Cimarex Energy (ticker: XEC) raised its 2017 production guidance to 1.13 Bcfe per day from 1.09 Bcfe per day following the establishment of increased Q1 production.
The company, which has operations based in the Mid-Continent and in the Permian basin, cited improvements in well results, a period of good weather, and a lack of significant outages all as reasons for upping the ante.
In Q1, 2017, Cimarex reported an average production of 1.063 Bcfe per day. In oil volume alone, Cimarex reported 51,181 BOPD across both its Permian oil assets and its Mid-Continent liquids assets.
Cimarex holds approximately 128,000 net acres in the Mid-Continent, where it focuses on liquids rich plays. In the Permian, Cimarex holds approximately 225,000 net acres.
In the company’s Q1, 2017 earnings call on May 5th, 2017, Thomas Jorden, the CEO of Cimarex, noted that the company’s exploration and development capital was between $1.1 and $1.2 billion. Of the capital allocated to exploration and development, $306 million was invested in Q1, 2017—with approximately 69% of that going to the Permian region. Approximately $197 million of the $306 million was spent to drill and complete new wells—resulting in 70 gross (26 net) wells brought to production during Q1, 2017.
Of the wells brought online during Q1, 25 gross (16 net) were located in the Permian basin; and 45 gross (10 net) were brought online in the Mid-Continent. As of May, 2017, Cimarex had 14 gross (11 net) wells waiting to be completed in the Permian and 68 gross (15 net) wells waiting to be completed in the Mid-Continent.
In the remaining $850 to $900 million exploration and development budget, the company plans to invest approximately 62% into the Permian region. Cimarex currently has 14 drilling rigs operating, six in the Mid-Continent, and eight in the Permian.
Exciting results in the Permian
In seeking new targets, Cimarex drilled a delineation well that produced a peak 30-day initial production of 1,557 BOEPD out of the Upper Wolfcamp in its White City, New Mexico acreage. The company believes that the results shown by this well give an indication to the potential of the Upper Wolfcamp interval.
In the Lower Wolfcamp, Cimarex mentioned that a new pilot set of infill wells—the Tim Tam infill development—have produced at a 30-day peak rate of approximately 13.9 Mcfe per day,verifying that Lower Wolfcamp is a candidate for infill drilling, with Cimarex considering testing tighter well spacing later in the year.
In Reeves County, where Cimarex is testing 12 wells per section in its Wood State, Upper Wolfcamp infill project, it has seen five of the wells produced a 30-day peak average rate of 1,973 BOEPD—46% of which was oil. Three of those wells have produced an average cumulative of 309,000 BOE—which is only slightly less than the company’s best parent well in the area—Big Timber.
Mid-Continent
In Cimarex’s Meramec play in the Mid-Continent, it has 24 wells with 5000 ft. laterals that averaged 1,417 BOEPD for 30-day peak initial production rates. The nine longer 10,000 ft. laterals have displayed higher 30-day peak initial production rates at 2,057 BOEPD. The company also reported promising results in its Leon Gundy project, which is a stacked/staggered Meramec-Woodford spacing pilot test, with ten wells per section. In October, the Leon Gundy project showed four 5000 ft. wells with 30-day peak rates of 8.4 Mcfe per day.
Cimarex Energy is presenting at EnerCom’s The Oil & Gas Conference® 22
Cimarex will be a presenting company at the upcoming EnerCom conference in Denver, Colorado—The Oil & Gas Conference® 22.
The conference is EnerCom’s 22nd Denver-based oil and gas focused investor conference, bringing together publicly traded E&Ps and oilfield service and technology companies with institutional investors. The conference will be at the Denver Downtown Westin Hotel, August 13-17, 2017. To register for The Oil & Gas Conference® 22 please visit the conference website.
