Cimarex Energy Co. XEC reported third-quarter 2019 earnings per share of 91 cents, missing the Zacks Consensus Estimate of 93 cents and declining from the year-ago quarter’s $1.99.
Total revenues of $582.3 million beat the Zacks Consensus Estimate of $570 million but declined from the year-ago quarter’s $591.5 million.
The weak earnings can be attributed to lower commodity price realizations, partially offset by increased production volumes.
Cimarex Energy Co Price, Consensus and EPS Surprise
Cimarex Energy Co price-consensus-eps-surprise-chart | Cimarex Energy Co Quote
In the quarter under review, total production averaged 287.1 thousand barrels of oil equivalent per day (MBOED), up from 218.6 MBOED in the year-ago period on considerably higher activities in the Permian Basin. Output from the basin surged 64% year over year to 198.6 MBOED.
Through the September quarter, this upstream energy player brought 96 gross wells online.
Total oil volumes rose to 89.7 thousand barrels per day (MBbls/d) from 63.9 MBbls/d in the year-ago period. Moreover, natural gas production increased to 718 MMcf/d from the year-ago level of 558.8 MMcf/d. Natural gas liquids (NGL) volumes jumped to 77.7 MBbls/d from the year-ago figure of 61.6 MBbls/d.
Production expense in the quarter was recorded at $3.34 per BOE, down 12% from the year-ago figure.
Realized Prices Decline
Realized prices for natural gas plunged 52% to 88 cents per thousand cubic feet, and the same for crude oil and NGL fell 10% and 58% year over year to $52.71 and $10.80 per barrel, respectively.
As of Sep 30, 2019, the company had cash and cash equivalents of $23.9 million. Net long-term debt was almost $2 billion, which represents a debt-to-capitalization ratio of almost 33.8%.
Cimarex's adjusted cash flow from operating activities totaled $360.7 million, down from $388.7 million in the prior-year quarter. The company spent almost $296 million on exploration and development in the September quarter, of which 84% was directed toward the Permian Basin.
Cimarex projects total production for the December quarter of 2019 in the range of 272-292 MBOED. The company also issued its projections of oil equivalent productions for 2019 in the band of 274-278 MBOED.
For 2019, the company lowered its guidance for capital spending on exploration & development activities by 4% to the range of $1.3-$1.4 billion. Cimarex is expected to invest $70 million in midstream operations in 2019. Production expense per BOE is expected in the range of $3.30-$3.55 for 2019.
Assuming WTI crude price at $50 per barrel and NYMEX gas price at $2.50, the company expects Permian operations to generate strong free cash flows.
Zacks Rank and Stocks to Consider
Currently, Cimarex has a Zacks Rank #5 (Strong Sell). Some better-ranked players in the energy space are Lonestar Resources US Inc. LONE, CNX Resources Corporation CNX and Contango Oil & Gas Company MCF. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lonestar’s 2020 earnings per share are expected to rise 77% year over year.
CNX Resources’ 2019 earnings per share have witnessed two upward movements and no downward revision in the past 30 days.
Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.
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