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Cimarex Energy's CEO Discusses Q1 2012 Results - Earnings Call Transcript

And with that, I'll go ahead and turn the call over to Tom.

Thomas E. Jorden

Thanks, Mark. Good morning, everyone, or good afternoon, at least for us. First quarter 2012 is a good quarter for Cimarex. We reported net income of $106 million or $1.23 per diluted share, and our cash flow from operations this quarter was $303 million, which continues to benefit from strong oil and natural gas liquids revenues.

First quarter 2012 production volumes averaged 603.5 million cubic feet equivalent per day or a barrel of oil equivalent just over 100,000 barrel of oil equivalent per day. Our first quarter 2012 Permian and Mid-Continent volumes hit an all-time high of 554.2 million cubic feet equivalent per day, growing 26% over the same period in 2011. That growth includes a 50% increase in Permian oil volumes over the first quarter of 2011 to a record 21,800 barrels of oil per day this quarter.

Overall, oil production also reached an all-time high of 29,562 barrels per day, and that is just a consequence of the strategy we've talked about in the past of emphasizing that Permian Basin and growing our oil and other liquids production. That liquids production accounted for 47% of our equivalent volumes this quarter and comprise 79% of our $411 million of oil and gas and NGL revenue.

Oil price realizations increased 9% this quarter to $99.28 per barrel, while natural gas prices fell 34%, averaging $2.92 per Mcf. Driving our growth are continued good results from our drilling programs. We have a great inventory of strong projects. In the first quarter, we drilled and completed 73 gross, 40 net wells, investing $400 million on exploration and development. Of that total, 50% were invested in projects located in the Permian Basin, 48% in the Mid-Continent and 2% in the Gulf Coast and other.

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