DENVER, Feb. 15, 2012 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported fourth-quarter 2011 net income of $116.9 million, or $1.36 per diluted share. This compares to fourth-quarter 2010 earnings of $117.6 million, or $1.37 per diluted share.

Oil, gas and natural gas liquids (NGLs) revenue in the fourth quarter of 2011 totaled $417.5 million, a 6% increase compared to $394.7 million in the same period of 2010. Fourth-quarter 2011 cash flow from operations was $310.2 million versus $318.3 million a year ago(1).

Fourth-quarter 2011 production volumes averaged 601.4 million cubic feet equivalent (MMcfe) per day as compared to fourth-quarter 2010 record output of 604.5 MMcfe per day. Notably fourth-quarter 2011 Permian and Mid-Continent volumes hit an all-time high of 531.1 MMcfe per day, growing 17% over the same period in 2010. Fourth-quarter 2011 production volumes were 56% gas, 27% oil and 17% NGLs.

For the year-ended December 31, 2011, net income totaled $529.9 million, or $6.15 per diluted share, as compared to $574.8 million, or $6.70 per share, for 2010. Full-year 2011 cash flow from operations totaled $1.31 billion versus $1.19 billion for 2010
(1).

Proved reserves grew 9% to 2.05 Tcfe. Adjusting for the impact of property sales, proved reserves increased 23%. Reserves added through drilling replaced 272% of production.

Full-year 2011 investment for exploration and development totaled $1.58 billion. Funding of the capital program was largely provided by cash flow and property sales. Long-term debt at December 31, 2011 was $405 million. Debt to total capitalization ratio at quarter-end was 11%(2).

2012 Outlook

Full-year 2012 Mid-Continent and Permian production volumes are projected to grow 19-25% above 2011, averaging between 580-610 MMcfe/d. Gulf Coast volumes, assuming no drilling contribution, are projected to average 35-40 MMcfe/d for 2012, or 6% of total estimated company volumes. Total company 2012 volumes are projected to average 615-650 MMcfe/d, or 4%-10% growth over 2011.

First-quarter 2012 Mid-Continent and Permian production volumes are projected to increase 25%-28% over first-quarter 2011, to within a range of 550-565 MMcfe/d. Gulf Coast volumes, assuming no drilling contribution, are projected to average 45-50 MMcfe/d for the first quarter of 2012. Total company first-quarter 2012 volumes are projected to average 595-615 MMcfe/d.

Full-year 2012 capital expenditures are expected to range from $1.4-$1.6 billion. Nearly all the 2012 capital is directed towards oil drilling or liquids-rich gas in the Permian and Cana-Woodford. We have a large inventory of drilling opportunities, limited lease expirations and few service commitments. Actual amount invested will depend on our calculated rate of return which is significantly influenced by commodity prices.

An approximate break down of the mid-point of our potential 2012 E&D capital investment and actual 2011 by region is provided below.

Expenses for 2012 are expected to fall within the following ranges:

Proved Reserves

Year-end 2011 proved reserves grew 9% to 2.05 trillion cubic feet equivalent (Tcfe), up from 1.88 Tcfe at year-end 2010. The increase was achieved despite selling 226 Bcfe of proved reserves, the majority of which was related to the Sublette County Wyoming Riley Ridge gas plant project. Adjusting for the impact of property sales, proved reserves increased 23%. Proved reserves are 82% developed at year-end 2011 as compared to 77% at year-end 2010.

Reserves added from extensions and discoveries totaled 587 billion cubic feet equivalent (Bcfe), replacing 272% of production. Reserve additions were comprised of 45% oil and natural gas liquids (liquids) and 55% gas. With continued focus on liquids rich production, the amount of proved reserves comprised of liquids at year-end 2011 increased to 41% as compared to 33% at year-end 2010. Proved reserves at year-end 2011 include 863 Bcfe in our western Oklahoma, Cana-Woodford shale play comprised of 492 Bcfe of proved developed and 371 Bcfe of proved undeveloped reserves.

Other

In the fourth-quarter 2011 and into February 2012 we entered into oil collars covering 2012 production. Cimarex currently has oil contracts covering on average approximately 14,000 barrels of oil per day for the balance of 2012. The following table summarizes the open hedge positions:

Cimarex accounts for commodity contracts using the mark-to-market (through income) accounting method. Fourth-quarter 2011 net cash receipts on gas swaps were $2.9 million.

Exploration and Development Activity

Cimarex's drilling activities are conducted within two main areas: Permian Basin and Mid-Continent. Permian activity is primarily directed to the Delaware Basin of southeast New Mexico and West Texas. The majority of our Mid-Continent drilling is in the western Oklahoma Cana-Woodford shale.

Cimarex drilled and completed 331 gross (174 net) wells during 2011, investing $1.58 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.

At year-end 11 net wells were drilled and awaiting completion: five Mid-Continent and six Permian Basin. Cimarex currently has 24 operated rigs running; 12 in the Permian Basin and 12 in the Mid-Continent.

Permian Basin

Cimarex drilled and completed 140 gross (100 net) Permian Basin wells during 2011, completing 96% as producers. At quarter-end, 8 gross (6 net) wells were awaiting completion. Drilling principally occurred in the Delaware Basin of Texas and southeast New Mexico, mainly targeting Bone Spring, Paddock and Wolfcamp formations. Fourth-quarter 2011 Permian production averaged 215.0 MMcfe/d, an increase of 18% over fourth-quarter 2010, which included 24% growth in oil volumes to 19,123 barrels per day.

Full-year 2011 New Mexico Bone Spring wells drilled and completed totaled 63 gross (40 net). Per-well 30-day gross production from the 2011 Bone Spring wells averaged 530 barrels equivalent (Boe) per day (84% oil). Seventeen of these wells were brought on in the fourth-quarter with an average per-well 30-day gross rate of 597 Boe per day (85% oil). Texas Third Bone Spring drilling totaled 17 gross (14 net) wells, which on average had per-well 30-day gross production rates of 730 barrels equivalent per day (73% oil).

Cimarex continues evaluating multiple shale intervals in the Delaware Basin including the Wolfcamp, Avalon and Cisco/Canyon. The majority of the drilling to date has been focused on the Wolfcamp.

In the fourth-quarter, four horizontal Wolfcamp wells were brought on production in southern Eddy County New Mexico (White City) and northern Culberson County Texas. The wells brought on in the fourth-quarter had first-30 day production rates averaging 6.8 MMcfe/d, comprised of 38% gas, 31% oil and 31% NGL. On average these wells have the highest oil contribution of the wells drilled to date in the Wolfcamp. For 2011 Cimarex drilled and completed 11 gross (10 net) horizontal Wolfcamp wells, bringing total wells in the play to 18 gross (16.8 net). First 30-day production from all the wells has averaged over 6.5 MMcfe/d, comprised of 44% gas, 24% oil and 32% NGL.

Mid-Continent

For 2011 Cimarex drilled and completed 180 gross (64 net) wells, completing 100% as producers. At year-end, 15 gross (5.5 net) wells were awaiting completion. Mid-Continent production averaged 316.1 MMcfe/d for the fourth quarter of 2011, a 17% increase over fourth-quarter 2010 average of 271.0 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 154 gross (49 net) wells. At year-end 13 gross (4.9 net) wells were being completed or awaiting completion in this area.

Since the Cana play began in late 2007, Cimarex has participated in 330 gross (119 net) wells. Of total wells, 297 gross (105 net) were on production at year-end and the remainder were either in the process of being drilled or awaiting completion. Fourth-quarter 2011 net production from Cana-Woodford averaged 157.9 MMcfe/d, a 59% increase versus the fourth-quarter 2010 average of 99.5 MMcfe/d.

Gulf Coast

During 2011 Cimarex drilled 11 gross (9.6 net) Yegua/Cook Mountain wells, of which three gross (2.5 net) were successful. Gulf Coast production averaged 68.9 MMcfe/d for the fourth quarter of 2011, a 54% decrease as compared to the fourth-quarter 2010 average of 149.9 MMcfe/d. The decreased output is a result of lack of exploration success in the 2011 drilling program and natural decline in highly-productive wells drilled near Beaumont, Texas.

Production by Region

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

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 ID # 42100453 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 # 42100453. The listen-only web cast of the call will be accessible via www.cimarex.com.

Investor Presentation

For more details on Cimarex's full-year 2011 financial and operating results, please refer to the year-end investor presentation available at www.cimarex.com on the Investor Relations-Presentation page.

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 and Permian Basin 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.

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1. Cash flow from operations is a non-GAAP financial measure. See below for a reconciliation of the related amounts.
2. Reconciliation of debt to total capitalization, which is a non-GAAP measure, is: long-term debt of $405 million divided by long-term debt of $405 million plus stockholders' equity of $3,130.6 million.
3. Pre-tax PV-10% is a non-GAAP financial measure. 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, 2011 and 2010, Cimarex's discounted future income taxes were $1,455.1 million and $1,101.3 million, respectively. Cimarex's standardized measure of discounted future net cash flows was $3,139.8 million at year-end 2011 and $2,515.3 million at year-end 2010. 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.
4. Year-end 2011 reserve estimates are based on trailing 12-month average prices of $4.12 per MMBtu of natural gas (Henry Hub) and $96.06 per barrel of oil (WTI).
5. Average daily volume in barrels per day.
6. WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange.

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