DENVER, May 19, 2015 /PRNewswire/ -- Cimarex Energy Co. (XEC) announced today that it intends to commence a registered public offering of 6,000,000 shares of its common stock, subject to market conditions. Cimarex also expects to grant the underwriters an option to purchase up to 900,000 additional shares of its common stock. Net proceeds from the offering are expected to be used for general corporate purposes and to fund increased drilling and completion activity in the second half of 2015 and more significantly in 2016.
J.P. Morgan and Barclays are acting as joint book-running managers for the offering. The offering will be made only by means of a preliminary prospectus supplement and the accompanying base prospectus, copies of which may be obtained on the Securities and Exchange Commission's website at www.sec.gov. Alternatively, the underwriters will arrange to send you the preliminary prospectus supplement and related base prospectus if you request them by contacting: J.P. Morgan, via Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York, 11717, by calling: (866) 803-9204 or by emailing prospectus-eq_fi@jpmorgan.com or Barclays Capital Inc., via Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by calling: (866) 603-5847 or by emailing barclaysprospectus@broadridge.com.
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Prior to this offer, Cimarex had 85.8 million fully diluted shares. This deal should bring in close to $700 million cash.
Cimarex Energy (XEC) selling equity
Cimarex Energy (XEC) selling equity
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Cimarex Energy (XEC) selling equity
DENVER, May 20, 2015 /PRNewswire/ -- Cimarex Energy Co. (XEC) announced today that it has priced a public offering of 6,000,000 shares of its common stock at a price to the public of $109.00 per share. Net proceeds from the offering are expected to be used for general corporate purposes and to fund increased drilling and completion activity in the second half of 2015 and more significantly in 2016. Cimarex has also granted the underwriters an option to purchase up to an additional 900,000 shares of its common stock. The offering is expected to close on or about May 26, 2015, subject to customary closing conditions.
Deals like this are "pre-sold", so it will happen. Cimarex already has a strong balance sheet, so this makes it even stronger.
Deals like this are "pre-sold", so it will happen. Cimarex already has a strong balance sheet, so this makes it even stronger.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Cimarex Energy (XEC) selling equity
last i looked xec was in the green selling for 115+. very strong move, imo.
Re: Cimarex Energy (XEC) selling equity
Equity offerings like this actually give me more confidence in a company. The buyers of these equity offerings are very large funds with very smart financial types working for them. They do extensive due diligence before agreeing to the price.
Here is what Morgan Stanley had to say:
Cimarex Energy Co.: Believe in the Team
Drew Venker, CFA – Morgan Stanley
May 20, 2015 3:54 PM GMT
XEC launched a secondary and announced plans to accelerate activity in 2H15 and 2016. The offering comes as a surprise, but it is in the best interest of shareholders. XEC remains among the most compelling opportunities in E&P.
Offering a surprise to most, but a logical move by mgmt. We urge investors to believe in the team that made Cimarex a favorite among investors. Perception of the company has transformed into best-in-class largely because of the results mgmt has delivered over the past 18 months. These were deliberate actions to significantly improve returns and they have proven highly effective.
Cimarex's is one of the best stewards of capital in the business. We keep this in mind when considering the secondary which mgmt said would fund increased activity levels. This plan underscores Cimarex's increased confidence in its portfolio, in our view, although we recognize that many investors could interpret it the opposite way. The stock trades at a more attractive multiple given the acceleration and net of the offering.
While the offering came as a surprise, it is a logical move for mgmt in our view, because of their priorities. First, maintaining a conservative balance sheet is a high priority for Cimarex. Historically the company has preferred to spend to cash flow and maintain net debt to EBITDA of around 1.0x or less (while more recently it has said it feels comfortable with debt slowly rising as high as 2.0x over the next few years). We believe the goal of this offering is to fully fund any outspend in 2015-16. Second, generating strong returns is at the top of the company's list. Accelerating makes sense if results, and thus returns, are continuing to improve. We believe results have shown marked improvement even since 1Q earnings.
Best in class at an average price. Cimarex can claim all the attributes investors want and it trades at an average multiple. We believe it has the best balance sheet in our Mid-Cap universe with highly regarded management.
Here is what Morgan Stanley had to say:
Cimarex Energy Co.: Believe in the Team
Drew Venker, CFA – Morgan Stanley
May 20, 2015 3:54 PM GMT
XEC launched a secondary and announced plans to accelerate activity in 2H15 and 2016. The offering comes as a surprise, but it is in the best interest of shareholders. XEC remains among the most compelling opportunities in E&P.
Offering a surprise to most, but a logical move by mgmt. We urge investors to believe in the team that made Cimarex a favorite among investors. Perception of the company has transformed into best-in-class largely because of the results mgmt has delivered over the past 18 months. These were deliberate actions to significantly improve returns and they have proven highly effective.
Cimarex's is one of the best stewards of capital in the business. We keep this in mind when considering the secondary which mgmt said would fund increased activity levels. This plan underscores Cimarex's increased confidence in its portfolio, in our view, although we recognize that many investors could interpret it the opposite way. The stock trades at a more attractive multiple given the acceleration and net of the offering.
While the offering came as a surprise, it is a logical move for mgmt in our view, because of their priorities. First, maintaining a conservative balance sheet is a high priority for Cimarex. Historically the company has preferred to spend to cash flow and maintain net debt to EBITDA of around 1.0x or less (while more recently it has said it feels comfortable with debt slowly rising as high as 2.0x over the next few years). We believe the goal of this offering is to fully fund any outspend in 2015-16. Second, generating strong returns is at the top of the company's list. Accelerating makes sense if results, and thus returns, are continuing to improve. We believe results have shown marked improvement even since 1Q earnings.
Best in class at an average price. Cimarex can claim all the attributes investors want and it trades at an average multiple. We believe it has the best balance sheet in our Mid-Cap universe with highly regarded management.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Cimarex Energy (XEC) selling equity
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Cimarex Energy (XEC) selling equity
Jim Cramer's take: "How about Cimarex, the oil company. Cimarex is one of the most blue-chip independent oils out there, with fantastic Permian acreage. In order to take advantage of the chaos in the oil patch yesterday, it offered 6 million shares of stock at $109, down a couple of points from the last sale. The obtuse among you panicked and figured something was wrong. But Cimarex issued the stock to get a better credit rating so it can do more drilling and buy more properties. You needed to do work, though, on why it sold stock rather than freaking out as so many did. It was a good thing, not a bad thing, hence why the stock's up 11 points in 24 hours since the pricing."
Most of the time I have found the selloffs right after a company sells equity to be great buying opportunities, especially when the share price dips below the offering price. - Dan
Most of the time I have found the selloffs right after a company sells equity to be great buying opportunities, especially when the share price dips below the offering price. - Dan
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group