Cimarex Is Transitioning To Large Scale Development As Planned

Jan. 15, 2019 2:52 PM ETCoterra Energy Inc. (CTRA)4 Comments
Todd Akin profile picture
Todd Akin


  • Cimarex has been thrown out with the bath water during the recent market selloff.
  • The company is setting production records with their optimized completions strategies, and is transitioning to large scale development, much like many other top E&Ps.
  • As a result, XEC is showing an attractive risk/reward energy point to re-enter the stock at.

Cimarex (XEC) has pulled back significantly with the overall market on fears of a global slowdown caused by rising interest rates. While U.S. GDP is expected to slow, growth will still be moderate at around 2%.

Consequently, I don’t see demand for oil falling as much as prices were previously forecasting, and the dip in oil prices is just providing an opportunity to reload on top E&Ps like Ximarex.

We reported on XEC’s previous Q2 call that their optimized drilling and completions strategies were driving efficiencies and revenues. XEC even beat the upper end of their guidance range of 206,000 to 215,000 BOEs per day in the third quarter, in large part, because of these completions strategies, which set a company record.

But, this latest earnings call seemed to focus more on their transition to large scale development, which is fully underway. Large scale development will boost revenues significantly, needless to say, and provide a consistency to earnings not seen previously.

As a result of this transition, the previous drop in XEC’s share prices is offering investors a attractive risk/reward setup to add to long positions.

Permian And Anadarko Basin To Drive Year-End Production

Third quarter production numbers were strong for XEC, as the they brought 46 wells online and even set a production record. Their fourth quarter is expected to be strong as well since production is ramping, reportedly increasing oil production by 21% to 23% year-over-year.

Much of the increase in activity is occurring in the Permian for XEC where the company operates 12 rigs, as well as in certain pockets of the Anadarko Basin in Oklahoma, where XEC is using 4 rigs. They also cut their completion crew count in half to three, but I expect this is because of efficiencies outpacing crews, and is seen more as a sign of strength.

This article was written by

Todd Akin profile picture
Graduated from the University of Houston- Downtown with a degree in Finance. My site,, focuses on portfolio management and unique investment opportunities.

Disclosure: I am/we are long GUSH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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