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Cimarex (XEC) Q2 Earnings Miss on Lower Gas & Liquid Prices

Zacks Equity Research

Cimarex Energy Co. XEC reported second-quarter 2019 earnings per share of 82 cents, missing the Zacks Consensus Estimate of $1.20 and declining from the year-ago quarter’s $1.59.

Total revenues of $546 million lagged the Zacks Consensus Estimate of $600 million and declined from the year-ago quarter’s $556 million.  

The weak June quarter results can be attributed to lower price realizations from natural gas and liquids.

Operational Highlights

In the quarter under review, total production averaged 274.8 thousand barrels of oil equivalent (MBOE) per day, up 30% year over year on considerably higher activities in the Permian Basin.

Oil volumes rose 35.3% to 83.4 thousand barrels per day (MBbls/d) on a year-over-year basis. Moreover, natural gas production increased 23.4% year over year to 665.8 MMcf/d. Natural gas liquids (NGL) volumes jumped 34.3% to 80.4 MBbls/d.

With realized prices for natural gas plunging almost 70% to 50 cents per thousand cubic feet, the same for crude oil and NGL fell 11.1% and 41.3% year over year to $54.24 per barrel and $13.08 per barrel, respectively.         

Through the June quarter, this upstream energy player brought online 110 gross wells.  

Financial Condition

As of Jun 30, 2019, the company had cash and cash equivalents of $19.4 million. Net long-term debt was almost $2 billion, which represents a debt-to-capitalization ratio of almost 33.9%.

Cimarex's cash flow from operating activities, adjusted, totaled $336.4 million, down from $349.5 million in the prior-year quarter. The company spent almost $325 million on exploration and development in the June quarter. 

Guidance

Cimarex projects total daily production for the September quarter of 2019 in the range of 265-279 MBoE. The company also issued its projections of daily oil equivalent productions for 2019 in the band of 263-272 MBoE.

For 2019, the company continues to project capital spending between $1.4 billion and $1.5 billion on exploration & development activities.

Zacks Rank & Stocks to Consider

Cimarex currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include MPLX LP MPLX, Oasis Midstream Partners LP OMP and Cheniere Energy, Inc. LNG. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MPLX is likely to see earnings growth of 23.6% through 2019.

Oasis Midstream has an average positive earnings surprise of 0.3% for the past four quarters.

Cheniere is likely to see earnings growth of 4.7% through 2019.

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