Cimarex Energy Co. will spend $1.4-1.6 billion on capital expenditures (capex) in fiscal 2012, with nearly all of it devoted to drilling for oil and natural gas liquids (NGLs) in the Permian Basin and the Cana-Woodford Shale, company officials said Wednesday.

The Denver-based producer also said it plans to ramp up full-year production from its Permian and Midcontinent assets to between 580 MMcfe/d and 610 MMcfe/d, a 19-25% increase from 2011. Higher production is set to begin immediately to within a range of 550 to 565 MMcfe/d by the end of March. The company projects its full-year total production volume will average 615-650 MMcfe/d, up 4-10% from 2011.

“As we look into 2012, it’s really obviously all about Permian and Cana,” CEO Thomas Jorden told financial analysts during a conference call to discuss 4Q2011 earnings. “The guidance range of $1.4-1.6 [billion] involves the possibility of slowing down a little bit at Cana, and we’re debating that. Right now, looking at the markets, we think that program generates really nice returns today. The Permian is just lights out, there’s no question that it is generating outstanding returns at today’s costs and in today’s pricing environment.”

Cimarex plans to spend $775 million (52% of capex) on exploration and development (E&D) in the Permian, followed by $625 million (42%) on Midcontinent assets, $80 million (5%) on Gulf Coast assets and $20 million (1%) elsewhere. Cimarex is allocating more money to the Permian in FY2012 than the previous fiscal year (up 6% from $731 million), but less to the Midcontinent (down nearly 16% from $741 million) and the Gulf Coast (also down nearly 16% from $95 million).

“We have a lot of flexibility for 2012,” Jorden said. “We have a tremendous opportunity set [but] we are going to adapt and change to a very changing environment. We’re watching gas prices and liquids prices carefully.”

This year Cimarex plans to deploy between 11 and 15 drilling rigs in the Permian with the goal of drilling 60 gross wells in the Bone Spring, 50 vertical wells in the Paddock area and 30 unconventional wells in the Wolfcamp and Avalon shales. Meanwhile, the company plans to deploy another 10-12 rigs in the Midcontinent to drill about 110 gross wells in the core area of its Cana-Woodford Shale holdings, plus another 20 wells elsewhere in the play.

“Depending on local conditions, we may switch some capital from Cana to the Permian, or not,” Jorden said. “Right now we’re seeing outstanding returns in the Permian, and our Permian group is hungry for more capital.”

Cimarex completed 331 gross (174 net) wells during 2011, of which 180 were drilled in the Midcontinent and 140 were in the Permian. Cimarex has 24 operated rigs running, an even 12 in both the Permian and Midcontinent.

Year-end proved reserves for 2011 totaled 2.05 Tcfe, of which 1.38 Tcfe (67%) was in the Midcontinent, including 862 Bcfe in the Cana-Woodford. Proved reserves in the Permian amounted to 620 Bcfe (30% of year-end total) and 49 Bcfe (2.4%) was in the Gulf Coast or elsewhere. Cimarex’s total proved reserves were 9% higher from the 1.88 Tcfe reported at the end of 2010. The company sold 226 Bcfe of proved reserves, but added 587 Bcfe (45% oil and NGLs, 55% natural gas) through extensions and discoveries.

Cimarex reported 4Q2011 net income of $116.9 million ($1.36/diluted share), which was $700,000 lower than the $117.6 million ($1.37) reported in 4Q2010. Although the company said 4Q2011 production volumes averaged 601.4 MMcfe/d — a decrease from the record output of 604.5 MMcfe/d achieved in 4Q2010 — production volumes from the Permian and Midcontinent hit a record high of 531.1 MMcfe/d during 4Q2011, a 17% increase from the previous fourth quarter.

Shares of the company closed at $81.59 (up 18.62%, or $12.81) on Wednesday on the New York Stock Exchange. On Thursday the stock finished at $80.96/share (down 0.77%, or 63 cents).