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Why Cimarex Energy Decreased Its 2016 Production Guidance

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Cimarex Energy’s key operational highlights

Cimarex Energy’s (XEC) 3Q16 production volumes totaled 947 million cubic feet equivalent (MMcfe) per day. In comparison, 3Q15 production volumes totaled ~979 million cubic feet equivalent per day. Cimarex Energy’s 2Q16 production volumes amounted to 974 MMcfe per day.

XEC’s production trends

As you can see in the graph above, XEC’s production has grown consistently since 2013—but it’s expected to fall slightly in 2016.

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Since 3Q15, when crude oil prices started experiencing multiyear lows, XEC’s oil production percentage declined. That being said, XEC’s liquids production (oil plus natural gas liquids) as a percentage of its total production has mostly remained consistent since 1Q13, at ~50%. Liquids production made up 53% of XEC’s total production in 3Q16. Natural gas made up the remaining 47%.

Cimarex Energy’s 3Q16 realized prices

Cimarex Energy’s average realized crude oil (OIL) and condensates price fell from $41.89 per barrel in 3Q15 to $40.54 per barrel in 3Q16. Its average realized price for natural gas (UNG) fell from $2.68 per thousand cubic feet in 3Q15 to $2.66 per thousand cubic feet in 3Q16.

Its average realized price for natural gas liquids rose from $12.19 per barrel in 3Q15 to $14.14 per barrel in 3Q16.

Cimarex Energy’s 2016 production guidance

Cimarex’s 2016 production growth guidance range decreased to 960 MMcfe per day to 970 MMcfe (million cubic feet equivalent) per day. The previous guidance range from 2Q16 was 980 MMcfe per day–1,000 MMcfe per day. The updated guidance represents a year-over-year decrease of 2% compared to 2015 at the mid-point.

The decrease in XEC’s 2016 production guidance was mostly due to the timing of its new well completions.

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