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

What I'd like to do now is give you a region-by-region walk through, and I'll start with the Permian. There, we drilled and completed 39 gross, 27 net wells during the first quarter of 2012, completing 95% of those as producers.

Permian first quarter exploration development capital was $201 million or 50% of total capital. So as you can see, we're on a run rate of about $800 million in the Permian, and we'll see what we do going forward depending on our cash flow, our results and costs.

And our New Mexico horizontal second and third Bone Spring play, that's our most active play. Year-to-date, we drilled and completed 13 gross, 6 net wells. And our per well 30-day gross production from the 2012 Bone Spring wells averaged 590 barrels equivalent, that's a Boe per day and 87% of that is oil. Throughout our presentation, you're going to hear us talk about 30-day averages. We think that's the meaningful number in some of these wells. From time to time, I'm going to sprinkle in some instantaneous 24-hour rates, but it's the 30-day rate that we look at and that's one we encourage you to look in the measure of the well.

And getting back to second and third Bone Spring, we're continuing to see very strong results in this program. We're very pleased with our recent wells and how it's trending. And that's a number of reasons, all of which are testament to our exploration and operational folks.

Of note, we've upsized our hydraulic fractures, as has many of our competitors. We've gone from 5 stages to 8 stage per lateral, and we've also done some geoscience we've talked about in the past, and we're seeing lower average water cuts. So really getting that program, delivering some nice solid performance.

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