-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AuaFcegq62CrRVBO7Lg8WN64j5mkChCzUb+IjgTuxk2pXyZPrOOydoJhkPDk6VQI OgZgXftDP7+ohNAXwQFoJA== 0000950172-02-001075.txt : 20020521 0000950172-02-001075.hdr.sgml : 20020521 20020521171436 ACCESSION NUMBER: 0000950172-02-001075 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20020521 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HELMERICH & PAYNE INC CENTRAL INDEX KEY: 0000046765 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 730679879 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: UTICA AT 21ST ST CITY: TULSA STATE: OK ZIP: 74114 BUSINESS PHONE: 9187425531 MAIL ADDRESS: STREET 1: UTICA AT 21ST ST CITY: TULSA STATE: OK ZIP: 74114 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CIMAREX ENERGY CO CENTRAL INDEX KEY: 0001168054 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 450466694 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 425 SEC ACT: 1934 Act SEC FILE NUMBER: 132-02238 FILM NUMBER: 02659127 BUSINESS ADDRESS: STREET 1: 1579 EAST 21ST STREET CITY: TULSA STATE: OK ZIP: 74114 BUSINESS PHONE: 9187425531 MAIL ADDRESS: STREET 1: 1579 EAST 21ST STREET CITY: TULSA STATE: OK ZIP: 74114 FORMER COMPANY: FORMER CONFORMED NAME: HELMERICH & PAYNE EXPLORATION & PRODUCTION CO DATE OF NAME CHANGE: 20020222 425 1 payne425.txt Filed by Helmerich & Payne, Inc. 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 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 May 15, 2002. Slide 2 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 and Key'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 3 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 4 PARTICIPANTS IN SOLICITATION H&P, Cimarex, Key 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. Information concerning Key's participants in the solicitation is set forth in Key's proxy statement dated April 26, 2001, which is filed with the SEC. 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 5 A New Look For An 82 Year Old Company >> H&P to Become a "Pure Play" Contract Drilling Company Contract Drilling E&P Portfolio HP 70 20 10 >> H&P's Total Rig Fleet to Increase by 33% from 2001 To 2003 1998 1999 2000 2001 2002E 2003E East 90 90 88 96 113 128 [graphic omitted] Slide 6 Helmerich & Payne, Inc. (pre-transaction) [graphic omitted] Contract Drilling - 104 rigs E&P - 245 Bcfe Portfolio - $300MM >> ~ $2.0 billion market cap >> ~ 50 million shares outstanding Slide 7 Exploration & Production Division Spun Off As Cimarex Energy Co. [graphic omitted] Exploration and Production division spun off to H&P Shareholders as Cimarex Energy Co. Slide 8 Spin/Merge Goals >> Use financial strength to enhance shareholder value >> Increase focus and visibility >> Strengthen E&P division's position >> Capture tax efficiency Slide 9 Why Key Production? >> Impressive people and organization >> Complementary and overlapping asset base >> Strong balance sheet >> Similar philosophies and cultures Slide 10 Key Production Record Of Growth ($ in millions) 1992 2001 ---- ---- Market Cap $25 $240 Debt $3 $34 Stock price ($/share) $3 $17 Reserves (Bcfe) 38 147 Reserves (Mcfe/share) 3.6 10.5 Production (Bcfe) 8.3 26.0 Slide 11 Combined Properties Helmerich & Payne, Inc. Proved reserves (Bcfe) 245 % Natural gas 87% Production (MMcfe/d) 116 Net undeveloped acres 150,401 Key Production Company Proved reserves (Bcfe) 147 % Natural gas 62% Production (MMcfe/d) 74 Net undeveloped acres 119,251 [graphic omitted] Slide 12 Cimarex Energy ($ 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% 2001 EBITDAX $80 $146 $226 Employees 95 150 245 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 East 90 90 88 96 113 128 [graphic omitted] Slide 15 Rig Locations [graphic omitted] 71 U.S. Rigs 33 International Rigs -- 104 Total H & P Rigs 4 Management Contracts Slide 16 HELMERICH & PAYNE INTERNATIONAL DRILLING CO. FlexRig(TM) [graphic omitted] The BEST VALUE rig for a wide range of wells Slide 17 The Market For FlexRig(TM)* o The customer needs BEST VALUE from the contractor to achieve lowest total well cost. o H&P believes BEST VALUE will come from investments in new rigs, innovative ideas and applications of new technologies - not from renovating the last used rig available. _________ * FlexRig(TM) hereinafter referred to as FlexRig Slide 18 The FlexRig's 8 - 18,000' Capacity is Aimed at a Market Need U.S. Rigs Drilling 1982-2001* [graphic omitted] 0-10,000' 10,001-15,000' 15,001-17,500' 17,501-20,000' >20,000' 1983 62% 29% 5% 3% 1%4 2001 44% 43% 7% 4% 2% Slide 19 FlexRig Offers Continuity Over 8 - 18,000' well depths Wells drilled by R166 (FlexRig1) for Chevron May '98 - Nov '01 8-9,000' 9-11,000' 11-14,000' 14-18,000' 9 28 8 4 [graphic omitted] Slide 20 FlexRig Offers Continuity Over 8 - 18,000' well depths Wells drilled by R168 (FlexRig1) for Shell Nov '99 - April '02 (Continuing) 8-9,000' 9-11,000' 11-14,000' 14-18,000' 5 1 10 7 [graphic omitted] Slide 21 H&P Goals For Improving Value o Reduce safety and environmental incidents. o Improve productivity o Build the right rig at the best value cost Slide 22 Reduce Safety & Environmental Incidents o Use "safety by design" to minimize or eliminate incidents. o Develop new ideas such as patented round mud tanks to reduce incidents. o Since 1998, mobile and FlexRigs have a Total Recordable Incident Rate (TRIR) 28% lower than H&P conventional rigs. 5 - Year Average TRIR (1998-1Q02) [graphic omitted] Slide 23 IMPROVE PRODUCTIVITY o Reduce crew turnover. o Mobile and FlexRig rig turnover rate is 73% lower than H&P conventional rigs. H&P Crew Turnover - Mobile and FlexRigs* vs. Conventional Rigs 15 Months Jan. '01 - Mar. '02 [graphic omitted] Slide 24 Capture & Use Organizational Learnings [graphic omitted] graphic shows: Maintenance Safety Environment Communications Training Supply Chain Management Slide 25 Apply New Ideas & Technology [Graphic omitted] graphic shows: V-ICIS eD Controls Round Mud Tanks Integrated Top Drive P-Quip System VFD AC Drainworks BoP Handling Slide 26 Reduce Well Cycle Time South Texas move times - 1500 HP Rigs Average days per 40 mile move: FlexRigs (257 moves) - 2.4 days Conventional (49 moves) - 6.7 days [graphic omitted] Slide 27 Reduce Total Well Cost [graphic omitted] Slide 28 Build The Right Rig At The Best Value Cost o 1997 industry estimate*: $12.45MM for new 2000HP land rig w/o top drive. Related estimate: $11MM for new 1500HP land rig w/o top drive. o H&P created value in FlexRig: Lower investment and enhanced capabilities Year Rig # Rigs New Cost ($MM) Top Drive ---- -------- ------ -------------- --------- 1998 FlexRig1 6 6.7A No 2001 FlexRig2 12 8.0A No 2002-3 FlexRig3 25 10.5E Yes * Source: Oil & Gas Journal, 22 September 1997 Slide 29 Reliability of New Technology [graphic omitted] Sources of Improvements - ----------------------- o Support from H&P field operations o Learning curve o Varco - H&P collaboration o Varco command center using H&P WAN o Daily conference call to share organizational learnings o Software and hardware upgrades o "No Retreat" attitude Slide 30 Rig Status as of 20 May 2002 Rigs Working / Available Contracted --------- ---------- U.S. Land, Mobile & FlexRigs(tm) 30 100% U.S. Land, Conventional 29 72% U.S. Platform 12 75% International Land 33 55% --- --- Total 104 75% Slide 31 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 39 54 [graphic omitted] Slide 32
EBITDA ($MM) 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002E 2003E EBITDA 32.889 46.48 52.745 53.762 85.461 114.086 142.1 127.3 118.9 180.8 140 Peak Run Rate 371
[graphic omitted] -----END PRIVACY-ENHANCED MESSAGE-----