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| 8-K/A - 8-K/A - CIMAREX ENERGY CO | a2018q3xec8kpressrelease1.htm |
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Cimarex Energy Co. 1700 Lincoln Street, Suite 3700 Denver, CO 80203 Phone: (303) 295-3995 |  | |
Cimarex Reports Third Quarter 2018 Results
• | Daily production averaged 218.6 MBOE; oil production averaged 63,909 barrels per day |
• | 2018 capital guidance unchanged; targeting mid point |
• | Fourth quarter oil production expected to average 73.0 - 78.0 MBbls per day |
DENVER, November 6, 2018 - Cimarex Energy Co. (NYSE: XEC) today reported third quarter 2018 net income of $148.4 million, or $1.56 per share, compared to $91.4 million, or $0.96 per share, in the same period a year ago. Third quarter adjusted net income (non-GAAP) was $189.6 million, or $1.99 per share, compared to third quarter 2017 adjusted net income (non-GAAP) of $103.6 million, or $1.09 per share1. Net cash provided by operating activities was $453.5 million in the third quarter of 2018 compared to $251.0 million in the same period a year ago. Adjusted cash flow from operations (non-GAAP) was $388.7 million in the third quarter of 2018 compared to $283.9 million in the third quarter a year ago1.
On August 31, Cimarex closed on the previously announced transaction for the sale of its Ward County assets for $544.5 million. Reported production volumes for the third quarter reflect this closing date.
Total company volumes for the quarter averaged 218.6 thousand barrels of oil equivalent (MBOE) per day. Oil production averaged 63,909 barrels (bbls) per day, up 13 percent from the same period a year ago (17 percent on a pro forma basis) and up four percent from second quarter 2018 levels (eight percent on a pro forma basis). Driven by the 80 wells expected to be brought on production in the second half of 2018 (including 46 wells brought on production in the third quarter) and pro forma for the sale of assets in Ward County, Texas, Cimarex continues to expect oil production growth of 21-23 percent year-over-year. (See Pro Forma Production Reconciliation table below.)
Realized oil prices averaged $58.25 per barrel, up 31 percent from the $44.38 per barrel received in the third quarter of 2017. Realized natural gas prices averaged $1.84 per thousand cubic feet (Mcf) down 31 percent from the third quarter 2017 average of $2.65 per Mcf. NGL prices averaged $25.72 per barrel, up 19 percent from the $21.63 per barrel received in the third quarter of 2017 and up 15 percent sequentially. Realized prices for 2018 reflect the adoption of Accounting Standards Codification 606 (ASC 606). See table below (Impact of ASC 606) for comparison of realized prices for 2018 for pre- and post-ASC 606.
Both oil and natural gas prices were negatively impacted by local price differentials. Our realized Permian oil differential to WTI Cushing averaged $(14.34) per barrel in the quarter, compared to $(8.05) per barrel in the second quarter of 2018 and $(4.06) per barrel in the third quarter of 2017. Cimarex's average differential on its
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Permian natural gas production was $(1.25) per Mcf below Henry Hub in the third quarter of 2018 compared to $(0.29) per Mcf lower in the third quarter of 2017. In the Mid-Continent region, realized gas prices were $(0.94) per Mcf below the Henry Hub index versus $(0.38) per Mcf below Henry Hub in the third quarter of 2017.
Cimarex invested $501 million in exploration and development (E&D) during the third quarter, of which $400 million is attributable to drilling and completion activities. Third quarter investments were funded with cash flow from operations and cash on the balance sheet. Total debt at September 30, 2018 consisted of $1.5 billion of long-term notes. Cimarex had no borrowings under its revolving credit facility and a cash balance of $864 million. Debt was 33 percent of total capitalization2.
2018 Outlook
Fourth quarter 2018 production volumes are expected to average 238 - 247 MBOE per day with oil volumes estimated to average 73.0 - 78.0 MBbls per day, or 29 - 38 percent higher than the pro forma fourth quarter 2017 average. The total 2018 daily production volumes are now expected to average 218 - 221 MBOE per day with annual oil volumes estimated to average 66.0 - 67.2 MBbls per day.
On a pro forma basis (excluding Ward volumes entirely), Cimarex expects 2018 total production (MBOE per day) and oil production (barrels per day) to grow 17-18 percent and 21-23 percent over 2017 volumes. See Pro Forma Production Reconciliation table below.
Pro Forma Production Reconciliation | |||||||||
(excludes Ward volumes for all periods) | |||||||||
2018E | 2017 | % Growth | |||||||
Daily Production (MBOE/d) | 213 | - | 216 | 183.1 | 17-18% | ||||
Daily Oil Production (MBbls/d) | 62.6 | - | 63.8 | 51.8 | 21-23% | ||||
Estimated 2018 exploration and development investment is $1.6 – 1.7 billion, unchanged. from original guidance given in February.
Expenses per BOE of production for the fourth quarter of 2018 are estimated to be:
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Production expense | $3.35 - 3.80 | |
Transportation, processing and other expense* | 2.40 - 3.00 | |
DD&A and ARO accretion | 7.00 - 7.60 | |
General and administrative expense | 1.10 - 1.40 | |
Taxes other than income (% of oil and gas revenue) | 5.75 - 6.25% | |
*Reflects adoption of ASC 606 (see Impact of ASC 606 table below). | ||
Operations Update
Cimarex invested $501 million in E&D during the third quarter, 74 percent in the Permian Basin and 26 percent in the Mid-Continent. Cimarex brought 120 gross (46 net) wells on production during the quarter. At September 30, 98 gross (41 net) wells were waiting on completion. Cimarex currently is operating 16 drilling rigs.
WELLS BROUGHT ON PRODUCTION BY REGION | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Gross wells | ||||||||||||
Permian Basin | 40 | 29 | 89 | 65 | ||||||||
Mid-Continent | 80 | 48 | 174 | 133 | ||||||||
120 | 77 | 263 | 198 | |||||||||
Net wells | ||||||||||||
Permian Basin | 26 | 16 | 48 | 42 | ||||||||
Mid-Continent | 20 | 14 | 36 | 32 | ||||||||
46 | 30 | 84 | 74 | |||||||||
Permian Region
Production from the Permian region averaged 120,822 BOE per day in the third quarter, a 15 percent increase from third quarter 2017 (19 percent on a pro forma basis). Oil volumes averaged 49,001 barrels per day, a 12 percent increase from third quarter 2017 (17 percent on a pro forma basis).
Cimarex completed 40 gross (26 net) wells in the Permian region during the third quarter. There were 45 gross (32 net) wells waiting on completion at September 30.
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In Lea County, New Mexico, Cimarex is pleased to announce results from five new wells including the Red Hills Unit 17H, a long lateral Upper Wolfcamp well that had average peak 30-day initial production of 5,164 BOE (3,611 barrels of oil) per day. Cimarex drilled three additional 10,000-foot lateral wells in the Red Hills area on the Vaca Draw 20-17 lease including one well in each of the Avalon, Leonard and Upper Wolfcamp formations (see company presentation for details). A 5,000-foot lateral in the Third Bone Spring was brought on line in Northern Lea County that had a 30-day initial production rate of 2,638 BOE (2,165 barrels of oil) per day.
Cimarex currently is operating 12 drilling rigs and three completion crews in the region.
Mid-Continent Region
Production from the Mid-Continent averaged 97,346 BOE per day for the third quarter, up 14 percent from third quarter 2017 and up ten percent sequentially.
During the third quarter, Cimarex completed 80 gross (20 net) wells in the Mid-Continent region including multi-well pads at the Steve-O Meramec development (six wells) and the Shelly (eight wells) and J.D. Hoppinscotch (four wells) spacing pilots in the Woodford formation in the Lone Rock area. At the end of the quarter, 53 gross (9 net) wells were waiting on completion. Cimarex currently is operating four drilling rigs and one completion crew in the region.
Production by Region
Cimarex’s average daily production and commodity price by region is summarized below:
DAILY PRODUCTION BY REGION | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Permian Basin | ||||||||||||
Gas (MMcf) | 239.4 | 217.9 | 239.3 | 212.9 | ||||||||
Oil (Bbls) | 49,001 | 43,735 | 49,211 | 43,544 | ||||||||
NGL (Bbls) | 31,919 | 24,659 | 29,863 | 23,771 | ||||||||
Total Equivalent (BOE) | 120,822 | 104,703 | 118,952 | 102,798 | ||||||||
Mid-Continent | ||||||||||||
Gas (MMcf) | 317.9 | 296.8 | 303.6 | 292.4 | ||||||||
Oil (Bbls) | 14,755 | 12,846 | 14,149 | 11,937 | ||||||||
NGL (Bbls) | 29,603 | 23,142 | 27,829 | 22,999 | ||||||||
Total Equivalent (BOE) | 97,346 | 85,451 | 92,569 | 83,676 | ||||||||
Total Company | ||||||||||||
Gas (MMcf) | 558.8 | 515.9 | 544.4 | 506.7 | ||||||||
Oil (Bbls) | 63,909 | 56,687 | 63,586 | 55,596 | ||||||||
NGL (Bbls) | 61,560 | 47,840 | 57,748 | 46,806 | ||||||||
Total Equivalent (BOE) | 218,595 | 190,518 | 212,069 | 186,858 | ||||||||
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AVERAGE REALIZED PRICE BY REGION | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018* | 2017 | 2018* | 2017 | |||||||||
Permian Basin | ||||||||||||
Gas ($ per Mcf) | 1.66 | 2.70 | 1.79 | 2.78 | ||||||||
Oil ($ per Bbl) | 55.16 | 44.14 | 58.24 | 45.33 | ||||||||
NGL ($ per Bbl) | 27.53 | 20.58 | 23.95 | 18.50 | ||||||||
Mid-Continent | ||||||||||||
Gas ($ per Mcf) | 1.97 | 2.61 | 2.01 | 2.85 | ||||||||
Oil ($ per Bbl) | 68.42 | 45.21 | 64.82 | 45.33 | ||||||||
NGL ($ per Bbl) | 23.75 | 22.75 | 21.77 | 21.70 | ||||||||
Total Company | ||||||||||||
Gas ($ per Mcf) | 1.84 | 2.65 | 1.92 | 2.82 | ||||||||
Oil ($ per Bbl) | 58.25 | 44.38 | 59.70 | 45.33 | ||||||||
NGL ($ per Bbl) | 25.72 | 21.63 | 22.90 | 20.07 | ||||||||
*Realized prices for 2018 reflect the adoption of ASC 606. See Impact of ASC 606 table for a comparison of 2018 realized prices on a pre- and post-ASC 606 basis.
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Other
The following table summarizes the company’s current open hedge positions:
4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | ||||||||||||||||||||||
Gas Collars: | PEPL(3) | |||||||||||||||||||||||||||
Volume (MMBtu/d) | 123,261 | 120,000 | 120,000 | 90,000 | 60,000 | 30,000 | — | |||||||||||||||||||||
Wtd Avg Floor | $ | 2.09 | $ | 2.05 | $ | 2.05 | $ | 1.93 | $ | 1.93 | $ | 1.97 | $ | — | ||||||||||||||
Wtd Avg Ceiling | $ | 2.43 | $ | 2.42 | $ | 2.42 | $ | 2.34 | $ | 2.42 | $ | 2.51 | $ | — | ||||||||||||||
El Paso Perm(3) | ||||||||||||||||||||||||||||
Volume (MMBtu/d) | 86,630 | 80,000 | 80,000 | 60,000 | 30,000 | 10,000 | — | |||||||||||||||||||||
Wtd Avg Floor | $ | 1.78 | $ | 1.69 | $ | 1.69 | $ | 1.48 | $ | 1.37 | $ | 1.40 | $ | — | ||||||||||||||
Wtd Avg Ceiling | $ | 2.01 | $ | 1.92 | $ | 1.92 | $ | 1.74 | $ | 1.60 | $ | 1.70 | $ | — | ||||||||||||||
Waha (3) | ||||||||||||||||||||||||||||
Volume (MMBtu/d) | 26,630 | 30,000 | 30,000 | 30,000 | 30,000 | 20,000 | — | |||||||||||||||||||||
Wtd Avg Floor | $ | 1.38 | $ | 1.38 | $ | 1.38 | $ | 1.38 | $ | 1.38 | $ | 1.40 | $ | — | ||||||||||||||
Wtd Avg Ceiling | $ | 1.67 | $ | 1.67 | $ | 1.67 | $ | 1.67 | $ | 1.67 | $ | 1.73 | $ | — | ||||||||||||||
Oil Collars: | WTI(4) | |||||||||||||||||||||||||||
Volume (Bbl/d) | 37,000 | 31,000 | 31,000 | 24,000 | 16,000 | 8,000 | — | |||||||||||||||||||||
Wtd Avg Floor | $ | 52.97 | $ | 53.94 | $ | 53.94 | $ | 55.67 | $ | 58.50 | $ | 60.00 | $ | — | ||||||||||||||
Wtd Avg Ceiling | $ | 64.79 | $ | 66.88 | $ | 66.88 | $ | 70.03 | $ | 71.94 | $ | 75.85 | $ | — | ||||||||||||||
Oil Basis Swaps: | WTI Midland(5) | |||||||||||||||||||||||||||
Volume (Bbl/d) | 29,000 | 29,000 | 29,000 | 24,000 | 16,000 | 7,000 | 7,000 | |||||||||||||||||||||
Weighted Avg Differential | $ | (5.01 | ) | $ | (5.46 | ) | $ | (5.46 | ) | $ | (6.50 | ) | $ | (7.79 | ) | $ | (0.40 | ) | $ | (0.40 | ) | |||||||
Conference call and webcast
Cimarex will host a conference call tomorrow, November 7, at 11:00 a.m. EDT (9:00 a.m. MT). The call will be webcast and accessible on the Cimarex website at www.cimarex.com. To join the live, interactive call, please dial 866-367-3053 ten minutes before the scheduled start time (callers in Canada dial 855-669-9657 and international callers dial 412-902-4216).
A replay will be available on the company’s website.
Investor Presentation
For more details on Cimarex’s third quarter 2018 results, please refer to the company’s investor presentation available at www.cimarex.com.
About Cimarex Energy
Denver-based Cimarex Energy Co. is an independent oil and gas exploration and production company with principal operations in the Permian Basin and Mid-Continent areas of the U.S.
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This press release contains forward-looking statements, including statements regarding projected results and future events. In particular, the “2018 Outlook” contains projections for certain 2018 operational and financial metrics. These forward-looking statements are based on management’s judgment as of the date of this press release and include certain risks and uncertainties. Please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC, and other filings including our Current Reports on Form 8-K and Quarterly Reports on Form 10-Q, for a list of certain risk factors that may affect these forward-looking statements.
Actual results may differ materially from company projections and other forward-looking statements and can be affected by a variety of factors outside the control of the company including among other things: oil, NGL and natural gas price levels and volatility; higher than expected costs and expenses, including the availability and cost of services and materials; compliance with environmental and other regulations; costs and availability of third party facilities for gathering, processing, refining and transportation; risks associated with operating in one major geographic area; environmental liabilities; the ability to receive drilling and other permits and rights-of-way in a timely manner; development drilling and testing results; declines in the values of our oil and gas properties resulting in impairments; the potential for production decline rates to be greater than expected; performance of acquired properties and newly drilled wells; regulatory approvals, including regulatory restrictions on federal lands; legislative or regulatory changes, including initiatives related to hydraulic fracturing, emissions and disposal of produced water; unexpected future capital expenditures; economic and competitive conditions; the availability and cost of capital; the ability to obtain industry partners to jointly explore certain prospects, and the willingness and ability of those partners to meet capital obligations when requested; changes in estimates of proved reserves; derivative and hedging activities; the success of the company's risk management activities; title to properties; litigation; the ability to complete property sales or other transactions; the effectiveness of controls over financial reporting; and other factors discussed in the company's reports filed with the SEC. Cimarex Energy Co. encourages readers to consider the risks and uncertainties associated with projections and other forward-looking statements. In addition, the company assumes no obligation to publicly revise or update any forward-looking statements based on future events or circumstances.
1 | Adjusted net income and adjusted cash flow from operations are non-GAAP financial measures. See below for reconciliations of the related GAAP amounts. |
2 | Debt to total capitalization is calculated by dividing long-term debt by long-term debt plus stockholders’ equity. |
3 | PEPL refers to Panhandle Eastern Pipe Line Tex/OK Mid-Continent index, El Paso Perm refers to El Paso Permian Basin index, and Waha refers to West Texas (Waha) Index, all as quoted in Platt’s Inside FERC. |
4 | WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange. |
5 | Index price on basis swaps is WTI NYMEX less the weighted average WTI Midland differential, as quoted by Argus Americas Crude. |
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RECONCILIATION OF ADJUSTED NET INCOME
The following reconciles net income as reported under generally accepted accounting principles (GAAP) to adjusted net income (non-GAAP) for the periods indicated.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Net income | $ | 148,354 | $ | 91,399 | $ | 475,669 | $ | 319,633 | |||||||
Mark-to-market loss (gain) on open derivative positions | 53,507 | 19,085 | 51,128 | (53,003 | ) | ||||||||||
Loss on early extinguishment of debt | — | — | — | 28,169 | |||||||||||
Tax impact | (12,253 | ) | (6,851 | ) | (11,810 | ) | 9,213 | ||||||||
Adjusted net income | $ | 189,608 | $ | 103,633 | $ | 514,987 | $ | 304,012 | |||||||
Diluted earnings per share | $ | 1.56 | $ | 0.96 | $ | 5.00 | $ | 3.36 | |||||||
Adjusted diluted earnings per share* | $ | 1.99 | $ | 1.09 | $ | 5.39 | $ | 3.19 | |||||||
Weighted-average number of shares outstanding: | |||||||||||||||
Adjusted diluted** | 95,512 | 95,320 | 95,472 | 95,222 | |||||||||||
Adjusted net income and adjusted diluted earnings per share exclude the noted items because management believes these items affect the comparability of operating results. The company discloses these non-GAAP financial measures as a useful adjunct to GAAP measures because:
a) | Management uses adjusted net income to evaluate the company's operating performance between periods and to compare the company's performance to other oil and gas exploration and production companies. |
b) | Adjusted net income is more comparable to earnings estimates provided by research analysts. |
* Does not include adjustments resulting from application of the "two-class method" used to determine earnings per share under GAAP.
** Reflects the weighted-average number of common shares outstanding during the period as adjusted for the dilutive effects of outstanding stock options.
RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS
The following table provides a reconciliation from generally accepted accounting principles (GAAP) measures of net cash provided by operating activities to adjusted cash flows from operations (non-GAAP) for the periods indicated.
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Net cash provided by operating activities | $ | 453,474 | $ | 251,005 | $ | 1,157,813 | $ | 755,805 | |||||||
Change in operating assets and liabilities | (64,792 | ) | 32,901 | (52,386 | ) | 72,728 | |||||||||
Adjusted cash flow from operations | $ | 388,682 | $ | 283,906 | $ | 1,105,427 | $ | 828,533 | |||||||
Management uses the non-GAAP financial measure of adjusted cash flow from operations as a means of measuring our ability to fund our capital program and dividends, without fluctuations caused by changes in current assets and liabilities, which are included in the GAAP measure of net cash provided by operating activities. Management believes this non-GAAP financial measure provides useful information to investors for the same reason, and that it is also used by professional
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research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry.
IMPACT OF ASC 606
Effective January 1, 2018, Cimarex adopted the provisions of Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”). Application of ASC 606 has no impact on our net income or cash flows from operations; however, certain costs classified as Transportation, processing, and other operating expenses in the statement of operations under prior accounting standards are now reflected as deductions from revenue under ASC 606. The following tables present certain Pre- and Post-ASC 606 amounts:
REVENUES | ||||||||||||
Three Months Ended September 30, | ||||||||||||
2018 | 2017 | |||||||||||
Pre-ASC 606 Adoption | Post-ASC 606 Adoption | As Reported | ||||||||||
(in thousands) | ||||||||||||
Oil sales | $ | 342,495 | $ | 342,495 | $ | 231,441 | ||||||
Gas sales | $ | 98,321 | $ | 94,433 | $ | 125,707 | ||||||
NGL sales | $ | 151,648 | $ | 145,654 | $ | 95,191 | ||||||
Nine Months Ended September 30, | ||||||||||||
2018 | 2017 | |||||||||||
Pre-ASC 606 Adoption | Post-ASC 606 Adoption | As Reported | ||||||||||
(in thousands) | ||||||||||||
Oil sales | $ | 1,036,402 | $ | 1,036,402 | $ | 687,960 | ||||||
Gas sales | $ | 295,725 | $ | 284,941 | $ | 390,126 | ||||||
NGL sales | $ | 382,387 | $ | 361,066 | $ | 256,503 | ||||||
AVERAGE REALIZED PRICE BY REGION | |||||||||
Three Months Ended September 30, | |||||||||
2018 | 2017 | ||||||||
Pre-ASC 606 Adoption | Post-ASC 606 Adoption | As Reported | |||||||
Permian Basin | |||||||||
Gas ($ per Mcf) | 1.78 | 1.66 | 2.70 | ||||||
Oil ($ per Bbl) | 55.16 | 55.16 | 44.14 | ||||||
NGL ($ per Bbl) | 29.08 | 27.53 | 20.58 | ||||||
Mid-Continent | |||||||||
Gas ($ per Mcf) | 2.01 | 1.97 | 2.61 | ||||||
Oil ($ per Bbl) | 68.42 | 68.42 | 45.21 | ||||||
NGL ($ per Bbl) | 24.28 | 23.75 | 22.75 | ||||||
Total Company | |||||||||
Gas ($ per Mcf) | 1.91 | 1.84 | 2.65 | ||||||
Oil ($ per Bbl) | 58.25 | 58.25 | 44.38 | ||||||
NGL ($ per Bbl) | 26.78 | 25.72 | 21.63 | ||||||
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Nine Months Ended September 30, | |||||||||
2018 | 2017 | ||||||||
Pre-ASC 606 Adoption | Post-ASC 606 Adoption | As Reported | |||||||
Permian Basin | |||||||||
Gas ($ per Mcf) | 1.90 | 1.79 | 2.78 | ||||||
Oil ($ per Bbl) | 58.24 | 58.24 | 45.33 | ||||||
NGL ($ per Bbl) | 25.59 | 23.95 | 18.50 | ||||||
Mid-Continent | |||||||||
Gas ($ per Mcf) | 2.05 | 2.01 | 2.85 | ||||||
Oil ($ per Bbl) | 64.82 | 64.82 | 45.33 | ||||||
NGL ($ per Bbl) | 22.82 | 21.77 | 21.70 | ||||||
Total Company | |||||||||
Gas ($ per Mcf) | 1.99 | 1.92 | 2.82 | ||||||
Oil ($ per Bbl) | 59.70 | 59.70 | 45.33 | ||||||
NGL ($ per Bbl) | 24.26 | 22.90 | 20.07 | ||||||
TRANSPORTATION, PROCESSING, AND OTHER OPERATING EXPENSES | ||||||||||||
Three Months Ended September 30, | ||||||||||||
2018 | 2017 | |||||||||||
Pre-ASC 606 Adoption | Post-ASC 606 Adoption | As Reported | ||||||||||
(in thousands, except per BOE) | ||||||||||||
Transportation, processing, and other operating expenses | $ | 59,602 | $ | 49,720 | $ | 58,387 | ||||||
Per BOE | $ | 2.96 | $ | 2.47 | $ | 3.33 | ||||||
Nine Months Ended September 30, | ||||||||||||
2018 | 2017 | |||||||||||
Pre-ASC 606 Adoption | Post-ASC 606 Adoption | As Reported | ||||||||||
(in thousands, except per BOE) | ||||||||||||
Transportation, processing, and other operating expenses | $ | 178,923 | $ | 146,818 | $ | 172,034 | ||||||
Per BOE | $ | 3.09 | $ | 2.54 | $ | 3.37 | ||||||
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OIL AND GAS CAPITALIZED EXPENDITURES | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Acquisitions: | |||||||||||||||
Proved | $ | — | $ | — | $ | 62 | $ | 260 | |||||||
Unproved | 10,015 | 438 | 12,251 | 4,263 | |||||||||||
10,015 | 438 | 12,313 | 4,523 | ||||||||||||
Exploration and development: | |||||||||||||||
Land and seismic | $ | 55,603 | $ | 12,872 | $ | 76,027 | $ | 123,359 | |||||||
Exploration and development | 445,429 | 322,651 | 1,113,898 | 813,693 | |||||||||||
501,032 | 335,523 | 1,189,925 | 937,052 | ||||||||||||
Property sales: | |||||||||||||||
Proved | $ | (527,650 | ) | $ | 1,807 | $ | (557,191 | ) | $ | (85 | ) | ||||
Unproved | (12,022 | ) | (780 | ) | (17,323 | ) | (8,051 | ) | |||||||
(539,672 | ) | 1,027 | (574,514 | ) | (8,136 | ) | |||||||||
$ | (28,625 | ) | $ | 336,988 | $ | 627,724 | $ | 933,439 | |||||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands, except per share information) | ||||||||||||||||
Revenues: | ||||||||||||||||
Oil sales | $ | 342,495 | $ | 231,441 | $ | 1,036,402 | $ | 687,960 | ||||||||
Gas and NGL sales | 240,087 | 220,898 | 646,007 | 646,629 | ||||||||||||
Gas gathering and other | 8,906 | 11,342 | 32,487 | 32,720 | ||||||||||||
591,488 | 463,681 | 1,714,896 | 1,367,309 | |||||||||||||
Costs and expenses: | ||||||||||||||||
Depreciation, depletion, amortization, and accretion | 138,195 | 112,893 | 417,555 | 319,173 | ||||||||||||
Production | 76,272 | 65,410 | 226,758 | 190,409 | ||||||||||||
Transportation, processing, and other operating | 49,720 | 58,387 | 146,818 | 172,034 | ||||||||||||
Gas gathering and other | 10,569 | 8,856 | 29,859 | 25,930 | ||||||||||||
Taxes other than income | 28,431 | 24,314 | 86,549 | 63,104 | ||||||||||||
General and administrative | 21,148 | 21,039 | 64,208 | 58,835 | ||||||||||||
Stock compensation | 6,437 | 7,038 | 16,262 | 19,619 | ||||||||||||
Loss (gain) on derivative instruments, net | 54,006 | 16,109 | 71,546 | (50,261 | ) | |||||||||||
Other operating expense, net | 10,015 | 95 | 15,470 | 977 | ||||||||||||
394,793 | 314,141 | 1,075,025 | 799,820 | |||||||||||||
Operating income | 196,695 | 149,540 | 639,871 | 567,489 | ||||||||||||
Other (income) and expense: | ||||||||||||||||
Interest expense | 17,159 | 16,838 | 50,837 | 57,985 | ||||||||||||
Capitalized interest | (5,457 | ) | (5,373 | ) | (15,117 | ) | (17,456 | ) | ||||||||
Loss on early extinguishment of debt | — | — | — | 28,169 | ||||||||||||
Other, net | (7,544 | ) | (4,563 | ) | (14,716 | ) | (9,004 | ) | ||||||||
Income before income tax | 192,537 | 142,638 | 618,867 | 507,795 | ||||||||||||
Income tax expense | 44,183 | 51,239 | 143,198 | 188,162 | ||||||||||||
Net income | $ | 148,354 | $ | 91,399 | $ | 475,669 | $ | 319,633 | ||||||||
Earnings per share to common stockholders: | ||||||||||||||||
Basic | $ | 1.56 | $ | 0.96 | $ | 5.00 | $ | 3.36 | ||||||||
Diluted | $ | 1.56 | $ | 0.96 | $ | 5.00 | $ | 3.36 | ||||||||
Dividends declared per share | $ | 0.18 | $ | 0.08 | $ | 0.50 | $ | 0.24 | ||||||||
Weighted-average number of shares outstanding: | ||||||||||||||||
Basic | 93,845 | 93,501 | 93,758 | 93,431 | ||||||||||||
Diluted | 93,867 | 93,531 | 93,788 | 93,465 | ||||||||||||
Comprehensive income: | ||||||||||||||||
Net income | $ | 148,354 | $ | 91,399 | $ | 475,669 | $ | 319,633 | ||||||||
Other comprehensive income: | ||||||||||||||||
Change in fair value of investments, net of tax | 539 | 234 | 541 | 860 | ||||||||||||
Total comprehensive income | $ | 148,893 | $ | 91,633 | $ | 476,210 | $ | 320,493 | ||||||||
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CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 148,354 | $ | 91,399 | $ | 475,669 | $ | 319,633 | ||||||||
Adjustments to reconcile net income to net cash | ||||||||||||||||
provided by operating activities: | ||||||||||||||||
Depreciation, depletion, amortization, and accretion | 138,195 | 112,893 | 417,555 | 319,173 | ||||||||||||
Deferred income taxes | 43,083 | 51,239 | 142,815 | 188,168 | ||||||||||||
Stock compensation | 6,437 | 7,038 | 16,262 | 19,619 | ||||||||||||
Loss (gain) on derivative instruments, net | 54,006 | 16,109 | 71,546 | (50,261 | ) | |||||||||||
Settlements on derivative instruments | (499 | ) | 2,975 | (20,418 | ) | (2,742 | ) | |||||||||
Loss on early extinguishment of debt | — | — | — | 28,169 | ||||||||||||
Changes in non-current assets and liabilities | (1,957 | ) | 1,068 | (1,244 | ) | 2,144 | ||||||||||
Other, net | 1,063 | 1,185 | 3,242 | 4,630 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (26,784 | ) | (67,776 | ) | (11,772 | ) | (128,921 | ) | ||||||||
Other current assets | 2,535 | (8,268 | ) | 4,421 | (19,372 | ) | ||||||||||
Accounts payable and other current liabilities | 89,041 | 43,143 | 59,737 | 75,565 | ||||||||||||
Net cash provided by operating activities | 453,474 | 251,005 | 1,157,813 | 755,805 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Oil and gas capital expenditures | (500,677 | ) | (319,777 | ) | (1,151,484 | ) | (901,949 | ) | ||||||||
Sales of oil and gas assets | 538,525 | (1,027 | ) | 573,367 | 8,136 | |||||||||||
Sales of other assets | 465 | 116 | 990 | 510 | ||||||||||||
Other capital expenditures | (18,925 | ) | (13,123 | ) | (75,037 | ) | (31,332 | ) | ||||||||
Net cash provided (used) by investing activities | 19,388 | (333,811 | ) | (652,164 | ) | (924,635 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Borrowings of long-term debt | — | — | — | 748,110 | ||||||||||||
Repayments of long-term debt | — | — | — | (750,000 | ) | |||||||||||
Call premium, financing, and underwriting fees | — | (159 | ) | — | (29,194 | ) | ||||||||||
Dividends paid | (15,237 | ) | (7,590 | ) | (38,038 | ) | (22,743 | ) | ||||||||
Employee withholding taxes paid upon the net settlement of equity-classified stock awards | (5,464 | ) | (6,422 | ) | (6,410 | ) | (7,637 | ) | ||||||||
Proceeds from exercise of stock options | 962 | 190 | 2,211 | 226 | ||||||||||||
Net cash used by financing activities | (19,739 | ) | (13,981 | ) | (42,237 | ) | (61,238 | ) | ||||||||
Net change in cash and cash equivalents | 453,123 | (96,787 | ) | 463,412 | (230,068 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 410,823 | 519,595 | 400,534 | 652,876 | ||||||||||||
Cash and cash equivalents at end of period | $ | 863,946 | $ | 422,808 | $ | 863,946 | $ | 422,808 | ||||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||||||||
September 30, 2018 | December 31, 2017 | |||||||
Assets | (in thousands, except share and per share information) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 863,946 | $ | 400,534 | ||||
Accounts receivable, net of allowance | 471,423 | 460,174 | ||||||
Oil and gas well equipment and supplies | 55,546 | 49,722 | ||||||
Derivative instruments | 31,176 | 15,151 | ||||||
Other current assets | 5,624 | 10,054 | ||||||
Total current assets | 1,427,715 | 935,635 | ||||||
Oil and gas properties at cost, using the full cost method of accounting: | ||||||||
Proved properties | 18,047,645 | 17,513,460 | ||||||
Unproved properties and properties under development, not being amortized | 564,982 | 476,903 | ||||||
18,612,627 | 17,990,363 | |||||||
Less – accumulated depreciation, depletion, amortization, and impairment | (15,124,111 | ) | (14,748,833 | ) | ||||
Net oil and gas properties | 3,488,516 | 3,241,530 | ||||||
Fixed assets, net of accumulated depreciation of $324,270 and $290,114, respectively | 244,125 | 210,922 | ||||||
Goodwill | 620,232 | 620,232 | ||||||
Derivative instruments | 154 | 2,086 | ||||||
Other assets | 37,693 | 32,234 | ||||||
$ | 5,818,435 | $ | 5,042,639 | |||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 141,426 | $ | 98,386 | ||||
Accrued liabilities | 412,747 | 351,849 | ||||||
Derivative instruments | 97,480 | 42,066 | ||||||
Revenue payable | 193,692 | 187,273 | ||||||
Total current liabilities | 845,345 | 679,574 | ||||||
Long-term debt: | ||||||||
Principal | 1,500,000 | 1,500,000 | ||||||
Less – unamortized debt issuance costs and discount | (11,853 | ) | (13,080 | ) | ||||
Long-term debt, net | 1,488,147 | 1,486,920 | ||||||
Deferred income taxes | 244,592 | 101,618 | ||||||
Derivative instruments | 14,076 | 4,268 | ||||||
Other liabilities | 200,453 | 201,981 | ||||||
Total liabilities | 2,792,613 | 2,474,361 | ||||||
Stockholders' equity: | ||||||||
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued | — | — | ||||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 95,602,550 and 95,437,434 shares issued, respectively | 956 | 954 | ||||||
Additional paid-in capital | 2,778,203 | 2,764,384 | ||||||
Retained earnings (accumulated deficit) | 243,923 | (199,259 | ) | |||||
Accumulated other comprehensive income | 2,740 | 2,199 | ||||||
Total stockholders' equity | 3,025,822 | 2,568,278 | ||||||
$ | 5,818,435 | $ | 5,042,639 | |||||
14