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3Q 2019 Earnings Presentation – Cimarex Energy Co.

Cimarex Energy Co. · Nov 5, 2019 · 30 slides

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Slides

  1. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 1
    3Q19 EARNINGS PRESENTATION November 2019
  2. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 2
    Cimarex Energy Snapshot NYSE SYMBOL: XEC MARKET CAP1: 4.5 BILLION ENTERPRISE VALUE1: 6.5 BILLION DEBT/EBITDA2: 1.2X QUARTERLY DIVIDEND: 0.20/SHARE 2019E OIL PRODUCTION GROWTH: 25 - 28% 1 As of November 1, 2019 CIMAREX…
  3. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 3
    Cimarex Energy: Maximizing Returns PREMIER 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. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 4
    3Q19 Highlights EXCEEDED THE HIGH END OF BOE GUIDANCE 287.1 MBOE/d vs 265 279 MBOE/d CAPITAL GUIDANCE LOWERED GREW OIL PRODUCTION 8% SEQUENTIALLY D&C now 1.10 1.15 billion 89.7 MBbls/d vs 83.4 MBbls/d E&D now 1.30 1.40 billion…
  5. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 5
    2019 Capital Investment Program AVALON OTHER 2% 2% BONE SPRING 4% WOLFCAMP WOODFORD 78% 4% E&D CAPITAL OF 1.30 1.40 BILLION MERAMEC 10% D&C CAPITAL 1.10 1.15 BILLION 83% of E&D capital Permian Basin 86% Mid-Continent Region…
  6. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 6
    Capital Investment YTD AS OF SEPTEMBER 30 MILLIONS PERMIAN TOTAL DRILLING & COMPLETION 507 578 FACILITIES & FLOW BACK 87 92 OUTSIDE OPERATED 13 72 SWD 62 63 DRILLING & COMPLETION (D&C) 669 805 EXPLORATION & DEVELOPMENT*…
  7. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 7
    2019 Net Wells on Production by Quarter 50 80 NET WELLS IN 2019 44 40 40 NET WELL COUNT 30 21 20 11 10 8 0 1QA 2QA 3QA 4QE WELLS WAITING ON COMPLETION AT 12/31/19 MID-CONTINENT PERMIAN BASIN 2019 NET WELLS ON…
  8. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 8
    2019 Delaware Basin Plans D&C WELLS ON LINE AVERAGE LATERAL CAPITAL BY COUNTY LENGTH BY COUNTY 10,000 8,000 WOLFCAMP EDDY REEVES 6,000 LEA 4,000 9351,020MM 64 NET WELLS 2,000 0 CULBERSON REEVES EDDY…
  9. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 9
    Permian Region Cost Reductions DECLINING OPERATING EXPENSES IMPROVES % MARGIN 35 75% 80% 73% 70% FOCUS ON LOE IMPROVES MARGINS /BOE OPEX & CASH MARGIN 30 70% 62% Ownership and control of midstream and 60% 25 saltwater…
  10. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 10
    Delaware Basin Overview NEW MEXICO TEXAS 248,200 TOTAL NET ACRES 32% federal acres (All in New Mexico) 86% OF 2019 D&C BUDGET 22% capital spend in New Mexico CURRENTLY RUNNING 8 RIGS; 2 COMPLETION CREWS STACKED PAY…
  11. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 11
    Delaware Basin Reeves County, TX SKY PILOT 4 WELLS RED LODGE 6 WELLS 70,012 NET ACRES SANDLOT 39% OF 2019 D&C CAPITAL 4 WELLS SENTINEL 5 WELLS TARGETING UPPER WOLFCAMP HARDSCRABBLE 6 WELLS ALL DEVELOPMENTS CURRENTLY ON…
  12. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 12
    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…
  13. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 13
    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 24 MONTH XEC CULBERSON LEA LOVING EDDY REEVES WARD 450…
  14. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 14
    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…
  15. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 15
    Culberson: Strong Productivity, Low LOE PERMIAN BASIN PRODUCTION EXPENSE FRAC GENERATIONS INCREASING PRODUCTIVITY YTD AS OF SEPTEMBER 30 GEN 1 GEN 2 GEN 3 GEN 4 CUMULATIVE OIL PRODUCTION (MBBL) 800 4.00 PRODUCTION EXPENSE PER…
  16. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 16
    Delaware Basin Lea County, NM 31,384 NET ACRES VACA DRAW TARGETING: 6 WELLS Upper Wolfcamp Avalon Bone Spring VACA DRAW ON PRODUCTION NEW MEXICO CIMAREX ACREAGE TEXAS UPPER WOLFCAMP AVALON BONE SPRING DELAWARE…
  17. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 17
    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) Billy, Wort & Miss Mary developments on…
  18. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 18
    Initial 2020 Outlook CASH FLOW YIELD* OIL PRICE SENSITIVITY 12% 60/BBL WTI 10% 2020 BUDGETING ASSUMPTIONS 8% Flat to slightly down capital in 2020 vs 2019 Pricing assumptions 6% Oil: 50 per Bbl flat WTI 4% Natural gas: 2.50…
  19. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 19
    Disciplined Financial Positioning XEC DEBT/TTM EBITDA 3.0x 2.5x LIQUIDITY 1.3 billion of liquidity, including 24 MM of cash 2.0x (9/30/2019) 1.5x CONSERVATIVE LEVERAGE 1.2x Debt/TTM EBITDA (9/30/19) 1.0x INVESTMENT GRADE DEBT 0.5x…
  20. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 20
    Improving Cash Costs Offset Lower Realized Price TOTAL COMPANY CASH OPERATING MARGIN 50 80% 70% /BOE OPEX & CASH MARGIN 40 68% 67% 70% 65% 66% 62% 30 60% MARGIN % 55% 54% 20 50% 10 40% 14.15 10.71 9.51 9.55…
  21. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 21
    Environmental Highlights METHANE INTENSITY RATE1 TOTAL COMPANY RECYCLED WATER USE2 -51% 198% 0.43% 0.28% 0.21% 12% 23% 36% 2016 2017 2018 2016 2017 2018 1Intensity rate defined as total methane emissions divided by total…
  22. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 22
    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…
  23. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 23
    APPENDIX APPENDIX 24
  24. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 24
    2019 Guidance 4Q19E FY19E Production (MBOE/d) 272 292 274 278 Oil Production (MBbls/d) 86.0 92.0 84.5 86.5 Capital Expenditures (billion) E&D 1.30 1.40 D&C 1.10 1.15 Midstream/Other 0.07 Expenses (/BOE) 2019 Production 3.30…
  25. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 25
    Oil Hedges as of November 4, 2019 2019 2020 2021 OIL 4Q 1Q 2Q 3Q 4Q 1Q WTI OIL COLLARS1 Volume (Bbl/d) 37,326 30,000 22,000 14,000 14,000 6,000 Weighted Average Floor 54.05 53.12 50.61 49.68 49.68 49.24 Weighted Average 65.80…
  26. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 26
    Gas Hedges as of November 4, 2019 2019 2020 2021 GAS 4Q 1Q 2Q 3Q 4Q 1Q PEPL GAS COLLARS1 Volume (MMBtu/d) 120,000 90,000 60,000 30,000 30,000 10,111 Weighted Average Floor 1.92 1.92 1.90 1.85 1.85 1.85 Weighted Average Ceiling 2.35…
  27. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 27
    Permian Basin Takeaway SALES AGREEMENTS IN PLACE FOR OIL VOLUMES THROUGH 2019 85% of oil production on pipe STRATEGIC PARTNERSHIPS IN CORE AREAS Pipelines in place Purchase obligations Midland index pricing GAS SALES AGREEMENTS…
  28. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 28
    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…
  29. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 29
    Non-GAAP Reconciliation ( IN MILLIONS) 2016 2017 2018 LTM 9/30/19 Net income (loss) (409) 494 792 492 Income tax expense (benefit) (214) 188 231 145 Interest expense, net of capitalized 62 52 47 40 DD&A and ARO accretion 400 462…
  30. 3Q 2019 Earnings Presentation – Cimarex Energy Co. – slide 30
    Non-GAAP Reconciliation NINE MONTHS ENDED ( IN MILLIONS) SEPT 30, SEPTEMBER 30, 2019 ( IN MILLIONS) 2018 2019 Long-term debt (principal) 2,000 Net cash provided by operating activities 1,158 984 Redeemable preferred stock 82 Change in…

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