EX-99.1 2 e19552ex99_1.txt PRESS RELEASE Exhibit 99.1 Cimarex Energy Announces Third-Quarter 2004 Earnings of $0.91 Per Share DENVER, Nov. 3 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported third-quarter 2004 net income of $39.2 million, or $0.91 per diluted share, a 74 percent increase over year-ago net income of $22.5 million, or $0.53 per diluted share. Higher quarterly earnings are attributable to increases in production and prices. Aggregate output of oil and gas rose 22 percent to 220 million cubic feet (MMcf) equivalent per day, while gas prices increased by 18 percent to $5.63 per thousand cubic feet and oil prices improved by 44 percent to $41.81 per barrel. The increase in overall production output is attributable to new wells drilled in Oklahoma, Texas, Louisiana and California. Cimarex participated in drilling 61 wells during the quarter, of which 53, or 87 percent, were successful. Revenues from oil and gas sales during the third quarter of 2004 totaled $119.6 million, up from $79.8 million during the same three months of 2003, and cash flow from operations increased by 70 percent to $89.4 million from $52.5 million last year.(1) Third-quarter 2004 costs and expenses (not including marketing purchases) totaled $59.4 million versus $44.3 million during the third quarter of 2003. The largest component of the overall cost increase was a $9.4 million rise in depreciation, depletion and amortization partially stemming from higher reserve replacement costs. Production taxes increased by $3.6 million, which is mostly related to higher revenues. Exploration and development expenditures during the third quarter of 2004 totaled $58.5 million, up from $44.7 million in the third quarter 2003. Increased capital expenditures reflect expansion of the Company's drilling program in the Mid-Continent, Gulf Coast and Permian Basin regions of the U.S. Year-to-Date 2004 For the first nine months of 2004, Cimarex reported net income of $105.5 million, or $2.47 per diluted share. This compares to net income in the first nine months of 2003 of $76.3 million, or $1.81 per share. Oil and gas sales for the first three quarters of 2004 were $330.5 million. For the same period of 2003, oil and gas sales were $247.0 million. Cash flow from operations increased to $243.4 million from $166.5 million.(1) The increases reflect 20 percent higher production volumes, 29 percent higher oil prices, and seven percent higher gas prices. Capital expenditures for exploration and development during the first nine months of 2004 were $208.8 million, up from $102.1 million during the same period of 2003. For all of 2004, exploration and development expenditures are currently projected to total $250-270 million. A total of 178 gross (86 net) wells were drilled during the first nine months of 2004, of which 87 percent were successful. (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. Conference call and web cast A conference call with management has been scheduled for 11:00 a.m. Mountain Time (1:00 p.m. Eastern), Wednesday, November 3, 2004. Interested parties may access the call by dialing (800) 938-0653 and requesting the Cimarex Energy Co. teleconference. A listen-only web cast of the call will be provided at www.cimarex.com. Please go to the website at least ten minutes early to register and to download any necessary audio software. If you are unable to participate in the live broadcast of the call, an audio replay will be available by dialing (877) 519-4471 and entering conference code 5279193. Cimarex Energy Co. is an independent oil and gas exploration and production company with operations focused in Mid-Continent and Gulf Coast areas of the U.S. This news release may contain projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any such projections or statements reflect the Company's current view with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such projections will be achieved and actual results could differ materially from those projected. A discussion of important factors that could cause actual results to differ materially from those projected is included in the Company's annual report on Form 10-K filed for the year ended December 31, 2003, and the report filed on Form 10-Q for the quarter ended June 30, 2004. PRICE AND PRODUCTION DATA For the Three Months Ended For the Nine Months Ended September, 30 September, 30 2004 2003 2004 2003 Gas Production: Total production - Mcf 16,211,507 12,965,858 46,437,642 37,200,195 Gas volume - Mcf per day 176,212 140,933 169,480 136,264 Gas price - per Mcf $5.63 $4.78 $5.52 $5.18 Oil Production (including NGL): Total production - barrels 676,906 611,400 1,957,281 1,865,662 Oil volume - barrels per day 7,358 6,646 7,143 6,834 Oil price - per barrel $41.81 $29.07 $37.77 $29.20 CAPITALIZED COSTS INCURRED For the Three Months Ended For the Nine Months Ended September, 30 September, 30 2004 2003 2004 2003 (in thousands) (in thousands) Acquisitions of proved properties $100 $362 $102 $2,531 Exploration and development 58,534 44,727 208,783 102,140 Oil and gas expenditures 58,634 45,089 208,885 104,671 Sale proceeds (298) -- (662) (46) $58,336 $45,089 $208,223 $104,625 RECONCILIATION OF CASH FLOW FROM OPERATIONS For the Three Months Ended For the Nine Months Ended September, 30 September, 30 2004 2003 2004 2003 (in thousands) (in thousands) Net cash provided by operating activities $113,958 $51,862 $258,451 $171,160 Increase (decrease) in operating assets and liabilities (24,569) 624 (15,044) (4,673) Cash flow from operations $89,389 $52,486 $243,407 $166,487 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. INCOME STATEMENTS (unaudited) For the Three Months Ended For the Nine Months Ended September, 30 September, 30 2004 2003 2004 2003 (In thousands, except per share data) Revenues: Gas sales $91,333 $61,999 $256,529 $192,559 Oil sales 28,299 17,773 73,927 54,471 Marketing sales 49,329 32,822 139,921 101,459 Other, net 1,312 168 6,008 102 170,273 112,762 476,385 348,591 Costs and expenses: Depreciation, depletion and amortization 32,048 22,672 89,220 64,676 Asset retirement obligation accretion 319 241 913 737 Production 8,648 8,364 27,536 23,507 Transportation 2,696 2,055 7,544 5,210 Taxes other than income 9,736 6,131 27,565 19,449 Marketing purchases 48,495 32,786 138,081 100,884 General and administrative 5,398 4,181 15,040 12,320 Stock compensation 502 448 1,454 1,350 Financing costs - Interest expense 290 302 866 998 Capitalized interest -- -- -- (304) Interest income (232) (123) (421) (205) 107,900 77,057 307,798 228,622 Income before income tax expense and cumulative effect of a change in accounting principle 62,373 35,705 168,587 119,969 Income tax expense 23,191 13,164 63,070 45,245 Income before cumulative effect of a change in accounting principle 39,182 22,541 105,517 74,724 Cumulative effect of a change in accounting principle, net of tax -- -- -- 1,605 Net income $39,182 $22,541 $105,517 $76,329 Earnings per share: Basic - Income before cumulative effect of a change in accounting principle $0.94 $0.54 $2.55 $1.80 Cumulative effect of a change in accounting principle, net of tax -- -- -- 0.04 Net income $0.94 $0.54 $2.55 $1.84 Diluted - Income before cumulative effect of a change in accounting principle $0.91 $0.53 2.47 $1.77 Cumulative effect of a change in accounting principle, net of tax -- -- -- 0.04 Net income $0.91 $0.53 $2.47 $1.81 Weighted average shares outstanding: Basic 41,511 41,612 41,399 41,545 Diluted 42,885 42,297 42,689 42,195 CASH FLOW STATEMENTS (unaudited) For the Three Months Ended For the Nine Months Ended September, 30 September, 30 2004 2003 2004 2003 (In thousands) Cash flows from operating activities: Net income $39,182 $22,541 $105,517 $76,329 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 32,048 22,672 89,220 64,676 Amortization of restricted stock compensation 502 513 1,454 1,416 Cumulative effect of a change in accounting principle, net of tax -- -- -- (1,605) Deferred income taxes 15,600 6,410 42,899 24,137 Asset retirement obligation accretion 319 241 913 737 Income tax benefit related to stock options exercised 1,673 (112) 3,345 561 Other 65 221 59 236 Changes in operating assets and liabilities: (Increase) decrease in receivables, net 9,138 (388) (12,922) 1,621 (Increase) in inventories 1,950 (1,512) (4,622) (2,758) (Increase) decrease in other current assets 38 (31) 2,175 (615) Increase (decrease) in accounts payable (130) 347 21,425 (5,740) Increase (decrease) in accrued liabilities 12,401 855 7,658 12,308 Increase (decrease) in other non-current liabilities 1,172 105 1,330 (143) Net cash provided by operating activities 113,958 51,862 258,451 171,160 Cash flows from investing activities: Oil and gas expenditures (77,626) (41,627) (205,925) (97,896) Acquisition of oil and gas properties (100) (362) (102) (2,531) Proceeds from sale of assets 314 67 766 231 Other expenditures (4,692) (804) (8,078) (6,691) Net cash used by investing activities (82,104) (42,726) (213,339) (106,887) Cash flows from financing activities: Payments on long-term debt, net -- -- -- (32,000) Common stock reacquired and retired (593) (3) (714) (8) Proceeds from issuance of common stock 2,855 235 7,379 2,266 Net cash provided (used) by financing activities 2,262 232 6,665 (29,742) Net change in cash and cash equivalents 34,116 9,368 51,777 34,531 Cash and cash equivalents at beginning of period 58,081 47,490 40,420 22,327 Cash and cash equivalents at end of period $92,197 $56,858 $92,197 $56,858 BALANCE SHEETS (unaudited) September, 30 December 31, Assets 2004 2003 (In thousands, except share data) Current assets: Cash and cash equivalents $92,197 $40,420 Receivables, net 81,215 68,293 Inventories 11,322 6,700 Deferred income taxes 1,557 1,631 Other current assets 3,985 6,160 Total current assets 190,276 123,204 Oil and gas properties at cost, using the full cost method of accounting: Proved properties 1,510,448 1,331,095 Unproved properties and properties under development, not being amortized 70,686 39,370 1,581,134 1,370,465 Less - accumulated depreciation, depletion and amortization (832,935) (746,161) Net oil and gas properties 748,199 624,304 Fixed assets, net 15,934 12,092 Goodwill 44,967 44,967 Other assets, net 2,565 941 $1,001,941 $805,508 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $25,582 $18,394 Accrued liabilities 62,199 48,339 Revenue payable 33,013 18,776 Total current liabilities 120,794 85,509 Deferred income taxes 194,774 155,293 Other liabilities 35,457 29,966 Stockholders' equity: Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued -- -- Common stock, $0.01 par value, 100,000,000 shares authorized, 41,600,675 and 41,063,653 shares issued and outstanding, respectively 416 411 Paid-in capital 247,685 237,430 Unearned compensation (9,141) (9,540) Retained earnings 411,956 306,439 Accumulated other comprehensive income -- -- 650,916 534,740 $1,001,941 $805,508 SOURCE Cimarex Energy Co. -0- 11/03/2004 /CONTACT: Paul Korus of Cimarex Energy Co., +1-303-295-3995/ /Web site: http://www.cimarex.com / (XEC) CO: Cimarex Energy Co. ST: Colorado IN: OIL SU: ERN CCA MAV