EX-99.1 2 e17746ex991.txt PRESS RELEASE Exhibit 99.1 Cimarex Energy Announces First-Quarter 2004 Earnings of $0.70 Per Share DENVER, May 4 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported first-quarter 2004 net income of $29.9 million, or $0.70 per diluted share. This compares to first-quarter 2003 earnings before cumulative effect of a change in accounting principle of $31.1 million, or $0.74 per diluted share. Revenues from oil and gas sales in the first quarter of 2004 were $95.5 million, compared to $91.2 million in the same period of 2003. Cash flow from operations for the first quarter of 2004 was $69.5 million, versus $65.6 million in the same period of 2003.(1) First-quarter 2004 financial results were positively impacted by a 15 percent increase in gas production volumes, and a 12 percent increase in oil prices. These increases were offset by the effect of average realized gas prices dropping from $5.86 per Mcf for the first quarter of 2003 to $5.26 per Mcf for the three months ended March 31, 2004. Also, daily oil volumes dropped slightly between the two periods due to natural declines, falling from 7,212 barrels to 6,886 barrels. Total daily production volumes averaged 196.6 million cubic feet (MMcf) equivalent during the first quarter of 2004 versus 178.8 MMcf equivalent a year earlier. The increase is attributable to positive drilling results during 2003 and the first quarter of 2004. First-quarter 2004 production rose five percent from 186.7 MMcf equivalent per day in the fourth quarter of 2003. The accompanying tables detail quarterly volumes and prices. Other revenues of $3.6 million for the first quarter of 2004 include $3.0 million ($0.04 per diluted share, net of tax) of litigation settlements for which we were plaintiffs. Higher expenses were realized during the first three months of 2004 compared to the first quarter of 2003, resulting from the growth in the number of properties we manage, rising field operating costs and higher costs associated with exploration and development. Exploration and development expenditures during the first quarter of 2004 totaled $68.6 million, up from $27.0 million for the first quarter 2003. Increased capital expenditures reflect expansion of our drilling program. In the first quarter of 2004, we participated in drilling 44 gross wells, with an overall success rate of 86 percent. On a net basis, 18 of 22 wells drilled during the first quarter 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 a.m. Mountain Time (1 p.m. Eastern), Tuesday, May 4, 2004. Interested parties may access the call by dialing (888) 858-4710 and requesting the Cimarex Energy Co. teleconference. In addition, 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 4713923. Cimarex Energy Co. is an independent oil and gas exploration and production company with operations focused in the Mid-Continent and Gulf Coast regions 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. PRICE AND PRODUCTION DATA For the Three Months Ended March 31, ----------------------------- 2004 2003 ---------- ---------- Gas Production: Total production -- Mcf 14,130,125 12,196,911 Gas volume -- Mcf per day 155,276 135,521 Gas price -- per Mcf $5.26 $5.86 Oil Production (including NGL): Total production -- barrels 626,617 649,121 Oil volume -- barrels per day 6,886 7,212 Oil price -- per barrel $33.80 $30.31 CAPITALIZED COSTS INCURRED For the Three Months Ended March 31, ----------------------------- 2004 2003 ---------- ---------- (in thousands) Acquisitions of proved properties $9 $576 Exploration and development 68,619 27,014 ------- ------- Oil and gas expenditures 68,628 27,590 Sale proceeds (35) -- ------- ------- $68,593 $27,590 ======= ======= RECONCILIATION OF CASH FLOW FROM OPERATIONS For the Three Months Ended March 31, ----------------------------- 2004 2003 ---------- ---------- (in thousands) Net cash provided by operating activities $63,047 $53,833 Increase (decrease) in operating assets and liabilities 6,405 11,722 ------- ------- Cash flow from operations $69,452 $65,555 ======= ======= 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 March 31, ----------------------------- 2004 2003 ---------- ---------- (In thousands, except per share data) Revenues: Gas sales $74,332 $71,489 Oil sales 21,178 19,672 Marketing sales 36,761 45,407 Other 3,648 (9) ------- ------- 135,919 136,559 ------- ------- Costs and expenses: Depreciation, depletion and amortization 26,338 21,117 Asset retirement obligation accretion 290 241 Marketing purchases 36,300 44,993 Transportation 2,355 1,259 Production 9,469 6,988 Taxes other than income 8,365 7,171 General and administrative 4,509 4,067 Stock compensation 468 466 Financing costs -- Interest expense 296 422 Capitalized interest -- (265) Interest income (87) (29) ------- ------- 88,303 86,430 ------- ------- Income before income tax expense and cumulative effect of a change in accounting principle 47,616 50,129 Income tax expense 17,751 18,986 ------- ------- Income before cumulative effect of a change in accounting principle 29,865 31,143 Cumulative effect of a change in accounting principle, net of tax -- 1,605 ------- ------- Net income $29,865 $32,748 ======= ======= Earnings per share: Basic -- Income before cumulative effect of a change in accounting principle $0.72 $0.75 Cumulative effect of a change in accounting principle, net of tax -- 0.04 ------- ------- Net income $0.72 $0.79 ======= ======= Diluted -- Income before cumulative effect of change in accounting principle $0.70 $0.74 Cumulative effect of change in accounting principle, net of tax -- 0.04 ------- ------- Net income $0.70 $0.78 ======= ======= Weighted average shares outstanding: Basic 41,305 41,479 ======= ======= Diluted 42,615 42,027 ======= ======= CASH FLOW STATEMENTS (unaudited) For the Three Months Ended March 31, ----------------------------- 2004 2003 ---------- ---------- (In thousands) Cash flows from operating activities: Net income $29,865 $32,748 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 26,338 21,117 Deferred income taxes 10,924 12,136 Cumulative effect of a change in accounting principle, net of tax -- (1,605) Asset retirement obligation accretion 290 241 Amortization of restricted stock compensation 468 466 Income tax benefit related to stock options exercised 1,576 257 Other (9) 195 Changes in operating assets and liabilities: Increase in accounts receivable (13,435) (15,460) Increase in inventories (2,677) (1,016) (Increase) decrease in other current assets 1,837 (964) Increase in accounts and revenue payable 9,354 277 Increase (decrease) in accrued liabilities (1,511) 5,414 Increase in other liabilities 27 27 ------- ------- Net cash provided by operating activities 63,047 53,833 ------- ------- Cash flows from investing activities: Oil and gas expenditures (67,376) (24,769) Acquisition of oil and gas properties (9) (576) Proceeds from sale of assets 113 47 Other capital expenditures (1,952) (5,210) ------- ------- Net cash used in investing activities (69,224) (30,508) ------- ------- Cash flows from financing activities: Payments on long-term debt, net -- (27,000) Common stock reacquired and retired (121) (1) Proceeds from issuance of common stock 4,371 938 ------- ------- Net cash provided by (used in) financing activities 4,250 (26,063) ------- ------- Net change in cash and cash equivalents (1,927) (2,738) Cash and cash equivalents at beginning of period 40,420 22,327 ------- ------- Cash and cash equivalents at end of period $38,493 $19,589 ======= ======= BALANCE SHEETS (Unaudited) March 31, December 31, Assets 2004 2003 ---------- ------------ (In thousands, except share data) Current assets: Cash and cash equivalents $38,493 $40,420 Receivables, net 81,767 68,293 Inventories 9,377 6,700 Deferred income taxes 1,557 1,631 Other current assets 4,323 6,160 --------- --------- Total current assets 135,517 123,204 --------- --------- Oil and gas properties at cost, using the full cost method of accounting: Proved properties 1,386,258 1,331,095 Unproved properties and properties under development, not being amortized 53,410 39,370 --------- --------- 1,439,668 1,370,465 Less -- accumulated depreciation, depletion and amortization (771,743) (746,161) --------- --------- Net oil and gas properties 667,925 624,304 --------- --------- Fixed assets, net 13,256 12,092 Goodwill 44,967 44,967 Other assets, net 865 941 --------- --------- $862,530 $805,508 ========= ========= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $22,208 $18,394 Accrued liabilities 49,556 48,339 Revenue payable 24,316 18,776 --------- --------- Total current liabilities 96,080 85,509 --------- --------- Deferred income taxes 164,568 155,293 --------- --------- Other liabilities 31,147 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, 41,370,235 and 41,063,653 shares issued and outstanding, respectively 413 411 Paid-in capital 243,254 237,430 Unearned compensation (9,236) (9,540) Retained earnings 336,304 306,439 --------- --------- 570,735 534,740 --------- --------- $862,530 $805,508 ========= ========= SOURCE Cimarex Energy Co. -0- 05/04/2004 /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: CCA ERN