CIMAREX ENERGY CO. (NYSE:XEC) Files An 8-K Regulation FD Disclosure

ME Staff 8-k
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CIMAREX ENERGY CO. (NYSE:XEC) Files An 8-K Regulation FD Disclosure

Item 7.01. Regulation FD Disclosure.

On May4, 2017, the Company issued a press release relating to the
matters described below. A copy of the press release is attached
hereto as Exhibit99.1.

The Company filed its Annual Report on Form10-K for the year
ended December31, 2016 with the Securities and Exchange
Commission (the SEC) on February24, 2017 (the Original Filing).
Subsequent to the filing of the Original Filing, in the course of
preparing the Companys consolidated financial statements for the
quarter ended March31, 2017, management identified an error in
the quarterly full-cost ceiling test calculations used in prior
periods to test the Companys oil and gas properties for possible
impairment. Specifically, the calculations did not properly
consider the Companys tax net operating loss carry forwards in
the calculation of the capitalized costs of net oil and gas
properties to be tested for impairment. This error also had the
effect of incorrectly reporting impairments in prior periods. The
incorrect impairments reported in prior periods resulted in the
overstatement of depletion expense in prior periods. Management
promptly reported the matter to the Audit Committee of the
Companys Board of Directors and KPMG LLP, the Companys
independent registered public accounting firm.

After considering the guidance in SEC Staff Accounting Bulletin
(SAB) No.99 and Accounting Standards Codification250, management
evaluated the materiality of the error on financial statement
items quantitatively and qualitatively and concluded that the
error was not material to any of the Companys prior annual or
interim period financial statements. The Audit Committee, after
consulting with separate independent accounting and legal
advisors, agreed with these findings. The Company plans to file
an amended Annual Report on Form10-K for 2016 (the Form10-K/A) to
correct the immaterial errors in its Consolidated Financial
Statements included in PartII,Item 8 (collectively referred to as
the Financial Statements) and related footnote disclosures as of
December31, 2016 and 2015 and for the years ended December31,
2016, 2015 and 2014 (including the unaudited quarterly periods
within 2016 and 2015) in accordance with SAB No.108, Considering
the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements. The Company
currently anticipates that the Form10-K/A will be filed with the
SEC on or before May10, 2017.

The ceiling limitation calculation is not intended to be
indicative of the fair market value of the Companys proved
reserves or future results. Impairment charges do not affect cash
flow from operating activities, but do adversely affect net
income (loss) and various components of the Companys balance
sheet. Any recorded impairment of oil and gas properties is not
reversible at a later date.

Preliminary estimates of the aggregate adjustments for the years
ended December31, 2016, 2015 and 2014 are as follows (in
thousands, unaudited):

Impairment of oil and gas properties

Previously reported

$

(719,142

)

$

(3,716,883

)

$

Corrected

(757,670

)

(4,033,295

)

Understatement

$

(38,528

)

$

(316,412

)

$

%

%

%

Depreciation, depletion and amortization

Reported

$

465,936

$

778,923

$

806,021

Corrected

392,348

731,460

775,577

Overstatement

$

73,588

$

47,463

$

30,444

%

%

%

Net income (loss)

Reported

$

(431,049

)

$

(2,408,948

)

$

507,204

Corrected

(408,803

)

(2,579,604

)

526,498

Over(under)statement

$

22,246

$

(170,656

)

$

(19,294

)

%

-7

%

-4

%

Net cash provided by operating
activities

Reported

$

599,225

$

691,500

$

1,619,365

Corrected

599,225

691,500

1,619,365

Over(under)statement

$

$

$

%

%

%

Stockholders equity(1)

Reported

$

2,360,064

$

2,797,678

$

4,500,632

Corrected

2,042,989

2,458,357

4,331,966

Overstatement

$

317,075

$

339,321

$

168,666

%

%

%

Debt

$

1,500,000

$

1,500,000

$

1,500,000

Debt to total capitalization(2)

Reported

%

%

%

Corrected

%

%

%

(1)Corrected Stockholders equity for each year includes a
cumulative catchup of $188.0 million, which gives effect to
corrections made to the 2013 and 2012 periods.

(2)The reconciliation of debt to total capitalization, which is
a non-GAAP measure, is: long-term debt of $1.5 billion for all
periods divided by the sum of long-term debt of $1.5 billion
plus stockholders equity of $2.04 billion, $2.46 billion and
$4.33 billion as of December31, 2016,

2015 and 2014, respectively. Management uses this non-GAAP
measure as one indicator of the Companys financial condition.
Management believes professional research analysts and rating
agencies use this non-GAAP measure for this purpose and to
compare the Companys financial condition to other companies
financial conditions. In addition, the Companys revolving
credit agreement requires us to maintain a total debt to
capitalization ratio (as defined in the credit agreement) of
not more than 65%.

Internal Control Consideration

The Original Filing included a report of managements assessment
regarding internal control over financial reporting and an
audit report of KPMG LLP, the Companys independent registered
public accounting firm, without qualifications. However, in
connection with the corrections to be made in the Form10-K/A,
management re-evaluated the effectiveness of the Companys
internal control over financial reporting as of December31,
2016 and concluded that a deficiency in the design of the
Companys internal controls related to the full cost ceiling
test represents a material weakness in the Companys internal
control over financial reporting and, therefore, that the
Company did not maintain effective internal control over
financial reporting as of December31, 2016. We will amend our
2016 Annual Report on Form10-K to reflect this determination as
of December31, 2016 and the Companys independent registered
public accounting firm, KPMG LLP, will reissue its February24,
2017 report on internal control over financial reporting as of
December31, 2016 to reflect an adverse opinion on the
effectiveness of internal control over financial reporting due
to the existence of a material weakness. A description of the
material weakness identified by management and managements plan
of remediation for that material weakness will be included in
PartII,Item 9A Controls and Procedures of the Form10-K/A.

The information contained in this Item 7.01, including
Exhibit99.1 attached hereto, is being furnished to the
Securities and Exchange Commission and shall not be deemed
filed for the purpose of Section18 of the Securities Exchange
Act of 1934, as amended (the Exchange Act). In addition, such
information shall not be incorporated by reference in any
filing made by the Company under the Exchange Act or the
Securities Act of 1933, as amended, except to the extent
specifically referred to in any such filings.

Earnings Call Re-Scheduled

Cimarex now expects to report first quarter 2017 results on
Wednesday, May10, 2017, before market open, to be followed by
its quarterly conference call at 11:00 AM EDT that same day.
The call will be webcast and is accessible via the Cimarex
website at www.cimarex.com. To join the live, interactive call,
please dial 866-367-3053 ten minutes before the scheduled start
time (callers in Canada dial 855-669-9657 and international
callers dial 412-902-4216).

A replay will be available on the companys website and via the
Cimarex App.

Cautionary Note Regarding Forward-Looking
Statements

This report contains, and the earning call will contain,
forward-looking statements within the meaning of Section27A of
the Securities Act of 1933, as amended, and Section21E of the
Securities Exchange Act of 1934, as amended. For example,
forward-looking statements include statements regarding the
filing of financial statements, the content and timing thereof,
the anticipated timing of filing the Form10-K/A, the
anticipated effect of the errors, including the anticipated
change in the Companys ceiling test impairments and statements
of income, the scope of the errors, and the anticipation that
additional adjustments will not be material. In some cases,
forward-looking statements can be identified by terms such as
may, will, intend, expect, plan, believe, estimate, predict,
anticipate or the like. These statements involve risks and
uncertainties, and actual results could differ materially from
the statements made in this report. Factors that might cause
these differences include, but are not limited to, potential
delays in the preparation of corrected financial statements,
the risk that additional information will come to light during
the course of the preparation of corrected financial statements
or the review thereof by the Companys registered independent
accounting firm that alters the scope or magnitude of the
corrections, potential reviews, investigations or other
proceedings by government authorities, stockholders or other
parties, the risk that the Companys remediation plan will be
unsuccessful to prevent or detect additional misstatements and
potential delays arising from the corrections, including a
potential inability to prepare financial statements or file
periodic reports on a timely basis, which would be a default
under the Companys senior secured credit facility and note
indentures as well as a violation of the Securities Exchange
Act and the listing rulesof the NYSE. The Company does not
assume any obligation to update its forward-looking statements
to reflect new information and developments.

Item9.01. Financial Statements and Exhibits

(d)

Exhibits

Number

Exhibit

99.1

Press Release of Cimarex Energy Co. dated May4, 2017.


About CIMAREX ENERGY CO. (NYSE:XEC)

Cimarex Energy Co. is an independent oil and gas exploration and production company. The Company’s segment is exploration and production. Its operations are located mainly in Oklahoma, Texas and New Mexico. Its operations are focused in approximately two main areas, such as the Permian Basin and the Mid-Continent region. Its Permian Basin region includes west Texas and southeast New Mexico. Its Mid-Continent region consists of Oklahoma and the Texas Panhandle. Its Permian Basin efforts are located in the western half of the Permian Basin known as the Delaware Basin. It is focused on drilling horizontal wells that yielded oil and liquids-rich gas from the Wolfcamp shale, the Bone Spring formation and the Avalon shale. The Permian region produces approximately 542 million cubic feet equivalent per day. In the Mid-Continent region, it is focused in the Cana-Woodford shale and the Meramec horizon. The Mid-Continent region produces approximately 432 million cubic feet equivalent per day.

CIMAREX ENERGY CO. (NYSE:XEC) Recent Trading Information

CIMAREX ENERGY CO. (NYSE:XEC) closed its last trading session down -2.41 at 115.83 with 1,452,111 shares trading hands.