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$XEC 2Q15 Call: Permian equivalent production was 595.1MM a day, up 51% from 2Q14. Mid-Continent production came in at 419MM a day, virtually flat vs. 2Q14. Permian oil production were 48,448 barrels a day, up 12% over 1Q15. Permian gas production was 189MM a day, up 26% from 1Q15. Permian NGL production was 19,169 barrels a day, up 46% over 1Q15.
For 4Q17, $XEC expects its production volumes to average 1,175 - 1,225 MMcfe per day. Oil production is expected to grow by 32-37% when compared to 4Q16. For FY17, the total daily production volumes is estimated to average 1,134 - 1,147 MMcfe, up 18% from FY16.
$XEC plans to drill a few more wells in the White City area, both in the Upper Wolfcamp and the Lower Wolfcamp. $XEC will be testing upwards to the northern part of this contiguous acreage block. The company has more acreage located further to the north and it plans to test the upper and lower parts of this area.
Looking at net well completions quarter-to-quarter, $XEC had a good number of completions in 1Q17. This is expected to slow down in 2Q17, ramp up in 3Q17 and taper off slightly in 4Q17 as wells come online. The projected oil production and growth will parallel this. $XEC expects oil growth to extend to 4Q17 and surpass the ranges given in 4Q16.
In 1Q17, $XEC made $224MM in oil sales, up 90%. Gas sales jumped 60% to $132MM, while natural gas (NGL) sales surged 140% to $80MM. Total company production rose 9% to average 1,063 MMcfe per day, while oil production hiked 15% sequentially to 52,181 barrels per day. Cimarex invested $306MM in exploration and development during the quarter.
$XEC revenue soared 86% to $447MM in 1Q17, as the fossil fuel explorer turned to profit with a net income of $131MM from a loss of $232MM a year ago. Earnings were $1.38 per diluted share from a loss of $2.49 a share, as realized oil prices jumped 70% to average $47.71 a barrel and realized avg. natural gas prices hiked 57% to $3.01 per Mcf.
$XEC has discovered an error in its full cost ceiling test impairment calculation. The inaccuracy of the ceiling test calculation had no impact on $XEC’s cash flows or financial health. $XEC intends to file an amended 2016 Annual Report on Form 10-K to correct the errors for the years ended December 31, 2016 and 2015.
$XEC priced an offering of $750MM of senior unsecured notes due 2027, which will carry an interest rate of 3.90%. The notes were sold to the public at 99.748% for a yield to maturity of 3.93%. The offering is expected to close on April 10, 2017.
In terms of M&A, $XEC said it is always in the hunt for good opportunities, but the hurdle is high currently. The company said any M&A investment right now will have to compete with other internal investment opportunities that the company have for its cash flow.
In 2017, at the midpoint of guidance, $XEC expects to grow overall company production by 13%, which will be led by a 25% increase in oil volumes. Furthermore, the company projects its oil volume for 4Q17 to increase 30% to 35% over 4Q16 oil volumes.