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Cimarex (XEC) Q3 Earnings & Revenues Beat, Guidance Raised

Cimarex Energy Company XEC reported third-quarter 2017 earnings of $1.09 per share, which beat the Zacks Consensus Estimate of 97 cents. The figure also surpassed the prior-year quarter’s earnings of 41 cents. The improvement is mainly attributable to increased production and higher oil and liquids price realizations.

Total Revenues

Cimarex’s total revenues were $463.7 million, which beat the Zacks Consensus Estimate of $451 million. Reported revenues also increased from $335.7 million a year ago.
 

Cimarex Energy Co Price, Consensus and EPS Surprise

Cimarex Energy Co Price, Consensus and EPS Surprise | Cimarex Energy Co Quote

Operational Highlights

In the quarter under review, total production averaged 1,143 million cubic feet equivalent (MMcfe) per day, up 20.7% year over year. Oil volumes grew 27.3% year over year to 56.7 thousand barrels per day (MBbls/d). Natural gas volumes increased 15.5% to 515.9 MMcf year on year. Natural gas liquids (NGL) volumes were up 23.3% to 47.8 MBbls/d on a year-over-year basis.

Realized price of natural gas dropped 0.4% to $2.65 per thousand cubic feet. Meanwhile, prices of crude oil and NGL were up 9.5% $44.38 per barrel and 53% to $21.63 per barrel, respectively, in the reported quarter.. Natural gas prices, however, lagged the Zacks Consensus Estimate of $2.74.

The company brought 77 gross (30 net) onstream wells during the quarter. As of Sep 30, 2017, 131 gross (32 net) wells were yet to be completed. Cimarex is currently operating 14 drilling rigs.  

Financial Condition

As of Sep 30, Cimarex had cash and cash equivalents of $422.8 million, down from $698.7 million as of Sep 30, 2016. As of Sep 30, long-term debt was $1.5 billion, which represents a debt-to-capitalization ratio of 38.2%.

Net cash from operating activities during the quarter was $251 million compared with $223 million in the prior-year quarter. Cimarex invested $335 million in exploration and development during the third quarter, which was primarily funded with cash flow from operations.  

Q3 Price Performance

The pricing chart reveals that the company’s shares have outperformed the industry in the last three months. During this period, the company’s shares have returned 20.9% compared with the industry’s rally of 5%.

Guidance

Total production for fourth-quarter 2017 is projected to average 1,175-1,225 MMcfe per day, slightly up from the third-quarter level.

Production estimate for 2017 has been increased to the range of 1,134-1,147 MMcfe from the earlier guidance of 1,120-1,140 MMcfe and up 18% from 2016 levels.

Capital investment for exploration and development has been estimated at $1.2 billion versus the previous guidance of $1.1-$1.2 billion for 2017. Of the total, 61% is allocated for the Permian, while 37% is allocated for the Mid-Continent.

Zacks Rank & Key Picks

Cimarex currently has a Zacks Rank #3 (Hold).

A few better-ranked players in the energy sector are Braskem SA BAK, ConocoPhillips COP and ExxonMobil Corporation XOM. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The largest petrochemical operator in Latin America, Braskem, delivered a positive earnings surprise of 68.54% in the preceding quarter.

ConocoPhillips, based in Houston, TX, is a major global exploration and production company. It delivered an average positive earnings surprise of 152.34% in the last four quarters.

ExxonMobil, headquartered in Irving, TX, is engaged in exploration and production of crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. The company delivered average positive earnings surprise of 8.81% in the last four quarters.

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