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JP Morgan Energy Conference – Cimarex Energy Co.

Cimarex Energy Co. · Jun 18, 2019 · 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. JP Morgan Energy Conference – Cimarex Energy Co. – slide 1
    JP MORGAN ENERGY EQUITY CONFERENCE June 18, 2019
  2. JP Morgan Energy Conference – Cimarex Energy Co. – slide 2
    Cimarex Energy Snapshot NYSE SYMBOL: XEC MARKET CAP1: 6.8 BILLION ENTERPRISE VALUE1: 8.8 BILLION DEBT/EBITDA2: 1.3X QUARTERLY DIVIDEND: 0.20/SHARE 2019E OIL PRODUCTION GROWTH: 18 - 30% 1 As of June 11, 2019 CIMAREX…
  3. JP Morgan Energy Conference – Cimarex Energy Co. – slide 3
    Cimarex Energy: Maximizing Returns PREMIERE PORTFOLIO Core positions in the Permian and Anadarko Basins IDEA GENERATION Driven by rigorous technical evaluation FOCUSED EXECUTION Focused on maximizing ROR and NPV LOOKBACK…
  4. JP Morgan Energy Conference – Cimarex Energy Co. – slide 4
    Recent Highlights COMMITTED 125,000 MMBTU OF GAS PER DAY TO WHISTLER PIPELINE PROJECT 10-year, firm commitment out of the Permian Basin Gives Cimarex access to Gulf Coast pricing Expected to be in service 2Q 2021 2019 CAPITAL…
  5. JP Morgan Energy Conference – Cimarex Energy Co. – slide 5
    Hitting Our Stride: Generating Free Cash Flow* CUMULATIVE FREE CASH FLOW (MM) CUMULATIVE FREE CASH FLOW: 2016 - 2018A 2019 - 2021E 19-21E: 100-600 MM 600 16-18A: 532 MM outspend 600 AVERAGE ANNUAL OIL GROWTH: 400 19-21E: 15%…
  6. JP Morgan Energy Conference – Cimarex Energy Co. – slide 6
    2019 Capital Investment Program AVALON OTHER 2% 2% BONE SPRING 4% WOLFCAMP WOODFORD 78% 4% E&D CAPITAL OF 1.35 1.45 BILLION MERAMEC 10% D&C CAPITAL 1.10 1.20 BILLION 84% of E&D capital Permian Basin 85% Mid-Continent Region…
  7. JP Morgan Energy Conference – Cimarex Energy Co. – slide 7
    Capital Investment Q1 MILLIONS 1Q19A 2019E DRILLING & COMPLETION1 (D&C) 319 1,100 - 1,200 EXPLORATION & DEVELOPMENT2 (E&D) 368 1,350 - 1,450 MIDSTREAM 18 60 - 70 TOTAL CAPITAL INVESTMENT 386 1,410 - 1,520 1 Drilling,…
  8. JP Morgan Energy Conference – Cimarex Energy Co. – slide 8
    2019 Delaware Basin Plans D&C WELLS DRILLED AVERAGE LATERAL CAPITAL BY COUNTY LENGTH BY COUNTY 10,000 8,000 WOLFCAMP EDDY REEVES 6,000 LEA 4,000 9351,020MM 65 NET WELLS 2,000 0 CULBERSON REEVES EDDY…
  9. JP Morgan Energy Conference – Cimarex Energy Co. – slide 9
    Delaware Basin Overview NEW MEXICO TEXAS 259,000 TOTAL NET ACRES 85% OF 2019 D&C BUDGET CURRENTLY RUNNING 7 RIGS; 3 COMPLETION CREWS STACKED PAY OPPORTUNITIES Provides multi-zone development opportunities Upper and Lower…
  10. JP Morgan Energy Conference – Cimarex Energy Co. – slide 10
    Maximizing Value: Understanding Fracture Surface Area No Interference Not Maximizing PV: < 130mm CUMULATIVE PROJECT: PV vs. ROR CUMULATIVE PV (MM) ROR (%) 150 90% C A 140 80% CUMULATIVE PV (MM) 130 70% Increased Interference…
  11. JP Morgan Energy Conference – Cimarex Energy Co. – slide 11
    Maximizing Value PV vs ROR CUMULATIVE PROJECT: PV vs. ROR INCREMENTAL WELL: PV vs. ROR CUMULATIVE PV (MM) ROR (%) INCREMENTAL PV (MM) ROR (%) 35 90% 6 90% CULMULATIVE PV (MM) 30 80% PER WELL PV (MM) 4 60% PER WELL ROR…
  12. JP Morgan Energy Conference – Cimarex Energy Co. – slide 12
    Delaware Basin Reeves County, TX SKY PILOT 4 WELLS RESOLUTE ACQUISITION CLOSED SANDLOT 82,853 NET ACRES 4 WELLS SENTINEL 5 WELLS 38% OF 2019 D&C CAPITAL HARDSCRABBLE 6 WELLS TARGETING UPPER WOLFCAMP FOUR DEVELOPMENTS ON…
  13. JP Morgan Energy Conference – Cimarex Energy Co. – slide 13
    Delaware Basin Culberson/White City NEW MEXICO TEXAS OWL DRAW 3 WELLS 100,000+ NET ACRES JDA WITH CHEVRON IN CULBERSON ARISTIDES 6 WELLS SIR BARTON 34% OF 2019 D&C CAPITAL 7 WELLS Targeting Upper Wolfcamp & Bone Spring…
  14. JP Morgan Energy Conference – Cimarex Energy Co. – slide 14
    Culberson: Top-Tier Oil Wells DELAWARE BASIN CUMULATIVE OIL PRODUCTION BY COUNTY (8,500 LL, First Prod 2016, Upper Wolfcamp & Bone Spring Formations) 6 MONTH 12 MONTH 18 MONTH XEC CULBERSON LOVING LEA EDDY WARD REEVES 400 350…
  15. JP Morgan Energy Conference – Cimarex Energy Co. – slide 15
    Culberson: Water Infrastructure Driving Efficiencies RISER: XEC-ENGINEERED ACCESS FOR WATER REUSE SALTWATER DISPOSAL (SWD) Own & operate the system Improves operating costs System redundancy reduces downtime System expanding…
  16. JP Morgan Energy Conference – Cimarex Energy Co. – slide 16
    Culberson: Resilient Long Lateral Returns FRAC GENERATIONS INCREASING PRODUCTIVITY UPPER WOLFCAMP BTAX IRR* GEN 1 GEN 2 GEN 3 GEN 4 1/Mcf 2/Mcf CUMULATIVE OIL PRODUCTION (MBBL) 700 250% 600 200% 500 400 150% 300 100%…
  17. JP Morgan Energy Conference – Cimarex Energy Co. – slide 17
    Delaware Basin Lea County, NM 31,384 NET ACRES VACA DRAW TARGETING: 6 WELLS Upper Wolfcamp Avalon Bone Spring ONE DEVELOPMENT ON PRODUCTION IN 2019 NEW MEXICO CIMAREX ACREAGE TEXAS UPPER WOLFCAMP AVALON BONE…
  18. JP Morgan Energy Conference – Cimarex Energy Co. – slide 18
    Mid-Continent Overview OKLAHOMA 326,000 NET ACRES BILLY WORT MISS MARY 2 WELLS 3 WELLS 5 WELLS WOODFORD: 135,625 NET UNDEVELOPED ACRES (HBP) MERAMEC: 116,500 NET ACRES (98% HBP) Three developments on production in 2019…
  19. JP Morgan Energy Conference – Cimarex Energy Co. – slide 19
    Cash Operating Margin Expansion DECLINING CASH COSTS SUPPORTING MARGIN EXPANSION 50 80% 70% 68% /BOE OPEX & CASH MARGIN 40 70% 65% 66% 30 60% 55% MARGIN % 54% 20 50% 10 40% 14.2 10.7 9.5 9.6 8.6 8.3 0…
  20. JP Morgan Energy Conference – Cimarex Energy Co. – slide 20
    Cimarex Energy Overview PROVEN STRONG PREMIER ENDURING TRACK FINANCIAL PORTFOLIO CULTURE RECORD POSITION CREATING VALUE CORE POSITIONS IN MAXIMIZING FULL- LOW LEVERAGE AND AND GENERATING THE PERMIAN AND CYCLE RETURN ON…
  21. JP Morgan Energy Conference – Cimarex Energy Co. – slide 21
    APPENDIX APPENDIX 22
  22. JP Morgan Energy Conference – Cimarex Energy Co. – slide 22
    2019 Guidance 2Q19E FY19E Production (MBOE/d) 263 - 275 260 275 Oil Production (MBO/d) 79.5 85.5 80.0 88.0 Capital Expenditures (billion) E&D 1.35 1.45 D&C 1.10 1.20 Midstream/Other 0.06 0.07 Expenses (/BOE) Remainder of…
  23. JP Morgan Energy Conference – Cimarex Energy Co. – slide 23
    2019 Net Wells on Production 2019 ACTIVITY: 82 NET WELLS (AVERAGE OPERATED LATERAL LENGTH: 9,050) 38 30 26 18 8 1QA 2QE 3QE 4QE WELLS WAITING ON COMPLETION AT 12/31/19 PERMIAN BASIN MID-CONTINENT 2019 NET WELLS…
  24. JP Morgan Energy Conference – Cimarex Energy Co. – slide 24
    Disciplined Financial Positioning XEC DEBT/TTM EBITDA 3.0x 2.5x LIQUIDITY 1.3 billion of liquidity, including 21 MM of cash 2.0x (3/31/2019) 1.5x CONSERVATIVE LEVERAGE 1.3x Debt/TTM EBITDA (3/31/19) 1.0x INVESTMENT GRADE DEBT…
  25. JP Morgan Energy Conference – Cimarex Energy Co. – slide 25
    What are Fully-Burdened Returns % OF FULLY-BURDENED RETURNS FULLY- 100% BURDENED 90% HALF 80% CYCLE 70% 60% 50% 40% 30% 20% 10% 0% DRILLING & MIDSTREAM SWD OVERHEAD LAND - 1,500/ACRE COMPLETION ATAX…
  26. JP Morgan Energy Conference – Cimarex Energy Co. – slide 26
    Animal Kingdom Well Performance AVERAGE CUMULATIVE PRODUCTION vs TIME WOLFCAMP C, 3 WELLS WOLFCAMP D, 5 WELLS 450 EIGHT WELLS ON PRODUCTION FOR 225 DAYS 400 350 POSITIVE RESULTS FROM LOWER WOLFCAMP 300 SPACING PILOT Eight wells…
  27. JP Morgan Energy Conference – Cimarex Energy Co. – slide 27
    Permian Basin Water Management OWN AND OPERATE SALT WATER DISPOSAL (SWD) SYSTEMS IN CULBERSON, EDDY AND REEVES Improves operating costs RECYCLING PRODUCED WATER FOR COMPLETION OPERATIONS 53% of total water procured in 2018 was…
  28. JP Morgan Energy Conference – Cimarex Energy Co. – slide 28
    Permian Basin Takeaway SALES AGREEMENTS IN PLACE FOR OIL VOLUMES THROUGH 2019 80% of oil production on pipe STRATEGIC PARTNERSHIPS IN CORE AREAS Pipelines in place Purchase obligations Midland index pricing GAS SALES AGREEMENTS…
  29. JP Morgan Energy Conference – Cimarex Energy Co. – slide 29
    2018 Growth in Production and Reserves PROVED RESERVES (MMBOE) DAILY PRODUCTION (MBOE) 559 591 250 600 222 482 190 200 161 150 300 100 50 0 0 2016 2017 2018 2016 2017 2018 OIL NGL NATURAL GAS OIL NGL NATURAL GAS…
  30. JP Morgan Energy Conference – Cimarex Energy Co. – slide 30
    Oil Hedges as of May 8, 2019 2019 2020 OIL 2Q 3Q 4Q 1Q 2Q WTI Oil Collars1 Volume (Bbl/d) 34,000 32,000 24,000 16,000 8,000 Weighted Average Floor 53.68 54.81 56.42 56.13 52.25 Weighted Average Ceiling 66.57 68.60 69.40 70.08…
  31. JP Morgan Energy Conference – Cimarex Energy Co. – slide 31
    Gas Hedges as of May 8, 2019 2019 2020 GAS 2Q 3Q 4Q 1Q 2Q PEPL Gas Collars1 Volume (MMBtu/d) 150,000 120,000 90,000 60,000 30,000 Weighted Average Floor 2.03 1.94 1.94 1.96 1.95 Weighted Average Ceiling 2.39 2.32 2.37 2.38 2.26 El…
  32. JP Morgan Energy Conference – Cimarex Energy Co. – slide 32
    Non-GAAP Reconciliation ( in Millions) 2016 2017 2018 LTM 3/31/19 Net income (loss) (409) 494 792 632 Income tax expense (benefit) (214) 188 231 182 Interest expense, net of capitalized 62 52 47 47 DD&A and ARO accretion 400 462…
  33. JP Morgan Energy Conference – Cimarex Energy Co. – slide 33
    Non-GAAP Reconciliation Three Months Ended ( in Millions) Mar 31, March 31, 2019 ( in Millions) 2018 2019 Long-term debt (principal) 2,000 Net cash provided by operating activities 383 250 Redeemable preferred stock 82 Change in…

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