EX-99.1 2 e18688ex99_1.txt PRESS RELEASE Exhibit 99.1 Cimarex Energy Announces Second-Quarter 2004 Earnings of $0.85 Per Share DENVER, Aug. 4 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported second-quarter 2004 net income of $36.5 million, or $0.85 per diluted share, a 74 percent increase over year-ago net income of $21.0 million, or $0.50 per diluted share. Higher quarterly earnings are attributable to increases in production and prices. Aggregate output of oil and gas rose 28 percent to 220 million cubic feet (MMcf) equivalent per day, while gas prices increased by 15 percent to $5.65 per thousand cubic feet and oil prices improved by 33 percent to $37.40 per barrel. The increase in overall production output is attributable to new wells drilled in Oklahoma, Texas and Louisiana. Cimarex participated in drilling 73 wells during the quarter, of which 65, or 89 percent, were successful. Revenues from oil and gas sales during the second quarter of 2004 totaled $115.3 million, up from $76.1 million during the same three months of 2003, and cash flow from operations increased by 75 percent to $84.6 million from $48.4 million last year(1). Second-quarter 2004 costs and expenses (not including marketing purchases) totaled $58.3 million versus $42.0 million during the second quarter of 2003. The largest components of the overall cost increase are a $9.9 million rise in depreciation, depletion and amortization partially stemming from higher reserve replacement costs and a $3.4 million increase in production taxes which is mostly related to higher revenues. Exploration and development expenditures during the second quarter of 2004 totaled $81.6 million, up from $30.4 million in the second quarter 2003. Increased capital expenditures reflect expansion of the Company's drilling program in the Mid-Continent and Gulf Coast regions of the U.S. Year-to-Date 2004 For the first six months of 2004, Cimarex reported net income of $66.3 million, or $1.56 per diluted share. This compares to net income in the first six months of 2003 of $53.8 million, or $1.28 per share. Included in 2003 amounts was $1.6 million of net income ($0.04 per share) from the cumulative effect of adopting SFAS 143, Accounting for Asset Retirement Obligations. Oil and gas sales for the first half of 2004 were $210.8 million. For the same period of 2003, oil and gas sales were $167.3 million. Cash flow from operations increased to $154.0 million from $114.0 million(1). The increases reflect 19 percent higher production volumes, 22 percent higher oil prices, and one percent higher gas prices. Capital expenditures for exploration and development during the first six months of 2004 were $150.2 million, up from $57.4 million during the first half of 2003. For all of 2004, exploration and development expenditures are currently projected to total $230-260 million. We drilled 117 gross (58 net) wells during the first six months of 2004, realizing a success rate of 88 percent. (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 a.m. Mountain Time (1 p.m. Eastern), Wednesday, August 4, 2004. Interested parties may access the call by dialing (888) 858-4710 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 4969243. 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 March 31, 2004. PRICE AND PRODUCTION DATA For the For the Three Months Ended Six Months Ended June, 30 June, 30 ---------------------- ---------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Gas Production: Total production -- Mcf 16,096,010 12,037,426 30,226,135 24,234,337 Gas volume -- Mcf per day 176,879 132,279 166,078 133,891 Gas price -- per Mcf $5.65 $4.91 $5.47 $5.39 Oil Production (including NGL): Total production -- barrels 653,758 605,141 1,280,375 1,254,262 Oil volume -- barrels per day 7,184 6,650 7,035 6,930 Oil price -- per barrel $37.40 $28.14 $35.64 $29.26 CAPITALIZED COSTS INCURRED For the For the Three Months Ended Six Months Ended June, 30 June, 30 ------------------ ------------------- 2004 2003 2004 2003 ------- ------- -------- ------- (in thousands) (in thousands) Acquisitions of proved properties $(7) $1,593 $2 $2,169 Exploration and development 81,630 30,399 150,249 57,413 ------- ------- -------- ------- Oil and gas expenditures 81,623 31,992 150,251 59,582 Sale proceeds (329) (46) (364) (46) ------- ------- -------- ------- $81,294 $31,946 $149,887 $59,536 ======= ======= ======== ======= RECONCILIATION OF CASH FLOW FROM OPERATIONS For the For the Three Months Ended Six Months Ended June, 30 June, 30 ------------------ -------------------- 2004 2003 2004 2003 ------- ------- -------- -------- (in thousands) (in thousands) Net cash provided by operating activities $81,446 $65,465 $144,493 $119,298 Increase (decrease) in operating assets and liabilities 3,120 (17,019) 9,525 (5,297) ------- ------- -------- -------- Cash flow from operations $84,566 $48,446 $154,018 $114,001 ======= ======= ======== ======== 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 For the Three Months Ended Six Months Ended June, 30 June, 30 ------------------- ------------------ 2004 2003 2004 2003 -------- ------- -------- -------- (In thousands, except per share data) Revenues: Gas sales $90,864 $59,071 $165,196 $130,560 Oil sales 24,450 17,026 45,628 36,698 Marketing sales 53,831 23,230 90,592 68,637 Other 1,048 (57) 4,696 (66) -------- ------- -------- -------- 170,193 99,270 306,112 235,829 -------- ------- -------- -------- Costs and expenses: Depreciation, depletion and amortization 30,834 20,887 57,172 42,004 Asset retirement obligation accretion 304 255 594 496 Marketing purchases 53,286 23,105 89,586 68,098 Transportation 2,493 1,896 4,848 3,155 Production 9,419 8,155 18,888 15,143 Taxes other than income 9,464 6,147 17,829 13,318 General and administrative 5,133 4,072 9,642 8,139 Stock compensation 484 436 952 902 Financing costs -- Interest expense 280 274 576 696 Capitalized interest -- (39) -- (304) Interest income (102) (53) (189) (82) -------- ------- -------- -------- 111,595 65,135 199,898 151,565 -------- ------- -------- -------- Income before income tax expense and cumulative effect of a change in accounting principle 58,598 34,135 106,214 84,264 Income tax expense 22,128 13,095 39,879 32,081 Income before cumulative effect of a change in accounting principle 36,470 21,040 66,335 52,183 Cumulative effect of a change in accounting principle, net of tax -- -- -- 1,605 -------- ------- -------- -------- Net income $ 36,470 $21,040 $ 66,335 $ 53,788 ======== ======= ======== ======== Earnings per share: Basic -- Income before cumulative effect of a change in accounting principle $0.88 $0.51 $1.60 $1.26 Cumulative effect of a change in accounting principle, net of tax -- -- -- 0.04 -------- ------- -------- -------- Net income $0.88 $0.51 $1.60 $1.30 ======== ======= ======== ======== Diluted -- Income before cumulative effect of a change in accounting principle $0.85 $0.50 $1.56 $1.24 Cumulative effect of a change in accounting principle, net of tax -- -- -- 0.04 -------- ------- -------- -------- Net income $0.85 $0.50 $1.56 $1.28 ======== ======= ======== ======== Weighted average shares outstanding: Basic 41,379 41,545 41,342 41,512 ======== ======= ======== ======== Diluted 42,704 42,246 42,657 42,142 ======== ======= ======== ======== CASH FLOW STATEMENTS (unaudited) For the For the Three Months Ended Six Months Ended June, 30 June, 30 ------------------- ------------------ 2004 2003 2004 2003 ------- ------- -------- ------- (In thousands) Cash flows from operating activities: Net income $36,470 $21,040 $66,335 $53,788 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 30,834 20,887 57,172 42,004 Deferred income taxes 16,375 5,590 27,299 17,726 Cumulative effect of a change in accounting principle, net of tax -- -- -- (1,605) Asset retirement obligation accretion 304 255 594 496 Amortization of restricted stock compensation 484 436 952 902 Income tax benefit related to stock options exercised 96 416 1,672 673 Other 3 (178) (6) 17 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (8,625) 17,469 (22,060) 2,009 (Increase) in inventories (3,895) (230) (6,572) (1,246) (Increase) decrease in other current assets 300 380 2,137 (584) Increase (decrease) in accounts and revenue payable 12,201 (6,364) 21,555 (6,087) Increase (decrease) in accrued liabilities (3,232) 6,039 (4,743) 11,453 Increase (decrease) in other liabilities 131 (275) 158 (248) ------- ------- -------- ------- Net cash provided by operating activities 81,446 65,465 144,493 119,298 ------- ------- -------- ------- Cash flows from investing activities: Oil and gas expenditures (60,923) (31,500) (128,299) (56,269) Acquisition of oil and gas properties 7 (1,593) (2) (2,169) Proceeds from sale of assets 339 117 452 164 Other capital expenditures (1,434) (677) (3,386) (5,887) ------- ------- -------- ------- Net cash used by investing activities (62,011) (33,653) (131,235) (64,161) ------- ------- -------- ------- Cash flows from financing activities: Payments on long-term debt, net -- (5,000) -- (32,000) Common stock reacquired and retired -- (4) (121) (5) Proceeds from issuance of common stock 153 1,093 4,524 2,031 ------- ------- -------- ------- Net cash provided (used) by financing activities 153 (3,911) 4,403 (29,974) ------- ------- -------- ------- Net change in cash and cash equivalents 19,588 27,901 17,661 25,163 Cash and cash equivalents at beginning of period 38,493 19,589 40,420 22,327 ------- ------- -------- ------- Cash and cash equivalents at end of period $58,081 $47,490 $58,081 $47,490 ======= ======= ======= ======= BALANCE SHEETS (unaudited) June, 30 December 31, Assets 2004 2003 --------- --------- (In thousands, except share data) Current assets: Cash and cash equivalents $58,081 $40,420 Receivables, net 90,353 68,293 Inventories 13,272 6,700 Deferred income taxes 1,557 1,631 Other current assets 4,023 6,160 --------- --------- Total current assets 167,286 123,204 --------- --------- Oil and gas properties at cost, using the full cost method of accounting: Proved properties 1,443,776 1,331,095 Unproved properties and properties under development, not being amortized 78,030 39,370 --------- --------- 1,521,806 1,370,465 Less - accumulated depreciation, depletion and amortization (801,803) (746,161) --------- --------- Net oil and gas properties 720,003 624,304 --------- --------- Fixed assets, net 14,033 12,092 Goodwill 44,967 44,967 Other assets, net 774 941 --------- --------- $947,063 $805,508 ========= ========= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $24,676 $18,394 Accrued liabilities 67,217 48,339 Revenue payable 34,049 18,776 --------- --------- Total current liabilities 125,942 85,509 --------- --------- Deferred income taxes 180,847 155,293 --------- --------- Other liabilities 32,320 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, 41,393,306 and 41,063,653 shares issued and outstanding, respectively 414 411 Paid-in capital 243,752 237,430 Unearned compensation (8,986) (9,540) Retained earnings 372,774 306,439 --------- --------- 607,954 534,740 --------- --------- $947,063 $805,508 ========= ========= SOURCE Cimarex Energy Co. -0- 08/04/2004 /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