In order to boost its liquidity position, Denver-based Cimarex Energy Co. ( XEC ) disclosed the pricing of 4.375% Senior Unsecured Notes worth $750 million, due 2024. The size of the offering reflects an increase from the previously announced $600 million.
Cimarex intends to use the net proceeds to repay in full the amount outstanding under its revolving credit facility and for general corporate purposes. The company stated that the interest is payable bi-annually on Jun 1 and Dec 1. The first interest payment will be made on Dec 1, 2014, and interest will accrue from Jun 4, 2014.
A consortium of reputed financial institutions is assisting Cimarex as joint book-running managers in this offering. Among these are Wells Fargo Securities, LLC of Wells Fargo & Co. ( WFC ), U.S. Bancorp Investments, Inc. of U.S. Bancorp ( USB ) and Mitsubishi UFJ Securities (USA) of Mitsubishi UFJ Financial Group, Inc. ( MTU ). The offering will close on Jun 4, 2014, upon fulfillment of customary conditions.
For Cimarex, which had a cash position of approximately $5 million as of Mar 31, 2014, the aforementioned note offering is a strategic fit as the increased financial flexibility will lower debt and consequently the interest expenses.
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 #3 (Hold).