IPAA OGIS Toronto June 2014

Transcription

1 IPAA OGIS Toronto June

2 Forward-looking Statements This presentation contains projections and other forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of These projections and statements reflect the Company s current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved, and actual results could differ materially from those projected as a result of certain factors. A discussion of these factors is included in the Company s periodic reports filed with the U.S. Securities and Exchange Commission. Contact: Karen Acierno Director Investor Relations kacierno@cimarex.com Mark Burford VP Capital Markets & Planning Cimarex Energy Co Lincoln Street, Suite 1800 Denver, CO

3 Corporate Profile Shares outstanding 87.2 MM Proved reserves Tcfe Market cap 1... $11.2 B % Natural gas 52% Long-term debt 2.. $1.0 B % Proved developed 80% Enterprise value $12.2 B R/P Ratio.. 9.9x Stockholders' equity 2 $4.0 B Production MMcfe/d Debt/Cap 2 20% Quarterly dividend of $0.16/share 1 Share price as of May 27, At March 31, As of December 31, First quarter

4 What s New Daily Production (MMcfe) % Issued $750mm of senior unsecured notes at 4.375% Expect 2014 production to grow 20% (midpoint) $249mm Mid-Continent Acquisition (May 2014) 30,000 net acres in focus area 2014 E&D Capex of $1.9 billion up ~15% y-o-y Cana-Woodford Q1 production up 13% sequentially Upsized frac improves results Delaware Basin generating more opportunities Wolfcamp Shale expanding Invest ~$685mm in 2014 Avalon Shale Invest $150 mm in

5 Production Profile 1Q 2014 Production Mix Revenue Contribution Natural Gas 48% Oil 32% NGL 20% 740 MMcfe per day; up 12% year-over-year Permian Basin oil production of 31,624 b/d up 22% year-over-year Strong prices driving earnings & cash flow growth 5

6 2014 Capital Investment Plan Total Capital: $1.9 billion Facilities & Other 5% By Region: Land, Seismic & Cap. Overhead 14% Drilling 81% Robust Permian opportunity set commands 75% of capex Oil production growth of 20-23% expected in 2014 Cana activity expected to grow field production 30% 6

7 Permian Basin Region Delaware Basin focus Several zones producing 2 nd & 3 rd Bone Spring sands Multiple Wolfcamp zones Culberson area: D, C & A zones Reeves County: A & B/C Ward County: A Avalon Shale emerging locations identified 7

8 Delaware Basin - Bone Spring Activity. Spend $375mm in 2014 to drill 100 gross (56 net) wells ~25 gross (13 net) wells in Q1 Three areas New Mexico 2nd & 3rd Bone Spring (Eddy & Lea Counties) 10 gross wells drilled in Q1 30-day average IP*: 966 BOE/d; 718 bo/d Texas 3rd Bone Spring (Ward County) 6 gross wells drilled in Q1 30-day average IP*: 975 BOE/d (805 bo/d) Culberson County 2nd Bone Spring 3 gross wells drilled in Q1 30-day average IP*: 960 BOE/d (547 bo/d) *Q1 14 operated wells; two stream. 8

9 Delaware Basin Avalon Shale Nine wells drilled to date 30-day peak rate of 1,003 BOE/d (77% oil) Upsized frac design unlocks oil window in the Avalon 13,700 net acres identified as prospective in Lea County 200+ engineered locations net wells planned in 2014 $150mm of capex 9

10 Delaware Basin Wolfcamp Fairway ~225,000 net acres in the fairway Multiple Wolfcamp Targets Culberson/White City Area 94,000+ net acres Wolfcamp D, C & A producing JDA with Chevron Reeves County New focus area 77,000 net acres Wolfcamp A & B/C producing Ward County 42,000 net acres Wolfcamp A producing Favorable industry results 10

11 Thick, Multi-pay Wolfcamp Section Culberson Area 94,000 net acres Reeves County 77,000 net acres Ward County 42,000 net acres IIndicates producing zone

12 Culberson Focus Area Wolfcamp 94, ,000+ net net acres acres Two10, main objectives Wolfcamp D wells Average Drilling to 30-day hold acreage IP of 2,660 BOE/d (40% gas, 27% oil, 33% NGL) Wolfcamp C & D Two rigs; ~20 wells Wolfcamp A wells average 1,192 BOE/d 41 wells (54% to date; oil) 30-day average IP of 6.5 MMcfe/d 20-stage frac Product mix of 45% gas; Three Wolfcamp 26% oil; 29% D NGL wells with 20-stage Upsize D frac frac stages have 30-day average IP of 1,500 BOE/d First 20-stage test has 30-day Stacked average lateral IP test of 8.4 wells MMcfe/d completed Testing Wolfcamp & flowing A back Downspacing Experiment with pilot long laterals 4 Stacked wells; 80-acre lateral test spacing Wells have been drilled; Design downspacing pilot currently being completed 12

13 Upsized Returns from Upsized Frac Culberson County Wolfcamp D Wells 1600 BOE/day Old Tim Tam Well Cost ($MM) $8.0 $8.7 BT IRR 30% 77% NPV10 ($MM) $4.0 $10.7 Assumptions: Oil - $90/bbl; Gas - $4/Mcf; NGL - $30/bbl (full recovery) Months 13 Old Completion (12-well average; 12 stages) Tim Tam (20 stages; 5 months actual production) 13

14 Reeves & Ward Counties Emerging Wolfcamp. Reeves County Wolfcamp A wells have average 30-day IP of 1,091 BOE/d; 594 bo/d (54%) First 10,000 ft. lateral had 30- day IP of 1,816 BOE/d; 1,016 bo/d (56%) First Wolfcamp B/C test has 30- day IP of 1,190 BOE/d; 496 bo/d (41%) Two Wolfcamp A downspacing pilots underway Stacked laterals to be tested Ward County Thick Wolfcamp A section First well has 30-day IP of 889 BOE/d; 662 bo/d (74%) 14

15 Culberson County Wolfcamp Pilots Stacked Lateral Test Wolfcamp C & D Two wells Flowing back 80-acre Spacing Pilot Wolfcamp D Four wells Flowing back 15 15

16 Reeves County Wolfcamp Pilots 80-acre Spacing Pilot Wolfcamp A Four wells Currently completing Stacked/Staggered Spacing Pilot Wolfcamp A Six wells Currently drilling 16 16

17 Mid-Continent Highlights Cana-Woodford Activity Map Operated Well Non-operated Well Total 2014 E&D capex for the region of $420mm Cana capex of ~$300mm Upsized frac yield upsized results Two operated rigs Field production expected to grow 30% in 2014 (before acquisition) Well cost increase to $7.2mm from $6.5mm Remaining capex dedicated to other opportunities on large acreage position 17

18 Upsized Returns from Upsized Frac Golden Section Cana-Woodford Shale Mcfe/day 10,000 8,000 6,000 Old New Completion Completion Well Cost $MM $ 6.5 $ 7.2 BT IRR 38% 86% NPV10 ($MM) $ 5.5 $ 14.0 Assumptions: Oil $90; Gas $4.00; NGL $29 - held flat 4,000 Old Infill New Infill 2, Years 18 18

19 Mid-Continent Acquisition Cana-Woodford Activity Map Operated Well Non-operated Well $249 million purchase 30,000 net acres in focus area Adds 35 ~MMcfe/d 140 Bcfe Cana-Woodford capex of $300mm Three operated rigs Several sections yet to be completed Field production expected to grow 30% in

20 Summary Recap Well positioned for 2014 and beyond Focused on Permian projects & Cana-Woodford upside Continue generating new ideas Solid base of proved reserves and production 80% proved developed; 10-year reserve life Growing oil and NGL components Strong balance sheet Long track record of profitable growth 20 20

21 Appendix 21 21

22 Cana-Woodford Production 300 MMcfe/day Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Gas NGL Oil 22 22

23 Permian Production Growth MBOE/day Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Oil NGL Gas 23 23

24 Upsized Wolfcamp Frac Old Frac Design: 5,000-foot lateral; 12 stages; 4mm lbs of sand New Frac Design: 5,000-foot lateral; 20 stages; 6mm lbs of sand 24

25 2014 Guidance 2014 Production, Unit Expense and Capital Guidance Second Quarter Full-Year Production* Total Equivalent (Mmcfe/d) % Liquids 52% 52% Expenses ($/Mcfe): Production $ Transportation, processing & other * DD&A and ARO accretion General and administrative Taxes other than income (% of oil and gas revenue) % Capital Expenditures $1.9 billion 25 25

26 Hedges Oil Weighted Average Price Period Index (1) Type Bbl/d Floor Ceiling April - Dec. '14 WTI Collar 12,000 $85.00 $ Gas Weighted Average Price Period Index (1) Type MMBTU/d Floor Ceiling April - Dec. '14 PEPL Collar 80,000 $3.51 $4.57 April - Dec. '14 PermEP Collar 60,000 $3.65 $4.50 (1) WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange. PEPL refers to Panhandle Eastern Pipe Line Tex/OK Mid Continent index and PermEp is El Paso Permian Basin index both as quoted in Platt s Inside FERC. 26

27 Non-GAAP Reconciliation Reconciliation of Net Income to EBITDA and Adjusted EBITDA ($ in Millions) Net income (loss) $ 530 $ 354 $ 565 Income tax expense (benefit) Interest expense, net of capitalized DD&A and ARO accretion EBITDA 1,250 1,102 1,

28 Non-GAAP Reconciliation Reconciliation of cash flow from operations Debt/Cap Calculation Twelve months Ended December 31, (in millions) Net cash provided by operating activities $ 1,324 $ 1,193 Change in operating assets and liabilities 64 (58) Adjusted cash flow from operations $ 1,388 $ 1,135 Finding & development (F&D) cost December 31, 2013 (in millions) Long-term debt $ 924 Stockholders' Equity 4,022 Total capitalization $ 4,946 Long-term debt/total capitalization 19% 2013 Proved Reserves adds (Bcfe) Revisions of previous estimates (216.1) Extensions & discoveries [C] Purchase of reserves 0.5 Total adds [A] Total capital $MM [B] $ 1,603 All-sources F&D ($/Mcfe) [B]/[A] $ 3.13 Drilling (excl. revisions) F&D ($/Mcfe) [B]/[C] $