A month has gone by since the last earnings report for Cimarex Energy Co XEC . Shares have lost about 6.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is XEC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2017 Results
Cimarex Energy reported fourth-quarter 2017 earnings of $1.47 per share that beat the Zacks Consensus Estimate of $1.39. In the fourth quarter of 2016, the company had reported earnings per share of 60 cents. The improvement is mainly attributable to increased production as well as higher oil and liquids price realizations.
In the fourth quarter, Cimarex Energy's total revenues of $550.9 million surpassed the Zacks Consensus Estimate of $532 million. The figure also increased from $382.2 million a year ago.
In the quarter under review, total production averaged 1,204.4 million cubic feet equivalent (MMcfe) per day, up 25.5% year over year. Oil volumes increased 35.6% year over year to 61.8 thousand barrels per day (MBbls/d) and natural gas volumes rose 16.8% to 534 MMcf. Natural gas liquids (NGL) volumes improved 30.8% to 50 MBbls/d.
Year-over-year realized prices for natural gas decreased 9.1% to $2.60 per thousand cubic feet but realized prices for crude oil and NGL increased 15.7% and 42.6% to $51.68 per barrel and $25.88 per barrel, respectively, in the reported quarter.
As of Dec 31, 2017, a total of 91 gross (34 net) wells were awaiting completion compared with a total of 55 gross (25 net) wells as of Dec 31, 2016.
Cimarex Energy had cash and cash equivalents of $400.5 million as of Dec 31, 2017 compared with $652.9 million as of Dec 31, 2016. Long-term debt was $1.5 billion as of Dec 31, 2017, which represents a debt-to-capitalization ratio of 36.7%.
Cimarex Energy's net cash from operating activities was $340.8 million compared with $185.1 million in the prior-year quarter. The company invested $1.28 billion for exploration and development during 2017, which exceeded the company's estimate of $1.2 billion. It was primarily funded with cash flow from operations and cash in hand.
At the end of 2017, oil and gas proved reserves were 3.4 trillion cubic feet equivalent (Tcfe), up 16% year over year. In 2016, the company added 941 billion cubic feet equivalent (Bcfe) resulting in reserve replacement of 211% of the 2017 production. Proved developed reserves increased 21% to 2.8 Tcfe.
Total production for 2018 is estimated in the range of 211-221 thousand barrels of oil equivalent per day (MBoe/d), up 14% from the midpoint of 2017 production levels. Oil production is expected to grow 21-26% in 2018, while oil production in fourth quarter of 2018 is estimated to grow 29-34% year over year.
Total production for first-quarter 2018 is projected to average 198-207 MBoe per day, up 3% from the fourth-quarter 2017 level, while natural gas and NGL is expected to remain flat.
For 2018, capital investment for exploration and development has been estimated in the range of $1.6-$1.7 billion, of which $1.3-$1.4 billion will be for drilling and completion. The capital spending is up 29% from 2017 levels. Of the total, 70% is allocated for the Permian, while 30% is allocated for the Mid-Continent.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been four revisions higher for the current quarter compared to seven lower.
Cimarex Energy Co Price and Consensus
Cimarex Energy Co Price and Consensus | Cimarex Energy Co Quote
At this time, XEC has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. The stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, XEC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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