Cimarex Energy (CIMXP) 5 Aug 212021 Q2 Earnings call transcript

Good day, and welcome to the Cimarex Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Megan Hays, Vice President of Investor Relations. Please go ahead.

Thank you, Jordan. to Quarter welcome Conference and everyone, Cimarex’s XXXX Second Call. Hello,

today’s who on or want those press our to it For find reference release will presentation, website. you

CEO, be us today’s Burford; Mark call Participants financial President Vice John non-GAAP Chairman, Joining of call Exploration, Executive our measures. will may of and today’s President Financial discuss on our and on Lambuth; Tom President Officer, Operations, Jorden; Chief Sirgo. Cimarex Vice Blake

in we reconciliations GAAP call, You on earnings presentation. cautionary will GAAP I to expectations. will release a statements to appropriate the metrics statements, find release, our your attention provided available today’s the as conference those comparable statements in is disclaimers financial based the press directly Also, on current other forward-looking our and provide forward-looking reminder, and metrics during and call are that most which website.

turn that, Following over to our Instructions] [Operator prepared With remarks, questions. we the call your take I’ll will Tom.

thank of you, you Thank to are and you joining this those Megan, morning. us who

a commodity this by and performance As we operational strong Cimarex favorable driven quarter strong morning, second pricing. reported had

Optimizing Our understand efficiency is X% of over oil the of well and techniques. XX,XXX areas: program driven at spacing, is high and QX the line promised that drilling We a industry-leading in our our X a completion with on capital by improving competitive is our increase increase focus delivering advantage, day. and per efficiency, in capital refining guidance. volumes end in oil performance came This barrels

highlighted observed that Sky and in deck. of the our We uplift discuss developments on we highlight the X Big projects recent investor spacing. Dixieland relaxed Slide let’s First, that are incorporate the productivity

that encouraging number flowing of We new a are are back delivering developments results. also

per performance. Culberson in feet to We state TD, Hats well operational team outstanding Lieutenant days XH drilled performance. off in this X for averaging our X.X from County X,XXX to day. to recently our our spud Gibson drilling Moving

[Carol productivity. the where our the and Elder] completion Mid-Continent, X-well invested project drilling averages we finished completing significantly and also We prior drilling in for

which important proof of online We QX, this come to project, in expect will concept. be an

continuous decisions. Our our productivity operational third focus we techniques, our and refining incorporate latest data performance into as completion the area, is

of on to the in direction. means the our productivity Importantly, focus X and these our cost areas trend culmination continue right

Basin Delaware guidance foot. our Our lateral to of per costs are well tracking annual within $XXX range $XXX

always, all for completion, numbers costs flowback. drilling, with As well our account saltwater infrastructure in and onto production, gathering bringing associated the disposal and including cost facilities,

the We will eye As Mark during quarter. solid sharp maintain on performance controlling a costs. describe, financial we had

payment these benefits the on foundation, cycles. or our company to a flow, The shareholders guidance after terrific favorable deferred call. focused a of in performance, hand few base on on and of bringing We cash Cimarex’s momentum, our premier prices million Our to of organizational of we acreage quarter about operational through the cash production will with million we combined free drove our strong comments flow build caught the business combination are business expenses the today’s our Anadarko volumes, few ended that recently and have delivering Strong million for look On creating reiterate of Cimarex differentiated are up clear. now note, borrowings is workovers a as the With cash strong combined in good to Cabot. cost control with dividend. as $XXX revolver. outstanding shape is during the maintenance. workover Shale in like this and trending and uptick returns leading the I’d and make like future. basins, Marcellus the I’d that on to In announced capital Cabot’s and pricing commodity with strong within and no further a free $XXX in energy range together of an quarter Permian despite expenses position $XXX

and as free part higher distribute believe foremost, peers have approach at more premier of multi-basin free pricing, deliver best-in-class enables First distributions Cimarex strategies. combined by with shareholders capital substantially industry-leading profile similar and free of high-quality more XXXX. a stand-alone. to is levels. macro able of XXXX against Generating cumulative We is begun target flow from the cash returning to to compared mid-cycle flow capacity and business than to we expected expect confidence this is to to to Combined XX% commodity of flow $X.X than and between understand to us the capital quarterly be adopting flow shareholder billion cash cash strong XX% cash return complexities This portfolio exposure. return our price and in several operations driven with more

moderates commodity has exposure combination oil, liquids. As competitive that commodity. from natural I’ve said to single Cabot to This their base price the of any price benefited of our And strong swings. core impact enhances Cimarex before, swings advantage gas and remains a our resilience with and gas PDP

than Cimarex commitment progress making company governance To S-X cultural the EBITDAX. we look strong a lower in expiration the Together, focusing transaction preliminary deliver stewardship, financial combination. have to net corporate merger and And been of I aligned together. forward path diligently. our value-creating also I end, fourth and health bringing a cost the completing from I’m a debt sustainability teams we balance expect pride data liquidity working I of that due capital detailed my while Importantly, that strong to our our team, quarter we planning bringing emissions team, have look benefit period HSR our website, Xx forward important report to filed, towards hope Cabot. we the underway, From with safety and entire in performance, operational environmental have we and from with the Cimarex are morning the the teams of on dedicated strong perspective, the of very Cabot waiting and and and integration a our XXXX. about while strong to data. increased this am environmental increased and are incredibly to combined missed of confident will speaking as strengthened completing to profile. sheet with in on scale, financial less you the not fact-filled our posted We updated potential including safety together am a of and proud and our that the Cimarex forward, in business our talented continue delivering And on

at office meaningful will reductions, past driven has future field become our as do continue on This so and and has have tremendous our in focused years organization the footprint a substantial to highly emissions few it to as We is progress made this. engineering over the priority my top the from Cimarex.

that, this solid We continue together With environmental and progress. Cabot’s call to Mark. company hand bring will over shared with commitment focus new to make these the our on to I’ll principles

Thank quarter and you, in financial our outlook. address results items second Tom. Good morning, the everyone. XXXX I’ll key

volumes this strong of well guidance midpoint quarter production the in above came performance. Our our due to

increased Additionally, X% to volumes. quarter first XXXX compared second quarter production

grow XXXX to compared quarter and are of executing guidance, operation, is as achieve XX% XXXX. oil fourth highlighted, to volumes production fourth on track are oil more well by we to Tom our quarter which than extremely As

cash and crews million, quarter triple to million of revenue the flow unit we of capital. of XX% resumption first operations rig flow for realizations decrease compared production $X.XX XXXX $XXX Combination quarter. result higher and generating production dropping cash comprised flow workover the of we per X costs of completion volumes $XXX and Adjusted in cost to As million quarter the production X $XXX crews million, revenues cadence and frac is of which and midpoint unit the and price fourth after an resulted and million, taxes further transportation, our quarter With $XXX expect down discussed, including drilling was towards of free $XXX second increase cash as of half totaled NGL capital nearly completion the gas or efficient G&A quarter projected rigs to after dividend. approximately oil, trend in of to second no BOE, the LOE, for previously expense, Per of mid this free XXXX. the strong totaled compared as is of XXXX. first of the X cash $XXX million expense drilling from in per quarter guidance. the annual second volumes, Total investment a a a

quarter a As in exited from and $XXX of debt on this year-end new cash of net program. well very executing the decrease Overall, flow a noncash result with sales, of the quarter $X.X we’re a property second billion the million XXXX. strong we free

the turn translates that with free We’re that, higher incremental committed I’ll and With prices, over capital to the cash maintaining discipline, into to Blake. flow. strictly commodity call

Mark. Thanks,

Our operations strong teams deliver performance. continue to

significant the our concentrated capital track improvements areas, and operations gains the development of in efficiency telegraphed in We cadence in delivering on at check. and We’re to find a laterals key supply and our cost. steel cycle inflation the these cost crews and end chain, times capital X across while activity. Permian efficiency could rigs Maintaining cost of X including with us to unchecked, continued We fuel. longer our these All allows pad, frac structure facilities. focus labor, steady pressures our our in while efficiencies program together XXXX. resulting faster per wells keep improve and the help Left optimizing come see horsepower, inflation increase more

However, our teams, nearly ops with due cost to efficiency performance offset all pressures we have gains. to able the of been

drilling set in to this evident #XH the X.X than days. more this is in Nowhere in with County, team Texas, quarter our another state where which record Lieutenant-Gibson drilled F X TD Culberson performance, our

feet reaffirming X% Permian first $XXX feet full the total per for a of the our X,XXX these XX% foot. $XXX second which well program, cost in across are our day, year from quarter cost and is year and to day ago. per to Thanks guidance up at continued gains, drilled we came efficiency quarter per our from During

make to continues emissions advances footprint. organization reduce our our goals Our towards to

operation tankless We end-of-line our patches XXXX. sources with eliminating have which facilities in more of are fugitive emissions. through devices, replaced common surge new These and XX traditional vessels, with thereby planned X of [indiscernible] facilities tanks

us as on staff, are informs field at produced any that loop that future the to constantly new take data improve these help now further facilities. great has efforts, in footprint our and We’re we emissions. help performance from coupled with data by iterate that, down each designs happy collect to work critical a drive emissions last. learning allows Cimarex And These barrel new This a questions. the ensure lower to with we feedback

first Arun from Jayaram Our [Operator question comes JP Instructions] with Morgan.

to planning development in informing future Big some the Dixieland how and key your Basin. maybe wanted the is I and of start Delaware learnings Sky from with Tom, this

X learnings key just think Well, in parts also in Dixieland here it we X can that drilling extract a is comparable these And in from we seen chime are me. simply Sky John in Big stack thesis flowback. gain couple different efficiency, Dixieland they’re I’m increased confirming our trade-off space basin. has a our initial and to it’s We our zones going the minor, And very say up-spacing And is thesis a absolutely And -- But looked would can reserves and lost has absolutely almost to the reserves months have the that projects. more landing we’ve by of project, allowing certainly, wells. on we we’ve little Sky between now capital our different. and confirmed lowering major. of are invite I wells. with fewer Big some core a of is have triple purely that significantly capital the

completions. are up-space tremendous and spacing completions well-to-well interference, the about always further by we’ve sand differences differing not environments. about But a So and amount to and learned looking optimize. a learned shale performance we’re tremendous in and We’ve the amount explained

efficiency about going excited capital as and we’ve you’d highlighted, really just into ‘XX add? anything are we ‘XX. So our John, like to increasing

No, well covered think Tom, extremely you there. I it

section spacing existing Based really we we are every we’ve section develop, wells, we come to the about on aspect dialed the the and go of up that last in pretty rock every a think, as feel to We -- reservoir learned properties, really process we’re like based based And for parent forward. it. for on we over we’re the on with properties a X years. optimal pretty have, lot good on spacing

from My buy Great. question siders. excellent quite this Tom, a I’ve follow-up, few gotten

side about people I wanted merger. this touched I advantages the company. you to the of you’re about corporate to the technical Cimarex So a that know And about integration you team the been you Houston? reaction But little is ask retaining your employee your has about appears planning. one technical to Denver We Cabot the of of know ask all confidence as to And headquarters core it the going to talk merger? in your talent, could perhaps combine bit core the in

Arun, would mind, thank you are capability, those the hearts, think which know the why of you our and both retaining question that engine that forefront that to appealed know our Cabot minds is Cimarex the absolute I for me. reasons our that because drives that of souls in and operational combination core Dan with one is me

We’re similar very different companies, in but we’re very respects. many

of you’re new I company. Cimarex’s to going the majority talent think at the see overwhelming

Our excited staff is it. about

I or an But and wholly people a X want to to -- a had operation, And absolute my first people I take X our is about to absolute talent and weeks be committed our of companies. ever we to ready to think And make visit. this are the saying people, the did and was been to the we after our by have I in just the to go it. ready new operational the top-performing with challenge, on with X Pittsburgh finish there, was quality came it impressed in are get space. This sector of and just than up best to opportunity did these ago. talk the I more willing the fired also opportunity company caliber going back we’re field I to I

great Great. Tom, state Texas. tax income in the no of state

think good a thing to about. also that’s So

question from Doug Leggate next with of Bank America. Our comes

is This call will here for the John be Yes. Doug Leggate. maybe, follow-up Abbott for Doug on on question.

Just be basis laid company the combined first a of here. here Tom, out forward? good the merger. you on just will for for what strategy question our you some sort pretty the Could discuss commentary going on hedging

been a new I’ll insurance. first, topical what But you a discussing a through want about hedging kind it. how I’ll you think company tell just about it’s that’s as to And to and with insure. talk John, that. very We’ve issue need is Well, us. we’ll it say down of as sit think we question, that. We And

look built to capital program Shale capital increasing. I certainly to flow. look our dividend, a program, hedge percentage at the think think that we our I Cimarex, very historically, wanted was but era, our classically And cash -- high also of which insure ahead, which, X.X prior program, a we to our we’ll at our ordinary as as insure is

caught we team obviously, be would any you’re have So I to and than think in although we’ll up might a to volumes. voice never we need to -- a And we really get we and hedge that But long-term NewCo I together there a that is planning, going our hedging to little forward find debate our have it’s -- will when but this get we I is capital long expect had easy serious And haven’t And less the discuss want hard. currently. this do. expect yet, I optimism pretty and and XX% going debate don’t current of program disagreement. strong that programmatic debate. short-term would that

our I question, to put it. And S-X appreciate it’s that had the out. for follow-up related been

for Just shareholders? to looking discuss ran the merger you looks it COG regards shareholders. the for a process it, that full process ran at Could you like with

John, I Yes. what from I’ll did. get don’t didn’t describe we the -- my but of that S-X, reading I just

want up As conversations I merger those announcement. year X S-X, multiple casual And had over with I to our were laid clearly or conversations. represent out that the think fairly we don’t to counterparties in the leading multiple

and would understanding can We detail sophisticated team. we at drilling of in evaluation we our their of are do And our lay so very released asset pretty asset financials none set publicly based land. of detailed is, the solid, with our counterparty information. fairly potential technical a a our on upside the tools I public here projection financial look great to teams, with and understanding with can have our planning a second of We the say, assets, usually know and

Cimarex, that S-X, Cabot analysis entered one only the represented we on in forma we And agreement, we in allowed detailed counterparties. combination that looked into these companies plus a, believe did firmly go-forward was we other although many environment confidentiality the a of cyclic it no just at opportunity pro that very our a that X potential wow, shareholders commodity offered. we combination when So other

remain then. excited We we today. So were excited as

prices, for gas increase just with the recent ever transaction this feel fantastic In more fact, owners. a that stronger is our in I than

comes from Truist question next Neal Dingmann with Securities. Our

focus. or talk you’ve that I’m stick talked to in Northern you continue in John, lot the Tom, on wondering that see you will just success area. Del, you largely I of My just had you where you’ve would, regional lot about -- to first about -- could Reeves? if question, in And a a spacing

You talked Northern in the there in Southern to about area, success your or space you’ve versus had. Can like talk spacing Culberson the Eddy? either well thoughts you that

to Well, years, right. our in we’ve -- over again, very as you’re spacing, these regards learned,

the and acreage properties, And properties change. as whether is both reservoir across Our basin. the all the the the vast well geologically oil, of as reservoir gas we’re -- Wolfcamp

to Reeves, gassier. [current] we’re By we’ve again, depending looks Currently, the little spacing. but geology. pressured, X will to that get less as right account a it a to into well we that then lead time around as locations Culberson, take So vary wells we’re upon now, optimal little learned well to the per all the section bit, the bit

many wells same we finding the achieve kind as reserves. of recoverable need don’t to We’re

you’ll around position. is now, across X heart that of bit we’re little per a Culberson wells right kind too acreage although section, vary So the see of our lower

one have Upper a section across template across where County, Wolfcamp. decisions look going our in And wonderful main and Lea to we’re per fit learned up being would is our now the the right come at. about we’re we again, section X any peers, for very acreage the that’s entire as we position. true with kind our you spacing good for position. honing on forward. not in There, that around think we’ll But feeling very stamp of space thing we We’ve there based wells every on I studied is even adjust results. optimal And

numbers, Upper John the Yes, to Neal, add, about we’re just these want talking I quotes when Wolfcamp.

have We below us. above on other landing and

trading I our math, earlier. No. free on think your sort cash flow a guys your you’ve shares think on you thoughts wondering are NAV? And is that a I’d dips. this up, think hear you could, a by cash of balance if thought I just Tom. broad the in to a bit got forward. the little discount Great going how then nice your to is sheet. add, about some like some potentially going little second, shareholder What at are free alluded versus just flow about of that returns, like terms a just I’m to if Tom, to you obviously, just near-term combination great really piles have you more

Well, at share that the notes to of buybacks. and time debt. I that that. talked from can moving wake there’s flow think it about us. to fresh. due every XX% on We’ve prices, be XXXX we’re But we be to that of that is table all cash And operations in we’ll but and all look on mean, that owners. in mean also calling we those that are the of [indiscernible] options we rock-solid anything modeling our the cash up hit commodity I owners. look that time. to telegraphed most to from going returned of at retiring at Of front we’re all committed look lots those morning one contribute the options returning depending -- parts of to our We what the those, we will

for back I over question-and-answer remarks. the to the concludes to like Tom This closing Jorden session. turn conference would

you. Well, thank for everybody want us. I to thank joining

much a Cabot. the quarter. a together, and report I performing, E&P efforts the And integration We’ll continue to if also close solid you not our We’re continue forward leading I to We’ll moving everything update with independent delighted our to fourth organization towards with on look quarter combination operator. want promised we one coming to execute. delivering say very new becoming of, to

you much. thank So very

The conference attending for Thank presentation. has you now today’s concluded.

You may now disconnect.