DENVER, May 5, 2021 /PRNewswire/ -- Cimarex Energy Co. (NYSE:XEC) today reported first-quarter 2021 financial and operating results. Net income for first-quarter 2021 totaled $128.1 million, or $1.25 per share. Net income for the quarter was impacted by a mark-to-market loss on the Company's commodity derivative positions of $99.4 million. Excluding the impact of the mark-to-market loss on commodity derivatives, adjusted net income (non-GAAP) for first-quarter 2021 was $203.7 million, or $1.98 per share.
Highlights
- Generated cash flow from operating activities of $403 million.
- Adjusted cash flow from operating activities (non-GAAP) totaled $395 million, exceeding capital expenditures and generating $231 million of free cash flow (non-GAAP).
- Long-term debt at quarter end was $2 billion, while net debt (non-GAAP) decreased by approximately $250 million to $1.5 billion at the end of the quarter.
- Delivered oil volumes of 68.6 MBopd.
Outlook & Guidance
- Announces strategic non-core asset sales for total cash consideration of approximately $115 million, subject to customary closing and post-closing adjustments.
- Continue to expect total capital expenditures for full-year 2021 to range between $650 million and $750 million, which is expected to drive fourth-quarter 2021 oil volume growth of approximately 30% year-over-year.
- Expect second-quarter 2021 oil production to range between 69 MBopd to 73 MBopd.
- Advancing emissions reductions efforts, with a 2021 goal of reducing the Company's GHG emissions intensity by 8% to 12%, which follows a 22% reduction in 2020.
See "Supplemental Non-GAAP Financial Measures" below for descriptions of the above non-GAAP measures as well as reconciliations of these measures to the associated GAAP measures.
Tom Jorden, Chairman and Chief Executive Officer, commented, "Following a turbulent 2020, the first quarter of 2021 presented new challenges as severe winter weather impacted operations for many producers, including Cimarex. I'm proud of our remarkable team for putting safety first and delivering a strong quarter despite the conditions. Our priority in 2021 is efficiently investing in our assets to deliver strong returns and free cash flow, while also re-setting oil volumes higher following their decline in 2020. We remain on track with our capital budget and exit rate outlook, which positions Cimarex to continue generating substantial free cash flow and increasing returns to shareholders."
First-Quarter 2021 Summary
First-quarter 2021 oil production totaled 68.6 thousand barrels per day (MBopd). Total production for the quarter averaged 219.7 thousand barrels of oil equivalent per day (MBoepd).
Cimarex's average realized price for oil, natural gas and NGLs for first-quarter 2021, excluding the effect of commodity derivatives, was $33.89 per Boe, compared with $18.25 per Boe for the same period a year ago.
During first-quarter 2021, Cimarex's production and transportation costs were impacted by the severe winter storm. The incremental expenses were primarily due to higher fuel and electricity costs. The Company's full-year 2021 production cost guidance remains unchanged; however, the Company increased its outlook for full-year 2021 transportation costs to account for higher costs in first-quarter 2021 (as detailed in the Outlook section below).
Generated Strong Cash Flow
For first-quarter 2021, cash flow from operating activities was $402.9 million, including $7.7 million in working capital changes. Adjusted cash flow from operating activities (non-GAAP) was $395.2 million, exceeding first-quarter 2021 capital expenditures of $164.6 million, which included $130.9 million for drilling and completion activity. Free cash flow (non-GAAP) for first-quarter 2021 totaled $230.6 million.
Strong Financial Position
Cimarex maintains a strong financial position with investment-grade credit ratings and substantial liquidity. At the end of the reporting period, Cimarex had long-term debt of $2 billion, with no outstanding debt maturities until June 2024 and no debt outstanding under its credit facility. Driven by strong cash flow generation in first-quarter 2021, Cimarex's cash balance increased to $524 million at quarter end, compared to $273 million at December 31, 2020. The Company continues to prioritize debt reduction and anticipates allocating excess cash towards paying off the Company's $750 million Senior Unsecured Notes due June 2024.
Active Portfolio Management Reinforces the Balance Sheet and High-Grades Portfolio
Cimarex has entered into definitive agreements to sell non-core assets in the Permian Basin and Mid-Continent for a combined total of approximately $115 million. Cimarex's portfolio management efforts enable the Company to monetize legacy assets and reinforce the Company's balance sheet.
The divestitures include more than 3,000 gross wells in aggregate and are currently producing approximately 0.9 MBopd. Cimarex expects the asset sales will decrease the Company's production expense, with minimal impact to production volumes for full-year 2021. The transactions are expected to close in second-quarter 2021. The Company will look to update its guidance, if necessary, in its second-quarter 2021 earnings materials.
Hedge Position
Cimarex's commodity derivatives strategy mitigates the Company's exposure to commodity price fluctuations. Please see the table under "Derivatives Information" below for detailed information about Cimarex's current derivatives positions.
Outlook
Disciplined Capital Allocation Driving Strong Outlook
Cimarex is currently running five rigs in the Permian Basin, and plans to average two completions crews during second-quarter 2021. The Company is currently running one rig in the Mid-Continent region, which it plans to release by the end of May 2021. Cimarex maintains its previously-announced guidance range for 2021 capital expenditures of $650 million to $750 million. The Company's development program is expected to drive approximately 30% oil production growth in fourth-quarter 2021, as compared to fourth-quarter 2020, as well as strong cash flow generation for the year.
Second-quarter 2021 production volumes are expected to average between 220 MBoepd and 240 MBoepd, with oil volumes estimated to average between 69 MBopd and 73 MBopd.
As referenced above, first-quarter 2021 transportation costs were higher than anticipated due to the severe winter weather experienced in first-quarter 2021. As a result of elevated first-quarter transportation costs, the Company increased its full-year 2021 guidance for transportation and processing expenses to $2.45 per Boe to $2.75 per Boe, as compared to the prior range of $2.20 per Boe to $2.50 per Boe. Cimarex decreased its outlook for full-year 2021 DD&A expense to $5.50 per Boe to $6.50 per Boe; the prior range was $6.00 per Boe to $7.00 per Boe.
ESG Performance Foundational to Cimarex's Success
Cimarex believes the foundation for its success is the Company's ESG performance, and the Company continues to drive towards consistently improving its environmental performance. In 2020, Cimarex reduced its greenhouse gas (GHG) emissions intensity by 22%, and is targeting an incremental reduction between 8% and 12% in 2021. Cimarex's Board of Directors recently established a new Environmental, Health & Safety (EHS) Committee to oversee the Company's EHS risk management, initiatives and disclosure practices.
Enhancing Corporate Governance
Cimarex submitted an important management proposal to the Company's shareholders for a vote at its Annual Shareholders Meeting on May 12, 2021. The proposal seeks shareholder approval to amend the Company's Certificate of Incorporation (Charter) in order to declassify the Company's Board of Directors and allow for the annual election of directors.
First-Quarter 2021 Conference Call
Cimarex will host a conference call tomorrow, May 6, 2021 at 9:00 AM MT (11:00 AM ET) to discuss first-quarter 2021 financial and operational results.
Conference Call Information
Dial-in (for callers in the U.S.): (866) 367-3053
Dial-in (for callers in Canada): (855) 669-9657
Intl. dial-in: (412) 902-4216
The live audio webcast and related earnings presentation can be accessed on the "Events & Presentations" page under the "Investor Relations" section of the Company's website at www.cimarex.com. The webcast will be archived and available at the same location after the conclusion of the live event.
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. For more information about Cimarex, visit www.cimarex.com.
Forward-Looking Statements & Cautionary Statements
This press release contains forward-looking statements, including statements regarding projected results and future events. In particular, the disclosures under the heading "Outlook" contain projections for certain 2021 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, 2020, 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 estimates and projections and other forward-looking statements and can be affected by a variety of factors outside the control of the Company, all of which may be amplified by the COVID-19 pandemic and its unpredictable nature, including among other things: fluctuations in the price we receive for our oil, gas, and NGL production, including local market price differentials, which may be exacerbated by the demand destruction resulting from COVID-19; disruptions to the availability of workers and contractors due to illness and stay at home orders related to the COVID-19 pandemic; cost and availability of gathering, pipeline, refining, transportation and other midstream and downstream activities and our ability to sell oil, gas, and NGLs, which may be negatively impacted by the COVID-19 pandemic, severe weather and other risks, and may lead to a lack of any available markets; availability of supply chains and critical equipment and supplies; higher than expected costs and expenses, including the availability and cost of services and materials; compliance with environmental and other regulations, including new regulations that may result from the recent change in federal and state administrations and legislatures; legislative or regulatory changes, including initiatives related to hydraulic fracturing, emissions, and disposal of produced water, which may be negatively impacted by the recent change in Presidential administration or legislatures; the ability to receive drilling and other permits or approvals and rights-of-way in a timely manner (or at all), which may be negatively impacted by the impact of COVID-19 restrictions on regulatory employees who process and approve permits, other approvals and rights-of-way and which may be restricted by new Presidential and Secretarial orders and regulation and legislation; reductions in the quantity of oil, gas, and NGLs sold and prices received because of decreased demand and/or curtailments in production relating to mechanical, transportation, storage, capacity, marketing, weather (such as the severe winter weather impacting our operations in February 2021), the COVID-19 pandemic, or other problems; declines in the SEC PV10 value of our oil and gas properties resulting in full cost ceiling test impairments to the carrying values of our oil and gas properties; the effectiveness of our internal control over financial reporting; success of the Company's risk management activities; availability of financing and access to capital markets; estimates of proved reserves, exploitation potential, or exploration prospect size; greater than expected production decline rates; timing and amount of future production of oil, gas, and NGLs; cybersecurity threats, technology system failures and data security issues; the inability to transport, process and store oil and gas; hedging activities and the viability of our hedging counterparties, many of whom have been negatively impacted by the COVID-19 pandemic; economic and competitive conditions; lack of available insurance; cash flow and anticipated liquidity; continuing compliance with the financial covenant contained in our amended and restated credit agreement; the loss of certain federal income tax deductions; litigation; environmental liabilities; new federal regulations regarding species or habitats; exploration and development opportunities that we pursue may not result in economic, productive oil and gas properties; drilling of wells; development drilling and testing results; performance of acquired properties and newly drilled wells; ability to obtain industry partners to jointly explore certain prospects, and the willingness and ability of those partners to meet capital obligations when requested; unexpected future capital expenditures; amount, nature, and timing of capital expenditures; proving up undeveloped acreage and maintaining production on leases; unforeseen liabilities associated with acquisitions and dispositions; establishing valuation allowances against our net deferred tax assets; potential payments for failing to meet minimum oil, gas, NGL, or water delivery or sales commitments; increased financing costs due to a significant increase in interest rates; risks associated with concentration of operations in one major geographic area; availability and cost of capital; title to properties; ability to complete property sales or other transactions; 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.
Operational Activity | ||||||
The tables below provide a summary of operational activity, production volumes and price realizations by region for | ||||||
Wells Brought on Production by Region | Three Months Ended March 31, | |||||
2021 | 2020 | |||||
Gross wells | ||||||
Permian Basin | 8 | 35 | ||||
Mid-Continent | 5 | 19 | ||||
13 | 54 | |||||
Net wells | ||||||
Permian Basin | 7.0 | 19.8 | ||||
Mid-Continent | — | 0.3 | ||||
7.0 | 20.1 | |||||
Daily Production Volumes by Region | Three Months Ended March 31, | |||||
2021 | 2020 | |||||
Permian Basin | ||||||
Gas (MMcf) | 359.3 | 449.0 | ||||
Oil (Bbls) | 61,982 | 79,606 | ||||
NGL (Bbls) | 39,129 | 48,932 | ||||
Total Equivalent (MBOE) | 161.0 | 203.4 | ||||
Mid-Continent | ||||||
Gas (MMcf) | 199.8 | 244.1 | ||||
Oil (Bbls) | 6,503 | 9,941 | ||||
NGL (Bbls) | 18,570 | 22,110 | ||||
Total Equivalent (MBOE) | 58.4 | 72.7 | ||||
Total Company | ||||||
Gas (MMcf) | 560.1 | 694.3 | ||||
Oil (Bbls) | 68,581 | 89,791 | ||||
NGL (Bbls) | 57,752 | 71,099 | ||||
Total Equivalent (MBOE) | 219.7 | 276.6 | ||||
Average Realized Commodity Prices by Region | Three Months Ended March 31, | |||||
2021 | 2020 | |||||
Permian Basin | ||||||
Gas ($ per Mcf) | 4.00 | 0.10 | ||||
Oil ($ per Bbl) | 55.84 | 44.17 | ||||
NGL ($ per Bbl) | 21.52 | 8.84 | ||||
Mid-Continent | ||||||
Gas ($ per Mcf) | 4.40 | 1.38 | ||||
Oil ($ per Bbl) | 55.88 | 44.15 | ||||
NGL ($ per Bbl) | 24.35 | 12.03 | ||||
Total Company | ||||||
Gas ($ per Mcf) | 4.14 | 0.55 | ||||
Oil ($ per Bbl) | 55.85 | 44.18 | ||||
NGL ($ per Bbl) | 22.43 | 9.84 | ||||
Derivatives Information | ||||||||||||||||||||||||||||||||
The table below summarizes the Company's outstanding derivative contracts as of May 5, 2021, for the periods | ||||||||||||||||||||||||||||||||
2021 | 2022 | |||||||||||||||||||||||||||||||
2Q | 3Q | 4Q | Total | 1Q | 2Q | 3Q | Total | |||||||||||||||||||||||||
Gas Collars: | ||||||||||||||||||||||||||||||||
PEPL (1) | ||||||||||||||||||||||||||||||||
Volume (MMBtu/d) | 100,000 | 90,000 | 90,000 | 93,309 | 60,000 | 20,000 | — | 19,781 | ||||||||||||||||||||||||
Wtd Avg Floor | $ | 1.89 | $ | 2.00 | $ | 2.00 | $ | 1.96 | $ | 2.13 | $ | 2.40 | $ | — | $ | 2.20 | ||||||||||||||||
Wtd Avg Ceiling | $ | 2.28 | $ | 2.42 | $ | 2.42 | $ | 2.37 | $ | 2.55 | $ | 2.86 | $ | — | $ | 2.63 | ||||||||||||||||
El Paso Permian (1) | ||||||||||||||||||||||||||||||||
Volume (MMBtu/d) | 80,000 | 70,000 | 70,000 | 73,309 | 40,000 | 20,000 | — | 14,849 | ||||||||||||||||||||||||
Wtd Avg Floor | $ | 1.62 | $ | 1.86 | $ | 1.86 | $ | 1.77 | $ | 2.13 | $ | 2.40 | $ | — | $ | 2.22 | ||||||||||||||||
Wtd Avg Ceiling | $ | 1.92 | $ | 2.22 | $ | 2.22 | $ | 2.11 | $ | 2.53 | $ | 2.88 | $ | — | $ | 2.64 | ||||||||||||||||
Waha (1) | ||||||||||||||||||||||||||||||||
Volume (MMBtu/d) | 100,000 | 100,000 | 100,000 | 100,000 | 70,000 | 30,000 | 10,000 | 27,260 | ||||||||||||||||||||||||
Wtd Avg Floor | $ | 1.61 | $ | 1.88 | $ | 1.88 | $ | 1.79 | $ | 2.04 | $ | 2.40 | $ | 2.40 | $ | 2.17 | ||||||||||||||||
Wtd Avg Ceiling | $ | 1.93 | $ | 2.23 | $ | 2.23 | $ | 2.13 | $ | 2.44 | $ | 2.83 | $ | 2.77 | $ | 2.58 | ||||||||||||||||
Oil Collars: | ||||||||||||||||||||||||||||||||
WTI (2) | ||||||||||||||||||||||||||||||||
Volume (Bbl/d) | 34,000 | 40,000 | 40,000 | 38,015 | 26,000 | 19,000 | 10,000 | 13,668 | ||||||||||||||||||||||||
Wtd Avg Floor | $ | 34.62 | $ | 34.65 | $ | 34.65 | $ | 34.64 | $ | 37.31 | $ | 38.16 | $ | 40.00 | $ | 38.09 | ||||||||||||||||
Wtd Avg Ceiling | $ | 43.28 | $ | 44.37 | $ | 44.37 | $ | 44.04 | $ | 48.41 | $ | 49.56 | $ | 49.19 | $ | 48.95 | ||||||||||||||||
Oil Basis Swaps: | ||||||||||||||||||||||||||||||||
WTI Midland (3) | ||||||||||||||||||||||||||||||||
Volume (Bbl/d) | 33,000 | 35,000 | 35,000 | 34,338 | 22,000 | 15,000 | 7,000 | 10,929 | ||||||||||||||||||||||||
Wtd Avg Differential | $ | (0.02) | $ | (0.08) | $ | (0.08) | $ | (0.06) | $ | 0.25 | $ | 0.31 | $ | 0.38 | $ | 0.29 | ||||||||||||||||
Oil Roll Differential Swaps: | ||||||||||||||||||||||||||||||||
WTI (2) | ||||||||||||||||||||||||||||||||
Volume (Bbl/d) | 11,000 | 18,000 | 18,000 | 15,684 | 18,000 | 11,000 | 7,000 | 8,945 | ||||||||||||||||||||||||
Wtd Avg Price | $ | (0.22) | $ | (0.10) | $ | (0.10) | $ | (0.13) | $ | (0.10) | $ | (0.01) | $ | 0.10 | $ | (0.03) | ||||||||||||||||
1. PEPL refers to Panhandle Eastern Pipe Line Tex/OK Mid-Continent index, El Paso Permian refers to El Paso 2. WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange. 3. Index price on basis swaps and oil roll differential swaps are WTI NYMEX less the weighted average WTI Midland | ||||||||||||||||||||||||||||||||
Condensed Consolidated Balance Sheets (unaudited) | ||||||||
March 31, 2021 | December 31, | |||||||
Assets | (in thousands, except share and | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 523,798 | $ | 273,145 | ||||
Accounts receivable, net of allowance | 426,964 | 332,485 | ||||||
Oil and gas well equipment and supplies | 30,846 | 37,150 | ||||||
Derivative instruments | 173 | 6,848 | ||||||
Other current assets | 6,304 | 7,710 | ||||||
Total current assets | 988,085 | 657,338 | ||||||
Oil and gas properties at cost, using the full cost method of accounting: | ||||||||
Proved properties | 21,374,434 | 21,281,840 | ||||||
Unproved properties and properties under development, not being amortized | 1,203,910 | 1,142,183 | ||||||
22,578,344 | 22,424,023 | |||||||
Less – accumulated depreciation, depletion, amortization, and impairment | (19,083,054) | (18,987,354) | ||||||
Net oil and gas properties | 3,495,290 | 3,436,669 | ||||||
Fixed assets, net of accumulated depreciation of $472,961 and $455,815, respectively | 410,347 | 436,101 | ||||||
Derivative instruments | 2,376 | 2,342 | ||||||
Deferred income taxes | — | 20,472 | ||||||
Other assets | 69,023 | 69,067 | ||||||
$ | 4,965,121 | $ | 4,621,989 | |||||
Liabilities, Redeemable Preferred Stock, and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 78,092 | $ | 44,290 | ||||
Accrued liabilities | 315,570 | 280,849 | ||||||
Derivative instruments | 233,296 | 145,398 | ||||||
Revenue payable | 201,935 | 130,637 | ||||||
Operating leases | 57,120 | 59,051 | ||||||
Total current liabilities | 886,013 | 660,225 | ||||||
Long-term debt principal | 2,000,000 | 2,000,000 | ||||||
Less—unamortized debt issuance costs and discounts | (12,186) | (12,701) | ||||||
Long-term debt, net | 1,987,814 | 1,987,299 | ||||||
Deferred income taxes | 19,698 | — | ||||||
Derivative instruments | 22,611 | 17,749 | ||||||
Operating leases | 122,720 | 134,705 | ||||||
Other liabilities | 225,719 | 231,776 | ||||||
Total liabilities | 3,264,575 | 3,031,754 | ||||||
Redeemable preferred stock - 8.125% Series A Cumulative Perpetual Convertible | 36,781 | 36,781 | ||||||
Stockholders' equity: | ||||||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 102,827,556 and | 1,028 | 1,029 | ||||||
Additional paid-in capital | 3,193,760 | 3,211,562 | ||||||
Accumulated deficit | (1,531,023) | (1,659,137) | ||||||
Total stockholders' equity | 1,663,765 | 1,553,454 | ||||||
$ | 4,965,121 | $ | 4,621,989 | |||||
Condensed Consolidated Statements of Operations (unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(in thousands, except per share | ||||||||
Revenues: | ||||||||
Oil sales | $ | 344,704 | $ | 360,980 | ||||
Gas and NGL sales | 325,398 | 98,481 | ||||||
Gas gathering and other | 9,364 | 13,369 | ||||||
679,466 | 472,830 | |||||||
Costs and expenses: | ||||||||
Impairment of oil and gas properties | — | 333,651 | ||||||
Depreciation, depletion, amortization, and accretion | 115,152 | 219,810 | ||||||
Impairment of goodwill | — | 714,447 | ||||||
Production | 74,806 | 87,236 | ||||||
Transportation, processing, and other operating | 63,607 | 54,922 | ||||||
Gas gathering and other | 10,478 | 8,298 | ||||||
Taxes other than income | 40,986 | 30,961 | ||||||
General and administrative | 25,260 | 25,509 | ||||||
Stock compensation | 8,549 | 6,394 | ||||||
Loss (gain) on derivative instruments, net | 161,935 | (226,940) | ||||||
Other operating expense, net | (933) | 251 | ||||||
499,840 | 1,254,539 | |||||||
Operating income (loss) | 179,626 | (781,709) | ||||||
Other (income) and expense: | ||||||||
Interest expense | 23,078 | 23,181 | ||||||
Capitalized interest | (11,565) | (13,182) | ||||||
Other, net | (139) | (871) | ||||||
Income (loss) before income tax | 168,252 | (790,837) | ||||||
Income tax expense (benefit) | 40,170 | (16,555) | ||||||
Net income (loss) | $ | 128,082 | $ | (774,282) | ||||
Earnings (loss) per share to common stockholders: | ||||||||
Basic | $ | 1.25 | $ | (7.77) | ||||
Diluted | $ | 1.25 | $ | (7.77) | ||||
Dividends declared per common share | $ | 0.27 | $ | 0.22 | ||||
Weighted-average number of shares outstanding: | ||||||||
Basic | 100,126 | 99,842 | ||||||
Diluted | 100,163 | 99,842 | ||||||
Condensed Consolidated Statements of Cash Flows (unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 128,082 | $ | (774,282) | ||||
Adjustments to reconcile net income (loss) to net cash | ||||||||
provided by operating activities: | ||||||||
Impairment of oil and gas properties | — | 333,651 | ||||||
Depreciation, depletion, amortization, and accretion | 115,152 | 219,810 | ||||||
Impairment of goodwill | — | 714,447 | ||||||
Deferred income taxes | 40,170 | (16,357) | ||||||
Stock compensation | 8,549 | 6,394 | ||||||
Loss (gain) on derivative instruments, net | 161,935 | (226,940) | ||||||
Settlements on derivative instruments | (62,534) | 43,114 | ||||||
Amortization of debt issuance costs and discounts | 887 | 784 | ||||||
Changes in non-current assets and liabilities | (744) | 2,410 | ||||||
Other, net | 3,675 | 3,390 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (94,500) | 119,605 | ||||||
Other current assets | 774 | (24) | ||||||
Accounts payable and other current liabilities | 101,466 | (117,211) | ||||||
Net cash provided by operating activities | 402,912 | 308,791 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of oil and gas properties | (310) | (7,250) | ||||||
Oil and gas capital expenditures | (130,007) | (258,820) | ||||||
Other capital expenditures | (3,531) | (26,425) | ||||||
Sales of oil and gas assets | 5,035 | 830 | ||||||
Sales of other assets | 385 | 181 | ||||||
Net cash used by investing activities | (128,428) | (291,484) | ||||||
Cash flows from financing activities: | ||||||||
Borrowings of long-term debt | — | 101,000 | ||||||
Repayments of long-term debt | — | (101,000) | ||||||
Financing fees | (100) | (100) | ||||||
Finance lease payments | (1,067) | (1,465) | ||||||
Dividends paid | (23,049) | (21,593) | ||||||
Employee withholding taxes paid upon the net settlement of equity-classified stock | — | (165) | ||||||
Proceeds from exercise of stock options | 385 | — | ||||||
Net cash used by financing activities | (23,831) | (23,323) | ||||||
Net change in cash and cash equivalents | 250,653 | (6,016) | ||||||
Cash and cash equivalents at beginning of period | 273,145 | 94,722 | ||||||
Cash and cash equivalents at end of period | $ | 523,798 | $ | 88,706 | ||||
Supplemental Non-GAAP Financial Measures (unaudited) | |||||||
Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Earnings per Share | |||||||
The Company's presentation of adjusted net income and adjusted earnings per share that exclude the effect of certain items are non-GAAP financial measures. Adjusted net income and adjusted earnings per share represent earnings (loss) and diluted earnings (loss) per share determined under GAAP without regard to certain non-cash and special items. The Company believes these measures provide useful information to analysts and investors for analysis of its operating results on a recurring, comparable basis from period to period. Adjusted net income and adjusted earnings per share should not be considered in isolation or as a substitute for earnings (loss) or diluted earnings (loss) per share as determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. | |||||||
The following table provides a reconciliation from the GAAP measure of net income (loss) to adjusted net income, both in total and on a per diluted share basis, for the periods indicated: |
Three Months Ended March 31, | |||||||
2021 | 2020 | ||||||
(in thousands, except per share data) | |||||||
Net income (loss) | $ | 128,082 | $ | (774,282) | |||
Impairment of oil and gas properties | — | 333,651 | |||||
Impairment of goodwill | — | 714,447 | |||||
Mark-to-market loss (gain) on open derivative positions | 99,401 | (183,826) | |||||
Asset retirement obligation | — | 2,800 | |||||
Tax impact (1) | (23,757) | (33,120) | |||||
Adjusted net income | $ | 203,726 | $ | 59,670 | |||
Diluted earnings (loss) per share | $ | 1.25 | $ | (7.77) | |||
Adjusted diluted earnings per share* | $ | 1.98 | $ | 0.58 | |||
Weighted-average number of shares outstanding: | |||||||
Adjusted diluted** | 102,870 | 102,131 | |||||
______________________________________ (1) Because the goodwill impairment is not deductible for tax purposes, the tax impact in the 2020 period is calculated
Adjusted net income and adjusted diluted earnings per share exclude the noted items because management believes these
a) Management uses adjusted net income to evaluate the Company's operating performance between periods and to 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
** Reflects the weighted-average number of common shares outstanding during the period as adjusted for the dilutive
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Reconciliation of Cash Flow from Operating Activities (CFO) to Adjusted CFO and to Free Cash Flow | |||||||
The Company provides adjusted CFO, which is a non-GAAP financial measure. Adjusted CFO represents net cash provided by operating activities as determined under GAAP without regard to changes in operating assets and liabilities. The Company believes adjusted CFO is an accepted measure of an oil and natural gas company's ability to generate cash to fund development and acquisition activities and service debt or pay dividends. Additionally, the Company provides free cash flow, which is a non-GAAP financial measure. Free cash flow is adjusted CFO in excess of oil and gas capital expenditures and other capital expenditures. The Company believes that free cash flow is useful to investors as it provides a measure to compare both cash flow from operating activities and oil and gas capital expenditures across periods on a consistent basis. | |||||||
These non-GAAP measures should not be considered as alternatives to, or more meaningful than, net cash provided by operating activities as an indicator of operating performance. | |||||||
The following table provides a reconciliation from the GAAP measure of net cash provided by operating activities to adjusted CFO and to free cash flow as well as free cash flow after dividend, for the periods indicated: |
Three Months Ended March 31, | |||||||
2021 | 2020 | ||||||
(in thousands) | |||||||
Net cash provided by operating activities | $ | 402,912 | $ | 308,791 | |||
Total changes in cash due to changes in operating assets and liabilities (working | (7,740) | (2,370) | |||||
Adjusted cash flow from operating activities | 395,172 | 306,421 | |||||
Oil and gas capital expenditures | (130,007) | (258,820) | |||||
Other capital expenditures | (3,531) | (26,425) | |||||
Change in capital accruals | (21,704) | 16,216 | |||||
Capitalized stock compensation, inventory, and other | (9,380) | (5,202) | |||||
Capital expenditures | (164,622) | (274,231) | |||||
Free cash flow | 230,550 | 32,190 | |||||
Dividends paid | (23,049) | (21,593) | |||||
Free cash flow after dividend | $ | 207,501 | $ | 10,597 | |||
Reconciliation of Long-Term Debt to Net Debt | |||||||
The Company defines net debt as debt less cash and cash equivalents. Net debt should not be considered as an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses net debt to determine the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. The Company believes this metric is useful to analysts and investors in determining the Company's leverage position because the Company has the ability to, and may decide to, use a portion of its cash and cash equivalents to reduce debt. |
March 31, | December 31, | ||||||
(in thousands) | |||||||
Long-term debt | $ | 2,000,000 | $ | 2,000,000 | |||
Cash and cash equivalents | (523,798) | (273,145) | |||||
Net debt | $ | 1,476,202 | $ | 1,726,855 | |||
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SOURCE Cimarex Energy Co.