Cimarex Energy (XEC) Q4 Results - Feb 19

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Cimarex Energy (XEC) Q4 Results - Feb 19

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Cimarex Energy's Q4 results beat my forecast.

DENVER , Feb. 19, 2020 /PRNewswire/ --

Fourth quarter oil production averaged 92.0 MBbls per day < My forecast was 90.0 MBbls per day for Q4.

2019 capital investment (including midstream) totaled $1.32 billion ; below guidance range
Generated $1.34 billion of net cash from operating activities

Cimarex Energy Co. (NYSE: XEC) today reported a net loss for fourth quarter 2019 of $384.1 million , or $3.87 per share, compared to net income of $316.2 million , or $3.32 per share, in the same period a year ago. For the full year, Cimarex reported a net loss of $124.6 million , or $1.33 per share, compared to 2018 net income of $791.9 million , or $8.32 per share. Both fourth quarter and full year results were negatively impacted by a non-cash charge related to the impairment of oil and gas properties.

Fourth quarter 2019 adjusted net income (non-GAAP) was $120.4 million , or $1.18 per share < This compares to my Q4 forecast of $113.5 million net income, or $1.11 per share
Q4 2019 compared to adjusted net income (non-GAAP) of $192.1 million , or $2.01 per share in the same period a year ago 1 .
Full year 2019 adjusted net income (non-GAAP) was $448.8 million , or $4.46 per share, compared to $708.7 million , or $7.42 per share in 2018 1 .

Adjusted cash flow from operations (non-GAAP) was $416.0 million in fourth quarter 2019 compared to $428.2 million in the same period a year ago 1 . Full year 2019 adjusted cash flow from operations (non-GAAP) was $1.46 billion compared to $1.53 billion in 2018. < My forecast was $379.4 million operating cash flow for Q4.

Oil volumes in the fourth quarter were sequentially higher, averaging 92.0 thousand barrels (MBbls) per day. For the full year, Cimarex reported average daily oil volumes of 86.2 MBbls, a 27 percent year-over-year increase. Cimarex produced 292.7 thousand barrels of oil equivalent (MBOE) per day in the fourth quarter and averaged 278.5 MBOE per day for the year.

In the fourth quarter realized oil prices averaged $54.80 per barrel, up 11 percent from the $49.30 per barrel received in the fourth quarter of 2018. Realized natural gas prices averaged $1.19 per thousand cubic feet (Mcf), down 45 percent from the fourth quarter 2018 average of $2.16 per Mcf. NGL prices averaged $14.13 per barrel, down 32 percent from the $20.71 per barrel received in the fourth quarter of 2018, but up 31 percent from the lows we saw in the third quarter of 2019. For the full year, Cimarex realized $52.77 per barrel of oil, down 7 percent from 2018, $1.11 per Mcf of natural gas and $13.55 per barrel of NGLs sold.

Both oil and natural gas prices were negatively impacted by local price differentials in 2019 although oil price differential did see some improvement year-over-year. Our realized Permian oil differential to WTI Cushing averaged $(4.48) per barrel in 2019 compared to $(9.82) in 2018. For the year, Cimarex's average differential on its Permian natural gas production was $(2.14) per Mcf compared to the Henry Hub index and, in the Mid-Continent region, realized gas prices differentials were $(0.68) per Mcf compared to Henry Hub. < The oil price differential for the Permian Basin has recently turned positive.

My updated forecast/valuation model for XEC will be posted to the EPG website this evening. This is a very conservative company with a super strong balance sheet.
First Call's price target of $64.66 is close to my valuation. XEC closed at $40.66 on February 19th.
Dan Steffens
Energy Prospectus Group
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