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Cimarex Energy (XEC) Beats Q4 Earnings and Revenue Estimates

Zacks

Cimarex Energy Company XEC reported fourth-quarter 2017 earnings of $1.47 per share that beat the Zacks Consensus Estimate of $1.39. In the fourth quarter of 2016, the company had reported earnings per share of 60 cents. The improvement is mainly attributable to increased production as well as higher oil and liquids price realizations.

In 2017, the company reported adjusted earnings of $4.65, which beat the Zacks Consensus Estimate of $4.59 and increased nearly 291% from $1.19 per share in 2016.

Cimarex Energy Co Price, Consensus and EPS Surprise

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


Total Revenues

In the fourth quarter, Cimarex Energy’s total revenues of $550.9 million surpassed the Zacks Consensus Estimate of $532 million. The figure also increased from $382.2 million a year ago.

In 2017, total revenues jumped 52.6% year over year to $1,918.2 million but lagged the Zacks Consensus Estimate of $1,989 million.

Operational Highlights

In the quarter under review, total production averaged 1,204.4 million cubic feet equivalent (MMcfe) per day, up 25.5% year over year. Oil volumes increased 35.6% year over year to 61.8 thousand barrels per day (MBbls/d) and natural gas volumes rose 16.8% to 534 MMcf. Natural gas liquids (NGL) volumes improved 30.8% to 50 MBbls/d.

Year-over-year realized prices for natural gas decreased 9.1% to $2.60 per thousand cubic feet, but realized prices for crude oil and NGL increased 15.7% and 42.6% to $51.68 per barrel and $25.88 per barrel, respectively, in the reported quarter.

As of Dec 31, 2017, a total of 91 gross (34 net) wells were awaiting completion compared with a total of 55 gross (25 net) wells as of Dec 31, 2016.

Financial Condition

Cimarex Energy had cash and cash equivalents of $400.5 million as of Dec 31, 2017 compared with $652.9 million as of Dec 31, 2016. Long-term debt was $1.5 billion as of Dec 31, 2017, which represents a debt-to-capitalization ratio of 36.7%.

Cimarex Energy's net cash from operating activities was $340.8 million compared with $185.1 million in the prior-year quarter. The company invested $1.28 billion for exploration and development during 2017, which exceeded the company's estimate of $1.2 billion. It was primarily funded with cash flow from operations and cash in hand.

Reserves Replacement

At the end of 2017, oil and gas proved reserves were 3.4 trillion cubic feet equivalent (Tcfe), up 16% year over year. In 2016, the company added 941 billion cubic feet equivalent (Bcfe) resulting in reserve replacement of 211% of the 2017 production. Proved developed reserves increased 21% to 2.8 Tcfe.

Guidance

Total production for 2018 is estimated in the range of 211-221 thousand barrels of oil equivalent per day (MBoe/d), up 14% from the midpoint of 2017 production levels. Oil production is expected to grow 21-26% in 2018, while oil production in fourth quarter of 2018 is estimated to grow 29-34% year over year.

Total production for first-quarter 2018 is projected to average 198-207 MBoe per day, up 3% from the fourth-quarter 2017 level, while natural gas and NGL is expected to remain flat.

For 2018, capital investment for exploration and development has been estimated in the range of $1.6-$1.7 billion, of which $1.3-$1.4 billion will be for drilling and completion. The capital spending is up 29% from 2017 levels. Of the total, 70% is allocated for the Permian, while 30% is allocated for the Mid-Continent.

Q4 Price Performance

During the fourth quarter, Cimarex Energy’s shares have underperformed the industry. The company’s shares have gained 7.3% compared with the industry’s rally of 9%.



Zacks Rank & Key Picks

Cimarex Energy carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are EOG Resources EOG, Pioneer Natural Resources Company PXD and Devon Energy DVN. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based EOG Resources is a major independent oil and gas exploration and production company. The company delivered an average positive earnings surprise of 40.94% in the preceding four quarters.

Headquartered at Irving, TX, Pioneer Natural Resources Company is an independent oil and gas exploration and production company. The company delivered an average positive earnings surprise of 66.92% in the preceding four quarters.

Devon Energy, based in Oklahoma City, is an independent energy company engaged primarily in the exploration, development and production of oil and natural gas. The company delivered a positive earnings surprise of 13.77% in the preceding quarter.

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