Attached files
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| 8-K - CIMAREX ENERGY CO | v173404_8k.htm |
Exhibit
99.1
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N
E W S
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Cimarex
Energy Co.
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1700
Lincoln Street, Suite 1800
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Denver,
CO 80203
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Phone:
(303) 295-3995
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Cimarex
Announces Fourth-Quarter Production Volumes, Year-end
Proved
Reserves and 2010 Guidance; Provides Operations Update
DENVER,
February 8, 2010 - Cimarex Energy Co. (NYSE: XEC) today announced fourth-quarter
oil and gas production volumes averaged 467.6 million cubic feet equivalent per
day (MMcfe/d). Average daily equivalent production was comprised of
330.0 million cubic feet of gas and 22,935 barrels of oil.
Fourth-quarter
2009 production grew 6% sequentially from the third-quarter 2009 average of
441.5 MMcfe/d but fell 5% as compared to the fourth-quarter 2008 average of
493.7 MMcfe/d. Production rate fluctuations reflect the
reduction and then increase in operated drilling rigs and successful Gulf Coast
exploration. Cimarex’s fourth-quarter 2008 operated rig count
averaged 31, then was reduced to three rigs in the first quarter of 2009 and
averaged 12 by the fourth quarter of 2009.
Fourth-quarter
2009 realized prices are expected to be in the range of $5.25 to $5.35 per
thousand cubic feet of gas and $72.00 to $72.50 per barrel of oil.
Full-year
2009 production volumes averaged 462.9 MMcfe/d, a 4% decrease versus 2008
adjusted for property sales. Average daily equivalent production for
2009 was comprised of 323.2 million cubic feet of gas and 23,283 barrels of
oil.
Cimarex
will release its fourth-quarter 2009 financial results on Wednesday, February
17, 2010, before the market opens.
Proved
Reserves
Year-end
2009 proved reserves grew 15% to 1.53 trillion cubic feet equivalent (Tcfe) from
1.34 Tcfe at year-end 2008. Proved reserves are 77% developed at
year-end 2009 as compared to 82% at year-end 2008. Reserves added
from extensions, discoveries & improved recoveries totaled 312 billion cubic
feet equivalent (Bcfe), replacing 185% of production. Proved reserves
of 25 Bcfe were sold in 2009. Revisions to previous estimates added
73.9 Bcfe, comprised of 104.7 Bcfe from positive performance and reductions in
operating costs, offset by 30.8 Bcfe from lower prices.
Proved
reserves at year-end 2009 include 225.2 Bcfe in the western Oklahoma,
Cana-Woodford shale play, comprised of 110.9 Bcfe of proved developed and 114.3
Bcfe of proven undeveloped reserves.
The
following table reflects the 2009 activity related to Cimarex’s proved
reserves:
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December
31, 2009
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Gas
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Oil
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Total
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(Bcf)
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(MBbl)
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(Bcfe)
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Total
proved reserves
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Beginning
of year
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1,067.3 | 45,202 | 1,338.5 | |||||||||
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Revisions
of previous estimates
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6.7 | 11,201 | 73.9 | |||||||||
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Extensions,
discoveries & improved recoveries
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29.7 | 13,770 | 312.3 | |||||||||
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Purchase
of reserves
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2.1 | 300 | 3.9 | |||||||||
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Production
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(118.0 | ) | (8,498 | ) | (169.0 | ) | ||||||
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Sales
of properties
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(1.2 | ) | (3,958 | ) | (24.9 | ) | ||||||
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End
of year
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1,186.6 | 58,017 | 1,534.7 | |||||||||
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Proved
developed reserves, year-end 2009
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865.7 | 53,889 | 1,189.0 | |||||||||
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2009
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2008
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%
Chg.
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Pre-tax
PV-10 ($ in millions) (1)
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$ | 2,285.9 | $ | 2,327.9 | -2 | % | ||||||
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Standardized
Measure ($ in millions)
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$ | 1,668.0 | $ | 1,724.3 | -3 | % | ||||||
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Average
prices used in Standardized Measure (2)
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Gas price per Mcf
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$ | 3.56 | $ | 5.33 | -33 | % | ||||||
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Oil price per
barrel
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$ | 57.58 | $ | 36.34 | 58 | % | ||||||
The
following table summarizes our estimated proved oil and gas reserves by region
as of December 31, 2009.
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Oil
(MBbl)
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Gas
(Bcf)
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Equivalent
(Bcfe)
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Percent
of
Proved
Reserves
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Mid-Continent
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10,869 | 665.2 | 730.4 | 47 | % | |||||||||||
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Permian
Basin
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41,938 | 235.7 | 487.3 | 32 | % | |||||||||||
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Gulf
Coast
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5,170 | 75.0 | 106.0 | 7 | % | |||||||||||
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Wyoming/Other
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40 | 210.7 | 211.0 | 14 | % | |||||||||||
| 58,017 | 1,186.6 | 1,534.7 | 100 | % | ||||||||||||
Oil
and Gas Capital Investment
The
following table sets forth the capitalized costs incurred in our oil and gas
production, exploration, and development activities (in thousands):
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Years
Ended December 31,
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2009
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2008
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Acquisition:
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Proved
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$ | 13,530 | $ | 6,618 | ||||
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Unproved*
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(9,915 | ) | 175,777 | |||||
| 3,615 | 182,395 | |||||||
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Exploration
and development:
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Land and seismic
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48,466 | 157,403 | ||||||
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Exploration and
development
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475,960 | 1,280,980 | ||||||
| 524,426 | 1,438,383 | |||||||
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Sales
proceeds
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(109,408 | ) | (38,093 | ) | ||||
| $ | 418,633 | $ | 1,582,685 | |||||
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*
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The
negative balance reflects purchase price adjustments related to an acreage
acquisition in the fourth quarter of
2008.
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2010
Guidance
First-quarter
2010 production is projected to range between 515-530
MMcfe/d. Full-year 2010 production is projected to be in
the range of 520-540 MMcfe/d, or a 12-17% increase over 2009.
Full-year
2010 exploration and development (E&D) capital investment is targeted to be
generally within cash flow. At the present time, based on current
market prices and service costs, we would expect that 2010 capital expenditures
may range from $700-$900 million. We have a large inventory of
drilling opportunities and limited lease expirations.
An
approximate break down of the mid-point of our potential 2010 E&D capital
investment and actual 2009 by region is provided below.
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($
in millions)
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2010 E&D
Estimate
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2009 E&D
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Mid-Continent
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$ | 410 | 52 | % | $ | 251 | 48 | % | ||||||||
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Permian
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250 | 31 | % | 155 | 30 | % | ||||||||||
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Gulf
Coast/GOM
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130 | 16 | % | 106 | 20 | % | ||||||||||
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Western/Other
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10 | 1 | % | 12 | 2 | % | ||||||||||
| $ | 800 | 100 | % | $ | 524 | 100 | % | |||||||||
Bank-Credit
Facility
At
year-end 2009, Cimarex had $25.0 million in borrowings outstanding on its
revolving credit facility. Bank borrowings decreased $195 million
from the year-end 2008 balance of $220 million. The reduction was
funded from non-core property sales, tax refunds, lower capital spending
relative to cash flow and a net positive working capital change. The revolving
credit facility has commitments totaling $800 million and a borrowing base of
$1.0 billion.
Exploration
and Development Activity
Cimarex
drilled and completed 110 gross (67 net) wells during 2009, completing 93% as
producers. At year-end 11 gross (6.3 net) Cana-Woodford wells
were waiting on completion.
Cimarex’s
reduced operated rig count resulted in drilling 73% fewer wells in 2009 as
compared to 2008. Exploration and development (E&D) capital
investment for 2009 totaled $524 million versus 2008 investment of $1.4
billion. Currently, 14 operated rigs are drilling; six in Oklahoma,
one in the Texas Panhandle, four in the Permian Basin and three in the Gulf
Coast.
Mid-Continent
Cimarex
drilled and completed 51 gross (22 net) wells during the twelve months ending
December 31, 2009, completing 98% as producers. Mid-Continent capital
investment of $251 million accounted for 48% of total E&D
capital. Fourth-quarter 2009 Mid-Continent production averaged 205.7
MMcfe/d, versus a fourth-quarter 2008 average of 237.6 MMcfe/d
The
majority of the activity occurred in the Anadarko Basin, Cana-Woodford shale
play, where Cimarex drilled 46 gross (19.9 net) wells in 2009, of which at
year-end 11 gross (6.3 net) wells were waiting on completion.
Since the
Cana play began in late 2007, Cimarex has participated in 75 gross (32.8 net)
wells. Of total wells, 58 gross (23.7 net) were on production at
year-end and the remainder were either in the process of being drilled or
awaiting completion. Our year-end net production rate from the
completed wells was 46 MMcfe/d. Fourth-quarter 2009 net production from the Cana
play averaged 33 MMcfe/d versus the fourth-quarter 2008 production of 20
MMcfe/d. For the 58 producing wells, average estimated gross ultimate
recovery exceeds 6.5 Bcfe per well.
During
2009, the company's horizontal Cana wells had an average completed well cost of
$7.9 million, horizontal lateral length of 4,500 feet and time to drill to total
depth of less than 60 days.
Cimarex
currently has seven operated rigs running in the Mid-Continent; six in the Cana
play and one in the Texas Panhandle.
Permian
Basin
Permian
Basin drilling for 2009 totaled 49 gross (36.3 net) wells, 90% of which were
completed as producers. Full-year 2009 capital investment in this
area totaled $155 million, or 30% of total E&D capital. Fourth-quarter 2009
Permian Basin production averaged 144.2 MMcfe/d, as compared to 176.3 MMcfe/d
during the fourth quarter of 2008.
Southeast
New Mexico drilling, mainly targeting the Abo, Bone Spring, Cherry Canyon,
Paddock and Wolfcamp formations, totaled 38 gross (30 net) wells with 87% being
completed as producers.
Recent
Abo wells brought on production include the Midway 17 Federal 3H (100% working
interest) at 490 barrels per day and the Midway 17 Federal 2H (100% working
interest) at 310 barrels per day (first 30-day gross average). Other
notable 30-day average rates from 2009 Bone Spring horizontal oil wells include
the Shugart West 31 Fed 3H (79% working interest) at 560 barrels per day and
State 14 Com 2H (100% working interest) at 325 barrels per day.
Gulf Coast/Gulf of
Mexico
Cimarex
drilled nine gross (8.1 net) Gulf Coast wells in 2009, completing eight as
producers. Gulf Coast capital investment of $106 million accounted
for 20% of total E&D expenditures. Fourth-quarter 2009 Gulf Coast production
volumes averaged 107.2 MMcfe/d, a 57% increase over the fourth-quarter 2008
average of 68.4 MMcfe/d. Offshore production volumes averaged 9.0
MMcfe/d, as compared to 7.3 MMcfe/d in the fourth quarter of 2008.
In 2009,
Southeast Texas Yegua/Cook Mountain drilling totaled seven gross (6.9 net)
wells, with six being completed as producers. Cimarex’s Gulf Coast
drilling has primarily been near Beaumont in Jefferson County,
Texas. The Two Sisters #1, the first of four 2009 discoveries in this
area, commenced production in early July 2009 at approximately 40 MMcfe/d gross,
and has continued at that rate through year-end. In October 2009, the
Garth #1 was brought online at 32 MMcfe/d. Two more wells, the Jefferson
Airplane #2 and the Jefferson Airplane #3, each began producing in November and
December at 42 MMcfe/d.
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Year-end 2009
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Well Name
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First Prod.
Month
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Working
Interest
%
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Net
Revenue
Interest
%
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Gross Gas
(MMcf/d)
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Gross Oil/
Condensate
(Barrels/d)
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Gross
Equivalent
(MMcfe/d)
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Two
Sisters #1
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July
2009
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100 | % | 75 | % | 25 | 2,500 | 40 | ||||||||||||||
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Garth
#1
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Oct.
2009
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100 | % | 68 | % | 23 | 1,400 | 31 | ||||||||||||||
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Jefferson
Airplane #2
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Nov.
2009
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96 | % | 72 | % | 32 | 1,600 | 42 | ||||||||||||||
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Jefferson
Airplane #3
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Dec.
2009
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96 | % | 72 | % | 31 | 1,800 | 42 | ||||||||||||||
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Average
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28 | 1,825 | 39 | |||||||||||||||||||
Two
operated rigs are currently drilling in the Southeast Texas Yegua/Cook Mountain
play near Beaumont.
Cimarex
will release fourth-quarter 2009 financial results before the market opens on
Wednesday, February 17, 2010. 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 # 52139473 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 #
52139473. 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
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(1)
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Pre-tax
PV-10% is a financial measure that is not calculated in accordance with
generally accepted accounting principles, or GAAP, as defined by the
SEC. Pre-tax PV-10% is comparable to the standardized measure,
which is the most directly comparable GAAP financial
measure. Pre-tax PV-10% is computed on the same basis as the
standardized measure but without deducting future income taxes. As of
December 31, 2009 and 2008, Cimarex’s discounted future income taxes were
$617.9 million and $603.6 million, respectively. Cimarex’s
standardized measure of discounted future net cash flows was $1,668
million at year-end 2009 and $1,724.3 million at year-end
2008. Cimarex believes pre-tax PV-10% is a useful measure for
investors for evaluating the relative monetary significance of its oil and
natural gas properties. Cimarex further believes investors may utilize its
pre-tax PV-10% as a basis for comparison of the relative size and value of
its reserves to other companies because many factors that are unique to
each individual company impact the amount of future income taxes to be
paid. However, pre-tax PV-10% is not a substitute for the standardized
measure of discounted future net cash flows. Cimarex’s pre-tax PV-10% and
the standardized measure of discounted future net cash flows do not
purport to present the fair value of its oil and natural gas
reserves.
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(2)
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SEC's
rules for booking proved reserves changed for 2009, the impact to Cimarex
was minimal, beyond the change to a new standard using 12-month average
pricing. Year end 2009 reserve estimates are based on first day
12-month average prices of $3.87 per MMBtu of natural gas (Henry Hub) and
$61.18 per barrel of oil (WTI).
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