Cimarex Energy Co. raised its production and capital expenditures (capex) guidance figures for 2016 and said it will continue running a five-rig drilling program for the rest of the year in order to increase drilling in the Meramec formation and accelerate completions in the Midcontinent and the Permian Basin.

The Denver-based company said it now projects 2016 production volumes will average 0.98-1 Bcfe/d, up slightly from the 985 MMcfe/d recorded in 2015. Production in the third quarter is expected to average 950-980 MMcfe/d. The projections for both the full-year 2016 and 3Q2016 anticipate liquids will make up 53% of total production.

Capex for the full-year is now expected to total $750 million, up from the $600-650 million range it had proposed spending in 2016 at the beginning of the year. Cimarex plans to run five rigs, three in the Permian's Delaware Basin and two in the Anadarko Basin, for the rest of the year. The $750 million includes $600 million for drilling and completions.

"The increased capital will be used to further delineate the Meramec formation in the Anadarko Basin, push the completion of Woodford [Shale] infill wells forward, and add a handful of new wells through our Delaware Basin program," CEO Thomas Jorden said during an earnings call Thursday to discuss 2Q2016.

Cimarex reported total production of 974.2 MMcfe in 2Q2016, a 5% decrease from 2Q2015 (1.03 Bcfe). Natural gas production fell 0.9% (from 466.3 MMcf in 2Q2015 to 461.9 MMcf in 2Q2016) and oil production declined 21% (56,261 to 44,424 bbl), but production of natural gas liquids (NGLs) increased 10.5% (37,070 to 40,961 bbl).

Broken down by play, production increased 10.5% in the Midcontinent (from 419.1 MMcfe in 2Q2015 to 463 MMcfe in 2Q2016), but it fell 14.6% in the Permian (595.1 to 508.5 MMcfe). Natural gas production rose 3.3% in the Midcontinent (270.2 to 279.1 MMcf) but fell 4.3% in the Permian (189.4 to 181.2 MMcf), while oil production increased 24.4% in the Midcontinent (from 7,181 to 8.933 bbl) but declined 27.1% in the Permian (48,448 to 35,338 bbl). NGL production increased in both areas -- by 23.2% in the Midcontinent (17,633 to 21,716 bbl) and by 0.3% in the Permian (19,169 to 19,219 bbl).

Cimarex brought 34 gross (14 net) wells online in 2Q2016, compared to 45 gross (24 net) in the previous second quarter. Of the newest wells brought online, 21 gross (five net) were in the Midcontinent while 13 gross (nine net) were in the Permian. So far, the company has brought 56 gross (19 net) wells online in the first half of 2016, compared to 98 gross (57 net) in 1H2015.

In the Permian, Cimarex said it now has producing 15 wells with 10,000-foot laterals targeting the Lower Wolfcamp in Culberson County, TX. The wells had an average 30-day initial gross peak production rate of 2,361 boe/d, of which 46% is natural gas, 29% NGL and 25% oil. One of the wells, Flying Ebony 19 State A #5H, recorded average 30-day gross peak production of 3,127 boe/d (47% natural gas, 30% NGL, 23% oil). The company said the Flying Ebony well was completed using a larger stimulation.

"The success of the frac design used on the Flying Ebony is more than just a pound of sand per foot increase," said John Lambuth, vice president for exploration. "It is a direct consequence of Cimarex developing a strong understanding of the geology and work mechanics for this interval, which in turn leads to design changes not just in the amount of sand pumped, but also in the type of sand, cluster design, cluster count, stage phasing along with the type of fluid.

"This type of detail frac design is taking place internally for each of our perspective zones in both basins, which [in turn] is leading to the strong well performances that we have achieved across the board."

Meanwhile, in the Midcontinent, Cimarex said it plans to begin completion activities for wells targeting the Woodford Shale in the six-section Eastern Core infill development in September. The company had originally planned to begin the work in October. Cimarex also said it was continuing delineating its 115,000 net acres in Meramec formation.

The company took note of two Midcontinent wells in Oklahoma it said served as "bookends" for its acreage position there. In the northwest part of its acreage, the Peterson 1H-2821X well, located in Blaine County, recorded average 30-day gross peak production of 19 MMcfe (54% oil, 30% natural gas, 16% NGL). Meanwhile, in the southeast, the Sims 1H-2017X well in Canadian County, had average 30-day gross peak production of 12.8 MMcfe (46% natural gas, 29% oil, 25% NGL).

"These two bookend wells on our acreage are good confirmation of our ability to adjust both the landing zone and frac design to achieve very good rate of return of results across the breadth of our Meramec acreage," Lambuth said.

The Midcontinent -- specifically, the SCOOP (South Central Oklahoma Oil Province) and STACK (because of stacked pay zones) plays in Oklahoma -- was also a subject during a separate earnings call Wednesday by Oneok Partners LP.

"Based on the conversations we've had with producer customers in the STACK and SCOOP plays and with the results they are seeing, we expect to gather an incremental 100,000 barrels per day of natural gas liquids from the play," Oneok CEO Terry Spencer said.

During the Q&A session of Cimarex's call, Jorden said the company "isn't necessarily looking for an absolute price signal" to add more rigs, but is more interested in seeing commodity price stability.

"We want to manage our balance sheet, we watch our cash flow and we are absolutely committed to be disciplined and keep the health of this company second to none," Jorden said. "We're in pretty good shape if we see stability [in commodity prices]."

Cimarex reported a net loss of $270.3 million (minus $2.91/diluted share) for 2Q2016, compared to a net loss of $600.2 million (minus $6.47/share) in 2Q2015. Revenues totaled $298.9 million in 2Q2016, compared to $424.3 million in 2Q2015. Net cash from operating activities totaled $128.6 million in 2Q2016, compared to $257.4 million in the previous second quarter. The company said it had $642 million in cash at the end of June.

Stay up to date on 2Q16 earnings and projections for the remainder of the year with NGI'sEarnings Call and Coverage sheet.