EX-99.1 2 a20190630xecpressrelease.htm EXHIBIT 99.1 Exhibit
 
 
N E W S
Cimarex Energy Co.
1700 Lincoln Street, Suite 3700
Denver, CO 80203 
Phone: (303) 295-3995
 
cimarexa05.jpg


Cimarex Reports Second Quarter 2019 Results
•
Daily production averaged 274.8 MBOE; oil production averaged 83,430 barrels per day
•
3Q oil production expected to be 85.0- 91.0 MBO/d; up 5.5 percent sequentially
•
2019 oil production expected to grow 23-29 percent; led by the Permian region
•
2019 capital guidance unchanged

DENVER, August 5, 2019 - Cimarex Energy Co. (NYSE: XEC) today reported second quarter 2019 net income of $109.3 million, or $1.07 per share, compared to $141.0 million, or $1.48 per share, in the same period a year ago. Second quarter adjusted net income (non-GAAP) was $83.0 million, or $0.82 per share, compared to second quarter 2018 adjusted net income (non-GAAP) of $151.9 million, or $1.59 per share1. Net cash provided by operating activities was $414.0 million in the second quarter of 2019 compared to $321.2 million in the same period a year ago. Adjusted cash flow from operations (non-GAAP) was $336.4 million in the second quarter of 2019 compared to $349.5 million in the second quarter a year ago1.

Total company production volumes for the quarter averaged 274.8 thousand barrels of oil equivalent (MBOE) per day. Oil production averaged 83,430 barrels (bbls) per day, up 35 percent from the same period a year ago and up five percent sequentially.

Realized product prices were down in the second quarter as compared to the same quarter a year ago. Realized oil prices averaged $54.24 per barrel, down 11 percent from the $60.99 per barrel received in the second quarter of 2018. Realized natural gas prices averaged $0.50 per thousand cubic feet (Mcf), down 70 percent from the second quarter 2018 average of $1.65 per Mcf. NGL prices averaged $13.08 per barrel, down 41 percent from the $22.29 per barrel received in the second quarter of 2018. See footnotes to the Average Realized Prices by Region table below for ASC 606 impact on realized prices.

Natural gas prices were negatively impacted by local price differentials. Cimarex's average differential to Henry Hub on its Permian natural gas production was $3.10 per Mcf in the second quarter of 2019 compared to $1.31 per Mcf in the second quarter of 2018 and $1.91 in the first quarter of 2019. In the Mid-Continent region, the company's average differential to Henry Hub was $0.86 per Mcf versus $1.03 per Mcf in the second quarter of 2018 and $0.46 in the first quarter of 2019. Our realized Permian oil differential to WTI Cushing improved and averaged $5.80 per barrel in the quarter, compared to $8.05 per barrel in the second quarter of 2018 and $6.90 per barrel in the first quarter of 2019.


1


Cimarex invested $325 million in exploration and development (E&D) during the second quarter, of which $265 million is attributable to drilling and completion activities. Cimarex invested $22 million in midstream assets during the quarter. Second quarter investments were funded with cash flow from operating activities. Total debt at June 30, 2019 consisted of $2.0 billion of long-term notes. Cimarex had no borrowings under its revolving credit facility and a cash balance of $19 million. Debt was 35 percent of total capitalization2.

2019 Outlook
Third quarter 2019 production volumes are expected to average 265 - 279 MBOE per day. Oil volumes estimated to average 85.0 - 91.0 MBbls per day in the third quarter, up 5.5 percent sequentially at the midpoint. Total 2019 daily production volumes are now expected to average 263 - 272 MBOE per day, with annual oil volumes estimated to average 83.0 - 87.0 MBbls per day.

Estimated 2019 exploration and development investment is $1.35 – 1.45 billion, unchanged from guidance given in February. Midstream investments are estimated to total approximately $70 million in 2019.

Expenses per BOE of production for 2019 are estimated to be:

 
 
Production expense
$3.30 - 3.65
 
Transportation, processing and other expense
1.80 - 2.20
 
DD&A and ARO accretion
7.75 - 8.75
 
General and administrative expense
0.95 - 1.20
 
Taxes other than income (% of oil and gas revenue)
  6.5 - 7.5%

Operations Update
Cimarex invested $325 million in E&D during the second quarter, 83 percent in the Permian Basin and 17 percent in the Mid-Continent. Cimarex brought 110 gross (40 net) wells on production during the quarter. At June 30, 99 gross (24 net) wells were waiting on completion. Cimarex currently is operating eight drilling rigs.


2



WELLS BROUGHT ON PRODUCTION BY REGION
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Gross wells
 
 
 
 
 
 
 
 
Permian Basin
 
44

 
32

 
56

 
49

Mid-Continent
 
66

 
57

 
92

 
94

 
 
110

 
89

 
148

 
143

Net wells
 
 
 
 
 
 
 
 
Permian Basin
 
32

 
13

 
37

 
22

Mid-Continent
 
8

 
10

 
11

 
16

 
 
40

 
23

 
48

 
38


Permian Region
Production from the Permian region averaged 188,703 BOE per day in the second quarter, a 55 percent increase from second quarter 2018. Oil volumes averaged 70,669 barrels per day, a 45 percent increase from second quarter 2018 and up nine percent sequentially.

Cimarex completed 44 gross (32 net) wells in the Permian region during the second quarter. There were 44 gross (20 net) wells waiting on completion at June 30. Cimarex currently is operating eight drilling rigs and two completion crews in the region.

Mid-Continent Region
Production from the Mid-Continent averaged 85,696 BOE per day for the second quarter, down four percent from second quarter 2018 and down five percent sequentially.

During the second quarter, Cimarex completed 66 gross (8 net) wells in the Mid-Continent region. At the end of the quarter, 55 gross (4 net) wells were waiting on completion. Cimarex is not currently operating a drilling rig or completion crew in the Mid-Continent.



3


Production by Region
Cimarex’s average daily production and commodity price by region is summarized below:

DAILY PRODUCTION BY REGION
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Permian Basin
 
 
 
 
 
 
 
 
Gas (MMcf)
 
379.3

 
240.5

 
360.1

 
239.2

Oil (Bbls)
 
70,669

 
48,797

 
67,835

 
49,318

NGL (Bbls)
 
54,813

 
32,865

 
50,567

 
28,817

Total Equivalent (BOE)
 
188,703

 
121,744

 
178,413

 
118,002

 
 
 
 
 
 
 
 
 
Mid-Continent
 
 
 
 
 
 
 
 
Gas (MMcf)
 
285.5

 
297.0

 
291.3

 
296.2

Oil (Bbls)
 
12,623

 
12,473

 
13,419

 
13,841

NGL (Bbls)
 
25,496

 
26,894

 
26,060

 
26,927

Total Equivalent (BOE)
 
85,696

 
88,864

 
88,028

 
90,142

 
 
 
 
 
 
 
 
 
Total Company
 
 
 
 
 
 
 
 
Gas (MMcf)
 
665.8

 
539.5

 
652.5

 
537.1

Oil (Bbls)
 
83,430

 
61,651

 
81,433

 
63,422

NGL (Bbls)
 
80,362

 
59,857

 
76,680

 
55,810

Total Equivalent (BOE)
 
274,767

 
211,424

 
266,868

 
208,752


4



AVERAGE REALIZED PRICE BY REGION
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Permian Basin
 
 
 
 
 
 
 
 
Gas ($ per Mcf) (1)
 
(0.46
)
 
1.49

 
0.34

 
1.86

Oil ($ per Bbl)
 
54.02

 
59.83

 
51.15

 
59.79

NGL ($ per Bbl) (2)
 
11.97

 
22.80

 
13.72

 
21.93

 
 
 
 
 
 
 
 
 
Mid-Continent
 
 
 
 
 
 
 
 
Gas ($ per Mcf) (3)
 
1.78

 
1.77

 
2.24

 
2.04

Oil ($ per Bbl)
 
55.43

 
65.70

 
54.01

 
62.87

NGL ($ per Bbl) (4)
 
15.47

 
21.66

 
16.51

 
20.67

 
 
 
 
 
 
 
 
 
Total Company
 
 
 
 
 
 
 
 
Gas ($ per Mcf) (5)
 
0.50

 
1.65

 
1.19

 
1.96

Oil ($ per Bbl)
 
54.24

 
60.99

 
51.64

 
60.45

NGL ($ per Bbl) (6)
 
13.08

 
22.29

 
14.67

 
21.32

________________________________________
(1)
The average realized gas price shown in the table above includes the effects of ASC 606, which reduced the average realized prices by $0.40 per Mcf, $0.13 per Mcf, $0.34 per Mcf, and $0.11 per Mcf for the three months ended June 30, 2019 and 2018 and the six months ended June 30, 2019 and 2018, respectively.

(2)
The average realized NGL price shown in the table above includes the effects of ASC 606, which reduced the average realized prices by $1.77 per barrel, $1.01 per barrel, $1.79 per barrel, and $1.69 per barrel for the three months ended June 30, 2019 and 2018 and the six months ended June 30, 2019 and 2018, respectively.

(3)
The average realized gas price shown in the table above includes the effects of ASC 606, which reduced the average realized prices by $0.04 per Mcf, $0.04 per Mcf, $0.04 per Mcf, and $0.04 per Mcf for the three months ended June 30, 2019 and 2018 and the six months ended June 30, 2019 and 2018, respectively.

(4)
The average realized NGL price shown in the table above includes the effects of ASC 606, which reduced the average realized prices by $0.25 per barrel, $0.28 per barrel, $0.32 per barrel, and $1.34 per barrel for the three months ended June 30, 2019 and 2018 and the six months ended June 30, 2019 and 2018, respectively.

(5)
The average realized gas price shown in the table above includes the effects of ASC 606, which reduced the average realized prices by $0.25 per Mcf, $0.08 per Mcf, $0.21 per Mcf, and $0.07 per Mcf for the three months ended June 30, 2019 and 2018 and the six months ended June 30, 2019 and 2018, respectively.

(6)
The average realized NGL price shown in the table above includes the effects of ASC 606, which reduced the average realized prices by $1.29 per barrel, $0.68 per barrel, $1.29 per barrel, and $1.52 per barrel for the three months ended June 30, 2019 and 2018 and the six months ended June 30, 2019 and 2018, respectively.


5


Other
Cimarex received cash settlements of $21.2 million related to its gas hedges during the quarter. Settlement of oil hedges resulted in a cash payment of $14.9 million.

The following table summarizes the company’s current open hedge positions:

 
 
3Q19
 
4Q19
 
1Q20
 
2Q20
 
3Q20
 
4Q20
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas Collars:
PEPL(3)
 
 
 
 
 
 
 
 
 
 
 
 
Volume (MMBtu/d)
140,000

 
110,000

 
80,000

 
50,000

 
20,000

 
20,000

 
Wtd Avg Floor
$
1.93

 
$
1.92

 
$
1.93

 
$
1.91

 
$
1.85

 
$
1.85

 
Wtd Avg Ceiling
$
2.32

 
$
2.36

 
$
2.36

 
$
2.28

 
$
2.31

 
$
2.31

 
 
 
 
 
 
 
 
 
 
 
 
 
 
El Paso Perm(3)
 
 
 
 
 
 
 
 
 
 
 
 
Volume (MMBtu/d)
90,000

 
60,000

 
40,000

 
30,000

 
20,000

 
20,000

 
Wtd Avg Floor
$
1.46

 
$
1.38

 
$
1.40

 
$
1.40

 
$
1.35

 
$
1.35

 
Wtd Avg Ceiling
$
1.76

 
$
1.71

 
$
1.79

 
$
1.82

 
$
1.66

 
$
1.66

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Waha (3)
 
 
 
 
 
 
 
 
 
 
 
 
Volume (MMBtu/d)
60,000

 
60,000

 
50,000

 
30,000

 
—

 
—

 
Wtd Avg Floor
$
1.48

 
$
1.48

 
$
1.50

 
$
1.57

 
$
—

 
$
—

 
Wtd Avg Ceiling
$
1.82

 
$
1.82

 
$
1.87

 
$
1.97

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Oil Collars:
WTI(4)
 
 
 
 
 
 
 
 
 
 
 
 
Volume (Bbl/d)
40,000

 
32,000

 
24,000

 
16,000

 
8,000

 
8,000

 
Wtd Avg Floor
$
53.85

 
$
54.81

 
$
54.08

 
$
51.13

 
$
50.00

 
$
50.00

 
Wtd Avg Ceiling
$
67.44

 
$
67.75

 
$
67.65

 
$
63.56

 
$
62.80

 
$
62.80

 
 
 
 
 
 
 
 
 
 
 
 
 
Oil Basis Swaps:
WTI Midland(5)
 
 
 
 
 
 
 
 
 
 
 
 
Volume (Bbl/d)
35,500

 
35,500

 
23,000

 
15,000

 
8,000

 
8,000

 
Wtd Avg Differential
$
(7.36
)
 
$
(6.32
)
 
$
0.16

 
$
0.19

 
$
0.71

 
$
0.71

 
 
 
 
 
 
 
 
 
 
 
 
 
Oil Swaps:
WTI(4)
 
 
 
 
 
 
 
 
 
 
 
 
Volume (Bbl/d)
5,000

 
5,000

 
—

 
—

 
—

 
—

 
Wtd Avg Fixed
$
64.54

 
$
64.54

 
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Gas Swaps:
Henry Hub(6)
 
 
 
 
 
 
 
 
 
 
 
 
Volume (MMBtu/d)
35,000

 
35,000

 
—

 
—

 
—

 
—

 
Wtd Avg Fixed
$
3.00

 
$
3.00

 
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Sold Oil Calls:
WTI(4)
 
 
 
 
 
 
 
 
 
 
 
 
Volume (Bbl/d)
3,670

 
3,670

 
—

 
—

 
—

 
—

 
Wtd Avg Ceiling
$
64.36

 
$
64.36

 
$
—

 
$
—

 
$
—

 
$
—


Conference call and webcast
Cimarex will host a conference call tomorrow, August 6, at 11:00 a.m. EDT (9:00 a.m. MDT). The call will be webcast and accessible on the Cimarex website at www.cimarex.com. To join the live, interactive call, please dial 866-367-3053 ten minutes before the scheduled start time (callers in Canada dial 855-669-9657 and international callers dial 412-902-4216).


6


A replay will be available on the company’s website.


Investor Presentation
For more details on Cimarex’s second quarter 2019 results, please refer to the company’s investor presentation available at www.cimarex.com.

About Cimarex Energy
Denver-based Cimarex Energy Co. is an independent oil and gas exploration and production company with principal operations in the Permian Basin and Mid-Continent areas of the U.S.

This press release contains forward-looking statements, including statements regarding projected results and future events. In particular, the “2019 Outlook” contains projections for certain 2019 operational and financial metrics. These forward-looking statements are based on management’s judgment as of the date of this press release and include certain risks and uncertainties. Please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC, and other filings including our Current Reports on Form 8-K and Quarterly Reports on Form 10-Q, for a list of certain risk factors that may affect these forward-looking statements.
Actual results may differ materially from company projections and other forward-looking statements and can be affected by a variety of factors outside the control of the company including among other things: oil, NGL and natural gas price levels and volatility; local commodity price differentials; derivative and hedging activities; higher than expected costs and expenses, including the availability and cost of services and materials; our ability to successfully integrate the business of the recently acquired Resolute Energy Corporation; compliance with environmental and other regulations; costs and availability of third party facilities for gathering, processing, refining and transportation; risks associated with operating in one major geographic area; environmental liabilities; the ability to receive drilling and other permits and rights-of-way in a timely manner; development drilling and testing results; declines in the values of our oil and gas properties resulting in impairments; the potential for production decline rates to be greater than expected; performance of acquired properties and newly drilled wells; regulatory approvals, including regulatory restrictions on federal lands; legislative or regulatory changes, including initiatives related to hydraulic fracturing, emissions and disposal of produced water; unexpected future capital expenditures; economic and competitive conditions; the availability and cost of capital; the ability to obtain industry partners to jointly explore certain prospects, and the willingness and ability of those partners to meet capital obligations when requested; changes in estimates of proved reserves; the success of the company's risk management activities; title to properties; litigation; the ability to complete property sales or other transactions; the effectiveness of controls over financial reporting; and other factors discussed in the company's reports filed with the SEC. Cimarex Energy Co. encourages readers to consider the risks and uncertainties associated with projections and other forward-looking statements. In addition, the company assumes no obligation to publicly revise or update any forward-looking statements based on future events or circumstances.

FOR FURTHER INFORMATION CONTACT
Cimarex Energy Co.
Karen Acierno
303-285-4957
www.cimarex.com
                                            
            
1
Adjusted net income and adjusted cash flow from operations are non-GAAP financial measures. See below for reconciliations of the related GAAP amounts.
2
Debt to total capitalization is calculated by dividing the sum of (i) the principal amount of senior notes and (ii) redeemable preferred stock by the sum of (x) the principal amount of senior notes, (y) redeemable preferred stock, and (z) total stockholders’ equity.

3
PEPL refers to Panhandle Eastern Pipe Line Tex/OK Mid-Continent index, El Paso Perm refers to El Paso Permian Basin index, and Waha refers to West Texas (Waha) Index, all as quoted in Platt’s Inside FERC.


7


4
WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange.

5
Index price on basis swaps is WTI NYMEX less the weighted average WTI Midland differential, as quoted by Argus Americas Crude.

6
Henry Hub (located in So. Louisiana) is the official location for futures contracts on the New York Mercantile Exchange (NYMEX).

8


RECONCILIATION OF ADJUSTED NET INCOME

The following reconciles net income as reported under generally accepted accounting principles (GAAP) to adjusted net income (non-GAAP) for the periods indicated.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands, except per share data)
 
 
 
 
 
 
 
 
Net income
$
109,309

 
$
140,997

 
$
135,625

 
$
327,315

Mark-to-market (gain) loss on open derivative positions
(34,531
)
 
14,169

 
71,870

 
(2,379
)
Loss on early extinguishment of debt
—

 
—

 
4,250

 
—

Acquisition related costs
74

 
—

 
8,391

 
—

Tax impact
8,166

 
(3,259
)
 
(20,029
)
 
552

Adjusted net income
$
83,018

 
$
151,907

 
$
200,107

 
$
325,488

Diluted earnings per share
$
1.07

 
$
1.48

 
$
1.34

 
$
3.44

Adjusted diluted earnings per share*
$
0.82

 
$
1.59

 
$
2.01

 
$
3.41

 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding:
 
 
 
 
 
 
 
Adjusted diluted**
101,448

 
95,428

 
99,592

 
95,451


Adjusted net income and adjusted diluted earnings per share exclude the noted items because management believes these items affect the comparability of operating results. The company discloses these non-GAAP financial measures as a useful adjunct to GAAP measures because:

a)
Management uses adjusted net income to evaluate the company's operating performance between periods and to compare the company's performance to other oil and gas exploration and production companies.
b)
Adjusted net income is more comparable to earnings estimates provided by research analysts.

* Does not include adjustments resulting from application of the "two-class method" used to determine earnings per share under GAAP.

** Reflects the weighted-average number of common shares outstanding during the period as adjusted for the dilutive effects of outstanding stock options.

RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS

The following table provides a reconciliation from generally accepted accounting principles (GAAP) measures of net cash provided by operating activities to adjusted cash flows from operations (non-GAAP) for the periods indicated.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Net cash provided by operating activities
$
413,992

 
$
321,246

 
$
664,083

 
$
704,339

Change in operating assets and liabilities
(77,630
)
 
28,265

 
23,341

 
12,406

 
 
 
 
 
 
 
 
Adjusted cash flow from operations
$
336,362

 
$
349,511

 
$
687,424

 
$
716,745



9


Management uses the non-GAAP financial measure of adjusted cash flow from operations as a means of measuring our ability to fund our capital program and dividends, without fluctuations caused by changes in current assets and liabilities, which are included in the GAAP measure of net cash provided by operating activities. Management believes this non-GAAP financial measure provides useful information to investors for the same reason, and that it is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.

OIL AND GAS CAPITALIZED EXPENDITURES
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Acquisitions:
 
 
 
 
 
 
 
Proved
$
1,200

 
$
—

 
$
693,800

 
$
62

Unproved
1,000

 
77

 
1,051,782

 
2,236

 
2,200

 
77

 
1,745,582

 
2,298

 
 
 
 
 
 
 
 
Exploration and development:
 
 
 
 
 
 
 
Land and seismic
$
14,552

 
$
10,327

 
$
24,079

 
$
20,424

Exploration and development
310,428

 
365,097

 
668,919

 
668,469

 
324,980

 
375,424

 
692,998

 
688,893

 
 
 
 
 
 
 
 
Property sales:
 
 
 
 
 
 
 
Proved
$
(22,058
)
 
$
(4,577
)
 
$
(18,028
)
 
$
(29,541
)
Unproved
(6,253
)
 
(441
)
 
(9,754
)
 
(5,301
)
 
(28,311
)
 
(5,018
)
 
(27,782
)
 
(34,842
)
 
 
 
 
 
 
 
 
 
$
298,869

 
$
370,483

 
$
2,410,798

 
$
656,349








10




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(in thousands, except per share information)
Revenues:
 
 
 
 
 
 
 
 
Oil sales
 
$
411,766

 
$
342,184

 
$
761,072

 
$
693,907

Gas and NGL sales
 
126,044

 
202,202

 
343,959

 
405,920

Gas gathering and other
 
8,653

 
11,888

 
18,389

 
23,581

 
 
546,463

 
556,274

 
1,123,420

 
1,123,408

Costs and expenses:
 
 
 
 
 
 
 
 
Depreciation, depletion, amortization, and accretion
 
215,484

 
145,441

 
407,950

 
279,360

Production
 
87,726

 
79,215

 
164,959

 
150,486

Transportation, processing, and other operating
 
48,331

 
51,933

 
101,939

 
97,098

Gas gathering and other
 
13,605

 
9,467

 
25,925

 
19,290

Taxes other than income
 
41,033

 
27,930

 
74,727

 
58,118

General and administrative
 
24,911

 
19,739

 
53,995

 
43,060

Stock compensation
 
6,494

 
3,095

 
13,207

 
9,825

(Gain) loss on derivative instruments, net
 
(40,768
)
 
21,699

 
74,684

 
17,540

Other operating expense, net
 
590

 
5,252

 
8,916

 
5,455

 
 
397,406

 
363,771

 
926,302

 
680,232

 
 
 
 
 
 
 
 
 
Operating income
 
149,057

 
192,503

 
197,118

 
443,176

 
 
 
 
 
 
 
 
 
Other (income) and expense:
 
 
 
 
 
 
 
 
Interest expense
 
24,674

 
16,895

 
45,079

 
33,678

Capitalized interest
 
(16,805
)
 
(4,850
)
 
(25,547
)
 
(9,660
)
Loss on early extinguishment of debt
 
—

 
—

 
4,250

 
—

Other, net
 
(2,167
)
 
(2,605
)
 
(4,408
)
 
(7,172
)
 
 
 
 
 
 
 
 
 
Income before income tax
 
143,355

 
183,063

 
177,744

 
426,330

Income tax expense
 
34,046

 
42,066

 
42,119

 
99,015

Net income
 
$
109,309

 
$
140,997

 
$
135,625

 
$
327,315

 
 
 
 
 
 
 
 
 
Earnings per share to common stockholders:
 
 
 
 
 
 
 
 
Basic
 
$
1.07

 
$
1.48

 
$
1.34

 
$
3.44

Diluted
 
$
1.07

 
$
1.48

 
$
1.34

 
$
3.44

 
 
 
 
 
 
 
 
 
Dividends declared per share
 
$
0.20

 
$
0.16

 
$
0.40

 
$
0.32

 
 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
99,658

 
93,728

 
97,800

 
93,713

Diluted
 
99,665

 
93,759

 
97,809

 
93,748

 
 
 
 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
 
Net income
 
$
109,309

 
$
140,997

 
$
135,625

 
$
327,315

Other comprehensive income:
 
 
 
 
 
 
 
 
Change in fair value of investments, net of tax of $89, $57, $428 and $1, respectively
 
304

 
192

 
1,453

 
2

Total comprehensive income
 
$
109,613

 
$
141,189

 
$
137,078

 
$
327,317

 
 
 
 
 
 
 
 
 

11


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(in thousands)
Cash flows from operating activities:
 
 
 
 
 
 
 
 
Net income
 
$
109,309

 
$
140,997

 
$
135,625

 
$
327,315

Adjustments to reconcile net income to net cash
 
 
 
 
 
 
 
 
provided by operating activities:
 
 
 
 
 
 
 
 
Depreciation, depletion, amortization, and accretion
 
215,484

 
145,441

 
407,950

 
279,360

Deferred income taxes
 
34,046

 
42,783

 
42,119

 
99,732

Stock compensation
 
6,494

 
3,095

 
13,207

 
9,825

(Gain) loss on derivative instruments, net
 
(40,768
)
 
21,699

 
74,684

 
17,540

Settlements on derivative instruments
 
6,237

 
(7,530
)
 
(2,814
)
 
(19,919
)
Loss on early extinguishment of debt
 
—

 
—

 
4,250

 
—

Amortization of debt issuance costs and discounts
 
783

 
727

 
1,502

 
1,456

Changes in non-current assets and liabilities
 
601

 
1,613

 
2,749

 
713

Other, net
 
4,176

 
686

 
8,152

 
723

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
Accounts receivable
 
83,716

 
(29,710
)
 
117,692

 
15,012

Other current assets
 
(1,111
)
 
283

 
(761
)
 
1,886

Accounts payable and other current liabilities
 
(4,975
)
 
1,162

 
(140,272
)
 
(29,304
)
Net cash provided by operating activities
 
413,992

 
321,246

 
664,083

 
704,339

Cash flows from investing activities:
 
 
 
 
 
 
 
 
Acquisition of Resolute Energy, net of cash acquired
 
—

 
—

 
(284,441
)
 
—

Oil and gas capital expenditures
 
(379,015
)
 
(327,352
)
 
(711,757
)
 
(650,807
)
Sales of oil and gas assets
 
8,233

 
5,018

 
13,233

 
34,842

Sales of other assets
 
234

 
93

 
434

 
525

Other capital expenditures
 
(22,313
)
 
(37,056
)
 
(40,141
)
 
(56,112
)
Net cash used by investing activities
 
(392,861
)
 
(359,297
)
 
(1,022,672
)
 
(671,552
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
Borrowings of long-term debt
 
528,000

 
—

 
1,710,310

 
—

Repayments of long-term debt
 
(528,000
)
 
—

 
(2,081,000
)
 
—

Financing, underwriting, and debt redemption fees
 
(853
)
 
—

 
(11,791
)
 
—

Finance lease payments
 
(920
)
 
—

 
(1,555
)
 
—

Dividends paid
 
(21,468
)
 
(15,199
)
 
(38,647
)
 
(22,801
)
Employee withholding taxes paid upon the net settlement of equity-classified stock awards
 
—

 
(641
)
 
(654
)
 
(946
)
Proceeds from exercise of stock options
 
594

 
904

 
674

 
1,249

Net cash used by financing activities
 
(22,647
)
 
(14,936
)
 
(422,663
)
 
(22,498
)
Net change in cash and cash equivalents
 
(1,516
)
 
(52,987
)
 
(781,252
)
 
10,289

Cash and cash equivalents at beginning of period
 
20,930

 
463,810

 
800,666

 
400,534

Cash and cash equivalents at end of period
 
$
19,414

 
$
410,823

 
$
19,414

 
$
410,823



12

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
 
 
 
 
 
 
 
June 30, 2019
 
December 31, 2018
Assets
 
(in thousands, except share and per share information)
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
19,414

 
$
800,666

Accounts receivable, net of allowance
 
387,362

 
454,200

Oil and gas well equipment and supplies
 
58,306

 
55,553

Derivative instruments
 
42,957

 
101,939

Other current assets
 
12,017

 
11,781

Total current assets
 
520,056

 
1,424,139

Oil and gas properties at cost, using the full cost method of accounting:
 
 
 
 
Proved properties
 
19,846,426

 
18,566,757

Unproved properties and properties under development, not being amortized
 
1,564,074

 
436,325

 
 
21,410,500

 
19,003,082

Less – accumulated depreciation, depletion, amortization, and impairment
 
(15,659,363
)
 
(15,287,752
)
Net oil and gas properties
 
5,751,137

 
3,715,330

Fixed assets, net of accumulated depreciation of $356,631 and $324,631, respectively
 
526,429

 
257,686

Goodwill
 
727,573

 
620,232

Derivative instruments
 
613

 
9,246

Other assets
 
70,126

 
35,451

 
 
$
7,595,934

 
$
6,062,084

Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
119,076

 
$
106,814

Accrued liabilities
 
397,210

 
379,455

Derivative instruments
 
50,056

 
27,627

Revenue payable
 
186,206

 
194,811

Operating leases
 
62,119

 
—

Total current liabilities
 
814,667

 
708,707

Long-term debt principal
 
2,000,000

 
1,500,000

Less—unamortized debt issuance costs and discounts
 
(15,770
)
 
(11,446
)
Long-term debt, net
 
1,984,230

 
1,488,554

Deferred income taxes
 
439,429

 
334,473

Derivative instruments
 
840

 
2,267

Operating leases
 
191,413

 
—

Other liabilities
 
221,842

 
198,297

Total liabilities
 
3,652,421

 
2,732,298

Redeemable preferred stock - 8.125% Series A Cumulative Perpetual Convertible Preferred Stock, $0.01 par value, 62,500 shares authorized and issued and no shares authorized and issued, respectively
 
81,620

 
—

 
 
 
 
 
Stockholders' equity:
 
 
 
 
Common stock, $0.01 par value, 200,000,000 shares authorized, 101,473,177 and 95,755,797 shares issued, respectively
 
1,015

 
958

Additional paid-in capital
 
3,223,331

 
2,785,188

Retained earnings
 
635,339

 
542,885

Accumulated other comprehensive income
 
2,208

 
755

Total stockholders' equity
 
3,861,893

 
3,329,786

 
 
$
7,595,934

 
$
6,062,084


13