Cimarex Energy is a publicly traded company that supplies natural gas and crude oil to the United States-based in Houston, Texas. The Company has been in business since 1949 and is one of the largest independent exploration companies. It has a long history of supplying natural gas and is the largest producer in the Rocky Mountain area. The Company’s shares are on the rise and continue to provide a profitable opportunity for investors.
The Company is primarily focused on exploration, development, and production in the Midland Basin, Delaware Basin, and the DJ Basin (a formation in the Permian Basin). It has assets in 20 US states and operations in several other countries in the Western Hemisphere and South America. XEC owns and operates production assets and plans to drill more than 50 horizontal. The Company has $2.0 billion in assets and approximately $1 billion in liabilities, equating to $20.7 million in current assets and $3.6 billion in current liabilities. XEC has an annual production of 215,000 BOE / out of net production of 67,000 BOE / d.
It is a clear sign that crude oil prices have recently reached $45/bbl. In addition, the Company’s second-quarter earnings were $1.82/share, beating analyst expectations and setting a new record. The Company has also outlined its strategic priorities that focus on the continual shift to liquid production, improving productivity and infrastructure, cost optimization, new midstream offerings, and share buybacks. Cimarex is progressing on top priorities with its Permian Resources business growth and free cash flow generation. In addition, it has $2.2 billion in cash and short-term investments.
Cimarex has seen a steady financial performance and improvement in recent years. There has been strong revenue growth in recent years, but part of this is due to significant acquisitions. This is expected to decrease in the future. The cash flow from operations is impressive. Over the past four quarters, the Company generated $1.6b. This results in an average of around $400 million each quarter. This is impressive and should continue to improve as the Company approaches maturity.
Why invest in Cimarex Energy?
The US has abundant natural gas and oil resources. The country has 7.5% of the world’s total reserves, and America also holds 30% of the world’s crude oil reserves. According to the Energy Information Administration (EIA), natural gas reserves in the United States are currently around 2.3 trillion cubic feet (Tcf). And, there are about 0.75 billion barrels of recoverable crude oil in the United States. Furthermore, according to the EIA, the United States is the world’s largest oil producer at the moment. And it was responsible for 45% of total oil production, 29% of total natural gas production, and 26% of total US crude oil production. This makes America the world’s largest producer of crude oil and natural gas.
Buying Shares in Cimarex Energy
Cimarex Energy sells natural gas and crude oil from six shale fields and an associated salt dome and horizontal pipeline system in the Permian Basin. As of January 1, 2019, the Company was producing 1,058 MBbl/d (million barrels per day) of crude oil, 41% of which came from the Delaware Basin, 35% came from the Midland Basin, 16% came from San Andres, and 10% came from other places.
The US Energy Industry
Like all energy companies, demand for natural gas and crude oil has increased in the last year, and the current environment in the US is changing. IN APRIL, the US Energy Information Administration (EIA) announced that oil demand was at its highest levels since 1988. Energy production recently hit a record, and crude oil production hit a new high for the second consecutive year, confirming that the US is on track to break its record for crude oil production in November 2021. In addition, natural gas production is also on the rise, with more than 56% of demand growth coming from the United States.
Oil prices appear to be rising on the promise of continued cuts by the Organization of Petroleum Exporting Countries (OPEC) and some non-OPEC oil-producing countries. The resurgence in oil prices is expected to boost cash flow for oil and gas companies.
The energy sector is becoming more volatile and less predictable. However, with the strengthening of the global economy, lower oil prices, continued technological advances in oil field exploration and production, shale gas development, and increased use of unconventional gas extraction methods, the United States is becoming more energy independent. Diversified across multiple energy subsectors, CCL, one of the country’s leading oil and gas exploration and production companies, is well-positioned to capture the potential for growth in the US energy sector, especially in light of the potential repercussions of good gas shale and the slowdown in the Company’s commodities.