Denver-based Cimarex Energy Co., whose exploration efforts are centered in the MidContinent and Gulf Coast regions, reported Wednesday that its second quarter aggregate oil and natural gas output handily beat its production guidance, increasing 28% over a year ago on the strength of significant natural gas production.

The independent reported 2Q output was 220 MMcfe/d, pushed by new wells in Oklahoma, Texas and Louisiana. The company was formed two years ago by merging a spin off of Helmerich & Payne Inc.’s oil and gas division with Denver-based Key Production Co.

Compared with 2Q2003, gas production increased 34% percent to 176.9 MMcf/d, while oil volumes increased 8% to 7,184 bbl/d. During the first six months, total production averaged 208 MMcfe/d, an increase of 19% compared with a year ago.

Cimarex, which will release its 2Q earnings on Aug. 4, now is forecasting the last six months’ production to average 215-225 MMcfe/d, which would result in full-year 2004 average output of 210-215 MMcfe/d, versus 180 MMcfe/d in 2003. The forecast also would top Cimarex’s previous 2004 guidance of 195-210 MMcfe/d.

RBC Capital Markets analysts were impressed with the numbers. Joseph D. Allman and Scott Hanold said the numbers “blow away production guidance” with “better-than-expected” numbers. “Our new full-year forecast is 215 MMcfe/d and assumes a slight increase in production during both the 3Q2004 and 4Q2004.”

RBC also upped its earnings per share guidance to $2.99 from $2.81 because “the company benefits from having no hedges in an environment of strong commodity prices.” Allman and Hanold said, “The stock will likely respond well to the strong operational news. It is already trading above our $28 price target.”

Wednesday afternoon Cimarex was trading at around $32.10, after opening at $31.60.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.