I am now updating my forecast/valuation model for Cimarex.
Cimarex Energy Co. (NYSE: XEC) reported first quarter results on May 8:
> Q1 2018 net income of $186.3 million, or $1.96 per share, compared to $131.0 million, or $1.38 per share, in the same period a year ago. First quarter adjusted net income (non-GAAP) was $173.6 million, or $1.82 per share, compared to first quarter 2017 adjusted net income (non-GAAP) of $99.7 million, or $1.05 per share. < Compares to my EPS forecast of $1.58
> Net cash provided by operating activities was $383.1 million in the first quarter of 2018 compared to $249.5 million in the same period a year ago. Adjusted cash flow from operations (non-GAAP) was $367.2 million in the first quarter of 2018. < Compares to my forecast of $340.7 million
> Total company production for the quarter came in at the high end of guidance, averaging 206.1 thousand barrels of oil equivalent (MBOE) per day. < Compares to my forecast of 203.5 thousand Boepd for the quarter
> Oil production averaged 65,212 barrels per day, up six percent from fourth quarter 2017 levels. < Compares to my forecast of 62,500 BOPD for the quarter.
When it comes to production guidance, Cimarex has a long history of "under-promising and then over-delivering", so I am going to use the higher end of their production guidance for my forecast model.
Cimarex Energy (XEC) Update - May 10
Cimarex Energy (XEC) Update - May 10
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Cimarex Energy (XEC) Update - May 10
I have updated my forecast/valuation model for Cimarex. My valuation increases by $2.00/share to $162.00.
Since the company announced Q1 results and gave a detailed operations update, only three Wall Street Firms have updated their forecast/valuations for XEC.
Their valuations are $129, $138 and $186.
You may be wondering how three smart energy sector analysts come up with such a wide range of valuations??? It is because several Wall Street firms are still using very low oil prices in their forecast models. First Call's price target (as of today) is $134.42. It is the average of all of the valuations submitted to Reuters, some of which are over three months old and based on very low commodity prices.
Cimarex's production mix is approximately 43.2% natural gas, 31.7% crude oil and 25.1% NGLs. < It is their "gassy" production mix that is keeping a lid on the share price.
Cimarex has a super strong balance sheet, 14% to 16% YOY production growth locked and lots of running room in the Permian Basin and in SCOOP/STACK.
There is currently a takeaway capacity problem for natural gas and to a lesser extend oil in the Permian Basin. This is keeping fund managers from putting money into XEC. The transportation issues are being resolved, so XEC has a lot of upside for investors that can look past the next 10-12 months.
Since the company announced Q1 results and gave a detailed operations update, only three Wall Street Firms have updated their forecast/valuations for XEC.
Their valuations are $129, $138 and $186.
You may be wondering how three smart energy sector analysts come up with such a wide range of valuations??? It is because several Wall Street firms are still using very low oil prices in their forecast models. First Call's price target (as of today) is $134.42. It is the average of all of the valuations submitted to Reuters, some of which are over three months old and based on very low commodity prices.
Cimarex's production mix is approximately 43.2% natural gas, 31.7% crude oil and 25.1% NGLs. < It is their "gassy" production mix that is keeping a lid on the share price.
Cimarex has a super strong balance sheet, 14% to 16% YOY production growth locked and lots of running room in the Permian Basin and in SCOOP/STACK.
There is currently a takeaway capacity problem for natural gas and to a lesser extend oil in the Permian Basin. This is keeping fund managers from putting money into XEC. The transportation issues are being resolved, so XEC has a lot of upside for investors that can look past the next 10-12 months.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group