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Cimarex (XEC) Up 3.8% Since Last Earnings Report: Can It Continue?

·4 min read

It has been about a month since the last earnings report for Cimarex Energy (XEC). Shares have added about 3.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cimarex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Cimarex Energy Beats Q1 Earnings & Revenues Estimates

Cimarex Energy reported first-quarter 2021 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by a penny. Moreover, the figure increased from 58 cents per share in the year-ago quarter.

Total revenues of $679 million beat the Zacks Consensus Estimate of $584 million and increased from the year-ago quarter’s $473 million. 

The strong quarterly results can be attributed to higher oil and gas prices.

Operational Highlights

Production

For the quarter under review, total production averaged 219.7 thousand barrels of oil equivalent per day (MBoe/d), down from 276.6 MBoe/d in the year-ago period on considerably lower activities in the Mid-Continent and Permian Basin. Of the total production, 31.2% was crude oil and 26.3% comprised natural gas liquids (NGLs).

Total oil volumes fell to 68.6 thousand barrels per day (MBbls/d) from 89.8 MBbls/d in the year-ago period. Moreover, natural gas production decreased to 560.1 MMcf/d from the year-ago level of 694.3 MMcf/d. Also, NGL volumes dropped to 57.8 MBbls/d from the year-ago figure of 71.1 MBbls/d.

Realized Prices

Realized price of crude oil increased from $44.18 per barrel in the prior-year quarter to $55.85. The same for NGL surged to $22.43 from $9.84 in the year-ago quarter. Also, realized prices for natural gas rose to $4.14 per thousand cubic feet from 55 cents recorded a year ago.

Costs and Expenses

Overall costs and expenses for the quarter plunged to $499.8 million from the year-ago level of $1,254.5 million. Production expense for the first quarter was recorded at $74.8 million, down from the prior-year figure of $87.2 million. However, transportation, processing and other operating costs increased to $63.6 million from the year-ago figure of $54.9 million.

Financial Condition

As of Mar 31, 2021, the company had cash and cash equivalents of $523.8 million. Net long-term debt was almost $2 billion, representing a net long-term debt to capital of 54.4%. It has no debt maturities till June 2024.

Cimarex's adjusted cash flow from operating activities totaled $395.2 million, up from $306.4 million in the prior-year quarter. The company spent $130 million on oil and gas activities in the March quarter.

Guidance

The company reaffirmed its 2021 capital spending at the band of $650 million to $750 million. The upstream player issued its projection for oil production for the June quarter of this year in the band of 69 MBbl/d to 73 MBbl/d.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Cimarex has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cimarex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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