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Cimarex Energy's CEO Discusses Q4 2011 Results - Earnings Call Transcript

On Slide 8, it shows our core operating areas, and many of you are familiar with this but just to recap, of that 2.05 Tcf equivalent, 98% are Mid-Continent and Permian reserves, and fully 89% of our production are Mid-Continent and Permian. So those are the engines.

On Slide 9, it shows us graphically. Slide 9 shows our proved reserves as they've increased in the last few years. We have a very solid reserve base. As Paul said, our investments have pulled us towards liquids-rich areas. That's in part tactical, a little strategic, but it's mostly driven by the invisible hand of the disconnect between gas and oil prices, and we are just in a very nice position with one of the best Permian assets amongst our peers, and we can emphasize that oil production by simply shifting our weight. As you can see in 2011, we ended the year 41% liquids; 59% gas, that's a nice healthy growth; compound annual growth rate of 54% of liquids growth, and we ended the year with 82% proved developed reserves, 18% proved undeveloped.

The next slide, Slide 10, shows our proved reserves by region, and this again shows the solid growth that we're seeing out of the Permian and Mid-Continent. We've been growing the last few years, a compound annual growth rate of 28%. In 2010, we did sell our Riley Ridge asset in Sublette County, Wyoming. That was 210 Bcf of proved undeveloped gas reserves. That's the gray bar there on your slide on 10. We replaced those reserves, and accounting for that still increased our proved reserves 9%. If net of that sale, if we get back that sale out, we increased our proved reserves 23%. So a very solid year on a reserve basis.

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