Cimarex Energy Aims $326M Oil & Gas Asset Sale for September - Analyst Blog


Denver-based Cimarex Energy Company ( XEC ) announced it has signed various purchase and sale agreements to sell $326 million of oil and gas assets. All sales are expected to close on or before Sep 30.

The assets earmarked for sale mainly comprise 4,200 net acres and associated wells in the Midland Basin located in Reagan County, TX. This is to be disposed of for $242 million. An additional $84 million of non-core properties in the Mid-Continent and Gulf Coast are also being sold. In total, these properties contain approximately 47 billion cubic feet equivalent of proved developed reserves (63% natural gas) and produce about 11 million cubic feet equivalent per day.

Proceeds from the sales will be used to fund the company's ongoing capital investment program. For 2014, capital investment in exploration and development is expected at around $1.95 billion. Cimarex invested $964 million in exploration and development during the first half of 2014. The Permian Basin accounted for 71% of the capital investment in the first half of 2014 with Mid-Continent representing the remainder.  The company also purchased assets in the Cana-Woodford area for $238 million during the second quarter.

Cimarex is an independent exploration & production 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 and 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.

Currently, Cimarex carries a Zacks Rank #2 (Buy). One can also consider other players from the broader energy sector such as Sanchez Energy Corporation ( SN ), TransAtlantic Petroleum Ltd. ( TAT ) and Sunoco Logistics Partners L.P ( SXL ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: SXL , SN , XEC , TAT

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