OilVoice - Cimarex Reports Second Quarter 2009 Financial Results

Cimarex Reports Second Quarter 2009 Financial Results

Sunday, August 09, 2009

Cimarex Energy Co. has reported second-quarter 2009 financial and operating results. For the quarter, Cimarex reported net income of $38.8 million, or $0.46 per share. This compares to second-quarter 2008 earnings of $229.0 million, or $2.65 per diluted share.

Revenues from oil and gas sales in the second quarter of 2009 were $213.4 million, a 64% decrease as compared to $588.7 million in the same period of 2008. Second-quarter 2009 cash flow from operations totaled $153.1 million versus $435.8 million in the same period of 2008.

The decrease in second-quarter 2009 revenues, earnings and cash flow is primarily a result of lower oil and gas prices. Second-quarter 2009 gas prices decreased 67% to $3.48 per thousand cubic feet (Mcf) and oil fell 55% to $54.61 per barrel from the same period of 2008.

Second-quarter 2009 results contained certain non-cash charges, including a $3.7 million non-cash mark-to-market unrealized loss on derivatives ($2.4 million after tax) and a $6.3 million impairment of well equipment and supplies ($4.0 million after tax). Also included in the 2009 second-quarter results was a $3.5 million accrued charge for early cancellation of a rig contract ($2.2 million after tax).

Second-quarter 2009 oil and gas production averaged 453.9 million cubic feet equivalent per day (MMcfe/d), comprised of 317.7 million cubic feet of gas and 22,706 barrels of oil. Reflecting our planned reduction in drilling, daily production decreased 7% from a year-earlier. Cimarex's second-quarter 2009 operated rig count averaged six as compared to 37 in the comparable period of 2008.

For the first six months of 2009, Cimarex had a net loss of $455.3 million, or $5.58 per share, as compared to net income of $378.6 million, or $4.37 per share, for the comparable period of 2008. The net loss for 2009 was primarily a result of an after-tax non-cash oil and gas asset impairment charge of $501.8 million, during the first quarter.

Capital
Second-quarter 2009 exploration and development (E&D) capital totaled $98.7 million down from $359.9 million in the second quarter of 2008. In the second quarter of 2009, Cimarex drilled 24 gross (11 net) wells, completing 96% as producers.

For the first half of 2009, E&D capital expenditures were $240.7 million versus $666.9 million during the first six months of 2008. During the first half of 2009 we drilled 74% fewer wells as compared to 2008.

Exploration and development capital investment for the remainder of 2009 is targeted to be generally within cash flow. At the present time, based on current market prices and service costs, we expect that 2009 capital expenditures will range from $500-$600 million.

Outlook
Based on current drilling and completion activity, third-quarter 2009 production is projected to range between 435-450 MMcfe/d. Our full-year 2009 production estimate is projected to be in the range of 450-465 MMcfe/d.