Magnum Hunter Resources Inc., which will finalize a $1.9 billion stock merger Cimarex Energy Co. in early June, on Wednesday reported oil and natural gas production was up 26% from a year ago. The company also said it remains on track for production to grow 10-16% this year.
Last week the company reported net income of $33.1 million (36 cents/share) for the first quarter, a 29% increase over 1Q2004's $19.3 million (28 cents). Total revenues were $147.2 million, an increase of 47% compared with $100.4 million a year earlier. Operating profits were $61.9 million, a 52% increase over 1Q2004's $40.6 million, and net cash increased 19% to $68.9 million from $58.2 million.
Production volumes totaled 21.8 Bcfe, or 242.1 MMcfe/d in the quarter, a 25.8% increase over daily output in 1Q2004. Natural gas production was 70% of total equivalent production volumes for the first quarter of 2005.
A 2% sequential decline over 4Q2004 was attributed to start-up delays, mechanical problems and weather-related down time, primarily offshore in the Gulf of Mexico (GOM). These production related issues in 1Q2005 totaled 11 MMcfe/d, of which 8 MMcfe/d was attributed to the offshore GOM and 3 MMcfe/d was onshore. Had the approximately 11 MMcfe/d not been delayed, the company said its implied daily production rate of 253.1 MMcfe/d would have been 3% sequentially higher. and 32% higher than in 1Q2004.
"Although our average net daily production was diminished by operational issues largely outside of our control during the quarter, we nevertheless achieved record results," said CEO Richard R. Frazier. "Since first entering the Gulf of Mexico during fiscal year 1999, we have experienced weather- and mechanical-related delays in every reported first quarter; however, once the winter months are over we have also during this time achieved our stated growth rate expectation of approximately 10% for each and every year."
Currently, Magnum Hunter is averaging net daily production of around 252 MMcfe/d. It expects the fiscal-year 2005 daily production rate to average between 241-254 MMcfe/d, which would be 10-16% higher than fiscal 2004 levels.
Cimarex announced in January that it would buy Magnum Hunter (see NGI, Jan. 31). The shareholder vote has been set for June 6th, with final closing shortly thereafter, the company said.
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