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Cimarex Energy (XEC) Beats Q1 Earnings, Revenue Estimates

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Upstream firm Cimarex Energy Co. reported first-quarter 2017 earnings of $1.05 per share beat the Zacks Consensus Estimate of 85 cents. In the January–March quarter of 2016, the company had incurred a loss of 40 cents per share. The improvement is mainly attributable to increase in production and higher oil and gas price realizations.

Total Revenue

In the first quarter, Cimarex Energy’s total revenue of $447.2 million surpassed the Zacks Consensus Estimate of $428 million. Revenues also increased from $240.6 million a year ago.

Operational Highlights

In the quarter under review, total production averaged 1,063 million cubic feet equivalent (MMcfe) per day, up 9% year over year. Oil volumes increased 15% to 52.2 thousand barrels per day (MBbls/d) and natural gas volumes inched up 3% to 487.2 MMcf, both on a year-over-year basis. Natural gas liquids (NGL) volumes jumped 17.7% year over year to 43.8 MBbls/d. 

Realized prices for natural gas, crude oil and NGL displayed year-over-year increase of 57%, 70%, and 107% to $3.01 per thousand cubic feet, $47.71 per barrel and $20.40 per barrel, respectively, in the reported quarter.  

The company brought 70 gross (26 net) wells onstream during the quarter. The company added that a total of 82 gross (26 net) wells were pending completion as of Mar 31, 2017.

Financial Condition

As of Mar 31, 2017, Cimarex Energy had cash and cash equivalents of $578.9 million compared with $652.9 million as of Dec 31, 2016. Net long-term debt was $1.5 billion as of Mar 31, 2017, which represents a debt-to-capitalization ratio of 40.2%.   

Cimarex Energy's net cash from operating activities during the quarter was $249.5 million compared with $85.4 million in the prior-year period. The company spent $306 million for exploration and development during the first three months of this year. This was primarily funded with cash flow from operations and cash in hand.

First-Quarter Price Performance

The company’s shares underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry during the first quarter of this year. During the period, the stock lost 12.1% compared with a 11.1% decrease for the broader industry.

Guidance

Total production for the second quarter of 2017 is projected to average 1.08–1.13 Bcfe per day.

Full-year 2017 production is now estimated at the range of 1.09–1.13 Bcfe per day, up 15% from the midpoint of the 2016 level.

Capital investment for exploration and development has been reiterated at $1.1–$1.2 billion for 2017.

Zacks Rank & Stocks to Consider

Currently, Cimarex Energy carries a Zacks Rank #3 (Hold). This implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Some better-ranked players in the energy sector include Bellatrix Exploration Ltd. , McDermott International Inc. and W&T Offshore Inc. (WTI - Free Report) . Bellatrix Exploration sports a Zacks Rank #1 (Strong Buy), while McDermott and Bellatrix carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

McDermott beat the Zacks Consensus Estimate in each of the trailing four quarters with an average positive surprise of 387.50%.  

W&T Offshore had an average positive earnings surprise of 69.21% in the last four quarters. 

Bellatrix Exploration surpassed the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 58.54%.

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