EX-99.1 3 e16885ex99_1.txt PRESS RELEASE Exhibit 99.1 Cimarex Energy Announces Fourth-Quarter 2003 Earnings of $0.43 Per Share DENVER, Feb. 11 /PRNewswire-FirstCall/ -- Cimarex Energy Co. (NYSE: XEC) today reported fourth-quarter 2003 net income of $18.3 million, or $0.43 per diluted share. This compares to fourth-quarter 2002 net income of $15.8 million, or $0.38 per diluted share. Revenues from oil and gas sales in the fourth quarter of 2003 were $77.1 million, compared to $64.4 million in the same period of 2002. Cash flow from operations for the fourth quarter of 2003 was $50.5 million, versus $45.6 million in the same period of 2002.(1) Fourth-quarter 2003 financial results were positively impacted by a 4 percent increase in production volumes and a 15 percent increase in gas and oil prices. Total daily production volumes averaged 187 million cubic feet (MMcf) equivalent during the fourth quarter of 2003 versus 180 MMcf equivalent a year earlier. The increase is attributable to positive drilling results of 2003. Fourth quarter 2003 production rose 3 percent from 181 MMcf equivalent per day in the third quarter. The accompanying tables detail quarterly and year-to-date volumes and prices. Exploration and development expenditures during the fourth quarter of 2003 totaled $58.5 million, up from $36.5 million for the fourth quarter 2002. Increased capital expenditures reflect expansion of the Company's drilling program. In the fourth quarter of 2003, there were 60 gross (37 net) wells drilled, up from 48 gross (30 net) wells in the third quarter. Full-year 2003 For the full year 2003, Cimarex reported net income of $94.6 million, or $2.22 per diluted share. This compares to net income for 2002 of $39.8 million, or $1.31 per share. Oil and gas sales during 2003 totaled $324.1 million. For 2002, oil and gas sales were $157.3 million. Cash flow from operations for 2003 increased to $217.0 million from $110.7 million in 2002.(1) The increases reflect 36 percent higher production volumes, 60 percent higher gas prices and 17 percent higher oil prices. On September 30, 2002, Cimarex acquired 100 percent of the outstanding common stock of Key Production Company, Inc. (Key) in a tax-free exchange. The acquisition was accounted for using the purchase method of accounting. The consolidated results of operations and cash flows subsequent to September 30, 2002 include the acquisition of Key. Year-end 2003 proved oil and gas reserves increased by 3 percent to 422.2 billion cubic feet (Bcf) equivalent and were comprised of 337.3 Bcf of gas and 14.1 million barrels of oil. Of total proved reserves, 99.4 percent were proved developed. The estimated present value of the future net cash flow before income taxes from year-end 2003 reserves, calculated under guidelines established by the Securities and Exchange Commission and using a 10 percent discount rate, is $1.03 billion. For purposes of this calculation, our average gas price was $5.54 per Mcf and oil was $30.49 per barrel. The standardized measure of discounted cash flows after income taxes was $711.6 million. Capital expenditures for exploration and development during 2003 were $160.6 million, up from $82.5 million during 2002. For all of 2003, we drilled 178 gross (97 net) wells, realizing a success rate of 81 percent. During the fourth quarter of 2003, Emerging Issues Task Force ("EITF") issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs" was adopted. As a result, certain reclassifications have been made for oil and gas sales, marketing revenues and expenses, and gas gathering and transportation costs. Adoption of EITF No. 00-10 has no effect on net income or cash flow from operations. (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, February 11, 2004. Interested parties in the U.S. and Canada may access the call by dialing (800) 881-5262 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 (800) 642-1687 and entering conference code 2934307. 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, 2002, and the report filed on Form 10-Q for the quarter ended September 30, 2003. PRICE AND PRODUCTION DATA For the Three Months Ended For the Year Ended December 31, December 31, 2003 2002 2003 2002 Gas Production: Total production - Mcf 13,352,012 12,913,384 50,552,207 41,299,762 Gas volume - Mcf per day 145,131 140,363 138,499 113,150 Gas price - per Mcf $ 4.36 $ 3.79 $ 4.96 $ 3.10 Oil Production (including NGL): Total production - barrels 637,922 603,830 2,503,584 1,171,104 Oil volume - barrels per day 6,934 6,563 6,859 3,209 Oil price - per barrel $ 29.60 $ 25.54 $ 29.30 $ 24.97 Oil, Condensate and NGLs Gas Total PROVED RESERVES (MBbls) (MMcf) (MMcfe) December 31, 2002 15,025 318,627 408,777 Revisions of previous estimates 41 6,699 6,943 Extensions and discoveries 1,625 61,545 71,296 Production (2,504) (50,552) (65,574) Purchases 43 1,320 1,581 Sales (93) (295) (856) December 31, 2003 14,137 337,344 422,167 Proved Developed - December 31,2003 13,876 336,230 419,488 Oil, Condensate and NGLs Gas Total PROVED RESERVES BY REGION (MBbls) (MMcf) (MMcfe) Mid-Continent 2,951 172,150 189,855 Kansas 2,769 72,569 89,182 Permian Basin 3,307 36,959 56,800 Gulf Coast 1,916 35,829 47,328 Western 3,194 19,837 39,002 14,137 337,344 422,167 CAPITALIZED COSTS INCURRED For the Year Ended December 31, 2003 2002 (in thousands) Acquisitions of Properties Proved $ 2,032 $ 286,041 Unproved 9,330 16,008 Exploration 50,350 29,181 Development 100,915 37,273 Oil and gas expenditures 162,627 368,503 Sale Proceeds (694) (151) $ 161,933 $ 368,352 RECONCILIATION OF CASH FLOW FROM OPERATIONS For the Three Months Ended For the Year Ended December 31, December 31, 2003 2002 2003 2002 (in thousands) (in thousands) Net cash provided by operating activities $ 35,153 $ 32,826 $206,313 $104,455 Increase (decrease) in operating assets and liabilities 15,311 12,751 10,638 6,206 Cash flow from operations $ 50,464 $ 45,577 $216,951 $110,661 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 Year Ended December 31, December 31, 2003 2002 2003 2002 (In thousands, except per share data) Revenues: Gas sales $ 58,205 $ 48,950 $ 250,764 $ 128,060 Oil sales 18,884 15,423 73,355 29,239 Marketing, gathering and transportation 28,697 12,876 130,156 52,350 Other (165) (123) (63) (5) 105,621 77,126 454,212 209,644 Operating expenses: Depreciation, depletion and amortization 24,098 21,086 88,774 49,231 Asset retirement obligation accretion 272 -- 1,009 -- Marketing 28,619 12,480 129,503 49,671 Gas gathering and transportation 2,262 2,502 7,472 7,918 Production 8,294 7,756 31,801 19,427 Taxes other than income 8,036 4,794 27,485 13,154 General and administrative 5,206 3,700 17,526 8,568 Stock compensation 474 125 1,824 125 Financing costs - Interest expense 287 550 1,285 620 Capitalized interest -- (206) (304) (206) Interest income (127) (49) (332) (243) 77,421 52,738 306,043 148,265 Income before income tax expense and cumulative effect of a change in accounting principle 28,200 24,388 148,169 61,379 Income tax expense 9,896 8,601 55,141 21,560 Income before cumulative effect of a change in accounting principle 18,304 15,787 93,028 39,819 Cumulative effect of a change in accounting principle, net of tax -- -- 1,605 -- Net income $ 18,304 $ 15,787 $ 94,633 $ 39,819 Earnings per share: Basic - Income before cumulative effect of a change in accounting principle $ 0.44 $ 0.39 $ 2.24 $ 1.32 Cumulative effect of a change in accounting principle, net of tax -- -- 0.04 -- Net income $ 0.44 $ 0.39 $ 2.28 $ 1.32 Diluted - Income before cumulative effect of change in accounting principle $ 0.43 $ 0.38 $ 2.18 $ 1.31 Cumulative effect of change in accounting principle, net of tax -- -- 0.04 -- Net income $ 0.43 $ 0.38 $ 2.22 $ 1.31 Weighted average shares outstanding: Basic 41,441 40,908 41,521 30,239 Diluted 42,668 41,217 42,640 30,317 CASH FLOW STATEMENTS (unaudited) For the Three Months Ended For the Year Ended December 31, December 31, 2003 2002 2003 2002 (In thousands) Cash flows from operating activities: Net income $ 18,304 $ 15,787 $ 94,633 $ 39,819 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 24,098 21,086 88,774 49,231 Deferred income taxes 6,453 8,499 30,590 21,428 Cumulative effect of a change in accounting principle, net of tax -- -- (1,605) -- Asset retirement obligation accretion 272 -- 1,009 -- Amortization of restricted stock compensation 498 125 1,914 125 Income tax benefit related to stock options exercised 642 -- 1,203 -- Other 197 80 433 58 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (11,744) (13,516) (10,123) (15,996) (Increase) decrease in inventories 44 571 (2,714) 1,770 (Increase) decrease in other current assets (2,627) (2,260) (3,242) (934) Increase (decrease) in accounts and revenue payable (3,570) 12,310 (9,310) 17,010 Increase in accrued liabilities 3,318 (10,265) 15,626 (8,321) Increase (decrease) in other liabilities (732) 409 (875) 265 Net cash provided by operating activities 35,153 32,826 206,313 104,455 Cash flows from investing activities: Oil and gas expenditures (52,605) (20,540) (150,501) (66,458) Acquisition of oil and gas properties 499 -- (2,032) -- Merger related costs -- (179) -- (5,079) Cash received in connection with acquisition of Key -- -- -- 2,135 Proceeds from sale of assets 810 313 1,041 313 Other capital expenditures (1,458) (1,694) (8,149) (2,596) Net cash used by investing activities (52,754) (22,100) (159,641) (71,685) Cash flows from financing activities: Long-term borrowings -- 41,016 -- 41,016 Payments on long-term debt, net -- (45,016) (32,000) (45,016) Financing costs -- (927) -- (927) Change in amount due (to) from Helmerich & Payne, Inc -- 819 -- (13,089) Common stock reacquired and retired -- -- (8) -- Proceeds from issuance of common stock 1,163 403 3,429 403 Net cash provided (used) by financing activities 1,163 (3,705) (28,579) (17,613) Net change in cash and cash equivalents (16,438) 7,021 18,093 15,157 Cash and cash equivalents at beginning of period 56,858 15,306 22,327 7,170 Cash and cash equivalents at end of period $ 40,420 $ 22,327 $ 40,420 $ 22,327 BALANCE SHEETS (unaudited) December 31, December 31, Assets 2003 2002 (In thousands, except share data) Current assets: Cash and cash equivalents $ 40,420 $ 22,327 Receivables, net 68,293 58,276 Inventories 6,700 3,986 Deferred income taxes 1,631 2,073 Other current assets 6,160 2,949 Total current assets 123,204 89,611 Oil and gas properties at cost, using the full cost method of accounting: Proved properties 1,331,095 1,172,488 Unproved properties and properties under development, not being amortized 39,370 23,941 1,370,465 1,196,429 Less - accumulated depreciation, depletion and amortization (746,161) (665,711) Net oil and gas properties 624,304 530,718 Fixed assets, net 12,092 6,849 Goodwill 44,967 45,836 Other assets, net 941 1,272 $ 805,508 $ 674,286 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 18,394 $ 22,339 Accrued liabilities 48,339 21,892 Revenue payable 18,776 24,022 Total current liabilities 85,509 68,253 Long-term debt -- 32,000 Deferred income taxes 155,293 127,023 Asset retirement obligation 16,463 -- Deferred compensation 11,724 -- Other liabilities 1,779 2,130 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, 41,063,653 and 41,410,308 shares issued and outstanding, respectively 411 414 Paid-in capital 237,430 243,420 Unearned compensation (9,540) (10,814) Retained earnings 306,439 211,860 534,740 444,880 $ 805,508 $ 674,286 SOURCE Cimarex Energy Co. -0- 02/11/2004 /CONTACT: Paul Korus of Cimarex Energy Co., +1-303-295-3995/ /First Call Analyst: / /FCMN Contact: mrohrer@cimarex.com / /Web site: http://www.cimarex.com / (XEC) CO: Cimarex Energy Co. ST: Colorado IN: OIL SU: ERN CCA MAV TNM