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Q4 2016 Earnings Presentation – Cimarex Energy Co.

Cimarex Energy Co. · Feb 14, 2017 · 37 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 1
    February 2017 1
  2. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 2
    Who is Cimarex Market cap......... 12.6B Debt/Adj. EBITDA1........ 2.5x Production (4Q16)..... 960 MMcfe/d Proved reserves..... 2.9 Tcfe % Natural gas..... 51% % Proved developed..... 79% R/P Ratio..... 8.2x Quarterly…
  3. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 3
    Whats Important Returns drive decisions Balanced portfolio of assets Premier position in the Delaware Basin and MidCon region Flexibility through commodity cycles Idea generation and track record of strong execution Strong…
  4. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 4
    Reserves Through Commodity Cycles Proved Reserves (Tcfe) 3.5 3.1 3.0 2.9 2.9 2.5 2.5 2.3 7.72 7.48 2.0 6.90 1.5 3.94 3.46 1.0 0.5 0.0 2012 2013 2014 2015 2016 Oil NGL Gas Realized price (/Mcfe) 5 5
  5. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 5
    Production Growth Daily Production Net Debt Adjusted Production/Share (MMcfe) (MMcfe) 4 3.55 3.44 3.28 3 2.56 2 1 0 2013 2014 2015 2016 6 6
  6. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 6
    Record PerUnit LOE Highlights Continued Efficiency Gains 1.08 0.83 0.80 0.56 0.64 0.40 0.61 0.58 0.43 0.14 0.33 0.28 0.28 0.10 0.06 0.04 0.05 0.04 0.25 0.23 0.21 0.19 0.19 0.19 0.13 0.10 0.10 0.08 0.09 0.07 2014…
  7. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 7
    2017 Capital Plans Drilling & Completion Capital (millions) 2017 E&D Capital estimated 1,531 to be 1.1 1.2 billion Includes D&C capital of 850 1,251 900mm 25% Up 56% from 2016 level 76% of E&D capital 875 Generates 1015%…
  8. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 8
    2017 Drilling & Completion Capital Drilling & Completion Capital 850900 million 850900 million 2/3 Permian; 1/3 MidCon Includes 330mm of drilling to hold acreage Multiple projects & zones Delaware Basin Wolfcamp delineation &…
  9. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 9
    2017 Well Completions by Quarter 47 31 27 19 20 1Q 2Q 3Q 4Q Drilling & Permian Basin MidContinent WOC at 12/31/17 10 10
  10. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 10
    Completion Evolution Continues Pounds of Sand per Lateral Foot Jan. '15 July '15 Jan. '16 July '16 Jan. '17 Culberson Upper Wolfcamp 1,250 1,650 1,650 2,500 2,500 Culberson Lower Wolfcamp 1,250 1,250 1,250 2,400 2,500 Reeves Upper…
  11. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 11
    Biggest Opportunity Delaware Basin Wolfcamp 190,000 net acres in the fairway Multiple Wolfcamp Targets Culberson/White City Area 100,000+ net acres Upper & Lower Wolfcamp JDA with Chevron Reeves County 62,000 net acres Upper…
  12. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 12
    Culberson Area Wolfcamp Details 100,000+ net 100,000+ netacres; acresJDA with Chevron in Culberson County 2013 main objectives 21 Lower Wolfcamp long Drilling to hold acreage laterals producing Wolfcamp C & D 21 Upper Wolfcamp…
  13. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 13
    Long Lateral Performance Culberson Lower Wolfcamp Sixteen 10,000foot laterals 650 Cumulative Production Average 30day peak IP of (MBOE) 2,316 BOE/d (25% oil; 45% 550 gas; 30% NGL) 114% Increase Flying Ebony 450 Average 30day…
  14. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 14
    Improving Upper Wolfcamp Completion Design Culberson County Seven 10,000ft. laterals Cumulative Production (MBOE) 18% Increase completed to date 600 Wells with new frac have 1,650+ lb/ft of sand 500 30day peak IP of 2,097 BOE/d…
  15. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 15
    Resilient Long Lateral Returns Culberson County Wolfcamp 10,000ft. lateral BTax IRR* 200% 175% Lower Wolfcamp Flying Ebony completion 150% 125% 100% 75% 50% Upper Wolfcamp 25% Lower Wolfcamp 0% 20 30 40 50…
  16. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 16
    Culberson County Upper Wolfcamp Pilot 250 Extrapolated Average Cumulative Production per well Similar perwell results with (MBOE) 200 6 or 8 wells per section Next step: tighter spacing 150 12 wells per section Stack/Stagger…
  17. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 17
    Reeves County Focus Area Targeting Upper Wolfcamp 14 long laterals producing Average 30day peak IP of 1,645 Cabinet State BOE/d (50% oil; 28% gas; 22% NGL) Best wells to date 10kft: Big Timber has avg. 30day peak IP of 3,309…
  18. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 18
    Bigger Completion Improves Avalon Results Lea County 250 13,700 net acres Cumulative Production Current inventory of 250 (MBOE) 119% Increase locations 200 Includes Avalon and Leonard Assumes 8 wells per section Plans to test 12…
  19. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 19
    MidContinent Overview Meramec and Woodford Stacked Targets Meramec: 116,500 net prospective acres 90,000 derisked Woodford: 136,500 net undeveloped acres (88% HBP) Meramec play outline Woodford play outline Cana core…
  20. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 20
    Meramec: The Big Picture 245,000ft laterals have avg. Peterson 30day peak IP of 1,417 BOE/d 34% oil; 43% gas; 23% NGL Nine 10,000ft laterals have avg. 30day peak IP of 2,057 BOE/d Sims 43% oil; 37% gas; 20% NGL Oil yield range:…
  21. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 21
    Meramec Long Lateral Performance 300 54% uplift after 180 days Cumulative Production Nine 10,000ft laterals have 30 (MBOE) day peak IP of 2,057 BOE/d 250 43% oil; 37% gas; 20% NGL Oil yields range from 37 to 523 200 Bbl/MMcf 47%…
  22. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 22
    Meramec Spacing Pilots Stacked/Staggered Pilot Meramec Eight total wells Four Meramec wells Osage Stacked/staggered spacing Testing 10 wells per section Four Woodford wells Testing nine wells per section Woodford Flowing back 16…
  23. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 23
    Woodford Shale Activity CanaWoodford Activity Map Long history of activity Participated in 880 gross wells since 2007 Eastern core infill underway Operated Well Nonoperated Well Six sections; two operated 47 gross (22 net) wells…
  24. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 24
    Woodford Increased Density Spacing Pilots Testing 16 & 20 wells per 16 wells/section 264 20 wells/section section Woodford 80 Eight well test 4 wells tests 16 wells/section 330 5 wells testing 20 wells/section Two rigs…
  25. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 25
    Woodford: Completion Evolution Continues Cumulative Production Armacost section developed 2,400 using larger completion Per Well Average (MMcfe) Per well production inline with earlier sections 2,000 Tighter spacing means more…
  26. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 26
    Wellpositioned for 2017 and Beyond Diverse asset portfolio with solid returns Strong financial position Debt to total cap of 39% 653 million of cash on the balance sheet at 12/31/16 Investment grade rating with stable outlook at…
  27. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 27
    Appendix 28 28
  28. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 28
    2017 Guidance 2017 Production, Unit Expense and Capital Guidance First Quarter FullYear Production Total Equivalent (Bcfe/d) 1.01 1.05 1.06 1.110 % Gas 47% 45% Capital Expenditures 1.1 1.2 billion Expenses (/Mcfe): Production…
  29. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 29
    Hedges 2017 2018 Average First Second Third Fourth First Oil: Quarter Quarter Quarter Quarter Quarter WTI Oil Collars (1) Volume (Bbl/d) 20,000 20,000 16,000 11,000 6,000 14,602 Wtd Avg Floor Purchased (put) 43.08 43.08 45.09 46.27…
  30. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 30
    Hedge Strategy Hedged Volumes as of 12/31/16 Target volume is 50% of oil MMcfe/d and 50% of gas production 350 Methodical approach 300 Five quarter duration Bias toward costless collars 250 Downside protection 200 Some upside price…
  31. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 31
    Cana Area Production MMcfe/day Row 4 drilling commenced 450 Eastern Core completions began Row 4 completions began 419 406 400 384 385 390 375 350 353 350 333 322 310 300 255 250 200 150 100 50 Q1 14 Q2 14 Q3 14 Q4…
  32. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 32
    Permian Basin Production MBOE/day 100 99 94 90 87 86 85 85 81 80 80 74 70 68 65 60 58 50 40 30 20 10 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Oil NGL Gas 33 33
  33. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 33
    Permian Region Provides Multiple Opportunities Multiple projects/multiple zones Wolfcamp shale (oil & gas) Bone Spring sands (oil) Avalon Shale (oil window) 2016 Focus Wolfcamp Long Laterals Meeting acreage obligations 34
  34. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 34
    Culberson County Tim Tam Infill Development First Lower Wolfcamp Infill Five 10,000foot laterals Testing six wells per twosection unit Staggered well pattern Flowing back D Barbaro Lower Wolfcamp Tim Tam 878 878 Prewit…
  35. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 35
    NonGAAP Reconciliation Reconciliation of Net Income to EBITDA and Adjusted EBITDA1 ( in Millions) 2013 2014 2015 2016 Net income (loss) 565 507 (2,409) (431) Income tax expense (benefit) 329 299 (1,373) (227) Interest expense, net…
  36. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 36
    NonGAAP Reconciliation Reconciliation of cash flow from operations1 Debt/Cap Calculation2 Three months Dec. 31, Ended Dec. 31, 2016 2016 2015 (in millions) (in millions) Longterm debt (principal) 1,500 Net cash provided by…
  37. Q4 2016 Earnings Presentation – Cimarex Energy Co. – slide 37
    Upsized Frac Improves Second Bone Spring Results White City 5,000ft lateral 200 Cumulative Production (MBOE) Focus Area 180 160 140 70% Increase 120 100 80 15 stages from nine 60 100 locations identified 40 First…

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