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Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co.

Cimarex Energy Co. · Nov 14, 2018 · 33 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. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 1
    Bank of America Merrill Lynch 2018 Global Energy Conference November 14-15, 2018
  2. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 2
    Cimarex Energy Snapshot NYSE symbol: XEC Market Cap1: 8.5 billion Enterprise Value1: 9.1 billion Debt/EBITDA2: 1.1x Annual Dividend3: 0.72 (0.9% yield) Daily Production: 219 MBOE, 64 MBO 2018E Capex: 1.6-1.7 billion 2018E…
  3. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 3
    Cimarex Energy Overview Enduring Maximizing full-cycle return on invested capital Culture Proven Track Creating value, generating top-tier returns Record Premier Core positions in the Permian and Anadarko Basins Portfolio…
  4. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 4
    The Culture of Cimarex Idea Generation Driven by Rigorous Technical Evaluation Lookback Acreage Evaluation Concentration Improves Economic Increasing Economies Returns, Operational of Scale, Returns Efficiencies Maximize…
  5. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 5
    What are Fully-Burdened Returns Half-Cycle vs Fully-Burdened Returns (% of Fully-Burdened Investment vs IRR) 100% 90% Half-Cycle 80% 70% 60% Fully- Burdened 50% 40% 30% 20% 10% 0% Drilling & + Midstream + SWD +…
  6. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 6
    History of Outsized Returns Cash Return on Capital Employed (CROCE) XEC vs S&P 500 E&P Peers 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 XEC Peer Avg.*** 7
  7. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 7
    XEC Generating Top-Tier Returns 2018 Cash Return on Capital Employed (CROCE) XEC vs S&P 500 30% 25% 20% Average CROCE (%) 15% 10% 5% 0% Source: Stifel estimates E&P estimates based on Stifel estimates,…
  8. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 8
    Delaware Basin Overview 259,000 total net acres 70% of 2018 D&C Budget Currently running 12 rigs, 2 completion crews Stacked pay opportunities provides multi-zone development opportunities Upper and Lower Wolfcamp Second and…
  9. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 9
    Delaware Basin Culberson/White City Lower Wolfcamp Upper Wolfcamp Operated SWD 100,000+ net acres, JDA with Chevron in Culberson 25% of 2018 D&C capital Targeting Upper and Lower Wolfcamp, Bone Spring Western delineation…
  10. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 10
    Resilient Long Lateral Returns Culberson Long Lateral Wolfcamp BTAX IRR* 400% 300% 200% 100% 0% 30 40 50 60 70 Realized Oil Price Upper Wolfcamp - 2/Mcf Lower Wolfcamp - 2/Mcf Upper Wolfcamp - 1/Mcf Lower Wolfcamp -…
  11. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 11
    Delaware Basin Lea County Upper Wolfcamp 31,384 net acres Avalon Bone Spring 12% of 2018 D&C capital Targeting Upper Wolfcamp, Avalon, Bone Spring Vaca Draw 20-17 Lease IP30s: Triste Draw Upper Wolfcamp: 4,645 BOE/D (3,032 BO/D)…
  12. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 12
    Delaware Basin Reeves County 61,853 net acres Upper Wolfcamp Operated SWD 25% of 2018 D&C capital Targeting Upper Wolfcamp Wood State: 12 well/section Development wells 28% above parent wells Snowshoe Pagoda State: 16…
  13. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 13
    Well Productivity Improvements Long Lateral Upper Wolfcamp Wells (Culberson and Reeves Counties) 54 10,000-ft. lateral Upper Completion Generation IP180 (BOE/d) Wolfcamp wells drilled in Permian Basin since 2013 2,000 Improvement in…
  14. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 14
    Mid-Continent Overview 326,000 net acres 30% of 2018 D&C capital Woodford: 135,625 net undeveloped acres Participated in 950 wells Meramec: 116,500 net acres 14N-10W area: formulating Woodford/Meramec co-development plans…
  15. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 15
    Mid-Continent Meramec 116,500 net acres Lehman 100% HBP Steve O 15% of 2018 D&C capital Miss Mary 40 industry development pilots active, XEC has interest or data in 31 14N10W 2018 Developments Steve O: 6 wells on 8 well 5,000…
  16. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 16
    Mid-Continent Woodford Operated well Non-operated well 135,625 net undeveloped acres 15% of 2018 D&C capital 14N 10W Lone Rock (16,000 net acres) yielding best Woodford results to date, completion optimization Kim Anderson Farm…
  17. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 17
    Cash Operating Margin Expansion Declining LOE and Increasing Realized Prices Driving Margin Expansion 70% 35 60% 30 50% 25 /Boe OPEX & Margin 40% 20 Margin % 30% 15 20% 10 10% 5 0% 0 1Q16 2Q16 3Q16 4Q16 1Q17…
  18. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 18
    2018 Program Overview Production - MBOE/d Capital Program (mm) 2018E E&D Capital 1,600 - 1,700 238-247 218-221 D&C Capital 1,300 - 1,400 Midstream/Other 80 - 90 D&C as % of E&D 82% Permian 70% Mid-Continent 30% 1QA 2QA 3QA 4QE…
  19. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 19
    Disciplined Financial Positioning Significant 1.9 billion of liquidity, including 864mm of cash (3Q18) Liquidity Conservative 1.1x Debt/TTM EBITDA (3Q18) Leverage Investment 750 million 3.900% senior unsecured notes due in 2027 Grade…
  20. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 20
    Positioned for Success Enduring Maximizing full-cycle return on invested capital Culture Idea driven, technical emphasis Premier Generating strong returns Portfolio Decades of top-tier inventory Profitable 2018 Oil Production…
  21. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 21
    Appendix 22
  22. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 22
    2018 Guidance 4Q18E FY18E Production (MBOE/d) 238 - 247 218-221 Oil Production (MBbls/d) 73.0 - 78.0 66.0 67.2 Capital Expenditures (billion) E&D 1.6 1.7 D&C 1.3 1.4 Midstream/Other 0.08 0.09 Expenses (/BOE) Production 3.35…
  23. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 23
    Hedges as of October 30, 2018 2018 2019 2020 Fourth First Second Third Fourth First Second Quarter Quarter Quarter Quarter Quarter Quarter Quarter OIL WTI Oil Collars1 Volume (Bbl/d) 37,000 31,000 31,000 24,000 16,000 8,000…
  24. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 24
    Permian Basin Oil Takeaway Sales agreements in place for oil volumes through 2019 Strategic partnerships in core areas Pipelines in place Purchase obligations Midland index pricing 70% of oil production on pipe; increasing to…
  25. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 25
    Permian Basin Residue Gas & NGL Takeaway Sales agreements in place 98% of forecasted production through 2019 El Paso or Waha index pricing Own and operate two gas gathering systems Triple Crown Culberson/Eddy Counties Matterhorn…
  26. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 26
    Permian Basin Water Management Saltwater Disposal System Own and operate salt water disposal (SWD) systems in Culberson, Eddy and Reeves Improves operating costs Recycling produced water for completion operations 40% of total…
  27. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 27
    Permian Region Production Daily Production (BOE) 125 122 121 112 114 107 105 99 100 96 94 87 85 86 85 81 80 75 50 25 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Oil NGL…
  28. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 28
    Mid-Continent Region Production Daily Production (MBOE) 100 97 91 88 89 85 85 82 81 77 77 74 74 75 71 70 68 50 25 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Oil NGL Natural…
  29. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 29
    Investment Sensitivities Highlight Asset Quality and Depth Production Growth Cumulative 2019-2021 Capex (3-Yr CAGR) Free Cash Growth Sensitivities (mm) Boe Oil Flow (mm)* CROCE Maintenance Case 700 Flat Flat Growth Sensitivity…
  30. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 30
    Permian Basin Development Pilot Details Culberson Lower Wolfcamp - Animal Kingdom Animal Kingdom spacing Eight wells testing 14 wells per section Lower Wolfcamp 225 Producing 1,216 225 1,216 Red Hills (Lea) Upper Wolfcamp…
  31. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 31
    Non-GAAP Reconciliation Reconciliation of Net Income to EBITDA and Adjusted EBITDA1 LTM ( in Millions) 2015 2016 2017 9/30/18 Net income (loss) (2,580) (409) 494 650 Income tax expense (benefit) (1,472) (214) 188 143 Interest expense,…
  32. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 32
    Non-GAAP Reconciliation Reconciliation of cash flow from operations1 Debt/Cap calculation Nine Months Ended Sept 30, September 30, ( in Millions) 2018 ( in Millions) 2017 2018 Long-term debt (principal) 1,500 Net cash provided by…
  33. Bank of America Merrill Lynch 2018 Global Energy Conference – Cimarex Energy Co. – slide 33
    Non-GAAP Reconciliation Cash Return on Capital Employed (CROCE) Cash Flow from Operating Activities+ After-tax Interest Expense Average Book Equity + Average Debt 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cash flow from…

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