XEC valuation raised

[dan_s]

Cimarex Energy (XEC): An updated Net Income & Cash Flow Forecast model has been posted under the Sweet 16 Tab.

My Fair Value Estimate has increased $28.30/share to $181.00/share.

The company posted FANTASTIC first quarter results and they raised their production guidance. Cimarex is conservative in their guidance, so they will probably top the new guidance. Plus, the company now has over five years of low-risk high-return drilling inventory locked in and they have VERY STRONG balance sheet.

[dan_s]

Cimarex Energy (XEC) announced that it has signed a purchase and sale agreement to acquire oil and gas assets primarily in the Cana-Woodford shale play in Western Oklahoma for $497.4M in cash. Simultaneously, Cimarex entered into an agreement with Devon Energy (DVN) to sell at closing a 50% interest in these assets for $248.7M. The acquisition is expected to close on or before June 30. Cimarex's share of the assets includes its estimate of proved developed reserves of approximately 140B cubic feet equivalent at January 1, current production of approximately 35M cubic feet equivalent per day and 50,000 net acres, including 30,000 net acres in the Cana-Woodford area and oil-rich East Cana area. The acquisition will be funded with bank debt.

Devon Energy (DVN) is a first class company and they are Woodford experts. They already have 15 rigs drilling in the Woodford.