Revenues from oil and gas sales in the second quarter of 2007 were $325.8 million, up from $300.5 million in the same period of 2006. Second-quarter 2007 cash flow from operations totaled $236.3 million versus $235.9 million in the same period of 2006(1).
Second-quarter 2007 oil and gas production volumes averaged 442.6 million cubic feet equivalent per day (MMcfe/d) versus 447.9 MMcfe/d in the second quarter of 2006. The latest quarter's average daily production was comprised of 323.8 million cubic feet of gas and 19,800 barrels of oil. Second-quarter 2007 realized gas prices increased 17% to $7.30 per thousand cubic feet (Mcf) and oil prices decreased 6% to $61.51 per barrel.
For the six month period ended June 30, 2007, Cimarex reported net income of $143.3 million, or $1.69 per diluted share, as compared to $193.0 million, or $2.27 per diluted share, for the first six months of 2006. First-half 2007 cash flow from operations totaled $451.7 million versus $463.0 million in the same period of 2006(1).
Second-quarter 2007 exploration and development expenditures totaled $236.9 million as compared to $281.7 million in the second quarter of 2006. In the second quarter of 2007 Cimarex drilled 115 gross (75 net) wells, completing 89% as producers. Exploration and development capital investment for 2007 is projected to be approximately $1 billion.
Second-quarter 2007 property sales totaled $21 million. An additional $11 million in sales are pending. Total proved reserves associated with the closed and pending property sales approximates 9.8 billion cubic feet equivalent and related production is 3.5 MMcfe/d. The properties are located in South Texas, North Dakota and California.
In December 2005, the Board of Directors authorized the repurchase of up to four million shares of common stock. Second-quarter 2007 repurchases totaled 197,300 shares at an average price of $40.47. Cumulative purchases under the authorization through June 30, 2007 total 447,400 shares at an average price of $42.45.
Second-quarter 2007 pre-tax income includes a $5.1 million ($0.04 per share after-tax) gain on early extinguishments of debt resulting from the redemption of $195 million (face value) of 9.6% senior notes that were assumed in the 2005 Magnum Hunter merger. The gain recognized is the difference between the book value (recorded at fair value at the time of the merger) and the redemption price of $204.4 million. The old 9.6% notes and amounts outstanding under the Company's revolving credit facility were repaid with proceeds from the May 1, 2007 issuance of $350 million of new 7.125% ten-year senior notes.
Second-quarter 2007 production expense includes $1.3 million ($0.01 per share after-tax) related to hurricanes Rita and Katrina repair costs in excess of insurance reimbursement.
Including the impact of the asset sales, expected timing of Gulf of Mexico well-hookups and net risked exploration drilling potential, full-year 2007 production volumes are expected to average between 445-455 MMcfe/d. Third-quarter 2007 production volumes are also projected to average between 445-455 MMcfe/d.
Expenses for the remainder of 2007 are expected to fall within the following ranges:
Expenses ($/Mcfe): Production expense $1.20 - $1.25 Transportation expense 0.15 - 0.17 DD&A and ARO accretion 2.80 - 2.90 General and administrative expense 0.28 - 0.30 Production taxes (% of oil and gas revenue) 7.0% - 8.0%
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