Nov. 3, 2009 (PR Newswire) -- DENVER, Nov. 3 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported third-quarter 2009 net income of $38.7 million, or $0.46 per diluted share. Reducing third-quarter earnings are mark-to-market losses on derivatives of $17.5 million ($10.3 million after tax) and impairment of well equipment and supplies of $5.4 million ($3.2 million after tax).
A year ago, Cimarex had a third-quarter loss of $232.4 million, or $2.85 per share. Third-quarter 2008 results included a $657.1 million ($417.4 million after-tax) full-cost ceiling test write-down.
Revenues from oil and gas sales in the third quarter of 2009 were $238.3 million, a 57% decrease compared to $552.4 million in the same period of 2008. Third-quarter 2009 cash flow from operations totaled $181.7 million versus $413.8 million in the same period of 2008(1).
The decrease in third-quarter 2009 revenues and cash flow is primarily a result of lower oil and gas prices. Third-quarter 2009 gas prices decreased 61% to $3.80 per thousand cubic feet (Mcf) and oil fell 45% to $63.49 per barrel from the same period of 2008.
Third-quarter 2009 oil and gas production averaged 441.5 million cubic feet equivalent per day (MMcfe/d), comprised of 306.8 million cubic feet of gas and 22,439 barrels of oil. Reflecting our planned reduction in drilling, daily production decreased 9% from a year-earlier. Cimarex's third-quarter 2009 operated rig count averaged nine versus 43 in the comparable period of 2008.
For the first nine months of 2009, Cimarex had a net loss of $416.6 million, or $5.10 per share, as compared to net income of $146.1 million, or $1.71 per share, for the comparable period of 2008. The net loss for 2009 includes a first-quarter full-cost ceiling test write-down of $791.1 million ($501.8 million after-tax).
Capital
Third-quarter 2009 exploration and development (E&D) capital totaled $126.2 million, down from $418.9 million in the third quarter of 2008. In the third quarter of 2009, Cimarex drilled 29 gross (21 net) wells, completing 93% as producers.
For the first nine months of 2009, E&D capital expenditures were $366.9 million versus $1,085.8 million during the comparable period of 2008. During 2009 we have drilled 76% fewer wells as compared to 2008. We expect 2009 capital expenditures will range from $500-$550 million.
Other
Cimarex has oil and natural gas hedge contracts for October 2009 through December 2010. Calendar 2010 hedges cover on average 11,000 barrels of oil per day and 160,000 MMBtu of gas per day, representing slightly less than half of expected production. The following tables summarize the current commodity hedge position:
Natural Gas Contracts
Weighted Average Price
----------------------
Period Type Volume (2) Index(3) Floor Ceiling Swap
------ ---- --------- ------ ----- ------- ----
Oct 09 -
Dec 09 Collar 143,370 PEPL $3.00 $5.00 $-
Jan 10 -
Dec 10 Collar 100,000 PEPL $5.00 $6.62 $-
Jan 10 -
Dec 10 Swap 40,000 PEPL $- $- $5.18
Jan 10 -
Dec 10 Collar 20,000 HSC $5.00 $6.85 $-
------
160,000
Oil Contracts
Weighted Average Price
----------------------
Period Type Volume(2) Index(3) Floor Ceiling Put
------ ---- -------- -------- ----- ------- ---
Jan 10 -
Dec 10 Collar 10,000 WTI $60.03 $92.07 $-
Jan 10 -
Dec 10 Floor/Put 1,000 WTI $- $- $60.00
-----
11,000
Cimarex accounts for these commodity contracts using the mark-to-market accounting method.
Total long-term debt at the end of the third quarter was $523.8 million. As of September 30, 2009, our debt to total capitalization ratio was 21% (4).
As previously announced, Cimarex's bank group reaffirmed the Company's $1.0 billion borrowing base related to its credit facility maturing in April 2012. Bank group commitments of $800 million also remain unchanged. As of September 30, 2009, Cimarex had bank borrowings outstanding of $156 million, which is $183 million less than the second-quarter balance of $339 million. The reduction in borrowings was funded from non-core property sales, tax refunds, lower capital spending relative to cash flow and a net positive working capital change.
Immediately after quarter-end, Cimarex completed the sale of its interest in a Texas secondary recovery oil field for $81 million, which further reduced bank borrowings to $115 million. Year-to-date asset sales total approximately $117 million, with associated proved reserves of 28 billion cubic feet equivalent and 8 MMcfe/d of production.
Outlook
Based on current drilling and completion activity and including the impact of property sales, fourth-quarter 2009 production is projected to range between 440-455 MMcfe/d, resulting in full-year 2009 volumes of 455-460 Mcfe/d. Fourth-quarter projections have been reduced by approximately 8 MMcfe/d for properties sold, including the $81 million sale of the Texas secondary recovery oil field closed the first week of October.
Expenses for the fourth quarter of 2009 are expected to fall within the following ranges:
Expenses ($/Mcfe):
Production expense $1.10 - $1.20
Transportation expense 0.19 - 0.24
DD&A and ARO accretion 1.40 - 1.70
General and administrative expense 0.24 - 0.30
Taxes other than income (% of oil and gas 7.5% - 8.5%
revenue)
Conference call and web cast
Cimarex will also host a conference call today at 11:00 a.m. Mountain Time (1:00 p.m. Eastern Time). To access the live, interactive call, please dial (800) 921-0061 and reference call ID # 36165491 ten minutes before the scheduled start time. A digital replay will be available for one week following the live broadcast at (800) 642-1687 and by using the conference ID # 36165491. The listen-only web cast of the call will be accessible via www.cimarex.com.
1. Cash flow from operations is a non-GAAP financial measure. See below for
a reconciliation of the related amounts.
2. Gas volume in MMBtu per day and oil volume in barrels per day.
3. PEPL refers to Panhandle Eastern Pipe Line, Tex/Ok Mid-Continent index
and HSC stands for Houston Ship Channel Gulf Coast index both as quoted
in Platt's Inside FERC. WTI refers to West Texas Intermediate oil price
as quoted on the New York Mercantile Exchange.
4. Reconciliation of debt to total capitalization, which is a non-GAAP
measure, is: long-term debt of $523.8 million divided by long-term debt
of $523.8 million plus stockholders' equity of $1,933.2 million.
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, Permian Basin and Gulf Coast 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.
