Cimarex Energy Co. expects to grow its 2019 oil production by 23% to 29% compared with 2018's crude output, with the bulk of the production growth coming from the Permian Basin, company executives said Aug. 6.
The producer expects to see its oil production continue to grow for the remainder of 2019 and into 2020, with Permian oil growth expected to offset the declining volumes produced in the Midcontinent region, Chairman, CEO and President Thomas Jorden said in on the company's conference call Aug. 6.
Cimarex officials said that for the remainder of 2019, the company would primarily allocate its capital to the Permian, with the majority going to develop its Upper Wolfcamp assets. The producer has eight rigs running with two completion crews in the Delaware subbasin of the greater Permian Basin.
In a second-quarter earnings statement, the operator reported a record net production of 275,000 barrels of oil equivalent per day, which Joseph Albi, Cimarex's executive vice president of operations and COO, said was up 6% over the first quarter and 30% over the second quarter of 2018. Oil production grew 5% compared to the first quarter of 2019.
Permian production averaged 188,703 boe/d in the second quarter, a roughly 55% increase from the second quarter of 2018. Oil volumes in the play averaged 70,669 barrels per day, a 45% increase from the prior-year quarter and up 9% sequentially. Midcontinent production averaged 85,696 boe/d, down 4% from the year-ago quarter and down 5% sequentially.
In full-year 2019 production guidance, Cimarex tightened its expected production range to between 263,000 boe/d and 272,000 boe/d, keeping the same midpoint as its previous guidance. In the third quarter, the producer projects net equivalent volumes to average 265,000 boe/d to 279,000 boe/d, with net oil volumes forecast to average 85,000 bbl/d to 91,000 bbl/d.
Cimarex reported second-quarter net income of $109.3 million, or $1.07 per share, compared with $141.0 million, or $1.48 per share, in the same period a year ago. Officials said low regional commodity prices had a negative impact on cash flow and earnings in the quarter.
"With the price environment we're faced, particularly for natural gas and natural gas liquids, it would have been foolish to expect otherwise," Jorden said on the company's conference call.
G. Mark Burford, the company's CFO and senior vice president, said Cimarex would likely be mindful of how it chooses to spend its money in 2020.
"There's going to be some soul-searching on what the macro environment is and what we've got to do with our capital," Burford said during the call. "But we put a lot of work in the field efficiencies, we put a lot of work into organizational effectiveness and planning, and we certainly have made tremendous progress, as we discussed in the past, on smoothing out a field operations and being able to deliver consistent
Jim Magill is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.