DENVER, Nov. 7, 2017 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported third quarter 2017 net income of $91.4 million, or $0.96 per share, compared to a net loss of $10.7 million, or $0.12 per share, in the same period a year ago. Third quarter adjusted net income (non-GAAP) was $103.6 million, or $1.09 per share, compared to third quarter 2016 adjusted net income (non-GAAP) of $50.3 million, or $0.53 per share.¹ Net cash provided by operating activities was $251.0 million in the third quarter of 2017 compared to $223.0 million in the same period a year ago. Adjusted cash flow from operations (non-GAAP) was $283.9 million in the third quarter of 2017 compared to $181.9 million in the third quarter a year ago¹.

Total company production for the quarter came in slightly above the high end of our forecast, averaging 1,143 million cubic feet equivalent (MMcfe) per day (190.5 thousand barrels of oil equivalent (MBoe) per day). Oil production averaged 56,687 barrels per day, in line with the company's estimate. Natural gas production exceeded previous estimates due to timing of completions in our Woodford downspacing pilot.

Realized oil prices averaged $44.38 per barrel versus $40.54 per barrel in the third quarter of 2016. Realized natural gas prices averaged $2.65 per thousand cubic feet (Mcf) versus the third quarter 2016 average of $2.66 per Mcf. NGL prices were up 53 percent and averaged $21.63 per barrel from the $14.14 per barrel received in the same period of 2016 (see table of Average Realized Price by Region below).

Cimarex invested $335 million in exploration and development (E&D) during the third quarter, of which $280 million is attributable to drilling and completion activities. This brings year-to-date E&D expenditures to $937 million. Third quarter investments were funded with cash flow from operations and cash on hand. Total debt at September 30, 2017 consisted of $1.5 billion of long-term notes. Cimarex had no borrowings under its revolving credit facility and a cash balance of $423 million. Debt was 38 percent of total capitalization².

2017 Outlook
Fourth quarter 2017 production volumes are expected to average 1,175 - 1,225 MMcfe (195.8 - 204.2 Mboe) per day, up 3 – 7 percent from third quarter volumes, as a result of the increase in well completions late in the third quarter. Oil production is expected to grow 32 - 37 percent in fourth quarter 2017 versus fourth quarter 2016. Total daily production volumes for full year 2017 are now estimated to average 1,134 – 1,147 MMcfe (189.0 – 191.2 Mboe), up 18 percent from 2016 levels at the midpoint. Since giving 2017 production guidance in February, Cimarex has increased its midpoint 2017 daily production forecast by five percent.

Cimarex estimates full-year E&D capital investment will be approximately $1.2 billion, compared to its previous forecast of $1.1 – 1.2 billion. This capital investment is allocated 61 percent to the Permian and 37 percent to the Mid-Continent.

Expenses per Mcfe of production for the remainder of 2017 are estimated to be:


	Production expense	$0.60 - 0.70
	Transportation, processing and other expense	0.50 - 0.60
	DD&A and ARO accretion	1.05 - 1.15
	General and administrative expense	0.20 - 0.25
	Taxes other than income (% of oil and gas revenue)	5.0 - 5.5%

Operations Update
Cimarex invested $335 million in E&D during the third quarter, 60 percent in the Permian Basin and 39 percent in the Mid-Continent. Cimarex completed 77 gross (30 net) wells during the quarter. At September 30, 131 gross (32 net) wells were waiting on completion. Cimarex currently is operating 14 drilling rigs.

WELLS COMPLETED BY REGION

	For the Three Months Ended		For the Nine Months Ended
	September 30,		September 30,
	2017	2016	2017	2016
Gross wells
Permian Basin	29	17	65	37
Mid-Continent	48	25	133	61
	77	42	198	98
Net wells
Permian Basin	16	10	42	22
Mid-Continent	14	7	32	14
	30	17	74	36

Permian Region
Production from the Permian region averaged 628.2 MMcfe per day in the third quarter, a 21 percent increase from third quarter 2016. Oil volumes averaged 43,735 barrels per day and represented 42 percent of the region's total equivalent production.

Cimarex completed 29 gross (16 net) wells in the Permian region during the third quarter. There were 42 gross (16 net) wells waiting on completion at September 30. Cimarex currently operates nine rigs in the Permian region.

Mid-Continent
Production from the Mid-Continent averaged 512.7 MMcfe per day for the third quarter, up 20 percent versus third quarter 2016. Sequentially, crude oil volumes were up eight percent.

During the third quarter, Cimarex completed 48 gross (14 net) wells in the Mid-Continent region. At the end of the quarter, 89 gross (16 net) wells were waiting on completion. Cimarex currently is operating five rigs in the region.

Of note, Cimarex is announcing drilling results from several Woodford shale wells in its Lone Rock area. These wells were brought on production over the past several quarters and show some of the best returns the company has seen to date in the Woodford shale. Cimarex has approximately 16,000 net acres in the Lone Rock area and has completed seven wells in 2017 including the Hines Federal #1H, the company's best well to date in the area. The Hines had 30-day average peak production of 15.2 MMcfe per day (40% oil, 23% NGL, 37% gas). Additional drilling, including a downspacing test, is underway.

Also during the third quarter, Cimarex began producing from eight Woodford shale wells drilled as part of an increased density pilot. The project tested both 16- and 20-well spacing per section. Preliminary results show no significant difference in well performance between the two spacing tests, indicating that Woodford wells can be drilled closer together in future infill projects than they have been historically. More information is available in our most recent corporate presentation, which is available on our website at www.cimarex.com.

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 Nine Months Ended
		September 30,		September 30,
		2017	2016	2017	2016
Permian Basin
	Gas (MMcf)	217.9	178.4	212.9	177.7
	Oil (Bbls)	43,735	35,930	43,544	35,939
	NGL (Bbls)	24,659	20,549	23,771	17,952
	Total Equivalent (Mmcfe)	628.2	517.2	616.8	501.1
	Total Equivalent (Boe)	104,703	86,212	102,798	83,508

Mid-Continent
	Gas (MMcf)	296.8	266.7	292.4	281.3
	Oil (Bbls)	12,846	8,486	11,937	8,889
	NGL (Bbls)	23,142	18,194	22,999	21,009
	Total Equivalent (Mmcfe)	512.7	426.8	502.1	460.7
	Total Equivalent (Boe)	85,451	71,130	83,676	76,784

Total Company
	Gas (MMcf)	515.9	446.7	506.7	460.5
	Oil (Bbls)	56,687	44,532	55,596	45,020
	NGL (Bbls)	47,840	38,786	46,806	39,002
	Total Equivalent (Mmcfe)	1,143.1	946.6	1,121.1	964.6
	Total Equivalent (Boe)	190,518	157,768	186,858	160,765




AVERAGE REALIZED PRICE BY REGION

		For the Three Months Ended		For the Nine Months Ended
		September 30,		September 30,
		2017	2016	2017	2016
Permian Basin
	Gas ($ per Mcf)	2.70	2.69	2.78	2.18
	Oil ($ per Bbl)	44.14	40.65	45.33	36.32
	NGL ($ per Bbl)	20.58	12.49	18.50	11.11

Mid-Continent
	Gas ($ per Mcf)	2.61	2.63	2.85	2.10
	Oil ($ per Bbl)	45.21	40.07	45.33	35.31
	NGL ($ per Bbl)	22.75	16.00	21.70	14.07

Total Company
	Gas ($ per Mcf)	2.65	2.66	2.82	2.13
	Oil ($ per Bbl)	44.38	40.54	45.33	36.13
	NGL ($ per Bbl)	21.63	14.14	20.07	12.70

Other

The following table summarizes the company's current open hedge positions:

		4Q17	1Q18	2Q18	3Q18	4Q18	1Q19	2Q19
Gas Collars:	PEPL⁽³⁾
	Volume (MMBtu/d)	120,000	120,000	90,000	60,000	30,000	20,000	20,000
	Wtd Avg Floor	2.65	2.58	2.48	2.43	2.43	2.40	2.40
	Wtd Avg Ceiling	3.07	2.94	2.82	2.66	2.64	2.64	2.64

	El Paso Perm⁽³⁾
	Volume (MMBtu/d)	80,000	80,000	60,000	40,000	20,000	10,000	10,000
	Wtd Avg Floor	2.64	2.55	2.40	2.35	2.35	2.30	2.30
	Wtd Avg Ceiling	3.04	2.88	2.69	2.52	2.50	2.42	2.42

Oil Collars:	WTI⁽⁴⁾
	Volume (Bbl/d)	21,000	28,000	22,000	18,000	12,000	6,000	6,000
	Wtd Avg Floor	46.29	47.25	47.23	46.61	48.00	48.00	48.00
	Wtd Avg Ceiling	56.64	56.15	55.35	54.55	54.58	55.21	55.21

Oil Basis Swaps:	WTI Midland⁽⁵⁾
	Volume (Bbl/d)	5,000	13,000	13,000	13,000	8,000	5,000	5,000
	Weighted Avg Differential⁽⁶⁾	0.94	0.72	0.72	0.72	0.58	0.47	0.47

Conference call and webcast
Cimarex will host a conference call tomorrow at 11:00 a.m. EDT (9:00 a.m. MDT). The call will be webcast and accessible on the Cimarex website at www.cimarex.com. To join the live, interactive call, please dial 866-367-3053 ten minutes before the scheduled start time (callers in Canada dial 855-669-9657 and international callers dial 412-902-4216).

A replay will be available on the company's website.

Investor Presentation
For more details on Cimarex's third quarter 2017 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. In particular, the "2017 Outlook" contains projections for certain 2017 operational and financial metrics. These forward-looking statements are based on management's judgment as of the date of this press release and include certain risks and uncertainties. Please refer to the company's Annual Report on Form 10-K/A for the year ended December 31, 2016, filed with the SEC, and other filings including our Current Reports on Form 8-K and Quarterly Reports on Form 10-Q, 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 levels and volatility; higher than expected costs and expenses, including the availability and cost of services and materials; compliance with environmental and other regulations; risks associated with operating in one major geographic area; environmental liabilities; the ability to receive drilling and other permits and rights-of-way in a timely manner; development drilling and testing results; declines in the values of our oil and gas properties resulting in impairments; 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, emissions and disposal of produced water; unexpected future capital expenditures; economic and competitive conditions; the availability and cost of capital; 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; changes in estimates of proved reserves; derivative and hedging activities; the success of the company's risk management activities; title to properties; litigation; the ability to complete property sales or other transactions; the effectiveness of controls over financial reporting; 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 reconciliations of the related GAAP amounts.

2	Debt to total capitalization is calculated by dividing long-term debt ($1.5 billion) by long-term debt ($1.5 billion) plus stockholders' equity ($2.4 billion).

3	PEPL refers to Panhandle Eastern Pipe Line Tex/OK Mid-Continent index and El Paso Perm is El Paso Permian Basin index both as quoted in Platt's Inside FERC.

4	WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange.

5	Index price on basis swaps is WTI Midland as quoted by Argus Americas Crude.

6	Index price on basis swaps is WTI NYMEX less the weighted average differential shown in table.

RECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

The following table provides a reconciliation from generally accepted accounting principles (GAAP) measures of net income (loss) and earnings (loss) per share to adjusted net income and adjusted earnings per share (non-GAAP) for the periods indicated.

			For the Three Months Ended				For the Nine Months Ended
			September 30,				September 30,
			2017		2016		2017		2016
			(in thousands, except per share data)

Net income (loss)		$	91,399	$	(10,673)	$	319,633	$	(456,586)
	Impairment of oil and gas properties		—		105,593		—		757,670
	Mark-to-market (gain) loss on open derivative positions		19,085		(8,967)		(53,003)		32,769
	Loss on early extinguishment of debt		—		—		28,169		—
	Tax impact		(6,851)		(35,612)		9,213		(288,108)
Adjusted net income		$	103,633	$	50,341	$	304,012	$	45,745
Diluted earnings (loss) per share*		$	0.96	$	(0.12)	$	3.36	$	(4.90)
Adjusted diluted earnings per share*		$	1.09	$	0.53	$	3.19	$	0.48

Diluted shares attributable to common stockholders and participating securities
			95,320		95,018		95,222		95,018

Adjusted net income and adjusted diluted earnings per share excludes the noted items because management believes these items affect 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 operating performance between periods and to compare the company's performance to other oil and gas exploration and production companies.

b) Adjusted net income is more comparable to earnings estimates provided by research analysts.

Earnings (loss) per share are based on actual figures rather than the rounded figures presented.

RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS

The following table provides a reconciliation from generally accepted accounting principles (GAAP) measures of net cash provided by operating activities to adjusted cash flows from operations (non-GAAP) for the periods indicated.

			For the Three Months Ended				For the Nine Months Ended
			September 30,				September 30,
		2017		2016		2017		2016
		(in thousands)
Net cash provided by operating activities		$	251,005	$	223,002	$	755,805	$	440,788
	Change in operating assets and liabilities		32,901		(41,059)		72,728		(30,390)
Adjusted cash flow from operations		$	283,906	$	181,943	$	828,533	$	410,398


Management uses the non-GAAP financial measure of adjusted cash flow from operations as a means of measuring our ability to fund our capital program and dividends, without fluctuations caused by changes in current assets and liabilities, which are included in the GAAP measure of net cash provided by operating activities. Management believes this non-GAAP financial measure provides useful information to investors for the same reason, and that it is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.

OIL AND GAS CAPITALIZED EXPENDITURES

		For the Three Months Ended				For the Nine Months Ended
		September 30,				September 30,
		2017		2016		2017		2016
		(in thousands)
Acquisitions:
Proved	$	—	$	—	$	260	$	2,618
Unproved		438		3,200		4,263		11,546
		438		3,200		4,523		14,164

Exploration and development:
Land and seismic		12,872		16,974		123,359		45,610
Exploration and development		322,651		157,571		813,693		443,279
		335,523		174,545		937,052		488,889

Sale proceeds:
Proved		1,807		(376)		(85)		(12,605)
Unproved		(780)		(9,207)		(8,051)		(9,608)
		1,027		(9,583)		(8,136)		(22,213)

	$	336,988	$	168,162	$	933,439	$	480,840

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited)

				For the Three Months Ended				For the Nine Months Ended
				September 30,				September 30,
				2017		2016		2017		2016

			(in thousands, except per share data)

Revenues:
	Oil sales		$	231,441	$	166,079	$	687,960	$	445,657
	Gas sales			125,707		109,278		390,126		268,501
	NGL sales			95,191		50,464		256,503		135,755
	Gas gathering and other, net			11,342		9,896		32,720		25,277
				463,681		335,717		1,367,309		875,190
Costs and expenses:
	Impairment of oil and gas properties			—		105,593		—		757,670
	Depreciation, depletion, amortization, and accretion			112,893		92,310		319,173		309,080
	Production			65,410		52,976		190,409		180,891
	Transportation, processing, and other operating			58,387		48,706		172,034		139,585
	Gas gathering and other			8,856		7,905		25,930		23,477
	Taxes other than income			24,314		15,974		63,104		43,879
	General and administrative			21,039		20,118		58,835		55,439
	Stock compensation			7,038		5,764		19,619		18,782
	(Gain) loss on derivative instruments, net			16,109		(9,758)		(50,261)		23,050
	Other operating expense, net			95		179		977		293
				314,141		339,767		799,820		1,552,146

Operating income (loss)				149,540		(4,050)		567,489		(676,956)

Other (income) and expense:
	Interest expense			16,838		20,931		57,985		62,560
	Capitalized interest			(5,373)		(5,421)		(17,456)		(15,958)
	Loss on early extinguishment of debt			—		—		28,169		—
	Other, net			(4,563)		(3,828)		(9,004)		(7,489)

Income (loss) before income tax				142,638		(15,732)		507,795		(716,069)
Income tax expense (benefit)				51,239		(5,059)		188,162		(259,483)

Net income (loss)			$	91,399	$	(10,673)	$	319,633	$	(456,586)

Earnings (loss) per share to common stockholders:

	Basic		$	0.96	$	(0.12)	$	3.36	$	(4.90)
	Diluted		$	0.96	$	(0.12)	$	3.36	$	(4.90)

Dividends declared per share			$	0.08	$	0.08	$	0.24	$	0.24

Shares attributable to common stockholders:
	Unrestricted common shares outstanding			93,501		93,221		93,431		93,221
	Diluted common shares			93,531		93,221		93,465		93,221

Shares attributable to common stockholders and participating securities:
	Basic shares outstanding			95,290		N/A*		95,188		N/A*
	Fully diluted shares			95,320		N/A*		95,222		N/A*

Comprehensive income (loss):
	Net income (loss)		$	91,399	$	(10,673)	$	319,633	$	(456,586)
	Other comprehensive income:
		Change in fair value of investments, net of tax		234		287		860		567
	Total comprehensive income (loss)		$	91,633	$	(10,386)	$	320,493	$	(456,019)

Due to the net loss in the period ended September 30, 2016, shares of 94,973, which include participating securities, are not considered in the loss per share calculations.

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (unaudited)

					For the Three Months Ended					For the Nine Months Ended
					September 30,					September 30,
						2017		2016		2017		2016
					(in thousands)

Cash flows from operating activities:
	Net income (loss)				$	91,399	$	(10,673)	$	319,633	$	(456,586)
	Adjustments to reconcile net income (loss) to net cash
		provided by operating activities:
			Impairment of oil and gas properties			—		105,593		—		757,670
			Depreciation, depletion, amortization, and accretion			112,893		92,310		319,173		309,080
			Deferred income taxes			51,239		(3,944)		188,168		(258,368)
			Stock compensation			7,038		5,764		19,619		18,782
			(Gain) loss on derivative instruments, net			16,109		(9,758)		(50,261)		23,050
			Settlements on derivative instruments			2,975		791		(2,742)		9,718
			Loss on early extinguishment of debt			—		—		28,169		—
			Changes in non-current assets and liabilities			1,068		1,573		2,144		4,121
			Other, net			1,185		287		4,630		2,931
	Changes in operating assets and liabilities:
			Receivables			(67,776)		2,604		(128,921)		(1,723)
			Other current assets			(8,268)		5,706		(19,372)		23,034
			Accounts payable and other current liabilities			43,143		32,749		75,565		9,079
				Net cash provided by operating activities		251,005		223,002		755,805		440,788
Cash flows from investing activities:
	Oil and gas capital expenditures					(319,777)		(160,056)		(901,949)		(485,114)
	Sales of oil and gas assets					(1,027)		6,383		8,136		19,013
	Sales of other assets					116		5,494		510		5,718
	Other capital expenditures					(13,123)		(6,239)		(31,332)		(24,013)
				Net cash used by investing activities		(333,811)		(154,418)		(924,635)		(484,396)
Cash flows from financing activities:
	Borrowings of long-term debt					—		—		748,110		—
	Repayments of long-term debt					—		—		(750,000)		—
	Call premium, financing, and underwriting fees					(159)		—		(29,194)		(1)
	Dividends paid					(7,590)		(7,588)		(22,743)		(30,243)
	Employee withholding taxes paid upon the net settlement of equity-classified stock awards
						(6,422)		(7,375)		(7,637)		(11,457)
	Proceeds from exercise of stock options					190		3,336		226		4,623
				Net cash used by financing activities		(13,981)		(11,627)		(61,238)		(37,078)
Net change in cash and cash equivalents						(96,787)		56,957		(230,068)		(80,686)
Cash and cash equivalents at beginning of period						519,595		641,739		652,876		779,382
Cash and cash equivalents at end of period					$	422,808	$	698,696	$	422,808	$	698,696

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
			September 30,		December 31,
			2017		2016
Assets				(in thousands, except share data)
Current assets:
	Cash and cash equivalents		$	422,808	$	652,876
	Receivables, net of allowance			403,197		274,597
	Oil and gas well equipment and supplies			54,545		33,342
	Derivative instruments			6,924		—
	Other current assets			6,658		8,489
		Total current assets		894,132		969,304
Oil and gas properties at cost, using the full cost method of accounting:
	Proved properties			17,071,532		16,225,495
	Unproved properties and properties under development,
		not being amortized		572,651		478,277
				17,644,183		16,703,772
	Less – accumulated depreciation, depletion, amortization, and impairment			(14,629,884)		(14,349,505)
		Net oil and gas properties		3,014,299		2,354,267
Fixed assets, net of accumulated depreciation				208,320		205,465
Goodwill				620,232		620,232
Derivative instruments				129		—
Deferred income taxes				—		55,835
Other assets				31,942		32,621
			$	4,769,054	$	4,237,724
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	88,888	$	74,486
	Accrued liabilities			343,381		278,781
	Derivative instruments			5,778		49,370
	Revenue payable			154,578		119,715
		Total current liabilities		592,625		522,352
Long-term debt:
	Principal			1,500,000		1,500,000
	Less – unamortized debt issuance costs and discount			(13,491)		(12,061)
		Long-term debt, net		1,486,509		1,487,939
Deferred income taxes				99,695		—
Other liabilities				188,162		184,444
		Total liabilities		2,366,991		2,194,735
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, 95,260,701 and 95,123,525 shares issued, respectively
				953		951
	Additional paid-in capital			2,773,260		2,763,452
	Retained earnings (accumulated deficit)			(373,955)		(722,359)
	Accumulated other comprehensive income			1,805		945
		Total stockholders' equity		2,402,063		2,042,989
			$	4,769,054	$	4,237,724

CONTACT: Cimarex Energy Co., Karen Acierno, 303-285-4957, www.cimarex.com