Cimarex Energy (XEC) Update - Nov 9

[dan_s]

Cimarex's Q3 results beat my forecast, primarily because of higher production and higher NGL prices. All of the Sweet 16 companies received higher NGL prices than I was forecasting.

Production Mix is Important: Cimarex is on-track to exit 2018 with production over 250,000 Boepd (approximately 29.3% crude oil, 42.5% natural gas, 28.2% NGLs). Natural gas and NGL prices are on the rise, which offsets the recent drop in crude oil prices. I do think the "Right Price" of WTI crude oil is in the $65 to $75 range for 2019.

I have updated my forecast/valuation model for XEC and it will be posted to the EPG website later today. My valuation increases $2.50/share to $142.50, which compares to First Call's price target of $123.28.

FYI: The First Call price targets are the average valuations of all of the analysts' reports submitted to Reuters. 23 analysts' reports are in the XEC price target; only one has been updated since the company released their strong Q3 results ($129 price target). Some of the valuations used in First Call's price targets are over six months old for most of the Sweet 16.