Cimarex Reports Second Quarter 2019 Results

DENVER, Aug. 5, 2019

• Daily production averaged 274.8 MBOE; oil production averaged 83,430 barrels per day
• 3Q oil production expected to be 85.0- 91.0 MBO/d; up 5.5 percent sequentially
• 2019 oil production expected to grow 23-29 percent; led by the Permian region
• 2019 capital guidance unchanged

Cimarex Energy Co. (NYSE: XEC) today reported second quarter 2019 net income of $109.3 million, or $1.07 per share, compared to $141.0 million, or $1.48 per share, in the same period a year ago.  Second quarter adjusted net income (non-GAAP) was $83.0 million, or $0.82 per share, compared to second quarter 2018 adjusted net income (non-GAAP) of $151.9 million, or $1.59 per share¹.  Net cash provided by operating activities was $414.0 million in the second quarter of 2019 compared to $321.2 million in the same period a year ago.  Adjusted cash flow from operations (non-GAAP) was $336.4 million in the second quarter of 2019 compared to $349.5 million in the second quarter a year ago¹.

Total company production volumes for the quarter averaged 274.8 thousand barrels of oil equivalent (MBOE) per day.  Oil production averaged 83,430 barrels (bbls) per day, up 35 percent from the same period a year ago and up five percent sequentially.

Realized product prices were down in the second quarter as compared to the same quarter a year ago.  Realized oil prices averaged $54.24 per barrel, down 11 percent from the $60.99 per barrel received in the second quarter of 2018.  Realized natural gas prices averaged $0.50 per thousand cubic feet (Mcf), down 70 percent from the second quarter 2018 average of $1.65 per Mcf.  NGL prices averaged $13.08 per barrel, down 41 percent from the $22.29 per barrel received in the second quarter of 2018. See footnotes to the Average Realized Prices by Region table below for ASC 606 impact on realized prices.

Natural gas prices were negatively impacted by local price differentials. Cimarex's average differential to Henry Hub on its Permian natural gas production was $3.10 per Mcf in the second quarter of 2019 compared to $1.31 per Mcf in the second quarter of 2018 and $1.91 in the first quarter of 2019. In the Mid-Continent region, the company's average differential to Henry Hub was $0.86 per Mcf versus $1.03 per Mcf in the second quarter of 2018 and $0.46 in the first quarter of 2019.   Our realized Permian oil differential to WTI Cushing improved and averaged $5.80 per barrel in the quarter, compared to $8.05 per barrel in the second quarter of 2018 and $6.90 per barrel in the first quarter of 2019.

Cimarex invested $325 million in exploration and development (E&D) during the second quarter, of which $265 million is attributable to drilling and completion activities. Cimarex invested $22 million in midstream assets during the quarter.  Second quarter investments were funded with cash flow from operating activities. Total debt at June 30, 2019 consisted of $2.0 billion of long-term notes.  Cimarex had no borrowings under its revolving credit facility and a cash balance of $19 million.  Debt was 35 percent of total capitalization².

2019 Outlook
Third quarter 2019 production volumes are expected to average 265 - 279 MBOE per day.  Oil volumes estimated to average 85.0 - 91.0 MBbls per day in the third quarter, up 5.5 percent sequentially at the  midpoint.  Total 2019 daily production volumes are now expected to average 263 - 272 MBOE per day, with annual oil volumes estimated to average 83.0 - 87.0 MBbls per day.