Energy Prospectus

Cimarex Energy Co. (XEC) today reported fourth quarter 2017 net income of $174.7 million, or $1.83 per share, compared to fourth quarter 2016 net income of $47.8 million, or $0.50 per share.
> Adjusted fourth quarter net income (non-GAAP) was $140.0 million, or $1.47 per share. < This compares to my forecast of $124.1 million or $1.33 per share.
> Cash flow from operations was $340.8 million in the fourth quarter compared to $185.1 million in the fourth quarter of 2016. Adjusted cash flow from operations (non-GAAP) totaled $357.1 million in the fourth quarter. < This compares to my forecast of $327.7 million.

In the last 3 months, 15 ranked analysts set 12-month price targets for XEC. The average price target among the analysts is $145.50.

I have updated my forecast/valuation model for XEC. I am increasing my valuation by $9.00 to $168.00/share, primarily because I am now assuming $60/bbl WTI for 2018 and 2019. Higher NGL prices basically offsets lower natural gas prices. I am now assuming $2.75 HH natural gas for all future periods.

I do adjust "realized" oil, gas and NGL prices for each company's hedges.

Based on my forecast and supported by the Company's comments, Cimarex s/b able to fund their entire 2018 capex program with cash flow from operations. Production should be up slightly in Q1 2018 (held down a bit by weather related issues) and then accelerate to YOY growth of approximately 14%.

Cimarex has a STRONG BALANCE SHEET and access to a lot more capital if they choose to accelerate their drilling program.

My forecast/valuation model for Cimarex can be downloaded from the EPG website.