Cimarex Energy reported first-quarter 2010 net income of $204.4 million, or $2.39 per diluted share. A year ago, Cimarex had a first-quarter loss of $494.1 million, or $6.05 per share. First-quarter 2010 results include a $33 million ($0.39 per share) after-tax net gain on derivative instruments. First-quarter 2009 was impacted by a $502 million ($6.15 per share) after-tax full-cost ceiling test write-down.
Revenues from oil and gas sales in the first quarter of 2010 were $432.4 million, a 119% increase compared to $197.2 million in the same period of 2009. First-quarter 2010 cash flow from operations totaled $313.2 million versus $137.6 million in the same period of 2009(1).
The increase in first-quarter 2010 revenues is a result of higher commodity prices and increasing production. First-quarter 2010 gas prices increased 67% to $6.41 per thousand cubic feet (Mcf) and oil improved 112% to $76.11 per barrel as compared to the same period of 2009.
First-quarter 2010 oil and gas production averaged 584.5 million cubic feet equivalent per day (MMcfe/d), comprised of 390.8 million cubic feet of gas, 27,967 barrels of oil and 4,313 barrels of natural gas liquids (NGL).
First-quarter 2010 production grew 25% sequentially from the fourth-quarter 2009 average of 467.6 MMcfe/d and 20% as compared to the first-quarter 2009 average of 489.0 MMcfe/d. Production increases reflect successful Gulf Coast exploration and strong Cana-Woodford results.
Second-quarter 2010 production is projected to be in the range of 570-600 MMcfe/d. Full-year 2010 production is now projected to be in the range of 570-595 MMcfe/d, or a 23-29% increase over 2009.
Full-year 2010 exploration and development (E&D) capital investment, based on current market conditions, is still expected to be within the range of $700-$900 million.
First-quarter 2010 E&D capital totaled $192.6 million, up from $142.0 million in the first quarter of 2009. Cimarex drilled and completed 37 gross (23.1 net) wells in the first quarter of 2010. In addition, at quarter-end 29 gross (18.5 net) wells were drilled and not yet completed. First-quarter 2009 wells drilled and completed totaled 25 gross (15.2 net), and another 16 gross (8.4 net) wells were drilled and awaiting completion at period end.
Cimarex has oil and natural gas contracts for April 2010 through December 2011. Oil collars covering 6,000 barrels per day for calendar 2011 were entered into during 2010. Calendar 2010 hedges are unchanged covering on average 11,000 barrels of oil per day and 160,000 MMBtu of gas per day.
Cimarex accounts for these commodity contracts using the mark-to-market (through income) accounting method.
Long-term debt at March 31, 2010 was $367.8 million. Debt to total capitalization ratio at quarter-end was 14%(4).
Cimarex's bank group, as part of the regularly scheduled spring review, reaffirmed the Company's $1.0 billion borrowing base related to its credit facility maturing in April 2012. Bank group commitments of $800 million also remain unchanged. As of March 31, 2010, Cimarex had no borrowings outstanding under its bank credit facility.
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