XEC - Cimarex Energy - With all of the optimism on hand the analyst community has boosted their earnings estimates

Cimarex Energy Co. (XEC) just posted another great quarter in which its profit more than doubled from the same period last year. The company's excellent results were driven by higher production and a significant increase in the average selling prices of both gas and oil. Moving forward, Cimarex says its plan to invest $1.1 to $1.3 billion in 2008 in development and production projects, which should lead to a production increase between 8% and 12% on the year. Higher volumes, higher prices, this looks like a virtual formula for another great quarter.

Cimarex Energy Co. operates as an independent oil and gas exploration and production company. It primarily operates in Texas, Oklahoma, New Mexico, Louisiana, and the Gulf of Mexico. Cimarex Energy Co. was founded in 2002, has a market cap. of $5.5 billion and is headquartered in Denver, Colorado.

Awesome First-Quarter Results

In keeping with the trend of oil exploration companies, Cimarex reported excellent first-quarter results on May 6, more than doubling its profit from the same period last year.

Net income jumped to $149.8 million, up from $64.6 million in the same period last year. Revenue was increased to $454.4 million, up from $293.5 million last year. This produced earnings of $1.76, well ahead of last year's results and analyst estimates.

This is the fourth time in the last four quarters that Cimarex has surprised and beaten analyst estimates, having done so by an average of 20 cents, or 17.89%.

Cimarex attributed the increase to higher production and sharply increasing energy prices. First-quarter 2008 gas prices increased 25% to $8.38 per thousand cubic feet (Mcf) and oil rose 71% to $94.38 per barrel from the same period of 2007.

Increased Production

First-quarter 2008 daily oil and gas production grew 8% over last year's first quarter. Gas production in the latest quarter averaged 339.7 million cubic feet per day, an increase of 5% over the first-quarter 2007 and oil production grew 16% to an average of 22,757 barrels per day. Growing production reflects strong results from drilling.

Cimarex was also able to grow its provisional capital for exploration and development to $307 million from $245.5 million last year. Cimarex is projecting 2008 exploration and development expenditures between $1.1 billion and $1.3 billion.

Full-year gas and oil production is projected to increase 8%-12%.

Estimates Rising

With all of the optimism on hand the analyst community has boosted their earnings estimates. Within the last 30 days, the current-year estimate has tacked on 58 cents and advanced to $6.43 per share.

This higher earnings projection makes the company's stock look well priced at $68, carrying a forward P/E multiple of just over 10X.

The Chart

The Cimarex chart looks great. Shares have been on a great run since breaking higher on Feb 14, advancing from just above $43 to their current location just below $69, a very impressive short-term return of more than 55%. More recently, shares once again broke higher, this time from a level of resistance just above $63, creating a new 52-week and all-time high. Moving forward, its into uncharted territory, as this stock is driven by the strength of this company's excellent earnings profile. Take a look below.

Content Courtesy: Zacks Investment Research

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