XEC
Posted: Wed Aug 05, 2015 11:53 am
Morgan Stanley like what they heard from Cimarex.
Cimarex Energy Co.: Sixteen in '16
Drew Venker, CFA – Morgan Stanley
August 5, 2015 2:42 AM GMT
XEC beat on volumes and costs, raised 2015 guidance, and outlined 2016 activity. The 2016 outlook is similar to our estimates, but consensus looks too low. Positive update.
2016 activity sharply higher. Cimarex announced preliminary plans to operate 16 rigs in 2016, up from 7 currently. The company plans to spend its cash flow plus the remainder of the proceeds from its equity offering in 2016 (we assume $630 million remaining in 2016), but did not provide specific 2016 capex numbers. 2016 production volumes were not mentioned; however, for 2016 we estimate 11% production growth on $1.45 billion of total capex (including midstream and acreage), similar to our prior estimates.
Wolfcamp and Woodford take the lion's share of capital again in 2016. The Wolfcamp and Woodford are allocated 45% and 43% of 2016 drilling and completion capex while the Bone Spring and Meramec split the remainder. We are surprised Meramec is not allocated a greater share of the spend. However, XEC may prefer to gather more production history before shifting into development mode. Mgmt is likely to provide a great deal of color on its 2016 plan on the call tomorrow.
2015 production guidance increased to 12% growth from 6-9% prior. Our estimate of 11% production growth in 2015 prior to the update is consistent with the revised guidance for 11-13%. We have reduced our oil production growth estimates slightly to be consistent with guidance for 17-19% oil growth.
2015 E&D capex guidance increased 11% from $0.9 to $1.0 billion. This compares to the original 2015 E&D capex guidance range of $0.9-1.1 billion and $100 million below our estimate of $1.1 billion.
Raising 2015/2016 estimate on lower costs. We are raising our 2015 and 2016 CFPS estimates 5% and 6%, respectively, driven by 12% lower per unit LOE and 6% lower DD&A.
Cimarex Energy Co.: Sixteen in '16
Drew Venker, CFA – Morgan Stanley
August 5, 2015 2:42 AM GMT
XEC beat on volumes and costs, raised 2015 guidance, and outlined 2016 activity. The 2016 outlook is similar to our estimates, but consensus looks too low. Positive update.
2016 activity sharply higher. Cimarex announced preliminary plans to operate 16 rigs in 2016, up from 7 currently. The company plans to spend its cash flow plus the remainder of the proceeds from its equity offering in 2016 (we assume $630 million remaining in 2016), but did not provide specific 2016 capex numbers. 2016 production volumes were not mentioned; however, for 2016 we estimate 11% production growth on $1.45 billion of total capex (including midstream and acreage), similar to our prior estimates.
Wolfcamp and Woodford take the lion's share of capital again in 2016. The Wolfcamp and Woodford are allocated 45% and 43% of 2016 drilling and completion capex while the Bone Spring and Meramec split the remainder. We are surprised Meramec is not allocated a greater share of the spend. However, XEC may prefer to gather more production history before shifting into development mode. Mgmt is likely to provide a great deal of color on its 2016 plan on the call tomorrow.
2015 production guidance increased to 12% growth from 6-9% prior. Our estimate of 11% production growth in 2015 prior to the update is consistent with the revised guidance for 11-13%. We have reduced our oil production growth estimates slightly to be consistent with guidance for 17-19% oil growth.
2015 E&D capex guidance increased 11% from $0.9 to $1.0 billion. This compares to the original 2015 E&D capex guidance range of $0.9-1.1 billion and $100 million below our estimate of $1.1 billion.
Raising 2015/2016 estimate on lower costs. We are raising our 2015 and 2016 CFPS estimates 5% and 6%, respectively, driven by 12% lower per unit LOE and 6% lower DD&A.