Cimarex has good news for those who own GST and NFX
Posted: Wed Nov 04, 2015 10:15 am
Cimarex Energy Co.: 3Q15: Building Momentum
Drew Venker, CFA – Morgan Stanley
November 4, 2015 5:01 AM GMT
Production beat & raise on lower capex. Consensus 2016 production numbers look achievable even on a lighter rig count. Higher Meramec activity levels indicate mounting confidence in the emerging play. Positive update.
2016 plans evolving. Cimarex's plan for 2016 continues to evolve, but the current outlook is similar to what it unveiled in 2Q15. It expects to ramp its rig count to 12 by YE-15 from the 7 it has operating today. In the Permian we expect 2016 activity to be focused in Culberson County. Mid-Continent activity will increase in the Meramec. The Bone Spring and Meramec each are allocated about twice the amount of 2016 capital compared to the percentages provided with 2Q15 earnings (13% and 11% respectively on the new plan).
2016 will focus heavily on infill wells and density pilots. The 2016 drilling program will focus heavily on drilling infill wells and density pilots. The capital program appears to have two primary objectives: 1) maximize capital efficiency (infill drilling) and 2) evaluate the optimal development configuration in the Permian and Mid-Con. In Culberson County, Cimarex will combine infill drilling and density pilots in the Wolfcamp. Activity in the Mid-Con will focus on infill drilling in the Cana core and density pilots in the Meramec and Woodford.
Production beat and raise on lower capex. Cimarex reported 3Q production above the high end of the guidance range (3% above consensus) and raised 2015 volume guidance to 14% growth (or +6%). 3Q15 capex was below our estimate and the company cut its 2015 E&D budget 7.5% at the midpoint from $1.0 billion to $925 million.
Meramec activity increasing. Cimarex and its partner Devon plan to drill two density pilots: one to assess spacing within the Meramec (1,065 foot inter-lateral spacing) and one to test stacked laterals: one target in the Woodford and two in the Meramec (testing separate landing zones). This second pilot will effectively test 10 wells per section in the Meramec.
Drew Venker, CFA – Morgan Stanley
November 4, 2015 5:01 AM GMT
Production beat & raise on lower capex. Consensus 2016 production numbers look achievable even on a lighter rig count. Higher Meramec activity levels indicate mounting confidence in the emerging play. Positive update.
2016 plans evolving. Cimarex's plan for 2016 continues to evolve, but the current outlook is similar to what it unveiled in 2Q15. It expects to ramp its rig count to 12 by YE-15 from the 7 it has operating today. In the Permian we expect 2016 activity to be focused in Culberson County. Mid-Continent activity will increase in the Meramec. The Bone Spring and Meramec each are allocated about twice the amount of 2016 capital compared to the percentages provided with 2Q15 earnings (13% and 11% respectively on the new plan).
2016 will focus heavily on infill wells and density pilots. The 2016 drilling program will focus heavily on drilling infill wells and density pilots. The capital program appears to have two primary objectives: 1) maximize capital efficiency (infill drilling) and 2) evaluate the optimal development configuration in the Permian and Mid-Con. In Culberson County, Cimarex will combine infill drilling and density pilots in the Wolfcamp. Activity in the Mid-Con will focus on infill drilling in the Cana core and density pilots in the Meramec and Woodford.
Production beat and raise on lower capex. Cimarex reported 3Q production above the high end of the guidance range (3% above consensus) and raised 2015 volume guidance to 14% growth (or +6%). 3Q15 capex was below our estimate and the company cut its 2015 E&D budget 7.5% at the midpoint from $1.0 billion to $925 million.
Meramec activity increasing. Cimarex and its partner Devon plan to drill two density pilots: one to assess spacing within the Meramec (1,065 foot inter-lateral spacing) and one to test stacked laterals: one target in the Woodford and two in the Meramec (testing separate landing zones). This second pilot will effectively test 10 wells per section in the Meramec.