Second-quarter prices are expected to be in the range of $7.25 to $7.35 per thousand cubic feet of gas and $61.25 to $61.75 per barrel of oil.
Exploration and Development Activity
Cimarex drilled 225 gross (137 net) wells during the first six months of 2007, completing 91% as producers. Drilling activity remains high with 22 operated rigs currently running. Exploration and development activity is focused on oil and gas plays principally located in the Mid-Continent, Permian Basin and Gulf Coast areas of the United States. Cimarex's exploration and development capital investment for 2007 is projected to be approximately $1 billion.
Cimarex drilled 125 gross (65 net) wells in the Mid-Continent region during the first half of 2007, completing 95% as producers. Second-quarter 2007 Mid-Continent production volumes averaged 182.3 MMcfe/d, an increase of 2% over second-quarter 2006.
Texas Panhandle drilling totaled 47 gross (31 net) wells with 100% completed as producers. Notable wells, which commenced production this quarter include the Byrum 12-4 (75% working interest) at 2.1 MMcfe/d, Flowers 15-61 (100% working interest) at 1.7 MMcfe/d and the Hobart Ranch 18-68 (100% working interest) at 2.4 MMcfe/d.
First-half 2007 southern Oklahoma drilling totaled ten (seven net) wells with 100% being completed as producers. Drilling occurred in the Eola Robberson and Cumberland fields targeting multiple reservoirs at depths of 6,000-11,000 feet including the Sycamore, Woodford Shale, Hunton and Viola formations. Wells in this area recently commencing production include the Dutton 4-16 (l00% working interest) at 1.2 MMcfe/d, Mckee 2-17 (100% working interest) at 1.7 MMcfe/d and the Mullican 1-11 (98% working interest) at 4.0 MMcfe/d.
Nine operated rigs are currently drilling in the Mid-Continent region, including five in the Texas Panhandle.
Permian Basin first-half 2007 drilling totaled 78 gross (57 net) wells, 91% of which were completed as producers. Second-quarter 2007 Permian Basin production volumes averaged 142.1 MMcfe/d, a 3% increase over second-quarter 2006.
Second-quarter southeast New Mexico drilling totaled 38 gross (26 net) wells with 87% being completed as producers. Primary formations include the Morrow, Atoka and Strawn at depths of 11,500-14,000 feet. Recent wells brought on production in southeast New Mexico include the Crow Flats Fed 4 (96% working interest) at 2.2 MMcfe/d, Shifting Sands 15 Fed 1 (100% working interest) at 1.3 MMcfe/d and the Sunshine 1H (98% working interest) at 1.7 MMcfe/d.
A total of 16 gross (nine net) wells were drilled in West Texas, of which 94% were successful. Cimarex drilled 11 gross (six net) horizontal wells in the Bone Spring formation in the War-Wink field. Initial production rates from these wells averaged 300 barrels of oil equivalent per day (BOE/d). As a result of the successful horizontal drilling program War-Wink gross field production has increased from approximately 600 BOE/d in early to 2006 to nearly 3,000 BOE/d currently.
Cimarex has ten operated rigs drilling in the Permian Basin, five in southeast New Mexico and five in West Texas.
Gulf Coast/Gulf of Mexico
Cimarex drilled 21 gross (14 net) Gulf Coast wells during the first half of 2007, completing 68% as producers. Second-quarter 2007 Gulf Coast production volumes averaged 71.9 MMcfe/d a decrease of 6% from the second-quarter 2006 volumes of 76.4 MMcfe/d. Fluctuations in Gulf Coast production volumes are attributable to timing of exploration success relative to natural reservoir declines.
Current year Yegua/Cook Mountain drilling in Liberty/Hardin County, Texas has totaled nine gross (seven net) wells with an 89% success rate. The Pica 1 (100% working interest) began producing this quarter at 3.1 MMcfe/d. Five additional wells are in various stages of completion.
In Jefferson County, Texas, Cimarex also drilled a Hackberry discovery, the Smith 1 (100% working interest), which commenced production in May and is currently producing 3.6 MMcfe/d.
Offshore activity is now focused on completion operations and facility installations at prior-year Main Pass discoveries. Second-quarter 2007 Gulf of Mexico production volumes averaged 38.6 MMcfe/d, as compared to 46.0 MMcfe/d in the second quarter of 2006.
Gulf Coast dry-holes were drilled at the Coquille Point (33% working interest) Coastal Miocene prospect in the state water of Louisiana and the Comanche prospect (100% working interest) in Vermilion Parish Louisiana.
Cimarex has three operated rigs drilling in the Gulf Coast in Liberty, Jefferson and Hardin counties Texas.
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