Denver-based Cimarex Energy Co. (XEC - Free Report) signed an operating agreement with FieldPoint Petroleum Corporation to drill a horizontal well that will target the Bone Spring formation on its East Lusk Federal Section 15 property located in Lea County, New Mexico. Cimarex estimates the cost of drilling at approximately $7 million.
This proposed horizontal well is to be drilled vertically to a depth of approximately 9,500 feet to the Bone Spring formation and laterally in a westerly direction within the formation to the bottom hole location. Total measured depth of the well is likely to be approximately 14,000 feet. Cimarex expects to begin drilling during the first week of Jul 2013.
As per agreement, Cimarex will own a 37.5% stake in the well, with FieldPoint staking claim to 43.8%. Of the rest, 18.7% stake would be held by other partners. The duo, if successful in this venture, plans to drill another well in the same property in 2013 itself.
Cimarex is an independent oil and gas exploration and production (E&P) company. The primary activities of the company are in the Mid-Continent and Permian Basin areas of the U.S.
The company is focused on increasing shareholder value through strategies linked to generating attractive economic returns on capital employed and profitable growth in per-share reserves, production and cash flow. It intends to profitably grow reserves and production through a balanced mix of exploration, exploitation and acquisitions. Cimarex has a diversified base of high-quality production along with attractive drilling opportunities.
As is the case with other independent exploration and production companies, Cimarex’s results are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces.
The company currently carries a Zacks Rank #3 (Hold). But there are other E&P companies that are expected to perform well in the coming 1 to 3 months. These include EPL Oil & Gas, Inc. and SM Energy Company (SM - Free Report) with a Zacks Rank #1 (Strong Buy).