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Cimarex's Permian Woes Offset by Upswing in Cana-Woodford Output
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Cimarex Energy Co. reported third quarter 2014 results.
Operations Update
Cimarex invested $460 million on exploration and development during the third quarter, bringing the total invested in 2014 to $1.4 billion. The Permian Basin has accounted for 72 percent of the capital investment year-to-date.
Third quarter production volumes were impacted by severe weather conditions in the Delaware Basin during September. Heavy rains and flooding negatively impacted third quarter production by approximately 15 to 20 MMcfe per day (42 percent oil). Partially offsetting this was better-than-expected production volumes from newly completed wells in the Mid-Continent.
A total of 66 gross (36 net) wells were drilled during the quarter. At September 30, 52 gross (34 net) wells were awaiting completion.
For detailed operations updates, see below.
Cimarex Unveils 30-Day IPs Across the Wolfcamp, Bone Spring Plays
Cimarex Drills On in the Cana-Woodford; Four Rigs Running
Cimarex's average daily production by commodity and region is summarized below:
Production
Production volumes averaged 942 million cubic feet equivalent (MMcfe) per day in the third quarter, a 31 percent increase over third quarter 2013 output of 717 MMcfe per day. Oil production grew 10 percent to 43,376 barrels per day. Natural gas production increased 35 percent to 468 MMcf per day. Natural gas liquids (NGL) volumes of 35,627 barrels per day grew 59 percent. Third quarter 2014 production volumes were 50 percent natural gas, 27 percent oil and 23 percent NGL.
After adjusting for property sales (25-30 MMcfe per day) and weather-related production and well completion delays, fourth quarter 2014 volumes are projected to average 930-955 MMcfe per day. Incorporating updated fourth quarter guidance, full year production is now estimated to average 864-870 MMcfe per day, a mid-point increase of 25 percent over 2013. At the midpoint, year-over-year oil and natural gas volumes are now projected to grow approximately 16 and 23 percent, respectively, and NGL volumes are expected to increase 45 percent.
Capital investment budgeted for exploration and development for 2014 remains unchanged at $1.95 billion. Expenses per Mcfe of production for 2014 are estimated to be:
Financial Results
Cimarex reported third quarter 2014 net income of $144.3 million, or $1.65 per diluted share. This compares to 2013 third quarter net income of $138.4 million or $1.59 per diluted share. Adjusted 2014 third quarter net income was $1.53 per diluted share. Third quarter 2014 adjusted cash flow from operations was $439.7 versus $394.0 million a year ago. Revenues from oil and gas sales for the third quarter totaled $636.5 million compared to $549.6 million in the same period of 2013.
Natural gas prices averaged $4.10 per thousand cubic feet (Mcf) in the quarter, up 10 percent year-over-year. Oil prices averaged $87.27 per barrel, down 15 percent, and NGL prices averaged $34.08 per barrel. (See table of Price and Production Data below.)
Total debt at September 30, 2014, consisted of $1.5 billion of long-term notes. Cimarex had no borrowings under its revolving credit facility and had a cash balance of $564 million. Proceeds from property sales closed during the quarter totaled $454 million which, included $446 million from the sale of oil and gas properties and $8 million for gas gathering and processing assets.