425 1 lehman.txt Filed by Cimarex Energy Co. Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: Cimarex Energy Co. Commission File No.:132-02238 Slide 1 HELMERICH & PAYNE ESTABLISHED 1920 best people, equipment and technology Slide 2 The information contained within this presentation is forward looking and involves risks and uncertainties that could significantly impact expected results. A discussion of these risks and uncertainties is contained in the Company's Form 10-Q filed with the Securities and Exchange Commission on August 14, 2002. Slide 3 FORWARD-LOOKING STATEMENTS It should be noted that this announcement contains certain statements that may be deemed to be "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding the consummation of the proposed spin-off and merger, its effect on future earnings, cash flow or other operating results, the expected closing date of the proposed spin-off and merger, any other effect or benefit of the proposed spin-off and merger, the tax treatment of the proposed spin-off and merger and the combined company, market prospects, and any other statements that are not historical facts. H&P and Key strongly encourage readers to note that some or all of the assumptions upon which such forward-looking statements are based are beyond their ability to control or estimate precisely, and may in some cases be subject to rapid and material changes. Such assumptions include, but are not limited to, costs and difficulties related to the integration of the businesses, costs, delays and other difficulties related to the proposed spin-off and merger, closing conditions not being satisfied, general market conditions prevailing in the exploration for and development and production of oil and gas (including inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes), operating hazards and delays, actions by customers and other third parties, the future price of oil and gas, and other factors detailed in H&P's filings with the Securities and Exchange Commission (the "SEC"), which are available free of charge on the SEC's website at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. H&P and Key undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Slide 4 ADDITIONAL INFORMATION In connection with the proposed spin-off and merger, Key and Cimarex filed with the SEC on May 9, 2002, a Registration Statement No. 333-87948 on Form S-4. Investors and security holders are urged to carefully read the Registration Statement regarding the proposed transaction because it contains important information. Investors and security holders may obtain a free copy of the Registration Statement and other documents containing information about Key and H&P's oil and gas division, without charge, at the SEC's web site at www.sec.gov. Copies of the Registration Statement and the SEC filings incorporated by reference therein may also be obtained for free by directing a request to either: Key Production Company, Inc., 707 Seventeenth Street, Suite 3300, Denver, Colorado 80202, Attention: Sharon M. Pope, Assistant Corporate Secretary; telephone 303-295-3995, fax: 303-295-3494, or Helmerich & Payne, Inc, Utica at Twenty-First Street, Tulsa, Oklahoma 74114, Attention: Steven R. Mackey, Corporate Secretary; telephone 918-742-5531, fax 918-743-2671. Slide 5 PARTICIPANTS IN SOLICITATION H&P and Cimarex and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Key's shareholders in connection with the proposed merger. Hans Helmerich, Douglas E. Fears and Steven R. Mackey are currently directors of Cimarex, and each of them and Steven R. Shaw are currently officers of Cimarex (the "Cimarex Participants"). None of the Cimarex Participants beneficially owns any shares of Cimarex common stock. The Cimarex Participants are all executive officers of H&P. Information concerning H&P's participants in the solicitation is set forth in H&P's proxy statement dated January 25, 2002, which is filed with the SEC. Key's shareholders may obtain additional information about the interests of all such participants in the proposed merger by reading Registration Statement No. 333-87948 on Form S-4 which was filed with the SEC on May 9, 2002. Investors should read the Registration Statement carefully before making any voting or investment decisions. Slide 6 A New Look For An 82 Year Old Company > H&P to Become a "Pure Play" Contract Drilling Company > H&P's Total Rig Fleet to 1998 1999 2000 2001 2002E 2003E Increase by 33% from 2001 90 90 88 96 111 128 To 2003 > Sold $41.5 Million of Portfolio Pro Forma Post Spin Equity Debt Securities and Arranged $200 Million 82% 18% of 5, 7, 10, and 12 Year Notes Slide 7 Helmerich & Payne, Inc. (pre-transaction) [GRAPHIC OMITTED] Contract Drilling E&P Portfolio > - $1.7 billion market cap > - 50 million shares outstanding Slide 8 Exploration & Production Division Spun Off As Cimarex Energy Co. To H & P Shareholders September 30, 2002 Slide 9 Spin/Merge Goals > Increase focus and visibility > Use financial strength to enhance shareholder value > Strengthen E&P division's position > Capture tax efficiency Slide 10 Why Key Production? > Impressive people and organization > Complementary and overlapping asset base > Strong balance sheet > Similar philosophies and cultures Slide 11 Combined Properties Helmrich & Payne, Inc. Proved reserves (Bcfe) 245 % Natural gas 87% Production (MMcfe/d) 116 Net undeveloped acres 150,401 Key Production Company Proved reserves (Bcfe) 147 % Natural gas 62% Production (MMcfe/d) 74 Net undeveloped acres 119,251 Slide 12 Cimarex Energy ($ in millions) Key H&P Combined YE01 Proved reserves, Bcfe 147 245 392 2002E Production, MMcfe/d 74 116 190 % Gas Production 65% 90% 80% Slide 13 What makes H&P attractive as a "pure play" contract drilling company? > Unique Strategy > Expanding Rig Fleet > Strong balance sheet > Additional analyst coverage and ownership interest Slide 14 Helmerich & Payne, Inc. Total Rigs 33% Increase 1998 1999 2000 2001 2002E 2003E 90 90 88 96 111 128 Slide 15 Rig Locations Venezuela 14 Colombia 3 Ecuador 8 Bolivia 6 Argentina 2 73 U.S. Rigs 33 International Rigs 106 Total H & P Rigs 4 Management Contracts Slide 16 Rig Status as of 4 September 2002 Rigs Working / Available Contracted US Land, Mobile & FlexRigs(TM) 35 100% US Land, Conventional 29 72% US Platform 12 58% International Land 33 36% --- ---- Total 109 69% Slide 17 US Land Rig Activity July 2001 - August 2002 Recent Peak US Land Rigs 1,114 on July 13, 2001 [Graphic Omitted] Slide 18 US Land Daily Cash Operating Margins ($000's) H&P Nabors Grey Wolf Patterson 1Q00 1.456 1.435 1.569 1.375 2Q00 2.480 1.860 1.463 1.680 3Q00 2.612 1.975 1.945 2.030 4Q00 3.644 2.550 3.285 2.793 Source - A. Vietor w/Stifel, Nicolaus Slide 19 Safety - US Land Operations January 1997 - June 2002 Incidents Per 200,000 mhrs.: TRIR LTIR H&P US Land 3.30 0.33 IADC US Land 9.81 2.37 Slide 20 Safety - US Offshore Operations January 1997 - June 2002 Incidents Per 200,000 mhrs.: TRIR LTIR H&P US Offshore 1.11 0.06 IADC US Offshore 3.24 0.6 Slide 21 Distinctive Field Performance Data for Texas, Louisiana & Oklahoma Conditions: Calendar Year 2001 Texas, Oklahoma, Louisiana All land wells > 8,000' permitted depth (graphic omitted) From spud to release
Avg Depth (ft) H&P All Rigs A B C D E F G H I J All All Other Wells Wells 82 Contractors (Less H&P) # Wells 344 697 115 1,141 151 325 1,867 144 53 158 1,495 6,146 Avg Depth 13,291 11,882 12,032 12,431 10,594 11,643 10,363 10,083 13,801 9,746 10,162 10,982 Source: RigData report Year 2001
Slide 22 US Land Operations H&P Rig Moves from 1998 to July 2002
1200 HP Existing 1500 HP Mobile Rigs FlexRigs 1000 HP 1500 HP 2000 HP 3000 HP Average Rig Move Days 2.26 2.62 5.8 6.41 8.13 10.05 # Moves 540 360 158 107 96 60
Slide 23 Ten Year Drilling CAPEX 1994 - 2003B Fiscal Total Year CAPEX ------ ------ 1994 $57 1995 88 1996 80 1997 108 1998 211 1999 72 2000 39 2001 172 2002E 300 2003B 200 TOTAL ---- $1,327 MM Slide 24 Newest Fleet in Industry 1. Built or Upgraded 1999 Aug 2002 July 2003 1980-1989 44 16 16 1990-1994 20 23 23 1995-1999 25 39 39 ) 2000-2003 - 31 50 )70% ___ ___ ___ Total Rigs 89 109 128 2. Electric Rigs (SCR & AC) 90% 92% 3. Varco top drives 58 102 Slide 25 H&P Rig 205 GRAPHIC OMITTED On location in Gulf of Mexico Slide 26 H&P Rig 206 GRAPHIC OMITTED On location in Gulf of Mexico Slide 27 FlexRig3 Construction Program 25 New Rigs 1. Estimated cost: $10.75 MM per rig 2. First six rigs are working 3. First eight rigs are contracted 4. First eight rigs delivered by 30 September 2002 5. Next 17 rigs delivered by July 2003 6. Deliver two rigs per month Slide 28 Forecast Economics for FlexRigs Estimated 10 Year IRRAT ----- A. FlexRig1 (1998) 12 to 23% 6 Rigs @ $6.7 MM ea B. FlexRig2 (2001-2002) 14 to 28% 12 Rigs @ $8.0 MM ea C. FlexRig3 (2002-2003) 9 to 28% 25 Rigs @ $10.75 MM ea Slide 29 H&P Rig 211 GRAPHIC OMITTED On location in South Texas Slide 30 Capture & Use Organizational Learnings [Graphic Omitted] Slide 31 Apply New Ideas & Technology [Graphic Omitted] Slide 32 Inside the Driller's Cabin - H&P FlexRig 211 [Graphic Omitted] Slide 33 Total H&P Rigs Available 1998 1999 2000 2001 2002E 2003E Offshore Rigs 11 10 10 10 12 12 Conventional Land Rigs 63 62 61 61 62 62 Mobile & FlexRigs 16 17 17 25 37 54 Total 90 89 88 96 111 128 Slide 34 The Path Ahead 1. Good strategy and good execution are delivering the best value to our customers 2. Our customers are responding with high activity and high margins 3. The FlexRig3 program is adding leverage 4. Improve activity for platform rigs 5. Improve activity in South America 6. Seek opportunities outside North & South America