EX-99.1 2 ce2613ex991.txt Exhibit 99.1 CIMAREX ENERGY ANNOUNCES FIRST-QUARTER 2005 EARNINGS OF $1.00 PER SHARE DENVER, May 4 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported first-quarter 2005 net income of $43.4 million, or $1.00 per diluted share. This compares to first-quarter 2004 earnings of $29.9 million, or $0.70 per diluted share. Revenues from oil and gas sales in the first quarter of 2005 were $137.4 million, compared to $95.5 million in the same period of 2004. Cash flow from operations for the first quarter of 2005 was $101.1 million, versus $69.5 million in the same period of 2004(1). First-quarter 2005 financial results were positively impacted by a 22 percent increase in production volumes, 40 percent higher oil prices and 14 percent higher gas prices. Total daily production volumes averaged 240.4 million cubic feet (MMcf) equivalent during the first quarter of 2005 versus 196.6 MMcf equivalent a year earlier. Fourth-quarter 2004 production was 231.0 MMcf equivalent per day. The increase is attributable to continued positive drilling results in the Mid Continent, Permian Basin and Gulf Coast areas of operations. The accompanying tables detail quarterly volumes and prices. Exploration and development expenditures during the first quarter of 2005 totaled $92.7 million, up from $68.6 million for the first quarter 2004. Increased capital expenditures reflect expansion of our drilling program. In the first quarter of 2005, we participated in drilling 59 gross wells, with an overall success rate of 81 percent. On a net basis, 27 of 35 wells drilled during the first quarter were successful. (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. Conference call and web cast A conference call with management has been scheduled for 11 a.m. Mountain Time (1 p.m. Eastern), Wednesday, May 4, 2005. Interested parties may access the call by dialing (800) 938-0653 and requesting the Cimarex Energy Co. teleconference. In addition, a listen-only web cast of the call will be provided at www.cimarex.com. Please go to the website at least ten minutes early to register and to download any necessary audio software. On January 26, 2005, Cimarex and Magnum Hunter Resources, Inc. (NYSE: MHR) jointly announced that their boards of directors had approved an agreement and plan of merger that provides for the acquisition by Cimarex of Magnum Hunter. About Cimarex Energy Cimarex Energy Co., headquartered in Denver, CO, is an independent oil and gas exploration and production company with operations focused in the Mid-Continent, Permian Basin and Gulf Coast areas of the U.S. Its principal regional operations offices are located in Tulsa, New Orleans and Houston. About Magnum Hunter Resources, Inc. Magnum Hunter Resources, Inc., located in Irving, TX, is an independent oil and gas exploration and production company engaged in three principal activities: (1) the exploration, development and production of crude oil, condensate and natural gas; (2) the gathering, transmission and marketing of natural gas; and (3) the managing and operating of producing oil and natural gas properties for interest owners. Its operations are concentrated in the Permian Basin of West Texas and New Mexico, the Gulf of Mexico and in the Mid-Continent 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 Cimarex's and Magnum Hunter's 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. Risks, uncertainties and assumptions include 1) the possibility that the companies may be unable to obtain stockholder or regulatory approvals required for the acquisition; 2) the possibility that problems may arise in successfully integrating the businesses of the two companies; 3) the possibility that the acquisition may involve unexpected costs; 4) the possibility that the combined company may be unable to achieve cost-cutting synergies; 5) the possibility that the businesses may suffer as a result of uncertainty surrounding the acquisition; 6) the possibility that the industry may be subject to future regulatory or legislative actions; 7) the volatility in commodity prices for oil and gas; 8) the presence or recoverability of estimated reserves; 9) the ability to replace reserves; 10) environmental risks; 11) drilling and operating risks; 12) exploration and development risks; 13) competition; 14) the ability of management to execute its plans to meet its goals and other risks that are described in SEC reports filed by Cimarex and Magnum Hunter. Because forward-looking statements involve risks and uncertainties, actual results and events may differ materially from results and events currently expected by Cimarex and Magnum Hunter. Cimarex and Magnum Hunter assume no obligation and expressly disclaim any duty to update the information contained herein except as required by law. In connection with the proposed merger, Cimarex and Magnum Hunter have filed with the SEC a Registration Statement on Form S-4 (Registration Number 333-123019) that contains the joint proxy statement/prospectus on Form S-4 that discloses important information about the merger. Investors and security holders of Cimarex and Magnum Hunter are urged to read the joint proxy statement/prospectus filed with the SEC, and any other relevant materials filed by Cimarex or Magnum Hunter, as well as any amendments or supplements to those documents, because they contain important information about Cimarex, Magnum Hunter and the merger. Investors and security holders may obtain these documents (and any other documents filed by Cimarex and Magnum Hunter with the SEC) free of charge at the SEC's website at www.sec.gov. In addition, the documents filed with the SEC may be obtained free of charge (i) at www.cimarex.com or www.magnumhunter.com or (ii) by directing a request to Mary Kay Rohrer, Assistant Corporate Secretary, Cimarex Energy Co., phone: 303-295-3995, fax: 303-295-3494; or Morgan F. Johnston, Corporate Secretary, Magnum Hunter Resources, Inc., phone: 972-401-0752, fax: 972-443-6487. Investors and security holders are urged to read the joint proxy statement/prospectus and the other relevant materials before making any voting or investment decision with respect to the proposed acquisition. Cimarex, Magnum Hunter and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Cimarex and Magnum Hunter in favor of the merger. Information about the executive officers and directors of Cimarex and Magnum Hunter and their respective ownership of Cimarex and Magnum Hunter common stock is set forth in the joint proxy statement/prospectus, which was filed with the SEC on May 2, 2005. Investors and security holders may obtain more detailed information regarding the direct and indirect interests of Cimarex, Magnum Hunter and their respective executive officers and directors in the merger by reading the joint proxy statement/prospectus when it becomes available. PRICE AND PRODUCTION DATA For the Three Months Ended March 31, --------------------------- 2005 2004 ------------ ------------ Gas Production: Total production - Mcf 17,636,397 14,130,125 Gas volume - Mcf per day 195,960 155,276 Gas price - per Mcf $ 6.00 $ 5.26 Oil Production (including NGL): Total production - barrels 666,354 626,617 Oil volume - barrels per day 7,404 6,886 Oil price - per barrel $ 47.28 $ 33.80 CAPITALIZED COSTS INCURRED For the Three Months Ended March 31, --------------------------- 2005 2004 ------------ ------------ (in thousands) Exploration and development $ 92,737 $ 68,619 Acquisitions of proved properties 243 9 Oil and gas expenditures 92,980 68,628 Sale Proceeds (14) (35) $ 92,966 $ 68,593 RECONCILIATION OF CASH FLOW FROM OPERATIONS For the Three Months Ended March 31, --------------------------- 2005 2004 ------------ ------------ (in thousands) Net cash provided by operating activities $ 96,428 $ 63,047 Increase in operating assets and liabilities 4,641 6,405 Cash flow from operations $ 101,069 $ 69,452 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. INCOME STATEMENTS (unaudited) For the Three Months Ended March 31, --------------------------- 2005 2004 ------------ ------------ (In thousands, except per share data) Revenues: Gas sales $ 105,874 $ 74,332 Oil sales 31,508 21,178 Marketing sales 53,736 36,761 Other, net 589 3,648 191,707 135,919 Costs and expenses: Depreciation, depletion and amortization 38,085 26,338 Asset retirement obligation accretion 385 290 Transportation 2,474 2,355 Production 10,171 9,469 Taxes other than income 10,895 8,365 Marketing purchases 53,227 36,300 General and administrative 7,892 4,509 Stock compensation 1,225 468 Financing costs -- Interest expense 188 296 Interest income (652) (87) 123,890 88,303 Income before income tax expense 67,817 47,616 Income tax expense 24,452 17,751 Net income $ 43,365 $ 29,865 Earnings per share: Basic $ 1.04 $ 0.72 Diluted $ 1.00 $ 0.70 Weighted average shares outstanding: Basic 41,749 41,305 Diluted 43,218 42,615 CASH FLOW STATEMENTS (unaudited) For the Three Months Ended March 31, --------------------------- 2005 2004 ------------ ------------ (in thousands) Cash flows from operating activities: Net income $ 43,365 $ 29,865 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 38,085 26,338 Asset retirement obligation accretion 385 290 Deferred income taxes 17,312 10,924 Stock compensation 1,225 468 Other 697 1,567 Changes in operating assets and liabilities: (Increase) decrease in receivables, net 7,871 (13,435) (Increase) in inventories (4,292) (2,677) (Increase) decrease in other current assets (3,122) 1,837 Increase in accounts payable 1,910 9,354 (Decrease) in accrued liabilities (6,925) (1,511) Increase (decrease) in other non-current liabilities (83) 27 Net cash provided by operating activities 96,428 63,047 Cash flows from investing activities: Oil and gas expenditures (96,473) (67,376) Acquisition of oil and gas properties (243) (9) Proceeds from sale of assets 37 113 Other expenditures (3,093) (1,952) Net cash used by investing activities (99,772) (69,224) Cash flows from financing activities: Common stock reacquired and retired (67) (121) Proceeds from issuance of common stock 690 4,371 Net cash provided by financing activities 623 4,250 Net change in cash and cash equivalents (2,721) (1,927) Cash and cash equivalents at beginning of period 115,746 40,420 Cash and cash equivalents at end of period $ 113,025 $ 38,493 BALANCE SHEETS (unaudited) March 31, December 31, 2005 2004 ------------ ------------ (In thousands, except share data) Assets Current assets: Cash and cash equivalents $ 113,025 $ 115,746 Receivables, net 96,118 103,989 Inventories 14,034 9,742 Deferred income taxes 1,467 2,149 Other current assets 7,943 4,821 Total current assets 232,587 236,447 Oil and gas properties at cost, using the full cost method of accounting: Proved properties 1,699,528 1,596,704 Unproved properties and properties under development, not being amortized 63,030 72,249 1,762,558 1,668,953 Less - accumulated depreciation, depletion and amortization (903,704) (866,660) Net oil and gas properties 858,854 802,293 Fixed assets, net 17,483 16,109 Goodwill 44,967 44,967 Other assets, net 6,462 5,630 $ 1,160,353 $ 1,105,446 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 30,034 $ 26,511 Accrued liabilities 66,991 77,362 Revenue payable 37,516 39,129 Total current liabilities 134,541 143,002 Deferred income taxes 241,640 225,285 Other liabilities 38,561 36,447 Stockholders' equity: Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued -- -- Common stock, $0.01 par value, 100,000,000 shares authorized, 41,774,841 and 41,729,280 shares issued and outstanding, respectively 418 417 Paid-in capital 252,031 250,248 Unearned compensation (10,268) (10,072) Retained earnings 503,396 460,031 Accumulated other comprehensive income 34 88 745,611 700,712 $ 1,160,353 $ 1,105,446 SOURCE Cimarex Energy Co. -0- 05/04/2005 /CONTACT: Paul Korus, Vice President & CFO, or Mark Burford, Director of Capital Markets, both of Cimarex Energy Co., +1-303-295-3995/ /Web site: http://www.magnumhunter.com / /Web site: http://www.cimarex.com /