimarex's total company production. Total Mid-Continent production averaged 488.0 MMcfe per day for the fourth quarter of 2014 and 451.2 MMcfe per day for the full year. At year-end, 15 gross (5 net) wells were awaiting completion, including 10 gross (4 net) Cana-Woodford wells.
Cimarex also tested a new zone in the Mid-Continent in 2014. Called the Meramec, it sits above the Woodford Shale and is up to 550 feet thick. Cimarex drilled seven wells in 2014 over a broad swath of its acreage. All the Meramec wells were drilled using 5,000-foot laterals and 20 stage completions. The first six wells had an average 30-day peak production rate of 10.2 MMcfe per day. Oil comprised between 20-55 percent of the total production stream. Natural gas averaged 44 percent and NGL averaged 39 percent. The seventh well is currently flowing back. Cimarex has approximately 115,000 net acres that are prospective for the Meramec.
Production by Region Cimarex's average daily production and commodity price by region is summarized below:
DAILY PRODUCTION BY REGION
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2014
2013
2014
2013
Permian Basin
Gas (MMcf)
142.2
106.2
123.8
97.0
Oil (Bbls)
38,246
29,651
34,390
29,421
NGL (Bbls)
12,444
8,001
11,471
7,734
Total Equivalent (MMcfe)
446.4
332.1
399.0
320.0
Mid-Continent
Gas (MMcf)
314.5
231.3
292.4
232.3
Oil (Bbls)
7,889
5,956
7,348
5,947
NGL (Bbls)
21,044
12,745
19,122
13,032
Total Equivalent (MMcfe)
488.0
343.5
451.2
346.1
Total Company
Gas (MMcf)
464.6
351.5
425.0
343.1
Oil (Bbls)
46,990
37,237
42,846
36,659
NGL (Bbls)
33,830
21,663
31,078
21,578
Total Equivalent (MMcfe)
949.5
704.9
868.6
692.6
AVERAGE REALIZED PRICE BY REGION *
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2014
2013
2014
2013
Permian Basin
Gas ($ per Mcf)
3.96
4.11
4.48
3.91
Oil ($ per Bbl)
64.38
92.00
82.44
93.02
NGL ($ per Bbl)
22.23
27.13
30.04
26.13
Mid-Continent
Gas ($ per Mcf)
3.94
3.73
4.42
3.70
Oil ($ per Bbl)
66.91
93.23
88.23
93.48
NGL ($ per Bbl)
27.18
34.55
35.03
31.25
Total Company
Gas ($ per Mcf)
3.95
3.85
4.43
3.76
Oil ($ per Bbl)
64.94
92.34
83.70
93.44
NGL ($ per Bbl)
25.32
31.68
33.14
29.36
*
Prior to 2014, our average realized prices for gas and NGLs were net of certain processing fees. Beginning in 2014, these fees are no longer included in realized prices. The resulting positive impact on gas prices for the total company for the three and twelve months ended December 31, 2014 was $0.06 per Mcf and $0.07 per Mcf, respectively. The positive impact on NGL prices for the total company was $3.36 per Bbl and $3.54 per Bbl for the three and twelve months ended December 31, 2014, respectively.
Conference call and webcast Cimarex will host a conference call tomorrow, February 18 at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time). The call will be webcast and accessible on the Cimarex website at www.cimarex.com. To participate in the live, interactive call, please dial 866-367-3053 five minutes before the scheduled start time (international callers dial 1-412-902-4216). A replay will be available for one week following the call by dialing 877-344-7529 (international callers dial 1-412-317-0088); conference I.D. 10059816. The replay will also be available on the company's website or via the Cimarex App.
Investor Presentation For more details on Cimarex's 2014 results, please refer to the company's investor presentation available at 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 and Permian Basin areas of the U.S.
This press release contains forward-looking statements, including statements regarding projected results and future events. Please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2014, to be filed with the SEC, for a list of certain risk factors that may affect these forward-looking statements.
Actual results may differ materially from company projections and other forward-looking statements and can be affected by a variety of factors outside the control of the company including, among other things: oil, NGL and natural gas price volatility; the ability to complete property sales or other transactions; the ability to receive drilling and other permits and rights-of-way in a timely manner; development drilling and testing results; the potential for production decline rates to be greater than expected; performance of acquired properties and newly drilled wells; costs and availability of third party facilities for gathering, processing, refining and transportation; regulatory approvals, including regulatory restrictions on federal lands; legislative or regulatory changes, including initiatives related to hydraulic fracturing; higher than expected costs and expenses, including the availability and cost of services and materials; unexpected future capital expenditures; economic and competitive conditions; the ability to obtain industry partners to jointly explore certain prospects, and the willingness and ability of those partners to meet capital obligations when requested; declines in the values of our oil and gas properties resulting in impairments; changes in estimates of proved reserves; compliance with environmental and other regulations; derivative and hedging activities; risks associated with operating in one major geographic area; the success of the company's risk management activities; title to properties; litigation; environmental liabilities; and other factors discussed in the company's reports filed with the SEC. Cimarex Energy Co. encourages readers to consider the risks and uncertainties associated with projections and other forward-looking statements. In addition, the company assumes no obligation to publicly revise or update any forward-looking statements based on future events or circumstances.
(1)
Adjusted net income and adjusted cash flow from operations are non-GAAP financial measures. See below for a reconciliation of the related amounts.
(2)
Reconciliation of debt to total capitalization, which is a non-GAAP measure, is: long-term debt of $1.5 billion divided by long-term debt of $1.5 billion plus stockholders' equity of $4.5 billion.
RECONCILIATION OF ADJUSTED NET INCOME
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2014
2013
2014
2013
(in thousands, net of tax, except per share data)
Net income
$
75,792
$
206,827
$
507,204
$
564,689
Increase (decrease) in litigation expense
—
(90,264)
—
(90,264)
Mark-to-market (gain) loss on open derivative positions
587
1,065
2,440
(2,452)
Gain on sale of midstream assets
—
—
(4,276)
(2,708)
Adjusted net income
$
76,379
$
117,628
$
505,368
$
469,265
Diluted earnings per share *
$
0.86
$
2.37
$
5.78
$
6.47
Adjusted diluted earnings per share *
$
0.87
$
1.35
$
5.76
$
5.38
Diluted shares attributable to common stockholders and participating securities
87,695
87,298
87,732
87,281
Estimated tax rates utilized
37.1%
36.8%
37.1%
36.8%
Adjusted net income and adjusted diluted earnings per share excludes the noted item because management believes this item affects the comparability of operating results. The company discloses these non-GAAP financial measures as a useful adjunct to GAAP earnings because:
a) Management uses adjusted net income to evaluate the company's operational trends and performance relative to other oil and gas exploration and production companies.
b) Adjusted net income is more comparable to earnings estimates provided by research analysts.
* Earnings per share are based on actual figures rather than the rounded figures presented.
RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2014
2013
2014
2013
(in thousands)
Net cash provided by operating activities
$
347,395
$
383,600
$
1,619,365
$
1,324,348
Change in operating assets and liabilities
(4,935)
(28,131)
14,847
63,840
Adjusted cash flow from operations
$
342,460
$
355,469
$
1,634,212
$
1,388,188
Management believes that the non-GAAP measure of adjusted 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, without fluctuations caused by changes in current assets and liabilities, which are included in the GAAP measure of cash flow from operating activities. It is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.
PRICE AND PRODUCTION DATA
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2014
2013
2014
2013
Gas:
Total production (MMcf)
42,743
32,334
155,128
125,248
Daily production (MMcf)
465
352
425
343
Price (per Mcf) *
$
3.95
$
3.85
$
4.43
$
$3.76
Oil:
Total production (Bbls)
4,323,087
3,425,758
15,638,904
13,380,383
Daily production (Bbls)
46,990
37,237
42,846
36,659
Price (per Bbl)
$
64.94
$
92.34
$
83.70
$
$93.44
NGLs:
Total production (Bbls)
3,112,335
1,993,029
11,343,430
7,876,123
Daily production (Bbls)
33,830
21,663
31,078
21,578
Price (per Bbl) *
$
25.32
$
31.68
$
33.14
$
$29.36
*
Prior to 2014, our average realized prices for gas and NGLs were net of certain processing fees. Beginning in 2014, these fees are no longer included in realized prices. The resulting positive impact on gas prices for the three and twelve months ended December 31, 2014 was $0.06 per Mcf and $0.07 per Mcf, respectively. The positive impact on NGL prices was $3.36 per Bbl and $3.54 per Bbl for the three and twelve months ended December 31, 2014, respectively.
PROVED RESERVES
Gas
Oil
NGL
Total
(Bcf)
(MBbls)
(MBbls)
(Bcfe)
December 31, 2013
1,293.5
108,533
92,044
2,497.0
Revisions of previous estimates
85.5
(1,039)
4,262
104.8
Extensions and discoveries
420.4
29,155
36,424
813.9
Purchase of reserves
88.2
1,383
6,186
133.6
Production
(155.1)
(15,639)
(11,343)
(317.0)
Sale of properties
(65.8)
(3,401)
(2,300)
(100.0)
December 31, 2014
1,666.7
118,992
125,273
3,132.3
Proved developed reserves
Year-end 2013
1,060.7
86,665
69,089
1,995.2
Year-end 2014
1,264.0
100,050
89,630
2,402.0
2014
2013
% Change
Pre-tax PV-10 ($ in millions) **
$6,389.5
$5,200.6
23%
Standardized Measure ($ in millions)
$4,352.8
$3,598.9
21%
Average prices used in Standardized Measure
Gas Price per Mcf
$3.61
$3.01
20%
Oil price per barrel
$86.85
$92.74
-6%
NGL price per barrel
$28.23
$28.42
-1%
** Pre-tax PV-10% is a non-GAAP financial measure. Pre-tax PV-10% is comparable to the standardized measure, which is the most directly comparable GAAP financial measure. Pre-tax PV-10% is computed on the same basis as the standardized measure but without deducting future income taxes. As of December 31, 2014 and 2013, Cimarex's discounted future income taxes were $2,036.6 million and $1,601.7 million, respectively. Cimarex's standardized measure of discounted future net cash flows was $4,352.8 million at year-end 2014 and $3,598.9 million at year-end 2013. Cimarex believes pre-tax PV-10% is a useful measure for investors for evaluating the relative monetary significance of its oil and natural gas properties. Cimarex further believes investors may utilize its pre-tax PV-10% as a basis for comparison of the relative size and value of its reserves to other companies because many factors that are unique to each individual company impact the amount of future income taxes to be paid. However, pre-tax PV-10% is not a substitute for the standardized measure of discounted future net cash flows. Cimarex's pre-tax PV-10% and the standardized measure of discounted future net cash flows do not purport to present the fair value of its oil and natural gas reserves.
PROVED RESERVES BY REGION
Gas
Oil
NGL
Total
(Bcf)
(MBbls)
(MBbls)
(Bcfe)
Mid-Continent
1,280.2
27,791
89,621
1,984.7
Permian Basin
370.7
90,081
35,253
1,122.7
Other
15.8
1,120
399
24.9
1,666.7
118,992
125,273
3,132.3
OIL AND GAS CAPITALIZED EXPENDITURES
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2014
2013
2014
2013
(in thousands)
Acquisitions:
Proved
$
125
$
5
$
138,508
$
682
Unproved
314
30,915
111,225
36,396
439
30,920
249,733
37,078
Exploration and development:
Land and Seismic
28,349
38,043
176,061
165,107
Exploration and development
421,241
340,843
1,704,961
1,400,388
449,590
378,886
1,881,022
1,565,495
Sale proceeds:
Proved
(1,038)
(22,208)
(270,766)
(58,874)
Unproved
(38)
(1,588)
(175,341)
(2,629)
(1,076)
(23,796)
(446,107)
(61,503)
$
448,953
$
386,010
$
1,684,648
$
1,541,070
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited)
For the Three Months Ended
For the Twelve Months Ended
December 31,
December 31,
2014
2013
2014
2013
(in thousands, except per share data)
Revenues:
Oil sales
$
280,729
$
316,333
$
1,308,958
$
1,250,212
Gas sales
168,791
124,553
687,930
471,045
NGL sales
78,813
63,142
375,941
231,248
Gas gathering and other, net
10,218
12,574
51,347
45,546
538,551
516,602
2,424,176
1,998,051
Costs and expenses:
Depreciation, depletion, amortization and accretion
219,536
173,932
816,103
623,863
Production
91,994
71,757
342,304
286,742
Transportation, processing, and other operating
50,115
27,086
195,414
93,580
Gas gathering and other
7,700
7,566
35,113
25,876
Taxes other than income
29,339
28,693
128,793
112,732
General and administrative
23,637
20,050
81,160
77,466
Stock compensation
4,126
3,820
15,001
14,279
(Gain) loss on derivative instruments, net
(12,722)
1,442
(3,762)
209
Other operating (income) expense, net
82
(140,138)
116
(132,334)
413,807
194,208
1,610,242
1,102,413
Operating income
124,744
322,394
813,934
895,638
Other (income) and expense:
Interest expense
20,093
12,698
68,617
50,926
Amortization of deferred financing costs
1,127
1,003
4,248
4,047
Capitalized interest
(10,055)
(7,649)
(35,925)
(31,517)
Other, net
(6,700)
(7,881)
(28,907)
(21,518)
Income before income tax
120,279
324,223
805,901
893,700
Income tax expense
44,487
117,396
298,697
329,011
Net income
$
75,792
$
206,827
$
507,204
$
564,689
Earnings per share to common stockholders:
Basic
$
0.87
$
2.37
$
5.79
$
6.48
Diluted
$
0.86
$
2.37
$
5.78
$
6.47
Dividends per share
$
0.16
$
0.14
$
0.64
$
0.56
Shares attributable to common stockholders:
Unrestricted common shares outstanding
85,679
85,288
85,679
85,288
Diluted common shares
85,773
85,426
85,810
85,409
Shares attributable to common stockholders and participating securities:
Depreciation, depletion, amortization and accretion
219,536
173,932
816,103
623,863
Deferred income taxes
44,083
118,085
298,293
329,700
Stock compensation
4,126
3,820
15,001
14,279
(Gain) loss on derivative instruments
(12,722)
1,442
(3,762)
209
Settlements on derivative instruments
13,656
244
7,641
(4,088)
Changes in non-current assets and liabilities
(567)
(150,317)
(2,440)
(141,215)
Amortization of deferred financing costs and other, net
(1,444)
1,436
(3,828)
751
Changes in operating assets and liabilities:
Receivables, net
27,958
23,351
(35,133)
(64,780)
Other current assets
682
4,435
(25,428)
14,234
Accounts payable and other current liabilities
(23,705)
345
45,714
(13,294)
Net cash provided by operating activities
347,395
383,600
1,619,365
1,324,348
Cash flows from investing activities:
Oil and gas expenditures
(477,321)
(406,733)
(2,108,250)
(1,572,288)
Sales of oil and gas assets
(1,729)
23,796
449,981
61,503
Sales of other assets
235
409
8,413
31,661
Other capital expenditures
(13,827)
(17,256)
(90,611)
(51,913)
Net cash used by investing activities
(492,642)
(399,784)
(1,740,467)
(1,531,037)
Cash flows from financing activities:
Net bank debt borrowings
—
24,000
(174,000)
174,000
Proceeds from other long-term debt
—
—
750,000
—
Financing costs incurred
—
—
(11,616)
(100)
Dividends paid
(13,917)
(12,142)
(53,849)
(46,712)
Issuance of common stock and other
1,369
4,326
11,898
14,494
Net cash provided by (used in) financing activities
(12,548)
16,184
522,433
141,682
Net change in cash and cash equivalents
(157,795)
—
401,331
(65,007)
Cash and cash equivalents at beginning of period
563,657
4,531
4,531
69,538
Cash and cash equivalents at end of period
$
405,862
$
4,531
$
405,862
$
4,531
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
December 31,
December 31,
2014
2013
Assets
(in thousands, except share data)
Current assets:
Cash and cash equivalents
$
405,862
$
4,531
Receivables, net
412,108
367,754
Oil and gas well equipment and supplies
89,780
66,772
Deferred income taxes
13,475
16,854
Derivative instruments
—
4,268
Other current assets
10,579
8,960
Total current assets
931,804
469,139
Oil and gas properties at cost, using the full cost method of accounting:
Proved properties
14,402,064
12,863,961
Unproved properties and properties under development, not being amortized
759,149
585,361
15,161,213
13,449,322
Less – accumulated depreciation, depletion and amortization
(8,257,502)
(7,483,685)
Net oil and gas properties
6,903,711
5,965,637
Fixed assets, net
211,031
146,918
Goodwill
620,232
620,232
Other assets, net
58,515
51,209
$
8,725,293
$
7,253,135
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
138,051
$
116,110
Accrued liabilities
447,384
412,495
Derivative instruments
—
389
Revenue payable
190,892
154,173
Total current liabilities
776,327
683,167
Long-term debt
1,500,000
924,000
Deferred income taxes
1,754,706
1,459,841
Other liabilities
193,628
163,919
Total liabilities
4,224,661
3,230,927
Commitments and contingencies
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, 87,592,535 and 87,152,197 shares issued, respectively
876
872
Paid-in capital
1,997,080
1,970,113
Retained earnings
2,501,574
2,050,034
Accumulated other comprehensive income
1,102
1,189
4,500,632
4,022,208
$
8,725,293
$
7,253,135
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cimarex-reports-fourth-quarter-and-full-year-2014-results-300037335.html
SOURCE Cimarex Energy Co.
Contact Cimarex Energy Co., Karen Acierno, 303-285-4957, www.cimarex.com