baml conference 11.10.15
DESCRIPTION
bTRANSCRIPT
![Page 1: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/1.jpg)
1
BAML Global Energy ConferenceMiami | November 10‐11, 2015
![Page 2: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/2.jpg)
2
Forward‐looking StatementsThis 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 1934. 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 AciernoDirector – Investor [email protected]‐285‐4957
Cimarex Energy Co.1700 Lincoln Street, Suite 3700Denver, CO 80203303‐295‐3995
![Page 3: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/3.jpg)
3
Market cap……………………...…….....….$11.1B
Debt/Adj. EBITDA1……………...…………...………..1.5x
Production (3Q15)………………...……..979 MMcfe/d
Proved reserves………………...…….. 3.1 Tcfe
% Natural gas………………...……..53%
% Proved developed………………...……..77%
R/P Ratio………………...…….. 9.9x
Quarterly dividend of $0.16/share
Who is Cimarex?
3
1 LTM, as of September 30, 2015
![Page 4: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/4.jpg)
4
• Returns drive decisions
• Our balanced portfolio of assets
— Premier position in the Delaware Basin and Mid‐Con region— Provides flexibility through commodity cycles
• Idea generation and track record of strong execution
• Strong financial position
— Conservative debt levels and ample liquidity —May equity offering; $730mm net proceeds
What’s Important
4
![Page 5: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/5.jpg)
5
5
Sound Decisions = Solid Growth
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2012 2013 2014
Oil NGL Gas
350
444
343
425
693
869
0
250
500
750
1,000
2013 2014 2015E
Oil & NGL Natural Gas
+14%983‐991
2,2592,497
3,132
Daily Production(MMcfe)
Proved Reserves(Bcfe)
![Page 6: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/6.jpg)
6
Regional Diversity Provides Flexibility
Permian Basin Mid‐Continent
Third Quarter 2015 Production Mix
![Page 7: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/7.jpg)
7
• Total: $900‐$950 million• Currently seven operated rigs• Expect 12 operated rigs by
year‐end— Spud Culberson Wolfcamp A
downspacing pilot in 4Q— Meramec pilot to begin in 4Q
2015 E&D Investment Plan
Drilling & Completion Capital$769mm
![Page 8: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/8.jpg)
8
• Multiple projects/multiple zones• Delaware Basin— Begin Wolfcamp D development
in Culberson County— Continue Wolfcamp A pilot— Bone Spring sands (oil)— First Reeves infill development
• Mid‐Continent region— Continue Meramec spacing
pilots— Begin new Woodford infill
Capital Allocation*Drilling & Completion
2016 ‐ How it looks today
*Total 2016 capital allocation assumes current strip prices and a 12 operated rig program
![Page 9: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/9.jpg)
9
• ~235,000 net acres in the fairway
• Multiple Wolfcamp Targets— Culberson/White City Area
• 100,000+ net acres• Wolfcamp A, C & D• JDA with Chevron
— Reeves County • 80,000 net acres• Wolfcamp A & B/C
— Ward County• 37,000 net acres
Biggest Opportunity ‐ Delaware Basin Wolfcamp
![Page 10: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/10.jpg)
10
• 100,000+ net acres• 2013 main objectives— Drilling to hold acreage— Wolfcamp C & D
• Two rigs; ~20 wells• 41 wells to date; 30‐day
average IP of 6.5 MMcfe/d• Product mix of 45% gas;
26% oil; 29% NGL
— Upsize frac stages• First 20‐stage test has 30‐day
average IP of 8.4 MMcfe/d
— Testing Wolfcamp A — Experiment with long laterals— Stacked lateral test— Design downspacing pilot
• 100,000 net acres; JDA with Chevron
• 13 Wolfcamp D long laterals
— Avg. 30‐day peak IP of 2,308 BOE/d (25% oil; 46% gas; 29% NGL)
• Wolfcamp A downspacing pilot spuds in 4Q
• New oil gathering in place
• $25mm on infrastructure in 2015
Culberson Area Wolfcamp Details
![Page 11: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/11.jpg)
11
• Thirteen 10,000‐foot laterals
• Average 30‐day peak IP of 2,308 BOE/d (25% oil; 46% gas; 29% NGL)
Long Lateral Performance
Cumulative Production (MBOE)
Culberson Wolfcamp D
0
100
200
300
400
500
600
0 60 120 180 240 300 360
Days
10,000‐ft. lateral Tim Tam
63% Increase
![Page 12: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/12.jpg)
12
Long Laterals Provide Upsized Returns
12
Culberson County Wolfcamp D
0
500
1000
1500
2000
2500
3000
0 12 24 36 48
Months
10,000 ft. lateral 5,000 ft. lateral
BOE/day 5,000 ft. lateral 10,000 ft. lateral Well Cost ($MM) $7.1 $11.2 BTAX IRR 48% 75% NPV10 ($MM) $4.6 $12.5
Realized prices: Oil ‐ $50/Bbl; Gas ‐ $3.00/Mcf; NGL ‐ $12.50/Bbl (full recovery)
![Page 13: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/13.jpg)
13
Resilient Long Lateral Returns
13
Culberson County Wolfcamp D well – 10,000‐ft. lateral
*All product prices are realized; assumes full NGL recovery.
BTax IRR*
Oil Price
0%
20%
40%
60%
80%
100%
120%
140%
160%
$30 $40 $50 $60 $70
$3 gas; NGL ‐ 35% of oil price
$3 gas; NGL ‐ 25% of oil price
$2 gas; NGL ‐ 25% of oil price
![Page 14: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/14.jpg)
14
• Six‐well downspacing pilot— 7,500‐foot laterals— Stacked/staggered well pattern
• Sunny’s Halo section testing 8 wells/section; Gato del Sol testing 6 wells/section
• Wells spuds in 4Q15— First production expected midyear
• $8.8mm well cost
Culberson County – Wolfcamp A Pilot
14
Gato del Sol
Wol
fcam
p A
Sunny’s Halo
125’
675’ 900’
Parent Well
![Page 15: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/15.jpg)
15
• First Wolfcamp D Infill• Drill five 10,000‐foot laterals— 107‐acre spacing (6 wells/section)
• Wells to be staggered in the Wolfcamp D
• Spud in first quarter of 2016— First production expected mid‐year
Culberson County – Tim Tam Infill Development
15
Barbaro
Prewit‐Omaha
Tim Tam
Forward Pass
Parent Well
![Page 16: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/16.jpg)
16
• 15 wells with average 30‐day peak IP of 1,344 BOE/d* (910 bo/d)
• 15 stages from nine• 100 locations identified• Latest 7,000 ft lateral has average 30‐
day peak IP of 2,753 BOE/d* (68% oil)• HBP acreage; infrastructure in place*Three stream.
0
20
40
60
80
100
120
140
160
180
0 30 60 90 120 150 180
Days
Upsized Completion Original Completion
Upsized Frac Improves Second Bone Spring Results
64% Increase
Cumulative Production (MBOE)
White City Area
Focus Area
![Page 17: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/17.jpg)
17
Reeves County • 8 Wolfcamp A 10k‐ft. laterals— Average 30‐day peak IP of 1,575 BOE/d
(50% oil; 28% gas; 22% NGL)
• Best well in Upper A zone— Big Timber well has avg. 30‐day peak IP
of 3,309 BOE/d (49% oil; 27% gas; 24% NGL)
• 2016 plans— First Wolfcamp A infill development
2015 Activity in Reeves & Ward Counties
17
![Page 18: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/18.jpg)
18
• 2015 capex of ~$256mm • Row 4 completions done— Impacts 4Q15 production
• Upcoming activity— Eastern core infill: drilling in
1Q; completions in 2Q— Possible long lateral infill in
2H16
• 128,000 net prospective Woodford acres (86%HBP)
Mid‐Continent Woodford Shale Opportunity
Operated WellNon‐operated Well
Cana‐Woodford Activity Map
Row 4 Infill
Golden Section
Haley Section
Hartz Section Eastern Core Infill
![Page 19: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/19.jpg)
19
19
Woodford: Consistent Results Across Acreage
Golden Section
Haley Section
Hartz Section
0
400
800
1,200
1,600
2,000
2,400
0 60 120 180 240 300 360
Days
Golden Hartz Haley
Cumulative Production (MMCFE)
![Page 20: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/20.jpg)
20
• First 10,000‐ft lateral has 30‐day peak IP of 16.0 MMcfe/d — 57% gas, 28% NGL, 15% oil— Second well producing— Third long lateral drilling
• First stacked/staggered Meramec test producing— Two wells 270’ apart vertically;
660’ horizontally
• Eleven 5,000‐ft. wells to date w/ avg. 30‐day peak IP of 9.3 MMcfe/d — 47% gas, 29% oil, 24% NGL
• 115,000 net prospective acres — 60% downdip; 40% updip— 70,000 de‐risked
Meramec: The Big Picture
Cana core
Meramec play outline
5,000‐ft. Meramec well
Updip
Downdip
10,000‐ft. Meramec well
![Page 21: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/21.jpg)
21
• First 10,000‐ft. lateral avg. 30‐day peak IP of 16.0 MMcfe/d (57% gas, 15% oil, 28% NGL)
• 72% uplift in 30‐day peak IP from eleven 5000‐foot average
Meramec Long Lateral Performance
Cumulative Production (MMCFE)
0
200
400
600
800
1,000
1,200
0 60 120 180
Days
Average 5,000‐ft lateral 10,000‐foot lateral (Clayton)
![Page 22: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/22.jpg)
22
• Stacked/Staggered Pilot— Eleven total wells— Wells spud in 4Q— Six Meramec wells
• Staggered between upper and lower zones
• Testing 10 wells per section; five per landing zone
— Five Woodford wells• Testing 9 wells per section
• Downspacing pilot— Partner operated— Testing 5 wells per section— Drilling underway
Meramec Next Step: Spacing Pilots
Meramec
Woodford
Osage
Cana core
![Page 23: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/23.jpg)
23
• Diverse asset portfolio with solid returns
• Strong financial position
• Flexibility to adapt to commodity environment
• Emphasis on improved productivity
Well‐positioned for 2015 and Beyond
23
![Page 24: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/24.jpg)
24
Appendix
24
![Page 25: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/25.jpg)
25
2015 Guidance
25
2015 Production, Unit Expense and Capital Guidance
Fourth Quarter Full‐YearProductionTotal Equivalent (Mmcfe/d) 980‐1,010 983‐991
% Liquids 52% 53%
Capital Expenditures 900‐$950 million
Expenses ($/Mcfe): Remainder of '15Production $0.77 ‐ $0.87Transportation, processing & other 0.45 ‐ 0.55DD&A and ARO accretion 1.65 ‐ 1.85General and administrative* 0.23 ‐ 0.27Taxes other than income (% of oil and gas revenue) 5.5 ‐ 6.0%
*Includes $0.05/Mcfe related to a charitable contribution commitment
![Page 26: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/26.jpg)
26
Hedges
(1) WTI refers to West Texas Intermediate oil prices as quoted on the New York Mercantile Exchange.(2) PEPL refers to Panhandle Eastern Pipe Line Tex/OK Mid‐Continent. El Paso Perm is El Paso Permian Basin
index; both as quoted in Platt’s Inside FERC.
First Second Third Fourth
Oil: Quarter Quarter Quarter Quarter Total
2016WTI Oil Three‐Way Collars (1)
Volume (Bbl) 273,000 273,000 276,000 276,000 1,098,000 Wtd Avg Floor Sold (put) 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ Wtd Avg Floor Purchased (put) 50.00$ 50.00$ 50.00$ 50.00$ 50.00$ Wtd Avg Ceiling Sold (call) 60.00$ 60.00$ 60.00$ 60.00$ 60.00$
First Second Third Fourth
Gas: Quarter Quarter Quarter Quarter Total
2016PEPL Collars (2)
Volume (MMBtu) 910,000 910,000 920,000 920,000 3,660,000 Wtd Avg Floor 2.70$ 2.70$ 2.70$ 2.70$ 2.70$ Wtd Avg Ceiling 2.85$ 2.85$ 2.85$ 2.85$ 2.85$
El Paso Perm Collars (2)
Volume (MMBtu) 1,820,000 1,210,000 920,000 920,000 4,870,000 Wtd Avg Floor 2.75$ 2.75$ 2.75$ 2.75$ 2.75$ Wtd Avg Ceiling 3.12$ 3.09$ 3.06$ 3.06$ 3.09$
2017El Paso Perm Collars (2)
Volume (MMBtu) 900,000 910,000 ‐ ‐ 1,810,000 Wtd Avg Floor 2.75$ 2.75$ ‐$ ‐$ 2.75$ Wtd Avg Ceiling 3.36$ 3.36$ ‐$ ‐$ 3.36$
![Page 27: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/27.jpg)
27
161 156
184
215 229
216 217 226
255
310
406
384
350 333
322
‐
50
100
150
200
250
300
350
400
450
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15
Gas NGL Oil
27
MMcfe/day
Cana Area Production
Row 4 Drilling Commenced
Row 4 Completions Began
![Page 28: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/28.jpg)
28
28
Permian Basin Production
40 41
46 49
46
53
59 55
58
6568
74
81
9994
‐
10
20
30
40
50
60
70
80
90
100
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15
Oil NGL Gas
MBOE/day
![Page 29: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/29.jpg)
29
• Multiple projects/multiple zones— Wolfcamp shale (oil & gas)— Bone Spring sands (oil)— Avalon Shale (oil window)
• 2015 Focus— Wolfcamp Long Laterals— Meeting acreage obligations— White City Bone Spring
Permian Region Provides Multiple Opportunities
![Page 30: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/30.jpg)
30
Thick, Multi‐pay Wolfcamp Section
30
Culberson Area100,000 net acres
Reeves County80,000 net acres
Ward County37,000 net acres
IIndicates producing zone.
![Page 31: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/31.jpg)
31
• Two four‐well pilots; 5,000‐ft laterals
• Barbaro Pilot— 80‐acre spacing (8 wells/section)— 20‐stage completion; 1,200 lbs/foot
• Prewit‐Omaha Pilot— 107‐acre spacing (6 wells/section)— 16‐stage completion;1,200 lbs/foot
• Results lead to design of first Wolfcamp D infill development
Culberson County – Downspacing Pilot Results
31
Barbaro
Prewit-Omaha
![Page 32: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/32.jpg)
32
Shallow Decline of Upsized Fracs
(BOE/d)
Strong Performance from Key Culberson Wolfcamp Wells
1,365
2,450
1,500
2,500
‐
500
1,000
1,500
2,000
2,500
3,00030‐day IP
Days 30‐60
Days 60‐90
90 day average1,0951,250
‐
400
800
1,200
1,600
Wolfcamp D Wolfcamp A
Twenty Grand5,000 ft. lateral
First Year Cum:0.6 Bcf (wet gas)
135 Mbbls
Tim Tam5,000 ft. lateral
First Year Cum:1.0 Bcf (wet gas)
89 Mbbls
Gallant Fox10,000 ft. lateral
First Year Cum:2.1 Bcf (wet gas)
149 Mbbls
![Page 33: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/33.jpg)
33
• Four spacing pilots; 18 total wells— Testing 6 & 8 wells/section— Average 30‐day peak rate of
1,012 BOE/d (70% oil; 17% gas; 13% NGL)
• ~250 locations— Includes Avalon and Leonard— Assumes 80‐acre spacing
• 13,700 net acres identified as prospective in Lea County— All HBP
Delaware Basin Avalon Shale: Spacing Pilots
Indicates spacing pilot
![Page 34: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/34.jpg)
34
34
Performance of Upsized Fracs in Cana‐Woodford Core
(MMcfe/d)
10.2
9.2
10.38.78.2
8.8
0
2
4
6
8
10
12
Golden Hartz Haley
30‐day IP
Days 30‐60
Days 60‐90
90 day average
Oil Yield(Bbl/MMcf) 21 30 46
Golden Section
Haley Section
Hartz Section
![Page 35: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/35.jpg)
35
Non‐GAAP Reconciliation
35
($ in Millions) 2012 2013 2014 LTM
Net income (loss) 354$ 565$ 507$ (1,703)$
Income tax expense (benefit) 207 329 299 (955)
Interest expense, net of capitalized 14 23 37 49
DD&A and ARO accretion 527 624 816 846
EBITDA 1,102 1,541 1,659 (1,763)
Impairment of oil and gas properties - - - 2,752
Adjusted EBITDA 1,102 1,541 1,659 989
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
![Page 36: BAML Conference 11.10.15](https://reader030.vdocuments.net/reader030/viewer/2022020211/56d6bf9f1a28ab301696f866/html5/thumbnails/36.jpg)
36
Non‐GAAP Reconciliation
36
2015 2014
Net cash provided by operating activities $ 206 $ 502
Change in operating assets
and liabilities (27) (62)
Adjusted cash flow from operations $ 179 $ 440
Three months
Ended Sep. 30
(in millions)
Debt/Cap Calculation
2014
Proved Reserves adds (Bcfe)
Revisions of previous estimates 104.8
Extensions & discoveries [C] 813.9
Purchase of reserves 133.6
Total adds [A] 1,052.3
Total capital $MM [B] 2,131$
All-sources F&D ($/Mcfe) [B]/[A] 2.03$
Drilling (excl. revisions) F&D ($/Mcfe) [B]/[C] 2.62$
Reconciliation of cash flow from operations
Finding & development (F&D) cost
2015
Long-term debt $ 1,500
Stockholders' Equity 3,434
Total capitalization $ 4,934
Long-term debt/total capitalization 30%
Sep. 30,
(in millions)
Debt/Adj. EBITDA Calculation
Twelve months
Ended December 31, LTM
2013 2014 9/30/15
Long-term debt 924 1,500 1,500
Adj. EBITDA 1,541 1,659 989
Debt/Adj. EBITDA 0.6x 0.9x 1.5x