It has been about a month since the last earnings report for Cimarex Energy (XEC). Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cimarex due for a breakout? 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 catalysts.
Cimarex’s Q4 Earnings Beat Estimates, Proved Reserves Surges Y/Y
Cimarex Energy reported fourth-quarter 2018 earnings per share of $1.98, which surpassed the Zacks Consensus Estimate of $1.75 and improved from the year-ago $1.47.
Total revenues of $624.1 million exceeded the Zacks Consensus Estimate of $615 million. The figure also beat $551 million registered in fourth-quarter 2017.
The strong fourth-quarter results were aided by an increase in oil equivalent production backed by ramped up activities in the Permian Basin and Mid-Continent.
The company’s board of directors has given authorization to increase the quarterly dividend by 11% to 20 cents per share sequentially. The new dividend is likely to be paid on May 31, to shareholders of record as of May 15.
In the quarter under review, total production averaged 251.3 thousand barrels of oil equivalent (MBOE) per day, up 25.2% year over year, thanks to higher activities in the Permian Basin and Mid-Continent.
Oil volumes rose 29.4% to 79.9 thousand barrels per day (MBbls/d) on a year-over-year basis. Moreover, natural gas volumes increased 16.5% to 621.9 MMcf/d year over year. Natural gas liquids (NGL) volumes jumped 35.5% year over year to 67.7 MBbls/d.
With realized prices for natural gas declining 16.3% to $2.16 per thousand cubic feet, the same for crude oil and NGL fell 4.6% and 20% year over year to $49.30 per barrel and $20.71 per barrel, respectively.
Through the December quarter, this upstream energy player brought online 86 gross wells.
As of Dec 30, 2018, the company had cash and cash equivalents of $800.7 million. Net long-term debt was roughly $1.5 billion, which represents a debt-to-capitalization ratio of almost 31%.
Cimarex's cash flow from operating activities, adjusted, totaled $428.2 million, up from $357.1 million in the prior-year quarter. The company spent $373.6 million on exploration and development in the fourth quarter.
Proved Reserves Grow
The company reported proved reserves — as of Dec 31, 2018 — of 591,195 MBOE, up from 559,037 MBOE as of Dec 31, 2017.
Cimarex projects total daily production for the March quarter of 2019 in the range of 245-257 MBoE. Of this, oil production is projected in the band of 75-81 MBbls/d. Daily production for 2019 is estimated in the range of 250-270 MBoE.
For 2019, the company projects capital spending between $1.4 billion and $1.5 billion on exploration & development activities.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
Currently, Cimarex has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
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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