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Cimarex Reports Second-Quarter 2008 Earnings of $2.68 Per Share

Posted on: Tuesday, 5 August 2008, 06:00 CDT

DENVER, Aug. 5 /PRNewswire-FirstCall/ -- Cimarex Energy Co. today reported second-quarter 2008 net income of $229.3 million, or $2.68 per diluted share. This compares to second-quarter 2007 earnings of $78.7 million, or $0.93 per diluted share.

Revenues from oil and gas sales in the second quarter of 2008 were $588.7 million, compared to $325.8 million in the same period of 2007. Second- quarter 2008 cash flow from operations totaled $435.6 million versus $236.3 million in the same period of 2007(1).

The increase in second-quarter 2008 revenues, earnings and cash flow is primarily a result of higher production and oil and gas prices. Second- quarter 2008 gas prices increased 45% to $10.57 per thousand cubic feet (Mcf) and oil rose 98% to $121.64 per barrel from the same period of 2007.

Second-quarter 2008 daily oil and gas production grew 10% over last year's second quarter. Gas production in the latest quarter averaged 353.5 million cubic feet per day, an increase of 9% over the second-quarter 2007 and oil production grew 13% to an average of 22,471 barrels per day. Growing production reflects strong results from drilling.

For the six month period ended June 30, 2008, net income totaled $379.1 million, or $4.44 per diluted share, as compared to $143.3 million, or $1.69 per diluted share, for the first six months of 2007. First-half 2008 cash flow from operations totaled $770.3 million versus $451.7 million in the same period of 2007(1)

Capital

Second-quarter 2008 exploration and development capital totaled $359.9 million as compared to $236.9 million in the second quarter of 2007. In the second quarter of 2008, Cimarex drilled 126 gross (82 net) wells, completing 94% as producers. Exploration and development capital investment for 2008 is projected to approximately $1.3 - $1.5 billion.

Outlook

Third-quarter 2008 oil and gas production volumes are projected to range between 485 - 495 million cubic feet equivalent per day (MMcfe/d). Full-year 2008 production is projected to be in the range of 480 - 495 MMcfe/d, or a 9- 12% increase over 2007 after adjusting for property sales.

Expenses for the remainder of 2008 are expected to fall within the following ranges:

Expenses ($/Mcfe): Production expense $1.15 - $1.25 Transportation expense 0.20 - 0.25 DD&A and ARO accretion 3.05 - 3.20 General and administrative expense 0.30 - 0.34 Production taxes (% of oil and gas revenue) 6.5% - 7.5% Conference call and web cast

Cimarex will host a follow-up conference call today at 11:00 a.m. Mountain Time (1:00 p.m. Eastern Time). To access the live, interactive call, please dial (888) 603-6873 and reference call ID # 55614975 ten minutes before the scheduled start time. A digital replay will be available for one week following the live broadcast at (800) 642-1687 and by using the conference ID # 55614975. The listen-only web cast of the call will be accessible via http://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 that represents Net Cash Provided By Operating Activities adjusted for the change in operating assets and liabilities. See below for a reconciliation of the related amounts. PRICE AND PRODUCTION DATA For the Three Months Ended For the Six Months Ended June 30, June 30, 2008 2007 2008 2007 Gas Production: Total production - Mcf 32,172,121 29,462,142 63,081,660 58,638,779 Gas volume - Mcf per day 353,540 323,760 346,603 323,971 Gas price - per Mcf (before hedge effect) $10.57 $7.19 $9.47 $6.87 Effect of hedges $0.00 $0.11 $0.02 $0.14 Gas price - per Mcf (after hedge effect) $10.57 $7.30 $9.49 $7.01 Oil Production (including NGL): Total production - barrels 2,044,831 1,801,811 4,115,688 3,561,535 Oil volume - barrels per day 22,471 19,800 22,614 19,677 Oil price - per barrel $121.64 $61.51 $107.93 $58.40 OIL AND GAS CAPITALIZED EXPENDITURES For the Three Months Ended For the Six Months Ended June 30, June 30, 2008 2007 2008 2007 (in thousands) (in thousands) Acquisition of properties $324 $- $1,369 $23 Exploration and development 359,898 236,874 666,853 482,379 Total oil and gas expenditures 360,222 236,874 668,222 482,402 Sale proceeds - (20,630) - (20,880) $360,222 $216,244 $668,222 $461,522 RECONCILIATION OF CASH FLOW FROM OPERATIONS For the Three Months Ended For the Six Months Ended June 30, June 30, 2008 2007 2008 2007 (in thousands) (in thousands) Net cash provided by operating activities $382,307 $246,794 $697,552 $433,263 Increase in operating assets and liabilities 53,326 (10,488) 72,781 18,441 Cash flow from operations $435,633 $236,306 $770,333 $451,704 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. CONDENSED INCOME STATEMENTS (unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, 2008 2007 2008 2007 (In thousands, except per share data) Revenues: Gas sales $339,965 $214,937 $598,920 $411,227 Oil sales 248,741 110,830 444,191 207,994 Gas gathering, processing and other 26,610 15,013 47,981 27,652 Gas marketing, net 1,067 1,304 2,367 2,086 616,383 342,084 1,093,459 648,959 Costs and expenses: Depreciation, depletion and amortization 133,201 112,797 258,757 221,681 Asset retirement obligation 1,862 2,399 3,456 4,990 Production 49,092 50,916 101,144 95,921 Transportation 10,621 6,294 18,930 12,228 Gas gathering and processing 12,361 7,825 22,402 15,136 Taxes other than income 39,749 23,802 70,356 44,429 General and administrative 13,876 11,958 25,460 24,609 Stock compensation, net 2,366 2,598 4,641 5,268 Other operating, net 85 2,586 1,121 2,315 263,213 221,175 506,267 426,577 Operating income 353,170 120,909 587,192 222,382 Other (income) and expense: Interest expense 7,748 10,297 16,168 19,462 Capitalized interest (4,653) (4,898) (9,259) (9,989) Amortization of fair value of debt (190) (580) (381) (1,527) Gain on early extinguishment of debt - (5,099) - (5,099) Other, net (5,507) (3,457) (8,524) (6,906) Income before income tax expense 355,772 124,646 589,188 226,441 Income tax expense 126,464 45,939 210,045 83,106 Net income $229,308 $78,707 $379,143 $143,335 Earnings per share: Basic $2.81 $0.96 $4.66 $1.74 Diluted $2.68 $0.93 $4.44 $1.69 Weighted average shares outstanding: Basic 81,474 82,282 81,380 82,252 Diluted 85,589 84,836 85,482 84,745 CONDENSED CASH FLOW STATEMENTS (unaudited) For the Three Months Ended For the Six Months Ended June 30, June 30, 2008 2007 2008 2007 Cash flows from operating activities: Net income $229,308 $78,707 $379,143 $143,335 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 133,201 112,797 258,757 221,681 Asset retirement obligation 1,862 2,399 3,456 4,990 Deferred income taxes 68,799 45,939 124,462 83,106 Stock compensation, net 2,366 2,598 4,641 5,268 Other 97 (6,134) (126) (6,676) Changes in operating assets and liabilities: (Increase) decrease in receivables, net (62,488) 5,430 (103,137) 11,741 Increase in other current assets (39,610) (10,083) (46,047) (8,968) Increase (decrease) in accounts payable and accrued liabilities 49,445 16,383 77,752 (18,862) Decrease in other non-current liabilities (673) (1,242) (1,349) (2,352) Net cash provided by operating activities 382,307 246,794 697,552 433,263 Cash flows from investing activities: Oil and gas expenditures (356,786) (220,858) (641,067) (473,229) Proceeds from sale of assets 250 21,181 354 21,530 Sales of short-term investments 2,061 - 7,061 - Other expenditures (12,092) (5,087) (21,086) (7,390) Net cash used by investing activities (366,567) (204,764) (654,738) (459,089) Cash flows from financing activities: Net decrease in bank debt - (161,000) - (95,000) Increase in other long-term debt - 350,000 - 350,000 Decrease in other long-term debt - (204,360) - (204,360) Financing costs incurred (50) (6,037) (50) (6,098) Treasury stock acquired - (5,623) - (5,623) Dividends paid (5,021) (3,382) (9,974) (6,747) Proceeds from issuance of common stock and other 10,845 432 12,961 8,017 Net cash provided by (used in) financing activities 5,774 (29,970) 2,937 40,189 Net change in cash and cash equivalents 21,514 12,060 45,751 14,363 Cash and cash equivalents at beginning of period 147,287 7,351 123,050 5,048 Cash and cash equivalents at end of period $168,801 $19,411 $168,801 $19,411 BALANCE SHEETS (unaudited) June 30, December 31, 2008 2007 Assets (In thousands, except share data) Current assets: Cash and cash equivalents $168,801 $123,050 Restricted cash 685 - Short-term investments 7,393 14,391 Receivables, net 418,464 315,327 Inventories 74,874 29,642 Deferred income taxes 365 5,697 Derivative instruments - 12,124 Other current assets 24,671 64,346 Total current assets 695,253 564,577 Oil and gas properties at cost, using the full cost method of accounting: Proved properties 6,195,685 5,545,977 Unproved properties and properties under development, not being amortized 388,020 364,618 6,583,705 5,910,595 Less - accumulated depreciation, depletion and amortization (2,188,611) (1,938,863) Net oil and gas properties 4,395,094 3,971,732 Fixed assets, net 101,647 90,584 Goodwill 691,432 691,432 Other assets, net 85,846 44,469 $5,969,272 $5,362,794 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $107,697 $52,671 Accrued liabilities 236,830 240,387 Derivative instruments 16,555 - Revenue payable 184,819 131,513 Total current liabilities 545,901 424,571 Long-term debt 486,778 487,159 Deferred income taxes 1,178,369 1,076,223 Other liabilities 136,959 115,554 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, 83,962,774 and 83,620,480 shares issued, respectively 840 836 Treasury stock, at cost, 885,392 and 1,078,822 shares held, respectively (33,344) (40,628) Paid-in capital 1,846,365 1,842,690 Retained earnings 1,817,902 1,448,763 Accumulated other comprehensive income (10,498) 7,626 3,621,265 3,259,287 $5,969,272 $5,362,794

Cimarex Energy Co.

CONTACT: Mark Burford, Director of Capital Markets of Cimarex EnergyCo., +1-303-295-3995

Web site: http://www.cimarex.com/

Source: PRNewswire-FirstCall

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