Zacks Rank: Cimarex Energy carries a Zacks Rank #3 (Hold) which, when combined with +50.00% ESP, makes us confident of an earnings beat. Note that stocks with Zacks Ranks #1, 2 or 3 have a significantly higher chance of beating earnings. On the other hand, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement. What is Driving the Better-Than-Expected Earnings? As is the case with other oil and gas producers, Cimarex Energy’s revenues/earnings have borne the brunt of the freefall in realized prices over the past 12 months. However, the company has come up with certain strategy initiatives to overcome the industry-wide slump and outperform earnings estimates in the second quarter. Firstly, with an aggressive cost reduction program, Cimarex Energy is looking to shore up its margins even in this weak oil and gas pricing environment. As part of this strategy, the company has embarked on a policy to minimize service and lease operating costs. Secondly, Cimarex Energy has zeroed its focus on the core Cana-Woodford shale and the emerging Meramec plays, which will help it to strengthen the balance sheet through operational efficiencies and new technology applications. Finally, Cimarex Energy is set to exhibit strong production growth in the second quarter. During the first quarter, the company’s total production of crude oil and natural gas improved 28% from the year-ago quarter level to 946.7 million cubic feet equivalent per day. Natural gas output increased 25.5% year over year while the company’s liquids operations registered 34.7% improvement in volumes. We expect the same for the to-be-reported-quarter as well. Other Stocks to Consider Cimarex Energy is not the only company looking up this earnings season. We see likely earnings beats coming from these energy firms as well: CONE Midstream Partners L.P. CNNX has an Earnings ESP of +12.50% and a Zacks Rank #2 (Buy). The partnership is slated to release earnings on Aug 5. Seadrill Partners LLC SDLP has an Earnings ESP of +12.28% and a Zacks Rank #2. The partnership is slated to release earnings on Aug 26. Calumet Specialty Products Partners L.P. CLMT has Earnings ESP of +15.79% and a Zacks Rank #2. The partnership is likely to release earnings on Aug 5. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CIMAREX ENERGY (XEC): Free Stock Analysis Report CALUMET SPECLTY (CLMT): Free Stock Analysis Report SEADRILL PTNRS (SDLP): Free Stock Analysis Report CONE MIDSTREAM (CNNX): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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