Cimarex Energy Co.NYSE
Cimarex Energy: 'The Permian Charm'
Richard Zeits • 21 Comments
Richard Zeits • 21 Comments
Fri, Dec. 9, 8:02 AM
Wed, Nov. 30, 7:30 PM
- Analysts say today's agreement to curb oil production will elevate prices through at least H1 2017, and the first to pounce on higher prices by expanding drilling will be U.S. shale explorers.
- In shale fields across the U.S., production costs have been cut roughly in half since 2014, when Saudi Arabia raised output in an attempt to drive higher-cost shale producers out of the market, but instead of killing the U.S. shale industry, the ensuing price war made shale a leaner and meaner rival.
- As an example, Concho Resources (NYSE:CXO) CEO Tim Leach says his company is on track to raise production 5% by year’s end, even though it is spending 7% less than originally budgeted for 2016.
- Continental Resources' (NYSE:CLR) Harold Hamm says U.S. oil production will rise in the wake of OPEC’s cut, and rising prices could unlock some of the thousands of drilled but uncompleted wells in the U.S.; some of CLR's ~175 uncompleted wells now will be completed in light of OPEC’s decision and the improved price outlook but the company will not add rigs.
- “As you move up the price curve and you get more confident of the outlook for future pricing, we’ll be able to add activity as cash flows grow," says Newfield Exploration (NYSE:NFX) CEO Lee Boothby.
- Among other shale-focused companies that enjoyed huge gains today: WLL, PE, OAS, SN, CRC, FANG, RSPP, PXD, XEC, EPE, WPX.
Wed, Nov. 30, 2:30 PM
- Oil and gas names continue to surge following the news that OPEC will cut production.
- Among the 36 energy stocks in the benchmark SPDR Energy ETF, 13 are up by at least 10%: MRO +21.6%, RIG +19.6%, MUR +15.7%, DVN +15.2%, NFX +15.2%, HES +14.8%, APC +13.6%, HAL +13.6%, CXO +11.3%, XEC +10.9%, EOG +10.5%, COP +10.4%, CHK +10%.
- Continental Resources (CLR +23.6%) soars to a 52-week high, making founder and CEO Harold Hamm, already the wealthiest U.S. energy billionaire, another $3B richer.
- Offshore drillers are broadly sporting double-digit gains: ESV +24.8%, ATW +20.6%, RIGP +18.7%, SDRL +16.5%, DO +15.7%, RDC +15%.
- "For all E&P stocks, this is a bullish call for sure, because price is directly correlated with cash flow," says Luana Siegfried, energy equity research associate at Raymond James, which sees U.S. crude reaching $60/bbl by year-end.
- MarketWatch's Philip van Doorn writes that pending earnings estimate increases from analysts ought to set a floor under the energy sector and support even higher prices for oil stocks.
Tue, Nov. 15, 10:49 AM
- West Texas' Permian Basin now holds nearly as many active oil rigs as the rest of the U.S. combined, including those offshore, the U.S. Energy Information Administration reports.
- The rig count has been rising since this summer, but the Permian began seeing rigs increase earlier than the U.S. as a whole, and is adding rigs more quickly; of the ~450 total U.S. rigs, the Permian now accounts for ~220.
- Permian production has reached 2M bbl/day of oil, while south Texas’ Eagle Ford and North Dakota’s Bakken have fallen to below 1M bbl/day.
- Top Permain producers include CVX, OXY, APA, PXD, CXO, DVN, EOG, MRO, FANG, XOM, ECA, RSPP, SM, EGN, PE, AREX, GPOR, XEC, LPI, CPE, ESTE, WPX, PDCE
Tue, Nov. 8, 11:13 AM
- Oklahoma’s oil and gas regulator says it plans to shut some disposal wells and reduce the volume of others in response to Sunday’s earthquake near the Cushing oil hub.
- The Oklahoma Corporation Commission says its plan covers 700 sq. miles but does not say how many wells were affected; when a quake of similar magnitude hit the state in September, the agency ordered 37 wells shut over a 500 sq. mile area.
- Pipeline operator Magellan Midstream Partners (NYSE:MMP) quickly resumed normal operations at Cushing following a controlled shutdown of its assets after the quake, while Kinder Morgan (NYSE:KMI) and Enbridge (NYSE:ENB) said their facilities were not affected.
- Oklahoma's top oil and gas producers include CLR, CHK, DVN, MRO, NFX, XEC and SD.
Mon, Nov. 7, 1:15 PM
- Energen (EGN +5.5%) is upgraded to Buy from Accumulate with a $73 price target, raised from $69, at KLR Group, which boosts its outlook for the company's capital productivity, 2017 growth and cash operating expenses.
- The firm also notes several potential catalysts ahead for EGN, including the continued performance from its upsized fracs and its balance sheet, that allows the company flexibility to either further accelerate activity or take advantage of potential acquisitions.
- KLR also upgrades Cimarex Energy (XEC +1.9%) to Accumulate from Hold with a $152 price target, up from $143, citing an anticipated 5%-10% lower capital intensity implied in preliminary 2017 guidance as well as a recent ~15% drop that has underperformed the sector.
Thu, Nov. 3, 3:30 PM
- Cimarex Energy (XEC -5.3%) plunges to its biggest loss in eight months after cutting production guidance.
- XEC's Q3 earnings came in ahead of analyst consensus and revenues were only slightly below expectations, but production of 947M cfe/day was slightly below company guidance, caused by several factors including higher than anticipated ethane rejection and the timing of new well completions and subsequent production as well as production shut in during completion operations.
- XEC cuts estimated Q4 production to 945M-985M cfe/day to reflect project delays, resulting in reduced FY 2016 production guidance to 960M-970M cfe/day from its previous outlook of 980M-1B cfe/day.
- XEC's new completion schedule moves 10 net well completions previously scheduled for Q4 into early 2017, bringing total net wells completed in 2016 to 62 from the previous expectation of 72 net wells; 2016 capex is now estimated at $785M, up from $750M previously.
Wed, Nov. 2, 4:05 PM
Tue, Nov. 1, 5:35 PM
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Mon, Sep. 19, 5:47 AM
Tue, Sep. 13, 10:48 AM
- U.S. and Oklahoma state officials are lowering by 22 the number of injection wells ordered to be shut in at an area where a 5.8-magnitude earthquake occurred on Sept. 3.
- State officials say the 27 wastewater wells ordered to be shut compared with the shutdown of 37 wastewater injection wells announced within hours of the quake earlier this month, while the EPA ordered the shut-in of five wells in its area of jurisdiction, down from 17 shut-ins it announced earlier this month.
- The mandatory shut-ins are expected to last at least six months and may become permanent, depending on new data that is collected.
- PetroQuest Energy (NYSE:PQ) reportedly has been the only publicly traded U.S. company among the operators affected by regulators' orders.
- Oklahoma's top oil and gas producers include CLR, CHK, DVN, MRO, NFX, XEC and SD.
Tue, Sep. 6, 12:39 PM
- A backlash against fracking in Oklahoma could grow following this weekend's 5.6-magnitude, earthquake as the U.S. Geological Survey examines whether the record-breaking tremor was triggered by the underground disposal of wastewater from oil and gas production.
- The USGS says it "cannot currently conclude whether or not this particular earthquake was caused by industrial-related, human activities. However, we do know that many earthquakes in Oklahoma have been triggered by wastewater fluid injection.”
- “They are going to push the industry to come up with some permanent solutions,” says Michael Lynch of Strategic Energy & Economic Research. “It’s hard to believe Oklahoma would move to ban fracking, but I can see where they would say to people that they have to do something else with the wastewater."
- PetroQuest Energy (PQ -3%) was ordered to shut four of its disposal wells in Oklahoma, and was the only publicly traded U.S. company among the operators affected by state regulators' orders to suspend a total of 37 wastewater disposal wells.
- Oklahoma's leading oil and gas producers include CLR, CHK, DVN, MRO, NFX, XEC and SD.
Tue, Aug. 30, 6:52 PM
- Earlier fears that some energy companies might not be able to secure new lines of credit because of the collapse in oil prices seem to be a thing of the past; in fact, banks are willing to lend but energy companies do not seem particularly eager to borrow, says Stifel's Daniel Guffy and his analyst team.
- Banks have sought to work through the debt challenges in the energy end markets, as forcing a bankruptcy risks a liquidation that would not come close to recovering the loan value; banks seem willing to lend again as the fall redetermination begins, but E&P companies have little appetite to add leverage, although this could shift as E&P fundamentals improve, Stifel says.
- Companies in Stifel's coverage that have chosen to take a defensive posture by reigning in capex and curbing growth to protect balance sheets and/or preserve liquidity include Buy-rated CRZO, EGN, NFX and XEC, as well as Hold-rated CLR, COG, CRK and PQ.
Mon, Aug. 29, 6:25 PM
- Williams Capital believes oil industry fundamentals are solid despite current commodity price levels but is cautious overall and advises investors not to chase the recent run at current valuations.
- However, the firm recommends select underappreciated companies with lower expectations and re-rating potential, and thinks companies situated in core resource plays that can demonstrate further capital efficiency improvements with catalysts will continue to garner top valuations and M&A premiums.
- Two of Williams' favorites are SM Energy (NYSE:SM), which the firm says remains one of the cheapest names in the sector with a solid balance sheet and assets as well as a conservative management team, and Newfield Exploration (NYSE:NFX), which Williams sees thriving through the current downturn given its strong balance sheet, ample financial liquidity and strong hedge book.
- Also initiated with Buy ratings: Cabot Oil & Gas (NYSE:COG), Energen (NYSE:EGN), Gulfport Energy (NASDAQ:GPOR), Oasis Petroleum (NYSE:OAS), PDC Energy (NASDAQ:PDCE), Pioneer Natural Resources (NYSE:PXD).
- Driven largely by valuation, Williams assigns Hold ratings on Diamondback Energy (NASDAQ:FANG), Gastar Exploration (NYSEMKT:GST), Laredo Petroleum (NYSE:LPI), Parsley Energy (NYSE:PE), Rice Energy (NYSE:RICE) and Cimarex Energy (NYSE:XEC).
Mon, Aug. 8, 11:57 AM
- SM Energy’s (SM +7.2%) $980M purchase of drilling rights in the Permian Basin shows that producers are willing to pay a premium for access to one of the few spots where oil exploration still turns a profit, Bloomberg reports.
- SM will pay the equivalent of $39.5K/acre for drilling rights across 24,783 acres in the Permian Basin, will ahead of the $25K-$35K that acreage in the Permian’s Midland Basin section had been fetching as recently as May and almost doubling SM's holdings in the region.
- Other Permian producers also are trading higher, including: PXD +2.2%, CXO +1.8%, XEC +2.1%, CWEI +6.1%, APA +3.8%, FANG +2.1%, PE +1.2%, QEP +3.6%, RSPP +2.4%, APC +2.6%, DVN +3.7%, MTDR +2.3%.
Wed, Aug. 3, 5:08 PM