Cimarex Energy (XEC) soundly beat my 2nd quarter forecast but they have reduce production guidance for Q3. I'm working on the forecast model and will have it posted to the website tomorrow along with an adjusted Fair Value estimate.
Oil, gas and natural gas liquids (NGLs) revenue in the second quarter of 2011 totaled $452.3 million, a 24% increase compared to $364.9 million in the same period of 2010. Second-quarter 2011 cash flow from operations was $343.4 million versus $259.9 million a year ago. < My cash flow forecast was $315.2 million so this is the best news of all.
XEC
Re: XEC
XEC production guidance is now lower partially due to the sale of the Riley Ridge project to fellow Sweet 16 member Denbury Resources. It looks like a good deal for both companies. XEC has a five year inventory of low risk oil projects where they can deploy the capital. Here is what XEC said about the deal on their CC. - Dan
"Before turning the call over to Paul, I'd like to say a few words about the recently announced sale of our interest in the Riley Ridge project in southwest Wyoming to Denbury, a deal we closed on this past Monday. As you know, we've been developing this project over the last few years. And we had an anticipated plant startup date scheduled for fall of this year. Well, Denbury became our partner in the project last September after acquiring the interest of the majority non-operating working interest owner. And the sale of our 57.5% interest in the project simply made -- ultimately made sense from the standpoint of both companies. Where we saw a value in the project from the sale of methane and helium, Denbury saw value in methane, helium and CO2. This last Co2 source is an important part of Denbury's enhanced recovery strategy and was certainly a win for Denbury. A solid purchase price was certainly a win for Cimarex."
"Selling a property outside of our core areas of activity for premium price and redirecting proceeds into our higher rate of return drilling program just simply made sense to us. Through the sale, we'll derive proceeds of $191 million, with $176 million paid at closing and another $15 million to be paid upon the successful startup of the plan. Net Cimarex hydrocarbon production of about 10 million per day was scheduled to occur in late fall, and that now is obviously and hasn't -- is not included in our guidance projections."
"Before turning the call over to Paul, I'd like to say a few words about the recently announced sale of our interest in the Riley Ridge project in southwest Wyoming to Denbury, a deal we closed on this past Monday. As you know, we've been developing this project over the last few years. And we had an anticipated plant startup date scheduled for fall of this year. Well, Denbury became our partner in the project last September after acquiring the interest of the majority non-operating working interest owner. And the sale of our 57.5% interest in the project simply made -- ultimately made sense from the standpoint of both companies. Where we saw a value in the project from the sale of methane and helium, Denbury saw value in methane, helium and CO2. This last Co2 source is an important part of Denbury's enhanced recovery strategy and was certainly a win for Denbury. A solid purchase price was certainly a win for Cimarex."
"Selling a property outside of our core areas of activity for premium price and redirecting proceeds into our higher rate of return drilling program just simply made sense to us. Through the sale, we'll derive proceeds of $191 million, with $176 million paid at closing and another $15 million to be paid upon the successful startup of the plan. Net Cimarex hydrocarbon production of about 10 million per day was scheduled to occur in late fall, and that now is obviously and hasn't -- is not included in our guidance projections."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group