DENVER, Feb. 22, 2021 /PRNewswire/ --
- Fourth quarter oil production averaged 67.8 MBbls per
day
-
- Full year oil production averaged 76.7 MBbls per
day
- 2020 total capital investment of $577.2 million; below guidance range
- Generated $904.2 million of
net cash from operating activities
-
- $372 million of free cash
flow1 (non-GAAP) in 2020; $279 million of free cash flow after
dividend1 (non-GAAP) in 2020
Cimarex Energy Co. (NYSE: XEC) today reported net income for
fourth quarter 2020 of $24.7 million,
or $0.25 per share, compared to a net
loss of $384.1 million, or
$3.87 per share, in the same period a
year ago. For the full year, Cimarex reported a net loss of
$1,967.5 million, or $19.73 per share, compared to 2019 net loss of
$124.6 million, or $1.33 per share. Both fourth quarter and
full year results were negatively impacted by a non-cash charge
related to the impairment of oil and gas properties. Fourth
quarter 2020 adjusted net income (non-GAAP) was $91.3 million, or $0.89 per share, compared to adjusted net income
(non-GAAP) of $120.4 million, or
$1.18 per share in the same
period a year ago1. Full year 2020 adjusted net
income (non-GAAP) was $142.2 million,
or $1.39 per share, compared to
$448.8 million, or $4.46 per share in
20191. Adjusted cash flow from operations
(non-GAAP) was $256.6 million in
fourth quarter 2020 compared to $416.0
million in the same period a year ago1.
Full year 2020 adjusted cash flow from operations (non-GAAP) was
$944.2 million compared to
$1.46 billion in
20191.
Oil volumes in the fourth quarter were sequentially lower,
averaging 67.8 thousand barrels (MBbls) per day. For the full
year, Cimarex reported average daily oil volumes of 76.7 MBbls, an
11 percent year-over-year decrease. Cimarex produced 229.5
thousand barrels of oil equivalent (MBOE) per day in the fourth
quarter and averaged 252.5 MBOE per day for the year.
In the fourth quarter realized oil prices averaged $40.09 per barrel, down 27 percent from the
$54.80 per barrel received in the
fourth quarter of 2019. Realized natural gas prices averaged
$1.69 per thousand cubic feet (Mcf),
up 42 percent from the fourth quarter 2019 average of $1.19 per Mcf. NGL prices averaged
$14.02 per barrel, down one percent
from the $14.13 per barrel received
in the fourth quarter of 2019. For the full year, Cimarex
realized $35.59 per barrel of oil,
down 33 percent from 2019, $1.05 per
Mcf of natural gas and $10.53 per
barrel of NGLs sold.
Realized oil and natural gas price differentials to WTI Cushing
and Henry Hub improved year-over-year. Our realized Permian
oil differential to WTI Cushing averaged $(3.74) per barrel in 2020 compared to
$(4.48) in 2019. For the year,
Cimarex's average differential on its Permian natural gas
production was $(1.39) per Mcf
compared to the Henry Hub index versus $(2.14) per Mcf in 2019. Cimarex's 2020
realized gas price differential in the Mid-Continent region was
$(0.41) per Mcf compared to Henry Hub
versus $(0.68) in 2019.
Cimarex invested a total of $577.2
million in 2020, which includes exploration and development
capital (E&D) of $544.9
million, $20.8 million
to saltwater disposal and $11.5
million to midstream and other investments. E&D
capital is comprised of $417.4
million attributable to drilling and completion (D&C)
activities and $127.5 million for
capitalized interest and overhead, production capital and leasehold
acquisition. Capital investments were funded with cash flow
from operations.
Proved reserves at December 31,
2020 totaled 531 million barrels of oil equivalent (MMBOE),
down 14 percent year over year. The decrease in proved
reserves resulted from a reduction in drilling activity and
negative price related revisions, both due to lower commodity
prices. Cimarex added 57 MMBOE through extensions and
discoveries while revisions reduced proved reserves by 52
MMBOE. Production for 2020 totaled 92 MMBOE. Proved
reserves are 84 percent proved developed.
Total debt at December 31, 2020 consisted of $2.0 billion of long-term notes. Cimarex
had no borrowings under its revolving credit facility and a cash
balance of $273.1 million at
year-end.
Cimarex repurchased and canceled 34,335 shares (55 percent) of
the outstanding 8.125% Series A Cumulative Perpetual
Convertible Preferred Stock in the fourth quarter, for a total
consideration of $43.5 million
including accrued and unpaid dividends.
Operations Update
Cimarex invested $577.2 million in 2020 including $417.4 million (72 percent) of D&C
capital. Also included is $20.8
million to saltwater disposal assets and $11.5 million to midstream. Of the
$577.2 million, 93 percent
was invested in the Permian region and seven percent in the
Mid-Continent.
During 2020, Cimarex participated in the drilling and completion
of 149 gross (51.0 net) wells. At year-end, 77 gross (39.6
net) wells were waiting on completion, of which 25 gross (0.5 net)
were in the Mid-Continent and 52 gross (39.1 net) were in the
Permian. Cimarex is currently operating six drilling rigs and
two completion crews.
WELLS BROUGHT ON
PRODUCTION BY REGION
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Gross
wells
|
|
|
|
|
|
|
|
|
Permian
Basin
|
|
33
|
|
|
31
|
|
|
92
|
|
|
131
|
|
Mid-Continent
|
|
14
|
|
|
16
|
|
|
57
|
|
|
160
|
|
|
|
47
|
|
|
47
|
|
|
149
|
|
|
291
|
|
Net
wells
|
|
|
|
|
|
|
|
|
Permian
Basin
|
|
15.9
|
|
|
22.5
|
|
|
48.1
|
|
|
75.5
|
|
Mid-Continent
|
|
1.2
|
|
|
0.5
|
|
|
2.9
|
|
|
16.6
|
|
|
|
17.1
|
|
|
23.0
|
|
|
51.0
|
|
|
92.1
|
|
Permian Region
Production from the Permian region
averaged 166.9 MBOE per day in the fourth quarter, or 73 percent of
total company volumes. Oil volumes averaged 60.0 MBbls per
day, 88 percent of total company oil volumes. For the full
year, production averaged 184.0 MBOE per day,
73 percent of total company volumes with Permian oil
representing 88 percent of Cimarex's oil volumes in 2020.
Cimarex brought 33 gross (15.9 net) wells on production in the
Permian during fourth quarter, bringing the total wells brought on
production in 2020 to 92 gross (48.1 net). About 97 percent
of our operated wells were drilled from multi-well pads and our
average lateral length on our operated wells brought on production
in the Permian was 9,268 feet in 2020. Cimarex is currently
operating five drilling rigs and two completion crews in the
region.
Mid-Continent Region
Production from the Mid-Continent
averaged 62.2 MBOE per day for the fourth quarter, down 27 percent
from fourth quarter 2019 and down 10 percent
sequentially. Oil volumes averaged 7.7 MBbls per day and
represented 11 percent of the company's total oil volume in the
quarter. For the full year, production averaged 68.1 MBOE per
day, down 22 percent year over year. Oil volumes averaged 8.8
MBbls per day in 2020, down 36 percent year over year.
Wells brought on production during the fourth quarter totaled 14
gross (1.2 net) in the Mid-Continent region, bringing the total
wells brought on production in 2020 to 57 gross (2.9 net). At
the end of the quarter, 25 gross (0.5 net) wells were waiting on
completion. Cimarex is currently operating one drilling rig in the
region.
Production by Region
Cimarex's average daily
production and commodity price by region is summarized below:
DAILY PRODUCTION
BY REGION
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Permian
Basin
|
|
|
|
|
|
|
|
|
Gas (MMcf)
|
|
373.5
|
|
|
451.4
|
|
|
405.0
|
|
|
398.9
|
|
Oil (Bbls)
|
|
59,952
|
|
|
78,421
|
|
|
67,785
|
|
|
72,264
|
|
NGL (Bbls)
|
|
44,665
|
|
|
53,438
|
|
|
48,718
|
|
|
51,982
|
|
Total Equivalent
(BOE)
|
|
166,867
|
|
|
207,096
|
|
|
184,001
|
|
|
190,735
|
|
|
|
|
|
|
|
|
|
|
Mid-Continent
|
|
|
|
|
|
|
|
|
Gas (MMcf)
|
|
214.8
|
|
|
280.1
|
|
|
229.6
|
|
|
289.1
|
|
Oil (Bbls)
|
|
7,672
|
|
|
13,514
|
|
|
8,796
|
|
|
13,788
|
|
NGL (Bbls)
|
|
18,732
|
|
|
25,081
|
|
|
21,039
|
|
|
25,379
|
|
Total Equivalent
(BOE)
|
|
62,207
|
|
|
85,282
|
|
|
68,094
|
|
|
87,348
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
Gas (MMcf)
|
|
589.5
|
|
|
732.6
|
|
|
635.6
|
|
|
689.2
|
|
Oil (Bbls)
|
|
67,799
|
|
|
92,048
|
|
|
76,740
|
|
|
86,200
|
|
NGL (Bbls)
|
|
63,468
|
|
|
78,557
|
|
|
69,819
|
|
|
77,408
|
|
Total Equivalent
(BOE)
|
|
229,524
|
|
|
292,709
|
|
|
252,491
|
|
|
278,480
|
|
|
AVERAGE REALIZED
PRICE BY REGION
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Permian
Basin
|
|
|
|
|
|
|
|
|
Gas ($ per
Mcf)
|
|
1.33
|
|
|
0.83
|
|
|
0.69
|
|
|
0.49
|
|
Oil ($ per
Bbl)
|
|
39.87
|
|
|
54.78
|
|
|
35.66
|
|
|
52.55
|
|
NGL ($ per
Bbl)
|
|
12.85
|
|
|
13.23
|
|
|
9.64
|
|
|
12.62
|
|
|
|
|
|
|
|
|
|
|
Mid-Continent
|
|
|
|
|
|
|
|
|
Gas ($ per
Mcf)
|
|
2.31
|
|
|
1.76
|
|
|
1.67
|
|
|
1.95
|
|
Oil ($ per
Bbl)
|
|
41.67
|
|
|
54.91
|
|
|
34.97
|
|
|
53.89
|
|
NGL ($ per
Bbl)
|
|
16.81
|
|
|
16.04
|
|
|
12.60
|
|
|
15.47
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
Gas ($ per
Mcf)
|
|
1.69
|
|
|
1.19
|
|
|
1.05
|
|
|
1.11
|
|
Oil ($ per
Bbl)
|
|
40.09
|
|
|
54.80
|
|
|
35.59
|
|
|
52.77
|
|
NGL ($ per
Bbl)
|
|
14.02
|
|
|
14.13
|
|
|
10.53
|
|
|
13.55
|
|
Other
The following table summarizes Cimarex's
current hedge positions:
|
|
|
1Q21
|
|
2Q21
|
|
3Q21
|
|
4Q21
|
|
1Q22
|
|
2Q22
|
|
3Q22
|
Gas
Collars:
|
PEPL(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(MMBtu/d)
|
|
100,000
|
|
|
100,000
|
|
|
90,000
|
|
|
90,000
|
|
|
60,000
|
|
|
20,000
|
|
|
—
|
|
|
Wtd Avg
Floor
|
|
$
|
1.83
|
|
|
$
|
1.89
|
|
|
$
|
2.00
|
|
|
$
|
2.00
|
|
|
$
|
2.13
|
|
|
$
|
2.40
|
|
|
$
|
—
|
|
|
Wtd Avg
Ceiling
|
|
$
|
2.23
|
|
|
$
|
2.28
|
|
|
$
|
2.42
|
|
|
$
|
2.42
|
|
|
$
|
2.55
|
|
|
$
|
2.86
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
El Paso
Perm(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(MMBtu/d)
|
|
70,000
|
|
|
80,000
|
|
|
70,000
|
|
|
70,000
|
|
|
40,000
|
|
|
20,000
|
|
|
—
|
|
|
Wtd Avg
Floor
|
|
$
|
1.50
|
|
|
$
|
1.62
|
|
|
$
|
1.86
|
|
|
$
|
1.86
|
|
|
$
|
2.13
|
|
|
$
|
2.40
|
|
|
$
|
—
|
|
|
Wtd Avg
Ceiling
|
|
$
|
1.79
|
|
|
$
|
1.92
|
|
|
$
|
2.22
|
|
|
$
|
2.22
|
|
|
$
|
2.53
|
|
|
$
|
2.88
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waha(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(MMBtu/d)
|
|
90,000
|
|
|
100,000
|
|
|
90,000
|
|
|
90,000
|
|
|
60,000
|
|
|
20,000
|
|
|
—
|
|
|
Wtd Avg
Floor
|
|
$
|
1.52
|
|
|
$
|
1.61
|
|
|
$
|
1.82
|
|
|
$
|
1.82
|
|
|
$
|
1.98
|
|
|
$
|
2.40
|
|
|
$
|
—
|
|
|
Wtd Avg
Ceiling
|
|
$
|
1.83
|
|
|
$
|
1.93
|
|
|
$
|
2.17
|
|
|
$
|
2.17
|
|
|
$
|
2.39
|
|
|
$
|
2.86
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
Collars:
|
WTI(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(Bbl/d)
|
|
40,000
|
|
|
34,000
|
|
|
40,000
|
|
|
40,000
|
|
|
26,000
|
|
|
19,000
|
|
|
10,000
|
|
|
Wtd Avg
Floor
|
|
$
|
38.06
|
|
|
$
|
34.62
|
|
|
$
|
34.65
|
|
|
$
|
34.65
|
|
|
$
|
37.31
|
|
|
$
|
38.16
|
|
|
$
|
40.00
|
|
|
Wtd Avg
Ceiling
|
|
$
|
46.45
|
|
|
$
|
43.28
|
|
|
$
|
44.37
|
|
|
$
|
44.37
|
|
|
$
|
48.41
|
|
|
$
|
49.56
|
|
|
$
|
49.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Basis
Swaps:
|
WTI
Midland(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(Bbl/d)
|
|
31,000
|
|
|
33,000
|
|
|
35,000
|
|
|
35,000
|
|
|
22,000
|
|
|
15,000
|
|
|
7,000
|
|
|
Wtd Avg
Differential
|
|
$
|
0.03
|
|
|
$
|
(0.02)
|
|
|
$
|
(0.08)
|
|
|
$
|
(0.08)
|
|
|
$
|
0.25
|
|
|
$
|
0.31
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Roll Differential
Swaps
|
WTI(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume
(Bbl/d)
|
|
7,000
|
|
|
11,000
|
|
|
18,000
|
|
|
18,000
|
|
|
18,000
|
|
|
11,000
|
|
|
7,000
|
|
|
Wtd Avg
Price
|
|
$
|
(0.24)
|
|
|
$
|
(0.22)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.01)
|
|
|
$
|
0.10
|
|
Conference call and webcast
Cimarex will host a
conference call tomorrow, February
23, at 11:00 a.m. EST
(9:00 a.m. MST) to discuss its fourth
quarter and 2020 financial and operating results as well as
management's outlook for 2021. The call will be webcast and
accessible on the Cimarex website at www.cimarex.com. To join
the live, interactive call, please dial 866-367-3053 ten minutes
before the scheduled start time (callers in Canada dial 855-669-9657 and international
callers dial 412-902-4216).
A replay will be available on the company's website.
Investor Presentation
For more details on Cimarex's
2020 results, please refer to the company's investor presentation
available at 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 Permian Basin and Mid-Continent areas
of the U.S.
Forward-Looking Statements
This press release
contains forward-looking statements, including statements regarding
projected results and future events. These forward-looking
statements are based on management's judgment as of the date of
this press release and include certain risks and uncertainties.
Please refer to the company's Annual Report on Form 10-K for the
year ended December 31, 2019, filed
with the SEC, the Annual Report on Form 10-K for the year ended
December 31, 2020 to be filed with
the SEC, and other filings including our Current Reports on Form
8-K and Quarterly Reports on Form 10-Q, for a description of
certain risk factors that may affect these forward-looking
statements.
Actual results may differ materially from company projections
and other forward-looking statements and can be affected by a
variety of factors outside the control of the company, all of which
may be amplified by the COVID-19 pandemic and its unpredictable
nature, including among other things: fluctuations in the price we
receive for our oil, gas, and NGL production, including local
market price differentials, which may be exacerbated by the demand
destruction resulting from COVID-19; disruptions to the
availability of workers and contractors due to illness and stay at
home orders related to the COVID-19 pandemic; cost and availability
of gathering, pipeline, refining, transportation and other
midstream and downstream activities and our ability to sell oil,
gas, and NGLs, which may be negatively impacted by the COVID-19
pandemic, severe weather and other risks and lead to a lack of any
available markets; availability of supply chains and critical
equipment and supplies; higher than expected costs and expenses,
including the availability and cost of services and materials;
compliance with environmental and other regulations, including new
regulations that may result from the recent change in federal and
state administrations and legislatures; legislative or regulatory
changes, including initiatives related to hydraulic fracturing,
emissions, and disposal of produced water, which may be negatively
impacted by the recent change in Presidential administration or
legislatures; the ability to receive drilling and other permits or
approvals and rights-of-way in a timely manner (or at all), which
may be negatively impacted by the impact of COVID-19 restrictions
on regulatory employees who process and approve permits, other
approvals and rights-of-way and which may be restricted by new
Presidential and Secretarial orders and regulation and legislation;
reductions in the quantity of oil, gas, and NGLs sold and prices
received because of decreased demand and/or curtailments in
production relating to mechanical, transportation, storage,
capacity, marketing, weather, the COVID-19 pandemic, or other
problems; declines in the SEC PV10 value of our oil and gas
properties resulting in full cost ceiling test impairments to the
carrying values of our oil and gas properties; the effectiveness of
our internal control over financial reporting; success of the
company's risk management activities; availability of financing and
access to capital markets; estimates of proved reserves,
exploitation potential, or exploration prospect size; greater than
expected production decline rates; timing and amount of future
production of oil, gas, and NGLs; cybersecurity threats, technology
system failures and data security issues; the inability to
transport, process and store oil and gas; hedging activities and
the viability of our hedging counterparties, many of whom have been
negatively impacted by the COVID-19 pandemic; economic and
competitive conditions; lack of available insurance; cash flow and
anticipated liquidity; continuing compliance with the financial
covenant contained in our amended and restated credit agreement;
the loss of certain federal income tax deductions; litigation;
environmental liabilities; new federal regulations regarding
species or habitats; exploration and development opportunities that
we pursue may not result in economic, productive oil and gas
properties; drilling of wells; development drilling and testing
results; performance of acquired properties and newly drilled
wells; ability to obtain industry partners to jointly explore
certain prospects, and the willingness and ability of those
partners to meet capital obligations when requested; unexpected
future capital expenditures; amount, nature, and timing of capital
expenditures; proving up undeveloped acreage and maintaining
production on leases; unforeseen liabilities associated with
acquisitions and dispositions; establishing valuation allowances
against our net deferred tax assets; potential payments for failing
to meet minimum oil, gas, NGL, or water delivery or sales
commitments; increased financing costs due to a significant
increase in interest rates; risks associated with concentration of
operations in one major geographic area; availability and cost of
capital; title to properties; ability to complete property sales or
other transactions; and other factors discussed in the company's
reports filed with the SEC. Cimarex Energy Co. encourages readers
to consider the risks and uncertainties associated with projections
and other forward-looking statements. In addition, the
company assumes no obligation to publicly revise or update any
forward-looking statements based on future events or
circumstances.
1
|
Adjusted net income,
adjusted cash flow from operations, free cash flow, and free cash
flow after dividend are non-GAAP financial measures. See
below for reconciliations of the related GAAP amounts.
|
|
|
2
|
PEPL refers to
Panhandle Eastern Pipe Line Tex/OK Mid-Continent index, El Paso
Perm refers to El Paso Permian Basin index, and Waha refers to West
Texas (Waha) Index, all as quoted in Platt's Inside
FERC.
|
|
|
3
|
WTI refers to West
Texas Intermediate oil price as quoted on the New York Mercantile
Exchange.
|
|
|
4
|
Index price on basis
swaps is WTI NYMEX less the weighted average WTI Midland
differential, as quoted by Argus Americas Crude.
|
RECONCILIATION OF
ADJUSTED NET INCOME
|
|
The following
reconciles net income (loss) as reported under generally accepted
accounting principles (GAAP) to adjusted net income (non-GAAP) for
the periods indicated.
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
24,711
|
|
|
$
|
(384,091)
|
|
|
$
|
(1,967,458)
|
|
|
$
|
(124,619)
|
|
Impairment of oil and
gas properties
|
12,451
|
|
|
618,693
|
|
|
1,638,329
|
|
|
618,693
|
|
Impairment of
goodwill
|
—
|
|
|
—
|
|
|
714,447
|
|
|
—
|
|
Mark-to-market loss on
open derivative positions
|
71,500
|
|
|
28,888
|
|
|
154,781
|
|
|
63,719
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
4,250
|
|
Acquisition related
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
8,404
|
|
Asset retirement
obligation
|
2,100
|
|
|
—
|
|
|
4,900
|
|
|
—
|
|
Tax impact
(1)
|
(19,448)
|
|
|
(143,115)
|
|
|
(402,754)
|
|
|
(121,637)
|
|
Adjusted net
income
|
$
|
91,314
|
|
|
$
|
120,375
|
|
|
$
|
142,245
|
|
|
$
|
448,810
|
|
Diluted earnings
(loss) per share
|
$
|
0.25
|
|
|
$
|
(3.87)
|
|
|
$
|
(19.73)
|
|
|
$
|
(1.33)
|
|
Adjusted diluted
earnings per share*
|
$
|
0.89
|
|
|
$
|
1.18
|
|
|
$
|
1.39
|
|
|
$
|
4.46
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding:
|
|
|
|
|
|
|
|
Adjusted
diluted**
|
102,270
|
|
|
101,903
|
|
|
102,140
|
|
|
100,679
|
|
|
|
(1) The tax impact in
the 2020 periods is calculated using an effective tax rate that
excludes the effects of the first quarter 2020 goodwill impairment,
other non-deductible items, and changes in valuation
allowances.
|
|
|
Adjusted net income
and adjusted diluted earnings per share exclude the noted items
because management believes these items affect the comparability of
operating results. The company discloses these non-GAAP financial
measures as a useful adjunct to GAAP measures because:
|
|
|
a)
|
Management uses
adjusted net income to evaluate the company's operating performance
between periods and to compare the company's performance to other
oil and gas exploration and production companies.
|
|
|
b)
|
Adjusted net income
is more comparable to earnings estimates provided by research
analysts.
|
|
|
* Does not include
adjustments resulting from application of the "two-class method"
used to determine earnings per share under GAAP.
|
|
|
** Reflects the
weighted-average number of common shares outstanding during the
period as adjusted for the dilutive effects of outstanding stock
options.
|
RECONCILIATION OF
ADJUSTED CASH FLOW FROM OPERATIONS, FREE CASH FLOW
AND
|
FREE CASH FLOW
AFTER DIVIDEND
|
|
The following table
provides a reconciliation from generally accepted accounting
principles (GAAP) measures of net cash provided by operating
activities to adjusted cash flows from operations (non-GAAP) , free
cash flow (non-GAAP) and free cash flow after dividend (non-GAAP)
for the periods indicated.
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(in
thousands)
|
Net cash provided by
operating activities
|
$
|
191,477
|
|
|
$
|
359,809
|
|
|
$
|
904,167
|
|
|
$
|
1,343,966
|
|
Change in operating
assets and liabilities
|
65,109
|
|
|
56,178
|
|
|
40,032
|
|
|
120,174
|
|
|
|
|
|
|
|
|
|
Adjusted cash flow
from operations
|
256,586
|
|
|
415,987
|
|
|
944,199
|
|
|
1,464,140
|
|
|
|
|
|
|
|
|
|
Oil and gas
expenditures
|
(112,655)
|
|
|
(246,232)
|
|
|
(594,796)
|
|
|
(1,245,457)
|
|
Other capital
expenditures
|
(4,337)
|
|
|
(14,658)
|
|
|
(44,302)
|
|
|
(73,693)
|
|
Change in capital
accruals
|
(18,356)
|
|
|
1,126
|
|
|
66,587
|
|
|
12,993
|
|
Free cash
flow
|
121,238
|
|
|
156,223
|
|
|
371,688
|
|
|
157,983
|
|
|
|
|
|
|
|
|
|
Dividends
paid
|
(24,083)
|
|
|
(21,579)
|
|
|
(92,976)
|
|
|
(81,709)
|
|
Free cash flow after
dividend
|
$
|
97,155
|
|
|
$
|
134,644
|
|
|
$
|
278,712
|
|
|
$
|
76,274
|
|
|
Management uses the
non-GAAP financial measures of adjusted cash flow from operations,
free cash flow and free cash flow after dividend as a means of
measuring our ability to fund our capital program and dividends,
without fluctuations caused by changes in current assets and
liabilities, which are included in the GAAP measure of net cash
provided by operating activities. Management believes these
non-GAAP financial measures provide useful information to investors
for the same reason, and that they are also used by professional
research analysts in providing investment recommendations
pertaining to companies in the oil and gas exploration and
production industry.
|
PROVED
RESERVES
|
|
|
Gas
(MMcf)
|
|
Oil
(MBbls)
|
|
NGL
(MBbls)
|
|
Total
(MBOE)
|
December 31,
2019
|
1,532,145
|
|
|
169,770
|
|
|
194,468
|
|
|
619,595
|
|
Revisions of previous
estimates
|
(43,504)
|
|
|
(19,692)
|
|
|
(25,488)
|
|
|
(52,430)
|
|
Extensions and
discoveries
|
107,322
|
|
|
22,269
|
|
|
16,419
|
|
|
56,575
|
|
Purchases of
reserves
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Production
|
(232,625)
|
|
|
(28,087)
|
|
|
(25,554)
|
|
|
(92,412)
|
|
Sales of
reserves
|
(496)
|
|
|
(197)
|
|
|
(27)
|
|
|
(307)
|
|
December 31,
2020
|
1,362,842
|
|
|
144,063
|
|
|
159,818
|
|
|
531,021
|
|
|
|
|
|
|
|
|
|
Proved developed
reserves:
|
|
|
|
|
|
|
|
December 31,
2019
|
1,358,329
|
|
|
138,783
|
|
|
166,552
|
|
|
531,722
|
|
December 31,
2020
|
1,190,907
|
|
|
112,785
|
|
|
135,901
|
|
|
447,170
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
%
Change
|
|
|
Standardized Measure
($ in millions)
|
2,253
|
|
|
3,629
|
|
|
(38)
|
%
|
|
|
Pre-tax PV-10 ($ in
millions) *
|
2,288
|
|
|
3,948
|
|
|
(42)
|
%
|
|
|
|
|
|
|
|
|
|
|
Average prices used
in Standardized Measure
|
2020
|
|
2019
|
|
%
Change
|
|
|
Gas ($ per
Mcf)
|
1.99
|
|
|
2.58
|
|
|
(23)
|
%
|
|
|
Oil ($ per
Bbl)
|
39.54
|
|
|
55.67
|
|
|
(29)
|
%
|
|
|
|
* 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, 2020 and 2019, Cimarex's discounted future
income taxes were $35.6 million and $319.4 million, respectively.
Cimarex's standardized measure of discounted future net cash flows
was $2,252.5 million at year-end 2020 and $3,629.0 million at
year-end 2019. Management uses pre-tax PV-10 as one measure of the
value of the company's proved reserves and to compare relative
values of proved reserves to other exploration and production
companies without regard to income taxes. Management believes
pre-tax PV-10 is a useful measure for comparison of proved reserve
values among companies because, unlike standardized measure, it
excludes future income taxes that often depend on the unique income
tax characteristics of the owner of the reserves rather than on the
nature, location and quality of the reserves themselves. Management
further believes that professional research analysts and rating
agencies use pre-tax PV-10 in similar ways. 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.
|
PROVED RESERVES BY
REGION
|
|
|
Gas
(MMcf)
|
|
Oil
(MBbls)
|
|
NGL
(MBbls)
|
|
Total
(MBOE)
|
Permian
Basin
|
790,750
|
|
|
126,327
|
|
|
103,606
|
|
|
361,725
|
|
Mid-Continent
|
570,578
|
|
|
17,491
|
|
|
56,130
|
|
|
168,717
|
|
Other
|
1,514
|
|
|
245
|
|
|
82
|
|
|
579
|
|
|
1,362,842
|
|
|
144,063
|
|
|
159,818
|
|
|
531,021
|
|
OIL AND GAS
CAPITALIZED EXPENDITURES
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(in
thousands)
|
Acquisitions:
|
|
|
|
|
|
|
|
Proved
|
$
|
4,628
|
|
|
$
|
(723)
|
|
|
$
|
11,878
|
|
|
$
|
695,450
|
|
Unproved
|
—
|
|
|
3,908
|
|
|
—
|
|
|
1,025,376
|
|
|
4,628
|
|
|
3,185
|
|
|
11,878
|
|
|
1,720,826
|
|
|
|
|
|
|
|
|
|
Exploration and
development:
|
|
|
|
|
|
|
|
Land and
seismic
|
10,842
|
|
|
17,719
|
|
|
48,468
|
|
|
60,175
|
|
Exploration and
development
|
121,031
|
|
|
234,603
|
|
|
496,388
|
|
|
1,181,605
|
|
|
131,873
|
|
|
252,322
|
|
|
544,856
|
|
|
1,241,780
|
|
|
|
|
|
|
|
|
|
Total acquisition,
exploration, and development capital expenditures
|
$
|
136,501
|
|
|
$
|
255,507
|
|
|
$
|
556,734
|
|
|
$
|
2,962,606
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Years
Ended
December 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(in thousands, except
per share information)
|
Revenues:
|
|
|
|
|
|
|
|
|
Oil sales
|
|
$
|
250,059
|
|
|
$
|
464,044
|
|
|
$
|
999,682
|
|
|
$
|
1,660,210
|
|
Gas and NGL
sales
|
|
173,503
|
|
|
182,269
|
|
|
513,006
|
|
|
661,711
|
|
Gas gathering and
other
|
|
11,161
|
|
|
10,931
|
|
|
45,907
|
|
|
41,048
|
|
|
|
434,723
|
|
|
657,244
|
|
|
1,558,595
|
|
|
2,362,969
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Impairment of oil and
gas properties
|
|
12,451
|
|
|
618,693
|
|
|
1,638,329
|
|
|
618,693
|
|
Depreciation,
depletion, amortization, and accretion
|
|
134,556
|
|
|
252,637
|
|
|
710,607
|
|
|
890,759
|
|
Impairment of
goodwill
|
|
—
|
|
|
—
|
|
|
714,447
|
|
|
—
|
|
Production
|
|
71,726
|
|
|
82,722
|
|
|
285,324
|
|
|
339,941
|
|
Transportation,
processing, and other operating
|
|
52,032
|
|
|
64,780
|
|
|
213,366
|
|
|
238,259
|
|
Gas gathering and
other
|
|
7,118
|
|
|
6,279
|
|
|
23,591
|
|
|
23,294
|
|
Taxes other than
income
|
|
9,430
|
|
|
43,353
|
|
|
79,699
|
|
|
148,953
|
|
General and
administrative
|
|
30,672
|
|
|
26,349
|
|
|
111,005
|
|
|
95,843
|
|
Stock
compensation
|
|
7,016
|
|
|
6,394
|
|
|
29,895
|
|
|
26,398
|
|
Loss on derivative
instruments, net
|
|
72,982
|
|
|
40,901
|
|
|
35,534
|
|
|
76,850
|
|
Other operating
expense, net
|
|
291
|
|
|
248
|
|
|
839
|
|
|
19,305
|
|
|
|
398,274
|
|
|
1,142,356
|
|
|
3,842,636
|
|
|
2,478,295
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
36,449
|
|
|
(485,112)
|
|
|
(2,284,041)
|
|
|
(115,326)
|
|
|
|
|
|
|
|
|
|
|
Other (income) and
expense:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
23,325
|
|
|
23,721
|
|
|
92,914
|
|
|
93,386
|
|
Capitalized
interest
|
|
(11,623)
|
|
|
(14,421)
|
|
|
(50,030)
|
|
|
(56,232)
|
|
Loss on early
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,250
|
|
Other, net
|
|
(1,593)
|
|
|
(1,193)
|
|
|
(540)
|
|
|
(5,741)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income tax
|
|
26,340
|
|
|
(493,219)
|
|
|
(2,326,385)
|
|
|
(150,989)
|
|
Income tax expense
(benefit)
|
|
1,629
|
|
|
(109,128)
|
|
|
(358,927)
|
|
|
(26,370)
|
|
Net income
(loss)
|
|
$
|
24,711
|
|
|
$
|
(384,091)
|
|
|
$
|
(1,967,458)
|
|
|
$
|
(124,619)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share to common stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.25
|
|
|
$
|
(3.87)
|
|
|
$
|
(19.73)
|
|
|
$
|
(1.33)
|
|
Diluted
|
|
$
|
0.25
|
|
|
$
|
(3.87)
|
|
|
$
|
(19.73)
|
|
|
$
|
(1.33)
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
0.22
|
|
|
$
|
0.20
|
|
|
$
|
0.88
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
100,072
|
|
|
99,789
|
|
|
99,952
|
|
|
98,789
|
|
Diluted
|
|
100,072
|
|
|
99,789
|
|
|
99,952
|
|
|
98,789
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss):
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
24,711
|
|
|
$
|
(384,091)
|
|
|
$
|
(1,967,458)
|
|
|
$
|
(124,619)
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
Change in fair value
of investments, net of tax
|
|
—
|
|
|
(10)
|
|
|
—
|
|
|
(755)
|
|
Total comprehensive
income (loss)
|
|
$
|
24,711
|
|
|
$
|
(384,101)
|
|
|
$
|
(1,967,458)
|
|
|
$
|
(125,374)
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED CASH FLOW STATEMENTS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Years
Ended
December 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
(in
thousands)
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
24,711
|
|
|
$
|
(384,091)
|
|
|
$
|
(1,967,458)
|
|
|
$
|
(124,619)
|
|
Adjustments to
reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Impairment of oil and
gas properties
|
|
12,451
|
|
|
618,693
|
|
|
1,638,329
|
|
|
618,693
|
|
|
Depreciation,
depletion, amortization, and accretion
|
|
134,556
|
|
|
252,637
|
|
|
710,607
|
|
|
890,759
|
|
|
Impairment of
goodwill
|
|
—
|
|
|
—
|
|
|
714,447
|
|
|
—
|
|
|
Deferred income
taxes
|
|
1,499
|
|
|
(109,660)
|
|
|
(358,896)
|
|
|
(26,902)
|
|
|
Stock
compensation
|
|
7,016
|
|
|
6,394
|
|
|
29,895
|
|
|
26,398
|
|
|
Loss on derivative
instruments, net
|
|
72,982
|
|
|
40,901
|
|
|
35,534
|
|
|
76,850
|
|
|
Settlements on
derivative instruments
|
|
(1,482)
|
|
|
(12,013)
|
|
|
119,247
|
|
|
(13,131)
|
|
|
Loss on early
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,250
|
|
|
Changes in non-current
assets and liabilities
|
|
1,119
|
|
|
(167)
|
|
|
7,189
|
|
|
(2,797)
|
|
|
Other, net
|
|
3,734
|
|
|
3,293
|
|
|
15,305
|
|
|
14,639
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(63,461)
|
|
|
(15,055)
|
|
|
116,492
|
|
|
65,128
|
|
|
Other current
assets
|
|
(1,554)
|
|
|
(2,879)
|
|
|
5,134
|
|
|
(739)
|
|
|
Accounts payable and
other current liabilities
|
|
(94)
|
|
|
(38,244)
|
|
|
(161,658)
|
|
|
(184,563)
|
|
|
Net cash provided by
operating activities
|
|
191,477
|
|
|
359,809
|
|
|
904,167
|
|
|
1,343,966
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Oil and gas capital
expenditures
|
|
(112,655)
|
|
|
(246,232)
|
|
|
(594,796)
|
|
|
(1,245,457)
|
|
|
Acquisition of oil and
gas properties
|
|
(4,628)
|
|
|
(3,185)
|
|
|
(11,878)
|
|
|
(288,781)
|
|
|
Sales of oil and gas
assets
|
|
147
|
|
|
398
|
|
|
69,983
|
|
|
28,945
|
|
|
Sales of other
assets
|
|
226
|
|
|
245
|
|
|
2,118
|
|
|
1,104
|
|
|
Other capital
expenditures
|
|
(4,337)
|
|
|
(14,658)
|
|
|
(44,302)
|
|
|
(73,693)
|
|
|
Net cash used by
investing activities
|
|
(121,247)
|
|
|
(263,432)
|
|
|
(578,875)
|
|
|
(1,577,882)
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Borrowings of
long-term debt
|
|
—
|
|
|
380,000
|
|
|
172,000
|
|
|
2,619,310
|
|
|
Repayments of
long-term debt
|
|
—
|
|
|
(380,000)
|
|
|
(172,000)
|
|
|
(2,990,000)
|
|
|
Financing,
underwriting, and debt redemption fees
|
|
—
|
|
|
—
|
|
|
(1,566)
|
|
|
(11,798)
|
|
|
Finance lease
payments
|
|
(979)
|
|
|
(1,138)
|
|
|
(4,842)
|
|
|
(3,869)
|
|
|
Repurchase of
redeemable preferred stock
|
|
(43,029)
|
|
|
—
|
|
|
(43,029)
|
|
|
—
|
|
|
Dividends
paid
|
|
(24,083)
|
|
|
(21,579)
|
|
|
(92,976)
|
|
|
(81,709)
|
|
|
Employee withholding
taxes paid upon the net settlement
of equity-classified stock awards
|
|
(1,951)
|
|
|
(2,823)
|
|
|
(4,456)
|
|
|
(5,229)
|
|
|
Proceeds from exercise
of stock options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,267
|
|
|
Net cash used by
financing activities
|
|
(70,042)
|
|
|
(25,540)
|
|
|
(146,869)
|
|
|
(472,028)
|
|
|
Net change in cash
and cash equivalents
|
|
188
|
|
|
70,837
|
|
|
178,423
|
|
|
(705,944)
|
|
|
Cash and cash
equivalents at beginning of period
|
|
272,957
|
|
|
23,885
|
|
|
94,722
|
|
|
800,666
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
273,145
|
|
|
$
|
94,722
|
|
|
$
|
273,145
|
|
|
$
|
94,722
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
|
|
|
|
|
|
|
|
December 31,
2020
|
|
December 31,
2019
|
Assets
|
|
(in thousands, except
share and
per share information)
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
273,145
|
|
|
$
|
94,722
|
|
Accounts receivable,
net of allowance
|
|
332,485
|
|
|
448,584
|
|
Oil and gas well
equipment and supplies
|
|
37,150
|
|
|
47,893
|
|
Derivative
instruments
|
|
6,848
|
|
|
17,944
|
|
Other current
assets
|
|
7,710
|
|
|
12,343
|
|
Total current
assets
|
|
657,338
|
|
|
621,486
|
|
Oil and gas
properties at cost, using the full cost method of
accounting:
|
|
|
|
|
Proved
properties
|
|
21,281,840
|
|
|
20,678,334
|
|
Unproved properties
and properties under development, not being amortized
|
|
1,142,183
|
|
|
1,255,908
|
|
|
|
22,424,023
|
|
|
21,934,242
|
|
Less – accumulated
depreciation, depletion, amortization, and impairment
|
|
(18,987,354)
|
|
|
(16,723,544)
|
|
Net oil and gas
properties
|
|
3,436,669
|
|
|
5,210,698
|
|
Fixed assets, net of
accumulated depreciation of $455,815 and $389,458,
respectively
|
|
436,101
|
|
|
519,291
|
|
Goodwill
|
|
—
|
|
|
716,865
|
|
Derivative
instruments
|
|
2,342
|
|
|
580
|
|
Deferred income
taxes
|
|
20,472
|
|
|
—
|
|
Other
assets
|
|
69,067
|
|
|
71,109
|
|
|
|
$
|
4,621,989
|
|
|
$
|
7,140,029
|
|
Liabilities,
Redeemable Preferred Stock, and Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
44,290
|
|
|
$
|
49,020
|
|
Accrued
liabilities
|
|
280,849
|
|
|
418,978
|
|
Derivative
instruments
|
|
145,398
|
|
|
16,681
|
|
Revenue
payable
|
|
130,637
|
|
|
207,939
|
|
Operating
leases
|
|
59,051
|
|
|
66,003
|
|
Total current
liabilities
|
|
660,225
|
|
|
758,621
|
|
Long-term
debt:
|
|
|
|
|
Principal
|
|
2,000,000
|
|
|
2,000,000
|
|
Less – unamortized
debt issuance costs and discounts
|
|
(12,701)
|
|
|
(14,754)
|
|
Long-term debt,
net
|
|
1,987,299
|
|
|
1,985,246
|
|
Deferred income
taxes
|
|
—
|
|
|
338,424
|
|
Derivative
instruments
|
|
17,749
|
|
|
1,018
|
|
Operating
leases
|
|
134,705
|
|
|
184,172
|
|
Other
liabilities
|
|
231,776
|
|
|
214,787
|
|
Total
liabilities
|
|
3,031,754
|
|
|
3,482,268
|
|
Redeemable preferred
stock - 8.125% Series A Cumulative Perpetual Convertible
Preferred Stock, $0.01 par value, 28,165 shares authorized and
issued and 62,500
shares authorized and issued, respectively
|
|
36,781
|
|
|
81,620
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock, $0.01
par value, 200,000,000 shares authorized, 102,866,806 and
102,144,577 shares issued, respectively
|
|
1,029
|
|
|
1,021
|
|
Additional paid-in
capital
|
|
3,211,562
|
|
|
3,243,325
|
|
(Accumulated deficit)
retained earnings
|
|
(1,659,137)
|
|
|
331,795
|
|
Total stockholders'
equity
|
|
1,553,454
|
|
|
3,576,141
|
|
|
|
$
|
4,621,989
|
|
|
$
|
7,140,029
|
|
View original
content:http://www.prnewswire.com/news-releases/cimarex-reports-fourth-quarter-and-full-year-2020-results-301232780.html
SOURCE Cimarex Energy Co.