EX-99.1 2 v112809_ex99-1.txt Cimarex Reports First-Quarter 2008 Earnings of $1.76 per Share DENVER, May 6 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported first-quarter 2008 net income of $149.8 million, or $1.76 per diluted share. This compares to first-quarter 2007 earnings of $64.6 million, or $0.77 per diluted share. Revenues from oil and gas sales in the first quarter of 2008 were $454.4 million, compared to $293.5 million in the same period of 2007. First-quarter 2008 cash flow from operations totaled $334.7 million versus $215.4 million in the same period of 2007(1). The increase in first-quarter 2008 revenues, earnings and cash flow is primarily a result of higher production and oil and gas prices. First-quarter 2008 gas prices increased 25% to $8.38 per thousand cubic feet (Mcf) and oil rose 71% to $94.38 per barrel from the same period of 2007. First-quarter 2008 daily oil and gas production grew 8% over last year's first quarter. Gas production in the latest quarter averaged 339.7 million cubic feet per day, an increase of 5% over the first-quarter 2007 and oil production grew 16% to an average of 22,757 barrels per day. Growing production reflects strong results from drilling. Capital First-quarter 2008 exploration and development capital totaled $307.0 million as compared to $245.5 million in the first quarter of 2007. In the first quarter of 2008, Cimarex drilled 126 gross (76 net) wells, completing 95% of the gross wells as producers. Exploration and development capital investment for 2008 is still projected to range from $1.1 - $1.3 billion. Outlook Second-quarter 2008 production volumes are projected to range between 478-488 MMcfe/d. Full-year 2008 production is projected to be in the range of 475-495 MMcfe/d, or an 8-12% increase over 2007 after adjusting for property sales. Expenses for the remainder of 2008 are expected to fall within the following ranges: Expenses ($/Mcfe): Production expense $1.20 - $1.30 Transportation expense 0.17 - 0.20 DD&A and ARO accretion 2.85 - 3.00 General and administrative expense 0.26 - 0.30 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 call, please dial (888) 603-6873 and reference call ID # 42803763 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 # 42803763. The listen-only web cast of the call will be accessible via http://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, 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. (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 March 31, 2008 2007 Gas Production: Total production - Mcf 30,909,539 29,176,637 Gas volume - Mcf per day 339,665 324,185 Gas price - per Mcf (before hedge effect) $8.35 $6.55 Effect of hedges $0.03 $0.18 Gas price - per Mcf (after hedge effect) $8.38 $6.73 Oil Production (including NGL): Total production - barrels 2,070,857 1,759,724 Oil volume - barrels per day 22,757 19,552 Oil price - per barrel $94.38 $55.22 OIL AND GAS CAPITALIZED EXPENDITURES For the Three Months Ended March 31, 2008 2007 (in thousands) Acquisition of properties $1,045 $23 Exploration and development 306,955 245,505 Total oil and gas expenditures 308,000 245,528 Sale proceeds -- (250) $308,000 $245,278 RECONCILIATION OF CASH FLOW FROM OPERATIONS For the Three Months Ended March 31, 2008 2007 (in thousands) Net cash provided by operating activities $315,245 $186,469 Increase in operating assets and liabilities 19,455 28,929 Cash flow from operations $334,700 $215,398 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 Ended March 31, 2008 2007 (In thousands, except per share data) Revenues: Gas sales $258,955 $196,290 Oil sales 195,450 97,164 Gas gathering, processing and other 21,371 12,639 Gas marketing, net 1,300 782 477,076 306,875 Costs and expenses: Depreciation, depletion and amortization 125,556 108,884 Asset retirement obligation 1,594 2,591 Production 52,052 45,005 Transportation 8,309 5,934 Gas gathering and processing 10,041 7,311 Taxes other than income 30,607 20,627 General and administrative 11,584 12,651 Stock compensation, net 2,275 2,670 Other operating, net 1,036 (271) 243,054 205,402 Operating income 234,022 101,473 Other (income) and expense: Interest expense 8,420 9,165 Capitalized interest (4,606) (5,091) Amortization of fair value of debt (191) (947) Other, net (3,017) (3,449) Income before income tax expense 233,416 101,795 Income tax expense 83,581 37,167 Net income $149,835 $64,628 Earnings per share: Basic $1.84 $0.79 Diluted $1.76 $0.77 Weighted average shares outstanding: Basic 81,286 82,222 Diluted 85,200 84,393 CONDENSED CASH FLOW STATEMENTS (unaudited) For the Three Months Ended March 31, 2008 2007 Cash flows from operating activities: Net income $149,835 $64,628 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 125,556 108,884 Asset retirement obligation 1,594 2,591 Deferred income taxes 55,663 37,167 Stock compensation, net 2,275 2,670 Other (223) (542) Changes in operating assets and liabilities: (Increase) decrease in receivables, net (40,649) 6,311 (Increase) decrease in other current assets (6,437) 1,115 Increase (decrease) in accounts payable and accrued liabilities 28,307 (35,245) Decrease in other non-current liabilities (676) (1,110) Net cash provided by operating activities 315,245 186,469 Cash flows from investing activities: Oil and gas expenditures (284,281) (252,371) Proceeds from sale of assets 104 349 Sales of short-term investments 5,000 -- Other expenditures (8,994) (2,303) Net cash used by investing activities (288,171) (254,325) Cash flows from financing activities: Net increase in bank debt -- 66,000 Dividends paid (4,953) (3,365) Proceeds from issuance of common stock and other 2,116 7,524 Net cash provided by (used in) financing activities (2,837) 70,159 Net change in cash and cash equivalents 24,237 2,303 Cash and cash equivalents at beginning of period 123,050 5,048 Cash and cash equivalents at end of period $147,287 $7,351 BALANCE SHEETS (unaudited) March 31, December 31, 2008 2007 Assets (In thousands, except share data) Current assets: Cash and cash equivalents $147,287 $123,050 Restricted cash 724 -- Short-term investments 9,364 14,391 Receivables, net 355,976 315,327 Inventories 40,785 29,642 Deferred income taxes 79 5,697 Derivative instruments -- 12,124 Other current assets 10,489 64,346 Total current assets 564,704 564,577 Oil and gas properties at cost, using the full cost method of accounting: Proved properties 5,851,042 5,545,977 Unproved properties and properties under development, not being amortized 362,416 364,618 6,213,458 5,910,595 Less - accumulated depreciation, depletion and amortization (2,060,047) (1,938,863) Net oil and gas properties 4,153,411 3,971,732 Fixed assets, net 94,440 90,584 Goodwill 691,432 691,432 Other assets, net 94,461 44,469 $5,598,448 $5,362,794 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $72,294 $52,671 Accrued liabilities 234,664 240,387 Derivative instruments 6,773 -- Revenue payable 145,474 131,513 Total current liabilities 459,205 424,571 Long-term debt 486,968 487,159 Deferred income taxes 1,121,923 1,076,223 Other liabilities 132,310 115,554 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, 83,929,645 and 83,620,480 shares issued, respectively 839 836 Treasury stock, at cost, 1,078,822 shares held (40,628) (40,628) Paid-in capital 1,848,532 1,842,690 Retained earnings 1,593,627 1,448,763 Accumulated other comprehensive income (4,328) 7,626 3,398,042 3,259,287 $5,598,448 $5,362,794