CIMAREX ENERGY CO - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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Cimarex Reports Third-Quarter 2011 Net Income of $128.2 Million

DENVER, Nov. 3, 2011 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported third-quarter 2011 net income of $128.2 million, or $1.49 per diluted share. This compares to third-quarter 2010 earnings of $128.2 million, or $1.50 per diluted share.

Third-quarter 2011 net income includes an unrealized non-cash gain on derivative instruments associated with 2011 oil and gas hedges of $3.4 million after-tax, or $0.04 per share.

Oil, gas and natural gas liquids (NGLs) revenue in the third quarter of 2011 totaled $419.7 million, a 15% increase compared to $366.6 million in the same period of 2010. The increase in third-quarter 2011 revenues is a result of higher realized oil, natural gas liquids (NGL) and gas prices, which were slightly offset by lower production.

Third-quarter 2011 production volumes averaged 592.0 million cubic feet equivalent (MMcfe) per day, a 1% decrease as compared to third-quarter 2010 output of 600.0 MMcfe per day. Third-quarter 2011 Permian and Mid-Continent volumes grew 22% and 15%, respectively over the same period in 2010. Growth in these regions was offset by a 51% decrease in Gulf Coast volumes. Gulf Coast production decreased as a result of declines in wells drilled over the last two years near Beaumont, Texas. Third-quarter 2011 production volumes were 56% gas, 27% oil and 17% NGLs.

Third-quarter 2011 realized oil and NGL prices increased 20% and 36% to $87.64 and $43.11 per barrel, respectively over third-quarter 2010. Gas prices gained 2% to $4.57 per thousand cubic feet (Mcf) as compared to the same period of 2010.

Third-quarter 2011 cash flow from operations was $356.8 million versus $296.8 million a year ago(1). Current quarter cash flow from operations includes a current income tax benefit of $44.1 million. Third-quarter 2010 cash flow included a current income tax benefit of $12.8 million.

For the nine months ended September 30, 2011, net income totaled $413.1 million, or $4.79 per diluted share, as compared to $457.2 million, or $5.33 per diluted share, for the first nine months of 2010. Year-to-date September 30, 2011 cash flow from operations totaled $1.0 billion versus $869.9 million for 2010(1).

2011 Outlook

Fourth-quarter 2011 production is projected to be in the range of 588-613 MMcfe/d, resulting in full-year 2011 volumes of 589-595 MMcfe/d.

Full-year 2011 exploration and development (E&D) capital investment is expected to be approximately $1.6 billion. E&D capital for the first nine months of 2011 totaled $1.2 billion.

Expenses for 2011 are expected to fall within the following ranges:

Expenses ($/Mcfe):
	Production expense	$1.02 - $1.22
	Transportation expense	0.28 - 0.33
	DD&A and ARO accretion	1.90 - 2.05
	General and administrative expense	0.20 - 0.25
	Taxes other than income (% of oil and gas revenue)	7.5% - 8.5%

Other

In August 2011, Cimarex sold its entire interest in the Riley Ridge Federal Unit and gas processing facility located in southwestern Wyoming. At closing Cimarex received $176 million, plus customary closing adjustments. The sales contract also provides for a $15 million contingent payment to be paid by the buyer at the time the gas processing facility is operational and certain other performance standards are met, which is now expected to occur in the first quarter of 2012.

Long-term debt at September 30, 2011 was $350 million. Debt to total capitalization ratio at quarter-end was 10% ⁽⁴⁾.

Cimarex's commodity hedge position comprised of natural gas swaps and oil collars remains unchanged as summarized below:

Natural Gas Contracts

				Weighted Average
Period	Type	Volume (2)	Index(3)	Swap Price
Oct 11 – Dec 11	Swap	20,000	PEPL		$	5.05

Oil Contracts

Weighted Average Price

Period

Type

Volume (2)

Index(3)

Floor

Ceiling

Oct 11 – Dec 11

Collar

12,000

WTI

65.00

105.44

Cimarex accounts for these commodity contracts using the mark-to-market (through income) accounting method. Third-quarter 2011 net cash settlements were $1.7 million and unrealized non-cash gains totaled $5.4 million.

Exploration and Development Activity

Cimarex's drilling activities are conducted within three main areas: Permian Basin, Mid-Continent and Gulf Coast. Permian activity is currently primarily directed to the Delaware Basin of southeast New Mexico and West Texas. Majority of Mid-Continent drilling is in the western Oklahoma Cana-Woodford shale and Texas Panhandle Granite Wash. Gulf Coast operations are currently focused in southeast Texas.

Cimarex drilled and completed 242 gross (138 net) wells during the first nine months of 2011, investing $1.2 billion on exploration and development. Of total expenditures, 47% were invested in projects located in the Mid-Continent area; 46% in the Permian Basin; and 7% in the Gulf Coast and other.


Wells Drilled and Completed by Region
	For the Three Months		For the Nine Months
	Ended September 30,		Ended September 30,
	2011	2010	2011	2010
Gross wells
Permian Basin	35	28	106	61
Mid-Continent	42	31	128	80
Gulf Coast/Other	5	4	8	11
	82	63	242	152
Net wells
Permian Basin	23	22	79	47
Mid-Continent	20	11	52	35
Gulf Coast/Other	5	3	7	10
	48	36	138	92
% Gross wells completed as producers	94%	94%	95%	94%

At the end of the third quarter, 16 net wells were awaiting completion: seven Permian Basin and nine Mid-Continent. Cimarex currently has 30 operated rigs running; 14 in the Permian Basin, 14 in the Mid-Continent, and two in southeast Texas Gulf Coast.

Permian Basin

Cimarex drilled and completed 106 gross (79 net) Permian Basin wells during the first nine months of 2011, completing 95% as producers. At quarter-end, 13 gross (7 net) wells were awaiting completion. Drilling principally occurred in the Delaware Basin of Texas and southeast New Mexico, mainly targeting Bone Spring, Paddock and Wolf Camp formations. Third-quarter 2011 Permian production averaged 206 MMcfe/d, an increase of 22% over third-quarter 2010, which included over 25% growth in oil volumes to 17,578 barrels per day.

Year-to-date New Mexico Bone Spring wells drilled and completed total 42 gross (27 net). The 30-day gross production from Bone Spring wells have averaged 510 barrels equivalent per day (83% oil). Texas Third Bone Spring drilling totaled 12 gross (9.8 net) wells, which on average had 30-day gross production rates of 660 barrels equivalent per day (74% oil).

During 2011 seven (6.6 net) horizontal Wolfcamp wells have been drilled and completed, bringing total wells in the play to 14 (13.4 net). First 30-day production from the horizontal Wolfcamp wells has averaged 6.2 MMcfe/d, comprised of 46% gas, 32% NGL and 22% oil.

Mid-Continent

For the first-nine months of 2011 Cimarex drilled and completed 128 gross (52 net) wells, completing 99% as producers. At quarter-end, 19 gross (9 net) wells were awaiting completion. Mid-Continent production averaged 303.1 MMcfe/d for the third quarter of 2011, a 15% increase over third-quarter 2010 average of 262.8 MMcfe/d.

The majority of the current year drilling activity has been in the Anadarko Basin, Cana-Woodford shale play, where Cimarex drilled and completed 108 gross (40 net) wells. At quarter-end 14 gross (6 net) wells were being completed or awaiting completion in this area.

Since the Cana play began in late 2007, Cimarex has participated in 283 gross (111 net) wells. Of total wells, 251 gross (96 net) were on production at quarter-end and the remainder were either in the process of being drilled or awaiting completion. Third-quarter 2011 net production from Cana-Woodford averaged 139.2 MMcfe/d, a 66% increase versus the third-quarter 2010 average of 83.9 MMcfe/d.

Gulf Coast

During the first nine months of 2011 Cimarex drilled eight gross (6.7 net) Yegua/Cook Mountain wells, of which three gross (2.4 net) were successful. Gulf Coast production averaged 81.8 MMcfe/d for the third quarter of 2011, a 51% decrease as compared to the third-quarter 2010 average of 166.8 MMcfe/d. The decreased output is a result of lack of exploration success in this year's drilling program and natural decline in highly-productive wells drilled near Beaumont, Texas over the last two years.

Production by Region

Cimarex's average daily production by commodity and region is summarized below:

Production by region
	For the Three Months			For the Nine Months
	Ended September 30,			Ended September 30,
		2011	2010	2011	2010
Gas (Mcf per day)
Permian Basin		76,872	70,939	72,150	71,361
Mid-Continent		209,459	196,890	197,688	193,597
Gulf Coast/Other		43,334	84,643	57,513	106,453
		329,665	352,472	327,351	371,411
Oil (barrels per day)
Permian Basin		17,578	14,026	15,977	13,468
Mid-Continent		5,720	4,687	5,641	4,595
Gulf Coast/Other		2,986	7,694	4,954	8,849
		26,284	26,407	26,572	26,912
NGL (barrels per day)
Permian Basin		3,921	2,389	3,231	1,262
Mid-Continent		9,885	6,290	8,866	4,819
Gulf Coast/Other		3,632	6,164	4,981	3,940
		17,438	14,843	17,078	10,021
Total Equivalent (Mcfe per day)
Permian Basin		205,866	169,429	187,398	159,741
Mid-Continent		303,089	262,752	284,730	250,081
Gulf Coast/Other		83,045	167,790	117,127	183,192
		592,000	599,971	589,255	593,014

Conference call and web cast

Cimarex will also host a conference call today at 11:00 a.m. Mountain Time (1:00 p.m. Eastern Time). To access the live, interactive call, please dial (877) 789-9039 and reference call # 18064713 ten minutes before the scheduled start time. A digital replay will be available for one week following the live broadcast at (855) 859-2056 and by using the conference ID # 18064713. 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.

(1) Cash flow from operations is a non-GAAP financial measure. See below for a reconciliation of the related amounts.
(2) Gas volume in MMBtu per day and oil volume in barrels per day.
(3) PEPL refers to Panhandle Eastern Pipe Line, Tex/Ok Mid-Continent index as quoted in Platt's Inside FERC. WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange.
(4) Reconciliation of debt to total capitalization, which is a non-GAAP measure, is: long-term debt of $350 million divided by long-term debt of $350 million plus stockholders' equity of $3,013.4 million.

RECONCILIATION OF CASH FLOW FROM OPERATIONS
			For the Three Months Ended				For the Nine Months Ended
			September 30,				September 30,
			2011		2010		2011		2010
			(in thousands)
Net cash provided by operating activities		$	332,432	$	314,408	$	971,523	$	886,668
	Change in operating assets
	and liabilities		24,372		(17,628)		33,264		(16,787)
Cash flow from operations		$	356,804	$	296,780	$	1,004,787	$	869,881

Management believes that the non-GAAP measure of cash flow from operations is useful information for investors because it is used internally and is accepted by the investment community as a means of measuring the company's ability to fund its capital program. It is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.

PRICE AND PRODUCTION DATA*
			For the Three Months Ended				For the Nine Months Ended
			September 30,				September 30,
			2011		2010		2011		2010

	Total gas production - Mcf		30,329,145		32,427,382		89,366,754		101,395,114
	Gas volume - Mcf per day		329,665		352,472		327,351		371,411
	Gas price - per Mcf		$4.57		$4.48		$4.59		$5.15

	Total oil production - barrels		2,418,141		2,429,407		7,254,247		7,347,108
	Oil volume - barrels per day		26,284		26,407		26,572		26,912
	Oil price - per barrel		$87.64		$73.20		$93.08		$74.87

	Total NGL production - barrels		1,604,337		1,365,581		4,662,376		2,735,823
	NGL volume - barrels per day		17,438		14,843		17,078		10,021
	NGL price - per barrel		$43.11		$31.73		$42.99		$33.41

*	During the first quarter of 2010 we began separately reporting NGL sales and production volumes. The determination of whether to record and separately disclose NGL volumes is based on where title transfer occurs during processing of the well stream. New gas processing contracts related to new drilling activity and ongoing contractual amendments have resulted in title of NGL volumes being conveyed to the Company. As a consequence, reported gas and NGL volumes and prices between periods may not be comparable.

OIL AND GAS CAPITALIZED EXPENDITURES
			For the Three Months Ended				For the Nine Months Ended
			September 30,				September 30,
			2011		2010		2011		2010
			(in thousands)
	Acquisitions:
	Proved	$	12,439	$	19	$	21,604	$	13,805
	Unproved		8,380		978		20,427		21,497
			20,819		997		42,031		35,302
	Exploration and development:
	Land and Seismic		61,907		49,368		146,832		112,076
	Exploration and development		360,733		246,501		1,032,794		613,387
			422,640		295,869		1,179,626		725,463
	Sale proceeds:
	Proved*		(83,709)		807		(102,192)		(24,054)
	Unproved		(150)		—		(1,971)		(3,917)
			(83,859)		807		(104,163)		(27,971)
		$	359,600	$	297,673	$	1,117,494	$	732,794

*	The positive amount in the third-quarter 2010 proved sales proceeds reflects purchase price adjustments related to a disposition in the second quarter 2010.

CONDENSED STATEMENTS OF OPERATIONS (unaudited)

			For the Three Months Ended				For the Nine Months Ended
			September 30,				September 30,
			2011		2010		2011		2010

			(In thousands, except per share data)

Revenues:
	Gas sales	$	138,631	$	145,396	$	410,331	$	522,408
	Oil sales		211,928		177,834		675,239		550,058
	NGL sales		69,169		43,331		200,428		91,391
	Gas gathering, processing and other, net		14,081		12,022		41,620		41,797
			433,809		378,583		1,327,618		1,205,654
Costs and expenses:
	Depreciation, depletion, amortization and accretion		108,259		79,906		287,777		227,047
	Production		62,333		52,010		181,558		139,349
	Transportation		15,196		13,084		45,029		35,076
	Gas gathering and processing		4,821		4,577		14,002		17,182
	Taxes other than income		30,533		28,094		98,625		88,862
	General and administrative		9,390		11,274		34,734		36,136
	Stock compensation, net		4,595		3,241		13,962		9,012
	Gain on derivative instruments, net		(7,120)		(15,028)		(11,353)		(70,914)
	Other operating, net		2,379		2,291		8,095		2,321
			230,386		179,449		672,429		484,071

Operating income			203,423		199,134		655,189		721,583

Other (income) and expense:
	Interest expense		7,278		7,348		22,192		22,481
	Amortization of deferred financing costs		2,001		1,711		5,407		5,141
	Capitalized interest		(7,253)		(7,259)		(21,830)		(21,968)
	Gain on early extinguishment of debt		—		(3,776)		—		(3,776)
	Other, net		(3,604)		(2,711)		(7,226)		(2,790)

Income before income tax			205,001		203,821		656,646		722,495
Income tax expense			76,849		75,605		243,583		265,298

Net income		$	128,152	$	128,216	$	413,063	$	457,197

Earnings per share to common stockholders:
	Basic	$	1.49	$	1.50	$	4.81	$	5.36
	Diluted	$	1.49	$	1.50	$	4.79	$	5.33

Dividends per share		$	0.10	$	0.08	$	0.30	$	0.24

Shares attributable to common stockholders:
	Unrestricted common shares outstanding		83,736		82,806		83,736		82,806
	Diluted common shares		84,115		83,217		84,151		83,265

Shares attributable to common stockholders and participating securities:
	Basic shares outstanding		85,806		85,348		85,806		85,348
	Fully diluted shares		86,185		85,759		86,221		85,807

CONDENSED CASH FLOW STATEMENTS (unaudited)

							For the Three Months Ended				For the Nine Months Ended
							September 30,				September 30,
							2011		2010		2011		2010
							(In thousands)

Cash flows from operating activities:
	Net income					$	128,152	$	128,216	$	413,063	$	457,197
	Adjustment to reconcile net income to net cash
		provided by operating activities:
			Depreciation, depletion, amortization and accretion				108,259		79,906		287,777		227,047
			Deferred income taxes				120,930		88,375		288,986		213,678
			Stock compensation, net				4,595		3,241		13,962		9,012
			Derivative instruments, net				(5,373)		(881)		(7,536)		(39,656)
			Changes in non-current assets and liabilities				(840)		4,893		3,719		10,507
			Amortization of deferred financing costs
				and other, net			1,081		(6,970)		4,816		(7,904)
	Changes in operating assets and liabilities:
			Increase in receivables, net				(49,778)		(14,413)		(32,229)		(4,364)
			(Increase) decrease in other current assets				40,430		(16,556)		30,736		31
			Increase (decrease) in accounts payable and
				accrued liabilities			(15,024)		48,597		(31,771)		21,120
					Net cash provided by operating activities		332,432		314,408		971,523		886,668
Cash flows from investing activities:
	Oil and gas expenditures						(453,375)		(264,595)		(1,152,676)		(691,536)
	Sales of oil and gas and other assets						195,354		4,741		216,000		33,646
	Other expenditures						(17,161)		(24,133)		(70,050)		(38,941)
					Net cash used by investing activities		(275,182)		(283,987)		(1,006,726)		(696,831)
Cash flows from financing activities:
	Net decrease in bank debt						—		—		—		(25,000)
	Decrease in other long-term debt						—		(19,450)		—		(19,450)
	Financing costs incurred						(7,248)		(1)		(7,348)		(101)
	Dividends paid						(8,583)		(6,827)		(23,998)		(18,662)
	Issuance of common stock and other						2,591		1,896		9,583		18,928
					Net cash used by financing activities		(13,240)		(24,382)		(21,763)		(44,285)
Net change in cash and cash equivalents							44,010		6,039		(56,966)		145,552
Cash and cash equivalents at beginning of period							13,150		142,057		114,126		2,544
Cash and cash equivalents at end of period						$	57,160	$	148,096	$	57,160	$	148,096

CONDENSED BALANCE SHEETS (unaudited)

				September 30,		December 31,
Assets				2011		2010
				(In thousands, except share data)
Current assets:
	Cash and cash equivalents		$	57,160	$	114,126
	Receivables, net			343,197		310,968
	Oil and gas well equipment and supplies			82,947		81,871
	Deferred income taxes			2,625		4,293
	Derivative instruments			3,680		5,731
	Other current assets			12,267		44,778
		Total current assets		501,876		561,767
Oil and gas properties at cost, using the full cost method of accounting:
	Proved properties			9,437,102		8,421,768
	Unproved properties and properties under development,
		not being amortized		659,947		547,609
				10,097,049		8,969,377
	Less – accumulated depreciation, depletion and amortization			(6,309,847)		(6,047,019)
		Net oil and gas properties		3,787,202		2,922,358
Fixed assets, net				98,032		156,579
Goodwill				691,432		691,432
Other assets, net				33,010		26,111
			$	5,111,552	$	4,358,247
Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable		$	61,705	$	47,242
	Accrued liabilities			379,344		320,989
	Derivative instruments			—		9,587
	Revenue payable			135,274		134,495
		Total current liabilities		576,323		512,313
Long-term debt				350,000		350,000
Deferred income taxes				906,118		619,040
Other liabilities				265,704		267,062
Stockholders’ equity:
	Preferred stock, $0.01 par value, 15,000,000 shares
		authorized, no shares issued		—		—
	Common stock, $0.01 par value, 200,000,000 shares authorized,
		85,742,139 and 85,234,721 shares issued, respectively		857		852
	Paid-in capital			1,899,725		1,883,065
	Retained earnings			1,112,978		725,651
	Accumulated other comprehensive income (loss)			(153)		264
				3,013,407		2,609,832
			$	5,111,552	$	4,358,247

CONTACT: Mark Burford, Vice President – Capital Markets and Planning, Cimarex Energy Co., +1-303-295-3995

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