Attached files
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| 8-K - CIMAREX ENERGY CO | v163426_8-k.htm |
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Cimarex
Energy Co.
1700
Lincoln Street, Suite 1800
Denver,
CO 80203
Phone:
(303) 295-3995
|
N
E W S
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Cimarex
Announces Third-Quarter Production Volumes, Borrowing Base Reaffirmation and
Provides Operations Update
DENVER,
October 22, 2009 - Cimarex Energy Co. (NYSE: XEC) today announced third-quarter
oil and gas production volumes averaged 441.5 million cubic feet equivalent per
day (MMcfe/d). Average daily equivalent production was comprised of
306.8 million cubic feet of gas and 22,439 barrels of oil.
Third-quarter
2008 production averaged 484.9 MMcfe/d and second-quarter 2009 averaged 453.9
MMcfe/d. Daily production decreased as expected and is the result of
reduced drilling. Cimarex’s third-quarter 2009 operated rig count averaged nine
as compared to 43 in the comparable period of 2008.
Third-quarter
2009 average realized prices are expected to be in the range of $3.75 to $3.85
per thousand cubic feet (Mcf) of gas and $63.25 to $63.75 per barrel of
oil.
Cimarex
will release its third-quarter 2009 financial results on Tuesday, November 3,
2009, before the market opens.
Bank-Credit
Facility
Cimarex’s
bank group, as part of the regularly scheduled fall review, reaffirmed the
Company’s $1.0 billion borrowing base related to its credit facility maturing in
April 2012. Bank group commitments of $800 million also remain
unchanged. As of September 30, 2009, Cimarex had borrowings
outstanding of $156 million, which is $183 million less than the second-quarter
balance of $339 million. The reduction in borrowings was funded from
non-core property sales, tax refunds, lower capital spending relative to cash
flow and a net positive working capital change.
Immediately
after quarter-end, Cimarex completed the sale of its interest in a Texas
secondary recovery oil field for $81 million, which further reduced bank
borrowings to $115 million. Year-to-date proved property sales total
$117 million, with associated proved reserves of 28 billion cubic feet
equivalent and 8 MMcfe/d of production.
Oil
and Gas Hedges
Cimarex
has oil and natural gas hedge contracts for October 2009 through December
2010. Calendar 2010 hedges cover on average 11,000 barrels of oil per
day and 160,000 MMBtu of gas per day, representing slightly less than half of
expected production. The following tables summarize the current commodity hedge
position:
Natural Gas
Contracts
|
Weighted
Average Price
|
|||||||||||||||||||
|
Period
|
Type
|
Volume
(1)
|
Index(2)
|
Floor
|
Ceiling
|
Swap
|
|||||||||||||
|
Oct
09 - Dec 09
|
Collar
|
143,370 |
PEPL
|
$ | 3.00 | $ | 5.00 | $ | - | ||||||||||
|
Jan
10 - Dec 10
|
Collar
|
100,000 |
PEPL
|
$ | 5.00 | $ | 6.62 | $ | - | ||||||||||
|
Jan
10 - Dec 10
|
Swap
|
40,000 |
PEPL
|
$ | - | $ | - | 5.18 | |||||||||||
|
Jan
10 - Dec 10
|
Collar
|
20,000 |
HSC
|
$ | 5.00 | $ | 6.85 | $ | - | ||||||||||
| 160,000 | |||||||||||||||||||
Oil
Contracts
|
Weighted
Average Price
|
|||||||||||||||||
|
Period
|
Type
|
Volume
(1)
|
Index(2)
|
Floor
|
Ceiling
|
Put
|
|||||||||||
|
Jan
10 – Dec 10
|
Collar
|
10,000 |
WTI
|
$ | 60.03 | $ | 92.07 | $ | - | ||||||||
|
Jan
10 – Dec 10
|
Floor/Put
|
1,000 |
WTI
|
$ | - | $ | - | $ | 60.00 | ||||||||
| 11,000 | |||||||||||||||||
|
(1)
|
Gas
volume in MMBtu per day and oil volume in barrels per
day.
|
|
(2)
|
PEPL
refers to Panhandle Eastern Pipe Line, Tex/Ok Mid-Continent index and HSC
stands for Houston Ship Channel Gulf Coast index both as quoted in Platt’s
Inside FERC. WTI refers to West Texas Intermediate oil price as
quoted on the New York Mercantile
Exchange.
|
Cimarex
accounts for these commodity contracts using the mark-to-market accounting
method.
Exploration
and Development Highlights
Cimarex
drilled 94 gross (56 net) wells during the first three quarters of 2009,
completing 94% as producers. Cimarex’s reduced operated rig
count resulted in drilling 76% fewer wells in the first three quarters of 2009
as compared to 2008. Currently, 11 operated rigs are drilling; five
in Oklahoma, four in the Permian Basin and two in the Gulf Coast.
Mid-Continent
Cimarex
drilled 52 gross (23 net) wells in the first nine months of 2009, completing 96%
as producers. Third-quarter 2009 Mid-Continent production averaged
208.8 MMcfe/d, a decrease of 10% as compared to the third-quarter
2008.
Western
Oklahoma 2009 drilling totals 46 gross (19 net) wells with 98% being completed
as producers. The majority of the drilling occurred in the Anadarko Basin
Woodford shale Cana play, where Cimarex has participated in 37 gross (15.7 net)
wells this year. Currently there are 11 gross (6.9 net) wells waiting
on completion or are in the process of being completed.
Since the
Cana play began in late 2007, Cimarex has participated in a total of 67 gross
(28.6 net) wells. Of which, 49 gross (18.8 net) wells have been
brought on production and the remainder are either in the process of being
drilled or awaiting completion. For the quarter ended September 30,
2009, Cimarex’s net production from the Cana play averaged approximately 31
MMcfe/d, as compared to the third-quarter 2008 average of 11
MMcfe/d. For the 49 producing wells, average estimated gross ultimate
recovery exceeds 6.0 Bcfe per well.
During
the first nine months of 2009, the company's horizontal wells had an average
completed well cost of $7.8 million, average horizontal lateral length of 4,500
feet and time to drill to total depth average of less than 60
days. Average 2008 completed well cost were $10.3 million, with
horizontal lateral length of 3,500 feet and 77 days to drill to total
depth.
Cimarex
currently has five operated rigs running in the Mid-Continent; three in the Cana
play, one in the Texas Panhandle and one in Southern Oklahoma.
Permian
Basin
For the
first nine months of 2009, Permian Basin drilling totaled 35 gross (26 net)
wells, 94% of which were completed as producers. Third-quarter 2009
production averaged 152.1 MMcfe/d (51% oil), an 8% decrease from the third
quarter of 2008.
Southeast
New Mexico Permian drilling for the first nine months of 2009 totaled 26 gross
(21.4 net) wells: five gross (4.5 net) horizontal Abo wells, 17 gross (13.6 net)
shallow Delaware wells, four gross (3.3 net) Bone Spring
wells.
Recent
Abo wells brought on production include the Midway 17 Federal 4H (100% working
interest) at 280 barrels per day and the Drumstick 7 Federal Com 1H (100%
working interest) at 230 barrels per day (first 30-day gross
average). Other notable 30-day average rates from 2009 shallow
Delaware horizontal oil wells include the Pintail 23 Fed 5H (100% working
interest) at 275 barrels per day and the White City 14 Fed 7H (87% working
interest) at 225 barrels per day.
Currently
four operated rigs are drilling horizontal oil wells in the Permian Basin, one
in West Texas and three in Southeast New Mexico.
Gulf Coast/Gulf of
Mexico
Cimarex
drilled five gross (4.9 net) Gulf Coast wells in the first nine months of
2009. Third-quarter 2009 onshore Gulf Coast production volumes
averaged 70.1 MMcfe/d, a 2% decrease compared to third-quarter
2008. Offshore production volumes averaged 8.1 MMcfe/d in the
third-quarter of 2009 versus 12.4 MMcfe/d in the third quarter of
2008.
In 2009,
Southeast Texas Yegua/Cook Mountain drilling has totaled four gross (four net)
wells, with a 75% success rate. Cimarex’s Gulf Coast drilling has
primarily been in Jefferson County, Texas near Beaumont. In early
July 2009, Cimarex brought on production the Two Sisters #1 (100% working
interest, 75% net revenue interest) at approximately 40 MMcfe/d (25 MMcf of gas
and 2,500 barrels of oil) gross, which it is still currently
producing. In October 2009, another discovery well, the Garth #1
(100% working interest, 75% net revenue interest) has been brought online and is
currently producing at approximately 32 MMcfe/d (22 MMcf/d of gas and 1,700
barrels of oil) gross.
Two
operated rigs are currently drilling in the Southeast Texas Yegua/Cook Mountain
play near Beaumont.
Cimarex
will release third-quarter 2009 financial results and update guidance before the
market opens on Tuesday, November 3, 2009. Cimarex will also host a
conference call that day at 11:00 a.m. Mountain Time (1:00 p.m. Eastern
Time). To access the live, interactive call, please dial (800)
921-0061 and reference call ID # 36165491 ten
minutes before the scheduled start time. A digital replay will be
available for one week following the live broadcast at (800) 642-1687 and by
using the conference ID # 36165491. The listen-only web cast of the
call will be accessible via www.cimarex.com.
About
Cimarex Energy
Denver-based
Cimarex Energy Co. is an independent oil and gas exploration and production
company with principal operations in the Mid-Continent, Permian Basin and Gulf
Coast areas of the U.S.
This
communication contains statements that constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are based on current expectations and beliefs
and are subject to a number of risks, uncertainties and assumptions that could
cause actual results to differ materially from those described in the
forward-looking statements. These risks and uncertainties are more fully
described in SEC reports filed by Cimarex. While Cimarex makes these
forward-looking statements in good faith, management cannot guarantee that
anticipated future results will be achieved. Cimarex assumes no obligation and
expressly disclaims any duty to update the information contained herein except
as required by law.
FOR FURTHER
INFORMATION CONTACT
Cimarex
Energy Co.
Mark
Burford, Director of Capital Markets
303-295-3995
www.cimarex.com