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Cimarex (XEC) Earnings and Revenues Beat Estimates in Q4

Zacks

Independent oil and gas exploration and production firm Cimarex Energy Company XEC reported fourth-quarter 2016 earnings of 60 cents per share that beat than the Zacks Consensus Estimate of 59 cents. In the fourth quarter of 2015, the company had incurred a loss of 25 cents per share. The improvement is mainly attributable to increase in price realizations.

For full-year 2016, adjusted earnings of 70 cents beat the Zacks Consensus Estimate of 68 cents. The company had incurred a loss of 60 cents per share in 2015.

Total Revenues

In the fourth quarter, Cimarex Energy’s total revenue of $382.2 million surpassed the Zacks Consensus Estimate of $372 million. The reported revenues also increased from $311.3 million a year ago.

Total revenue in 2016 plunged 13.4% year over year to $1,257.3 million but came in above the Zacks Consensus Estimate of $1,243 million.

Operational Highlights

In the quarter under review, total production averaged 959.7 million cubic feet equivalent (MMcfe) per day, down 2.6% year over year. Oil volumes dipped 3.3% year over year to 45.6 thousand barrels per day (MBbls/d) and natural gas volumes fell 3.8% to 457.2 MMcf, whereas natural gas liquids (NGL) volumes inched up 0.6% to 38.2 MBbls/d.

Year-over-year realized prices for natural gas, crude oil and NGL increased 30%, 19.7%, and 42.7% to $2.86 per thousand cubic feet, $44.67 per barrel and $18.15 per barrel, respectively, in the reported quarter.

The company brought 55 gross (25 net) wells onstream during the quarter. As of Dec 31, 2016, a total of 153 gross (61 net) wells were awaiting completion.

Financial Condition

Cimarex Energy had cash and cash equivalents of $652.9 million as of Dec 31, 2016 compared with $779.4 million as of Dec 31, 2015. Long-term debt was $1.5 billion as of Dec 31, 2016, which represents a debt-to-capitalization ratio of 38.7%.

Cimarex Energy's net cash from operating activities during the quarter was $170.0 million compared with $115.0 million in the prior-year period. The company invested $735 million for exploration and development during 2016, which was primarily funded with cash flow from operations and cash in hand.

Cimarex Energy Co Price, Consensus and EPS Surprise


Cimarex Energy Co Price, Consensus and EPS Surprise | Cimarex Energy Co Quote

Reserves Replacement

At the end of 2016, oil and gas proved reserves were 2.9 trillion cubic feet equivalent (Tcfe), almost flat with the prior year. In 2016, the company added 450.2 billion cubic feet equivalent (Bcfe) resulting in reserve replacement of 128% of the 2016 production. Proved developed reserves increased 5% to 2.3 Tcfe.

Guidance

Total production for the first quarter of 2017 is projected to average 1.01–1.05 Bcfe per day. In the first quarter, oil and gas productions are expected to increase by 10% and 4–5%, respectively, on a sequential basis. Full-year 2017 production is estimated to average 1.06–1.11 Bcfe per day, up 13% from the midpoint of the 2016 level. Oil production is expected to increase 22–27% on an annual basis. Capital investment for exploration and development is estimated at $1.1–$1.2 billion for 2017, up 56% from the midpoint of the 2016 level.

Zacks Rank

Cimarex Energy currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the same space include W&T Offshore Inc. WTI, Holly Energy Partners LP HEP and Sunrun Inc. RUN. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

W&T Offshore posted a positive earnings surprise of 44.19% in the preceding quarter. It beat estimates in all the four preceding quarters. It has an average positive earnings surprise of 31.49% in the four trailing quarters.

Holly Energy Partners posted a negative earnings surprise of 23.26% in the preceding quarter. It had an average negative earnings surprise of 0.96% in the four trailing quarters.

Sunrun posted a positive earnings surprise of 137.21% in the preceding quarter. It beat estimates in all the four preceding quarters and has an average positive earnings surprise of 134.71% in the four trailing quarters.

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