10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)
☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period ended		June 30, 2020
or
☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______________ to _______________

 Commission File No. 001-31446

CIMAREX ENERGY CO.

(Exact name of registrant as specified in its charter)

Delaware			45-0466694
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1700 Lincoln Street, Suite 3700	Denver	Colorado	80203
(Address of principal executive offices)			(Zip Code)

(303) 295-3995

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	XEC	New York Stock Exchange

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

        Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
						Emerging growth company	☐

        If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

          Yes ☐  No ☒

        The number of shares of Cimarex Energy Co. common stock outstanding as of July 31, 2020 was 102,048,311.

CIMAREX ENERGY CO.

Table of Contents

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2020 and December 31, 2019	7
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the three months and six months ended June 30, 2020 and 2019	8
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2020 and 2019	9
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three months and six months ended June 30, 2020 and 2019	10
	Notes to Condensed Consolidated Financial Statements (Unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	54
Item 4.	Controls and Procedures	55
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 6.	Exhibits	62
Signatures		63

GLOSSARY

Bbls—Barrels

Bcf—Billion cubic feet

BOE—Barrels of oil equivalent

Gross Wells—The total wells in which a working interest is owned.

MBbls—Thousand barrels

MBOE—Thousand barrels of oil equivalent

Mcf—Thousand cubic feet

MMBtu—Million British thermal units

MMcf—Million cubic feet

Net Wells—The sum of the fractional working interest owned in gross wells expressed in whole numbers and fractions of whole numbers.

NGL or NGLs—Natural gas liquids

Energy equivalent is determined using the ratio of one barrel of crude oil, condensate, or NGL to six Mcf of natural gas.

CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

Throughout this Form 10-Q, we make statements that may be deemed “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In particular, in our Management’s Discussion and Analysis of Financial Condition and Results of Operations, we provide projections of our 2020 capital expenditures. All statements, other than statements of historical facts, that address activities, events, outcomes, and other matters that Cimarex plans, expects, intends, assumes, believes, budgets, predicts, forecasts, projects, estimates, or anticipates (and other similar expressions) will, should, or may occur in the future are forward-looking statements. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Form 10-Q and our Form 10-K for the year ended December 31, 2019. All the risks disclosed in this Form 10-Q and our Form 10-K may be amplified by the COVID-19 outbreak and its unpredictable nature. Forward-looking statements include statements with respect to, among other things:

•Fluctuations in the price we receive for our oil, gas, and NGL production, including local market price differentials, which may be exacerbated by the demand destruction resulting from the highly transmissible and pathogenic coronavirus known as severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) that causes the disease known as COVID-19;

•Cash flow and anticipated liquidity;

•Disruptions to the availability of workers and contractors due to illness and stay at home orders related to the COVID-19 pandemic;

•The availability of gathering, pipeline, refining, transportation and other midstream and downstream activities and our ability to sell oil, gas, and NGLs, which may be negatively impacted by the COVID-19 pandemic and risks and lead to a lack of any available markets;

•Availability of supply chains and critical equipment and supplies, which may be negatively impacted by the COVID-19 pandemic and other risks;

•Operating costs and other expenses;

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•The effectiveness of our internal control over financial reporting and our ability to remediate a material weakness in our internal control over financial reporting;

•Declines in the SEC PV10 value of our oil and gas properties resulting in full cost ceiling test impairments to the carrying values of our oil and gas properties;

•Impairments of goodwill;

•Our continuing compliance with the financial covenant contained in our amended and restated credit agreement;

•The requirement to establish valuation allowances against our net deferred tax assets;

•Our hedging activities and the viability of our hedging counterparties, many of whom have been negatively impacted by the COVID-19 pandemic;

•Availability of financing and access to capital markets;

•Higher than expected costs and expenses, including the availability and cost of services and materials, which may be negatively impacted by the COVID-19 pandemic;

•Timing and amount of future production of oil, gas, and NGLs;

•Reductions in the quantity of oil, gas, and NGLs sold and prices received because of decreased demand and/or curtailments in production relating to mechanical, transportation, storage, capacity, marketing, weather, the COVID-19 pandemic, or other problems;

•Potential payments for failing to meet minimum oil, gas, and NGL delivery or sales commitments;

•Estimates of proved reserves, exploitation potential, or exploration prospect size;

•Our ability to successfully integrate the business acquired from Resolute Energy Corporation (“Resolute”);

•Unknown liabilities related to Resolute;

•Amount, nature, and timing of capital expenditures;

•Administrative, legislative, and regulatory changes;

•Operating and capital expenditures that are either significantly higher or lower than anticipated because the actual cost of identified projects varied from original estimates and/or from the number of exploration and development opportunities being greater or fewer than currently anticipated;

•Exploration and development opportunities that we pursue may not result in economic, productive oil and gas properties;

•Drilling of wells;

•Increased financing costs due to a significant increase in interest rates;

•Proving up undeveloped acreage;

•Compliance with environmental and other regulations;

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•Costs and availability of third party facilities for gathering, processing, refining, and transportation;

•Risks associated with concentration of operations in one major geographic area;

•Environmental liabilities;

•The ability to receive drilling and other permits and rights-of-way in a timely manner, which may be negatively impacted by the impact of COVID-19 restrictions on regulatory employees who process and approve permits and rights-of-way;

•Development drilling and testing results;

•The potential for production decline rates to be greater than expected;

•Performance of acquired properties and newly drilled wells;

•Regulatory approvals, including regulatory restrictions on state and federal lands, which may be negatively impacted by the impact of COVID-19 restrictions on regulatory employees responsible for regulatory approvals and by a change in presidential administration;

•Legislative or regulatory changes, including initiatives related to hydraulic fracturing, emissions, and disposal of produced water, which may be negatively impacted by a change in presidential administration;

•Unexpected future capital expenditures;

•Economic and competitive conditions;

•The availability and cost of capital;

•The ability to obtain industry partners to jointly explore certain prospects, and the willingness and ability of those partners to meet capital obligations when requested;

•Changes in estimates of proved reserves;

•Derivative and hedging activities;

•The success of the company’s risk management activities;

•Title to properties;

•Litigation;

•The ability to complete property sales or other transactions; and

•Other factors discussed in the company’s reports filed with the Securities and Exchange Commission (“SEC”).

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, many of which are beyond our control, incident to the exploration for and development, production, and sale of oil, gas, and NGLs.

These risks include, but are not limited to, commodity price volatility, demand, capacity, inflation, lack of availability of goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating proved oil and gas reserves and in projecting future rates of production,

5

production type curves, well spacing, timing of development expenditures, and other risks described herein. Many of these risks can be exacerbated by epidemics and pandemics including the current COVID-19 pandemic.

Reserve engineering is a subjective process of estimating underground accumulations of oil and gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data and the interpretation of such data by our engineers. As a result, estimates made by different engineers often vary from one another. In addition, the results of drilling, testing, and production activities may justify revisions of estimates that were made previously. If significant, such revisions could change the timing of future production and development drilling. Accordingly, reserve estimates are generally different from the quantities of oil and gas that are ultimately recovered.

Risk factors related to acquisitions, including our acquisition of Resolute, include, among others: the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected, the risk that the combined company may be unable to achieve synergies or other anticipated benefits of the transaction or it may take longer than expected to achieve those synergies or benefits, and other important factors, such as expenses related to integration, that could cause actual results to differ materially from those projected.

Should one or more of the risks or uncertainties described above or elsewhere in this Form 10-Q or in our Annual Report on Form 10-K for the year ended December 31, 2019 cause our underlying assumptions to be incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, express or implied, included in or incorporated by reference into this Form 10-Q and attributable to Cimarex are qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Cimarex or persons acting on its behalf may issue. Cimarex does not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date of filing this Form 10-Q with the SEC, except as required by law.

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PART I

ITEM 1. Financial Statements

CIMAREX ENERGY CO.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share information)

(Unaudited)

	June 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	43,842	$	94,722
Accounts receivable, net of allowance:
Trade	58,572		57,879
Oil and gas sales	180,912		384,707
Gas gathering, processing, and marketing	5,342		5,998
Oil and gas well equipment and supplies	51,184		47,893
Derivative instruments	71,590		17,944
Prepaid expenses	10,250		10,759
Other current assets	2,410		1,584
Total current assets	424,102		621,486
Oil and gas properties at cost, using the full cost method of accounting:
Proved properties	21,014,098		20,678,334
Unproved properties and properties under development, not being amortized	1,258,002		1,255,908
	22,272,100		21,934,242
Less—accumulated depreciation, depletion, amortization, and impairment	(18,373,655)		(16,723,544)
Net oil and gas properties	3,898,445		5,210,698
Fixed assets, net of accumulated depreciation of $423,873 and $389,458, respectively	478,553		519,291
Goodwill	—		716,865
Derivative instruments	—		580
Other assets	68,688		71,109
	$	4,869,788	$	7,140,029
Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity
Current liabilities:
Accounts payable:
Trade	$	13,746	$	36,280
Gas gathering, processing, and marketing	11,286		12,740
Accrued liabilities:
Exploration and development	30,205		112,228
Taxes other than income	33,427		54,446
Other	204,830		252,304
Derivative instruments	51,556		16,681
Revenue payable	102,824		207,939
Operating leases	56,901		66,003
Total current liabilities	504,775		758,621
Long-term debt principal	2,000,000		2,000,000
Less—unamortized debt issuance costs and discounts	(13,729)		(14,754)
Long-term debt, net	1,986,271		1,985,246
Deferred income taxes	50,524		338,424
Asset retirement obligation	150,374		154,045
Derivative instruments	23,210		1,018
Operating leases	155,023		184,172
Other liabilities	67,144		60,742
Total liabilities	2,937,321		3,482,268
Commitments and contingencies (Note 10)
Redeemable preferred stock - 8.125% Series A Cumulative Perpetual Convertible Preferred Stock, $0.01 par value, 62,500 shares authorized and issued (Note 5)	81,620		81,620
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 102,151,096 and 102,144,577 shares issued, respectively	1,022		1,021
Additional paid-in capital	3,241,244		3,243,325
(Accumulated deficit) retained earnings	(1,391,419)		331,795
Total stockholders’ equity	1,850,847		3,576,141
	$	4,869,788	$	7,140,029

See accompanying Notes to Condensed Consolidated Financial Statements.

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CIMAREX ENERGY CO.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share information)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenues:
Oil sales	$	138,817	$	411,766	$	499,797	$	761,072
Gas and NGL sales	100,261		126,044		198,742		343,959
Gas gathering and other	11,589		9,769		25,172		20,031
Gas marketing	(1,284)		(1,116)		(1,498)		(1,642)
	249,383		546,463		722,213		1,123,420
Costs and expenses:
Impairment of oil and gas properties	941,198		—		1,274,849		—
Depreciation, depletion, and amortization	194,954		213,327		410,040		403,744
Asset retirement obligation	1,661		2,157		6,385		4,206
Impairment of goodwill	—		—		714,447		—
Production	64,337		88,995		151,573		167,399
Transportation, processing, and other operating	53,282		54,107		108,204		113,682
Gas gathering and other	3,526		6,560		11,824		11,742
Taxes other than income	16,486		41,033		47,447		74,727
General and administrative	26,226		24,911		51,735		53,995
Stock compensation	6,747		6,494		13,141		13,207
Loss (gain) on derivative instruments, net	123,885		(40,768)		(103,055)		74,684
Other operating expense, net	130		590		381		8,916
	1,432,432		397,406		2,686,971		926,302
Operating (loss) income	(1,183,049)		149,057		(1,964,758)		197,118
Other (income) and expense:
Interest expense	23,047		24,674		46,228		45,079
Capitalized interest	(12,939)		(16,805)		(26,121)		(25,547)
Loss on early extinguishment of debt	—		—		—		4,250
Other, net	3,496		(2,167)		2,625		(4,408)
(Loss) income before income tax	(1,196,653)		143,355		(1,987,490)		177,744
Income tax (benefit) expense	(271,506)		34,046		(288,061)		42,119
Net (loss) income	$	(925,147)	$	109,309	$	(1,699,429)	$	135,625
Earnings (loss) per share to common stockholders:
Basic	$	(9.28)	$	1.07	$	(17.05)	$	1.34
Diluted	$	(9.28)	$	1.07	$	(17.05)	$	1.34
Comprehensive (loss) income:
Net (loss) income	$	(925,147)	$	109,309	$	(1,699,429)	$	135,625
Other comprehensive income:
Change in fair value of investments, net of tax of $0, $89, $0 and $428, respectively	—		304		—		1,453
Total comprehensive (loss) income	$	(925,147)	$	109,613	$	(1,699,429)	$	137,078

See accompanying Notes to Condensed Consolidated Financial Statements.

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CIMAREX ENERGY CO.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Net (loss) income	$	(1,699,429)	$	135,625
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Impairment of oil and gas properties	1,274,849		—
Depreciation, depletion, and amortization	410,040		403,744
Asset retirement obligation	6,385		4,206
Impairment of goodwill	714,447		—
Deferred income taxes	(287,900)		42,119
Stock compensation	13,141		13,207
(Gain) loss on derivative instruments, net	(103,055)		74,684
Settlements on derivative instruments	107,055		(2,814)
Loss on early extinguishment of debt	—		4,250
Amortization of debt issuance costs and discounts	1,602		1,502
Changes in non-current assets and liabilities	7,019		2,749
Other, net	6,795		8,152
Changes in operating assets and liabilities:
Accounts receivable	204,615		117,692
Other current assets	1,495		(761)
Accounts payable and other current liabilities	(203,562)		(140,272)
Net cash provided by operating activities	453,497		664,083
Cash flows from investing activities:
Acquisition of Resolute Energy, net of cash acquired (Note 13)	—		(284,441)
Oil and gas capital expenditures	(418,580)		(711,757)
Other capital expenditures	(38,052)		(40,141)
Sales of oil and gas assets	830		13,233
Sales of other assets	1,188		434
Net cash used by investing activities	(454,614)		(1,022,672)
Cash flows from financing activities:
Borrowings of long-term debt	161,000		1,710,310
Repayments of long-term debt	(161,000)		(2,081,000)
Financing, underwriting, and debt redemption fees	(1,557)		(11,791)
Finance lease payments	(2,808)		(1,555)
Dividends paid	(45,209)		(38,647)
Employee withholding taxes paid upon the net settlement of equity-classified stock awards	(189)		(654)
Proceeds from exercise of stock options	—		674
Net cash used by financing activities	(49,763)		(422,663)
Net change in cash and cash equivalents	(50,880)		(781,252)
Cash and cash equivalents at beginning of period	94,722		800,666
Cash and cash equivalents at end of period	$	43,842	$	19,414

See accompanying Notes to Condensed Consolidated Financial Statements.

9

CIMAREX ENERGY CO.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(Unaudited)

				Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
Balance, December 31, 2019	102,145	$	1,021	$	3,243,325	$	331,795	$	3,576,141
Dividends paid on stock awards subsequently forfeited	—	—		6		23		29
Dividends declared on common stock ($0.22 per share)	—	—		—		(22,548)		(22,548)
Dividends declared on redeemable preferred stock ($20.3125 per share)	—	—		—		(1,269)		(1,269)
Net loss	—	—		—		(774,282)		(774,282)
Common stock reacquired and retired	(12)	—		(165)		—		(165)
Restricted stock forfeited and retired	(31)	—		—		—		—
Stock-based compensation	—	—		11,594		—		11,594
Balance, March 31, 2020	102,102	$	1,021	$	3,254,760	$	(466,281)	$	2,789,500
Dividends paid on stock awards subsequently forfeited	—	—		1		7		8
Dividends declared on common stock ($0.22 per share)	—	—		(22,561)		2		(22,559)
Dividends declared on redeemable preferred stock ($20.3125 per share)	—	—		(1,269)		—		(1,269)
Net loss	—	—		—		(925,147)		(925,147)
Issuance of restricted stock awards	66	1		(1)		—		—
Common stock reacquired and retired	(2)	—		(24)		—		(24)
Restricted stock forfeited and retired	(15)	—		—		—		—
Stock-based compensation	—	—		10,338		—		10,338
Balance, June 30, 2020	102,151	$	1,022	$	3,241,244	$	(1,391,419)	$	1,850,847

See accompanying Notes to Condensed Consolidated Financial Statements.

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CIMAREX ENERGY CO.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(Unaudited)

				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
Balance, December 31, 2018	95,756	$	958	$	2,785,188	$	542,885	$	755	$	3,329,786
Dividends paid on stock awards subsequently forfeited	—	—		—		2		—		2
Dividends declared on common stock ($0.20 per share)	—	—		—		(20,308)		—		(20,308)
Dividends declared on redeemable preferred stock ($20.3125 per share)	—	—		—		(1,269)		—		(1,269)
Net income	—	—		—		26,316		—		26,316
Issuance of stock for Resolute Energy acquisition (Note 13)	5,652	56		412,959		—		—		413,015
Unrealized change in fair value of investments, net of tax	—	—		—		—		1,149		1,149
Issuance of restricted stock awards	11	—		—		—		—		—
Common stock reacquired and retired	(10)	—		(654)		—		—		(654)
Restricted stock forfeited and retired	(4)	—		—		—		—		—
Exercise of stock options	3	—		80		—		—		80
Stock-based compensation	—	—		13,245		—		—		13,245
Balance, March 31, 2019	101,408	$	1,014	$	3,210,818	$	547,626	$	1,904	$	3,761,362
Dividends paid on stock awards subsequently forfeited	—	—		1		4		—		5
Dividends declared on common stock ($0.20 per share)	—	—		—		(20,330)		—		(20,330)
Dividends declared on redeemable preferred stock ($20.3125 per share)	—	—		—		(1,270)		—		(1,270)
Net income	—	—		—		109,309		—		109,309
Unrealized change in fair value of investments, net of tax	—	—		—		—		304		304
Issuance of restricted stock awards	54	1		(1)		—		—		—
Restricted stock forfeited and retired	(4)	—		—		—		—		—
Exercise of stock options	15	—		594		—		—		594
Stock-based compensation	—	—		11,919		—		—		11,919
Balance, June 30, 2019	101,473	$	1,015	$	3,223,331	$	635,339	$	2,208	$	3,861,893

See accompanying Notes to Condensed Consolidated Financial Statements.

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CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

1.BASIS OF PRESENTATION

Cimarex Energy Co. (“Cimarex,” “we,” or “us”), a Delaware corporation, is an independent oil and gas exploration and production company. Our operations are mainly located in Texas, Oklahoma, and New Mexico. The accompanying unaudited financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures required by accounting principles generally accepted in the United States and normally included in Annual Reports on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with the financial statements, summary of significant accounting policies, and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2019.

In the opinion of management, the accompanying financial statements reflect all adjustments necessary to fairly present our financial position, results of operations, and cash flows for the periods and as of the dates shown. The accounts of Cimarex and its subsidiaries are presented in the accompanying financial statements, with intercompany balances and transactions eliminated in consolidation.

On March 1, 2019, we acquired Resolute Energy Corporation (“Resolute”) in a cash and stock transaction. The results of Resolute’s operations have been included in our consolidated financial statements since the March 1, 2019 acquisition date. See Note 13 for more information on this transaction.

Use of Estimates

Areas of significance requiring the use of management’s judgments include the estimation of proved oil and gas reserves used in calculating depletion, the estimation of future net revenues used in computing ceiling test limitations, the estimation of future abandonment obligations used in recording asset retirement obligations, and the assessment of goodwill. Estimates and judgments also are required in determining allowances for doubtful accounts, impairments of unproved properties and other assets, valuation of deferred tax assets, fair value measurements, lease liabilities, and contingencies.

Prior Year Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform to the 2020 financial statement presentation. These reclassifications include reclassifying certain “Gas gathering and other” expenses to “Transportation, processing, and other operating” expense and “Production” expense. These reclassifications were made to reflect an allocation of the costs incurred to operate our gas gathering facilities as a cost to transport our equity share of gas produced and operate our wells. The following table shows the reclassifications made:

	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
(in thousands)	Prior Year Presentation		Current Year Reclassifications		Current Year Presentation		Prior Year Presentation		Current Year Reclassifications		Current Year Presentation
Production	$	87,726	$	1,269	$	88,995	$	164,959	$	2,440	$	167,399
Transportation, processing, and other operating	$	48,331	5,776		$	54,107	$	101,939	11,743		$	113,682
Gas gathering and other	$	13,605	(7,045)		$	6,560	$	25,925	(14,183)		$	11,742
			$	—					$	—

12

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

Oil and Gas Well Equipment and Supplies

Our oil and gas well equipment and supplies are valued at the lower of cost and net realizable value, where net realizable value is estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Declines in the price of oil and gas well equipment and supplies in future periods could cause us to recognize impairments on these assets. An impairment would not affect cash flow from operating activities, but would adversely affect our net income and stockholders’ equity.

Oil and Gas Properties

We use the full cost method of accounting for our oil and gas operations. All costs associated with property acquisition, exploration, and development activities are capitalized. Under the full cost method of accounting, we are required to perform a quarterly ceiling test calculation to test our oil and gas properties for possible impairment. If the net capitalized cost of our oil and gas properties, as adjusted for income taxes, exceeds the ceiling limitation, the excess is charged to expense. The ceiling limitation is equal to the sum of: (i) the present value discounted at 10% of estimated future net revenues from proved reserves, (ii) the cost of properties not being amortized, and (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, as adjusted for income taxes. We currently do not have any unproven properties that are being amortized. Estimated future net revenues are determined based on trailing twelve-month average commodity prices and estimated proved reserve quantities, operating costs, and capital expenditures.

The quarterly ceiling test is primarily impacted by commodity prices, changes in estimated reserve quantities, overall exploration and development costs, and deferred taxes.  If pricing conditions decline, or if there is a negative impact on one or more of the other components of the calculation, we may incur a full cost ceiling test impairment. The calculated ceiling limitation is not intended to be indicative of the fair market value of our proved reserves or future results. Impairment charges do not affect cash flow from operating activities, but do adversely affect our net income and various components of our balance sheet.  Any impairment of oil and gas properties is not reversible at a later date. 

For the six months ended June 30, 2020, we incurred ceiling test impairments totaling $1.275 billion ($941.2 million for the three months ended June 30, 2020 and $333.7 million for the three months ended March 31, 2020). These impairments resulted primarily from the impact of decreases in the 12-month average trailing prices for oil, gas, and NGLs as well as significant basis differentials utilized in determining the estimated future net cash flows from proved reserves. We expect these conditions to continue at least through September 30, 2020 and possibly beyond and, therefore, expect to incur another ceiling test impairment at September 30, 2020.

Goodwill

Goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment at least annually. In performing the goodwill test, we compare the fair value of our reporting unit with its carrying amount. If the carrying amount of the reporting unit were to exceed its fair value, an impairment charge would be recognized in the amount of this excess, limited to the total amount of goodwill allocated to that reporting unit. We evaluate our goodwill for impairment in the fourth quarter of each year and whenever events or changes in circumstances indicate the possibility that goodwill may be impaired. Based upon our assessment as of October 31, 2019, goodwill was not impaired. However, during the three months ended March 31, 2020 the company’s market capitalization declined significantly, caused by macroeconomic and geopolitical conditions including the collapse of oil prices driven by surplus supply and decreased demand caused by the COVID-19 pandemic. In addition, the uncertainty related to oil demand significantly impacted our investment and operating decisions. Based on those events, we concluded that a triggering event had occurred, which required us to perform an interim quantitative impairment test for goodwill as of March 31, 2020. As a result of that quantitative impairment test, which utilized quoted market prices for our common stock as a basis for determining fair value, we concluded that goodwill was fully impaired at March 31, 2020.

13

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

The following table reflects components of the change in the carrying amount of goodwill for the six months ended June 30, 2020:

(in thousands)	Six Months Ended June 30, 2020
Goodwill balance at January 1, 2020	$	716,865
Resolute acquisition purchase price adjustments (Note 13)	(2,418)
Impairment	(714,447)
Goodwill balance at June 30, 2020	$	—

Revenue Recognition

Oil, Gas, and NGL Sales

Revenue is recognized from the sales of oil, gas, and NGLs when the customer obtains control of the product, when we have no further obligations to perform related to the sale, and when collectability is probable. All of our sales of oil, gas, and NGLs are made under contracts with customers, which typically include variable consideration based on monthly pricing tied to local indices and monthly volumes delivered. The nature of our contracts with customers does not require us to constrain that variable consideration or to estimate the amount of transaction price attributable to future performance obligations for accounting purposes. As of June 30, 2020, we had open contracts with customers with terms of one month to multiple years, as well as “evergreen” contracts that renew on a periodic basis if not canceled by us or the customer. Performance obligations under our contracts with customers are typically satisfied at a point-in-time through monthly delivery of oil, gas, and/or NGLs. Our contracts with customers typically require payment within one month of delivery.

Our gas is sold under various contracts. Under these contracts the gas and its components, including residue gas and NGLs, may be sold to a single purchaser or separate purchasers. Regardless of the contract, we are compensated for the value of the residue gas and NGLs at current market prices for each product. Depending on the specific contract terms, certain gathering, treating, transportation, processing, and other charges may be deducted against the prices we receive for the products. Our oil typically is sold at specific delivery points under contract terms that also are common in our industry.

Gas Gathering

When we transport and/or process third-party gas associated with our equity gas, we recognize revenue for the fees charged to third-parties for such services.

Gas Marketing

When we market and sell gas for other working interest owners, we act as agent under short-term sales and supply agreements and may earn a fee for such services. Revenues from such services are recognized as gas is delivered.

Gas Imbalances

Revenue from the sale of gas is recorded on the basis of gas actually sold by or for us. If our aggregate sales volumes for a well are greater (or less) than our proportionate share of production from the well, a liability (or receivable) is established to the extent there are insufficient proved reserves available to make-up the overproduced (or underproduced) imbalance. Imbalances have not been significant in the periods presented.

14

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

2.LONG-TERM DEBT

Long-term debt at June 30, 2020 and December 31, 2019 consisted of the following:

	June 30, 2020						December 31, 2019
(in thousands)	Principal		Unamortized Debt Issuance Costs and Discounts (1)		Long-term Debt, net		Principal		Unamortized Debt Issuance Costs and Discounts (1)		Long-term Debt, net
4.375% Notes due 2024	$	750,000	$	(3,099)	$	746,901	$	750,000	$	(3,535)	$	746,465
3.90% Notes due 2027	750,000		(5,919)		744,081		750,000		(6,289)		743,711
4.375% Notes due 2029	500,000		(4,711)		495,289		500,000		(4,930)		495,070
	$	2,000,000	$	(13,729)	$	1,986,271	$	2,000,000	$	(14,754)	$	1,985,246

________________________________________

(1)The 4.375% Notes due 2024 were issued at par, therefore, the amounts shown in the table are for unamortized debt issuance costs only. At June 30, 2020, the unamortized debt issuance costs and discount related to the 3.90% Notes due 2027 were $4.6 million and $1.4 million, respectively. At June 30, 2020, the unamortized debt issuance costs and discount related to the 4.375% Notes due 2029 were $4.1 million and $0.6 million, respectively. At December 31, 2019, the unamortized debt issuance costs and discount related to the 3.90% Notes due 2027 were $4.8 million and $1.5 million, respectively. At December 31, 2019, the unamortized debt issuance costs and discount related to the 4.375% Notes due 2029 were $4.3 million and $0.6 million, respectively.

Bank Debt

On June 3, 2020, we entered into the First Amendment to Amended and Restated Credit Agreement (the “First Amendment”) dated as of February 5, 2019 for our senior unsecured revolving credit facility (“Credit Facility”). The Credit Facility has aggregate commitments of $1.25 billion with an option for us to increase the aggregate commitments to $1.5 billion, and matures on February 5, 2024. There is no borrowing base subject to the discretion of the lenders based on the value of our proved reserves under the Credit Facility. The First Amendment, among other things: (i) allows up to $3.5 billion of non-cash impairment charge add-backs to Shareholders’ Equity for covenant calculation purposes, (ii) institutes traditional anti-cash hoarding provisions at a consolidated cash threshold of $175.0 million, (iii) reduces the priority lien debt basket from 15% of Consolidated Net Tangible Assets (as defined in the credit agreement) to a $50.0 million cap, and (iv) adds an acknowledgement and consent to European Union bail-in legislation. As of June 30, 2020, we had no bank borrowings outstanding under the Credit Facility, but did have letters of credit of $2.5 million outstanding, leaving an unused borrowing availability of $1.248 billion. During the three and six months ended June 30, 2020, we borrowed and repaid an aggregate of $60.0 million and $161.0 million, respectively, on the Credit Facility to meet cash requirements as needed.

At our option, borrowings under the Credit Facility may bear interest at either (a) LIBOR (or an alternate rate determined by the administrative agent for the Credit Facility in accordance with the Credit Facility when LIBOR is no longer available) plus 1.125 – 2.0% based on the credit rating for our senior unsecured long-term debt, or (b) a base rate (as defined in the credit agreement) plus 0.125 – 1.0%, based on the credit rating for our senior unsecured long-term debt. Unused borrowings are subject to a commitment fee of 0.125 – 0.35%, based on the credit rating for our senior unsecured long-term debt.

The Credit Facility contains representations, warranties, covenants, and events of default that are customary for investment grade, senior unsecured bank credit agreements, including a financial covenant for the maintenance of a defined total debt-to-capitalization ratio of no greater than 65%. As of June 30, 2020, we were in compliance with all of the financial covenants.

15

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

At June 30, 2020 and December 31, 2019, we had $5.0 million and $4.0 million, respectively, of unamortized debt issuance costs associated with our Credit Facility, which were recorded as assets and included in “Other assets” on our Condensed Consolidated Balance Sheets. During the three months ended June 30, 2020, we incurred $1.5 million in fees paid to the creditor and third-party costs for the First Amendment. These costs are being amortized to interest expense ratably over the life of the Credit Facility.

Senior Notes

On March 8, 2019, we issued $500 million aggregate principal amount of 4.375% senior unsecured notes due March 15, 2029 at 99.862% of par to yield 4.392% per annum. We received $494.7 million in net cash proceeds, after deducting underwriters’ fees, discount, and debt issuance costs. The notes bear an annual interest rate of 4.375% and interest is payable semiannually on March 15 and September 15, with the first payment made on September 15, 2019.  We used the net proceeds to repay borrowings outstanding under our Credit Facility that were used to help fund the Resolute acquisition on March 1, 2019. The effective interest rate on these notes, including the amortization of debt issuance costs and discount, is 4.50%.

In April 2017, we issued $750 million aggregate principal amount of 3.90% senior unsecured notes at 99.748% of par to yield 3.93% per annum. These notes are due May 15, 2027 and interest is payable semiannually on May 15 and November 15. The effective interest rate on these notes, including the amortization of debt issuance costs and discount, is 4.01%.

In June 2014, we issued $750 million aggregate principal amount of 4.375% senior unsecured notes at par. These notes are due June 1, 2024 and interest is payable semiannually on June 1 and December 1. The effective interest rate on these notes, including the amortization of debt issuance costs, is 4.50%.

Our senior unsecured notes are governed by indentures containing certain covenants, events of default, and other restrictive provisions with which we were in compliance as of June 30, 2020.

3. DERIVATIVE INSTRUMENTS

We periodically use derivative instruments to mitigate volatility in commodity prices.  While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future cash flow from favorable price changes. Depending on changes in oil and gas futures markets and management’s view of underlying supply and demand trends, we may increase or decrease our derivative positions from current levels. 

As of June 30, 2020, we have entered into oil and gas collars, oil basis swaps, and oil “roll differential” swaps. We also occasionally enter into fixed price swaps. Under our collars, we receive the difference between the published index price and a floor price if the index price is below the floor price or we pay the difference between the ceiling price and the index price if the index price is above the ceiling price.  No amounts are paid or received if the index price is between the floor and the ceiling prices. By using a collar, we have fixed the minimum and maximum prices we can receive on the underlying production. Our basis swaps are settled based on the difference between a published index price plus or minus a fixed differential, as applicable, and the applicable local index price under which the underlying production is sold. By using a basis swap, we have fixed the differential between the published index price and certain of our physical pricing points. For our Permian oil production, the basis swaps fix the price differential between the WTI NYMEX (Cushing, Oklahoma) price and the WTI Midland price. For our Permian and Mid-Continent gas production, the contract prices in our collars are consistent with the index prices used to sell our production. Our oil roll differential swaps are settled based on the difference between the monthly roll differential and a fixed price per Bbl. The monthly roll differential is calculated as the sum of 2/3 of the difference in the WTI NYMEX closing settlement price for the first nearby month futures contract minus the second nearby futures contract and 1/3 of the difference in the WTI NYMEX closing settlement price for the first nearby

16

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

month futures contract minus the third nearby month futures contract. By using a roll differential swap, we have fixed the differential in pricing between the WTI NYMEX calendar month average and the physical crude oil delivery month. Under our fixed price swaps, we receive the difference between the fixed price and the published index price if the published index price is below the fixed price and we pay the difference between the fixed price and the published index price if the published index price is above the fixed price. The following tables summarize our outstanding derivative contracts as of June 30, 2020:

Oil Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
WTI (1)
Volume (Bbls)	—		—		3,772,000		3,772,000		7,544,000
Weighted Avg Price - Floor	$	—	$	—	$	40.91	$	40.91	$	40.91
Weighted Avg Price - Ceiling	$	—	$	—	$	49.84	$	49.84	$	49.84
2021:
WTI (1)
Volume (Bbls)	3,600,000		2,730,000		1,932,000		1,932,000		10,194,000
Weighted Avg Price - Floor	$	38.06	$	34.23	$	31.48	$	31.48	$	34.54
Weighted Avg Price - Ceiling	$	46.45	$	42.25	$	39.67	$	39.67	$	42.75
2022:
WTI (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Price - Floor	$	35.00	$	—	$	—	$	—	$	35.00
Weighted Avg Price - Ceiling	$	45.28	$	—	$	—	$	—	$	45.28

________________________________________

(1)The index price for these collars is West Texas Intermediate (“WTI”) as quoted on the New York Mercantile Exchange (“NYMEX”).

17

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

Gas Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
PEPL (1)
Volume (MMBtu)	—		—		9,200,000		9,200,000		18,400,000
Weighted Avg Price - Floor	$	—	$	—	$	1.78	$	1.78	$	1.78
Weighted Avg Price - Ceiling	$	—	$	—	$	2.21	$	2.21	$	2.21
Perm EP (2)
Volume (MMBtu)	—		—		6,440,000		6,440,000		12,880,000
Weighted Avg Price - Floor	$	—	$	—	$	1.36	$	1.36	$	1.36
Weighted Avg Price - Ceiling	$	—	$	—	$	1.64	$	1.64	$	1.64
Waha (3)
Volume (MMBtu)	—		—		6,440,000		6,440,000		12,880,000
Weighted Avg Price - Floor	$	—	$	—	$	1.43	$	1.43	$	1.43
Weighted Avg Price - Ceiling	$	—	$	—	$	1.73	$	1.73	$	1.73
2021:
PEPL (1)
Volume (MMBtu)	7,200,000		6,370,000		4,600,000		4,600,000		22,770,000
Weighted Avg Price - Floor	$	1.76	$	1.75	$	1.80	$	1.80	$	1.77
Weighted Avg Price - Ceiling	$	2.18	$	2.16	$	2.23	$	2.23	$	2.19
Perm EP (2)
Volume (MMBtu)	5,400,000		5,460,000		3,680,000		3,680,000		18,220,000
Weighted Avg Price - Floor	$	1.44	$	1.44	$	1.58	$	1.58	$	1.49
Weighted Avg Price - Ceiling	$	1.72	$	1.72	$	1.90	$	1.90	$	1.79
Waha (3)
Volume (MMBtu)	6,300,000		6,370,000		4,600,000		4,600,000		21,870,000
Weighted Avg Price - Floor	$	1.43	$	1.43	$	1.58	$	1.58	$	1.49
Weighted Avg Price - Ceiling	$	1.73	$	1.73	$	1.89	$	1.89	$	1.80
2022:
PEPL (1)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.90	$	—	$	—	$	—	$	1.90
Weighted Avg Price - Ceiling	$	2.36	$	—	$	—	$	—	$	2.36
Perm EP (2)
Volume (MMBtu)	900,000		—		—		—		900,000
Weighted Avg Price - Floor	$	1.80	$	—	$	—	$	—	$	1.80
Weighted Avg Price - Ceiling	$	2.19	$	—	$	—	$	—	$	2.19
Waha (3)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.70	$	—	$	—	$	—	$	1.70
Weighted Avg Price - Ceiling	$	2.10	$	—	$	—	$	—	$	2.10

________________________________________

18

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

(1)The index price for these collars is Panhandle Eastern Pipe Line, Tex/OK Mid-Continent Index (“PEPL”) as quoted in Platt’s Inside FERC.

(2)The index price for these collars is El Paso Natural Gas Company, Permian Basin Index (“Perm EP”) as quoted in Platt’s Inside FERC.

(3)The index price for these collars is Waha West Texas Natural Gas Index (“Waha”) as quoted in Platt’s Inside FERC.

Oil Basis Swaps	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
WTI Midland (1)
Volume (Bbls)	—		—		2,944,000		2,944,000		5,888,000
Weighted Avg Differential (2)	$	—	$	—	$	0.18	$	0.18	$	0.18
2021:
WTI Midland (1)
Volume (Bbls)	2,790,000		2,275,000		1,840,000		1,840,000		8,745,000
Weighted Avg Differential (2)	$	0.03	$	(0.10)	$	(0.38)	$	(0.38)	$	(0.18)
2022:
WTI Midland (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Differential (2)	$	0.11	$	—	$	—	$	—	$	0.11

________________________________________

(1)The index price we pay under these basis swaps is WTI Midland as quoted by Argus Americas Crude.

(2)The index price we receive under these basis swaps is WTI as quoted on the NYMEX plus or minus, as applicable, the weighted average differential shown in the table.

Oil Roll Differential Swaps	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2021:
WTI (1)
Volume (Bbls)	630,000		637,000		644,000		644,000		2,555,000
Weighted Avg Price	$	(0.24)	$	(0.24)	$	(0.24)	$	(0.24)	$	(0.24)
2022:
WTI (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Price	$	(0.24)	$	—	$	—	$	—	$	(0.24)

________________________________________

(1)The index price used to determine the settlement “roll” is WTI as quoted on the NYMEX.

19

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

The following tables summarize our derivative contracts entered into subsequent to June 30, 2020 through July 31, 2020:

Gas Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2021:
PEPL (1)
Volume (MMBtu)	1,800,000		1,820,000		1,840,000		1,840,000		7,300,000
Weighted Avg Price - Floor	$	2.10	$	2.10	$	2.10	$	2.10	$	2.10
Weighted Avg Price - Ceiling	$	2.44	$	2.44	$	2.44	$	2.44	$	2.44
Perm EP (2)
Volume (MMBtu)	900,000		910,000		920,000		920,000		3,650,000
Weighted Avg Price - Floor	$	1.90	$	1.90	$	1.90	$	1.90	$	1.90
Weighted Avg Price - Ceiling	$	2.18	$	2.18	$	2.18	$	2.18	$	2.18
Waha (3)
Volume (MMBtu)	1,800,000		1,820,000		1,840,000		1,840,000		7,300,000
Weighted Avg Price - Floor	$	1.84	$	1.84	$	1.84	$	1.84	$	1.84
Weighted Avg Price - Ceiling	$	2.20	$	2.20	$	2.20	$	2.20	$	2.20
2022:
PEPL (1)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	2.10	$	—	$	—	$	—	$	2.10
Weighted Avg Price - Ceiling	$	2.44	$	—	$	—	$	—	$	2.44
Perm EP (2)
Volume (MMBtu)	900,000		—		—		—		900,000
Weighted Avg Price - Floor	$	1.90	$	—	$	—	$	—	$	1.90
Weighted Avg Price - Ceiling	$	2.18	$	—	$	—	$	—	$	2.18
Waha (3)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.84	$	—	$	—	$	—	$	1.84
Weighted Avg Price - Ceiling	$	2.20	$	—	$	—	$	—	$	2.20

________________________________________

(1)The index price for these collars is PEPL as quoted in Platt’s Inside FERC.

(2)The index price for these collars is Perm EP as quoted in Platt’s Inside FERC.

(3)The index price for these collars is Waha as quoted in Platt’s Inside FERC.

20

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

Derivative Gains and Losses

Net gains and losses on our derivative instruments are a function of fluctuations in the underlying commodity index prices as compared to the contracted prices and the monthly cash settlements (if any) of the instruments. We have elected not to designate our derivatives as hedging instruments for accounting purposes and, therefore, we do not apply hedge accounting treatment to our derivative instruments. Consequently, changes in the fair value of our derivative instruments and cash settlements on the instruments are included as a component of operating costs and expenses as either a net gain or loss on derivative instruments. Cash settlements of our contracts are included in cash flows from operating activities in our statements of cash flows. The following table presents the components of “Loss (gain) on derivative instruments, net” for the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Decrease (increase) in fair value of derivative instruments, net:
Gas contracts	$	19,826	$	(6,370)	$	32,319	$	(16,216)
Oil contracts	168,000		(28,161)		(28,319)		88,086
	187,826		(34,531)		4,000		71,870
Cash (receipts) payments on derivative instruments, net:
Gas contracts	(5,870)		(21,176)		(17,589)		(17,412)
Oil contracts	(58,071)		14,939		(89,466)		20,226
	(63,941)		(6,237)		(107,055)		2,814
Loss (gain) on derivative instruments, net	$	123,885	$	(40,768)	$	(103,055)	$	74,684

21

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

Derivative Fair Value

Our derivative contracts are carried at their fair value on our balance sheet using Level 2 inputs and are subject to master netting arrangements, which allow us to offset recognized asset and liability fair value amounts on contracts with the same counterparty. Our accounting policy is to not offset asset and liability positions in our balance sheets.

The following tables present the amounts and classifications of our derivative assets and liabilities as of June 30, 2020 and December 31, 2019, as well as the potential effect of netting arrangements on our recognized derivative asset and liability amounts.

		June 30, 2020
(in thousands)	Balance Sheet Location	Asset		Liability
Oil contracts	Current assets — Derivative instruments	$	69,208	$	—
Gas contracts	Current assets — Derivative instruments	2,382		—
Oil contracts	Current liabilities — Derivative instruments	—		38,443
Gas contracts	Current liabilities — Derivative instruments	—		13,113
Oil contracts	Non-current liabilities — Derivative instruments	—		17,747
Gas contracts	Non-current liabilities — Derivative instruments	—		5,463
Total gross amounts presented in the balance sheet		71,590		74,766
Less: gross amounts not offset in the balance sheet		(57,678)		(57,678)
Net amount		$	13,912	$	17,088
		December 31, 2019
(in thousands)	Balance Sheet Location	Asset		Liability
Oil contracts	Current assets — Derivative instruments	$	1,624	$	—
Gas contracts	Current assets — Derivative instruments	16,320		—
Oil contracts	Non-current assets — Derivative instruments	580		—
Oil contracts	Current liabilities — Derivative instruments	—		16,681
Oil contracts	Non-current liabilities — Derivative instruments	—		824
Gas contracts	Non-current liabilities — Derivative instruments	—		194
Total gross amounts presented in the balance sheet		18,524		17,699
Less: gross amounts not offset in the balance sheet		(9,865)		(9,865)
Net amount		$	8,659	$	7,834

We are exposed to financial risks associated with our derivative contracts from non-performance by our counterparties. We mitigate our exposure to any single counterparty by contracting with a number of financial institutions, each of which has a high credit rating and is a member of our bank credit facility. Our member banks do not require us to post collateral for our derivative liability positions, nor do we require our counterparties to post collateral for our benefit. In the future we may enter into derivative instruments with counterparties outside our bank group to obtain competitive terms and to spread counterparty risk.

22

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

4.FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Authoritative accounting guidance has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable.

The following table provides fair value measurement information for certain assets and liabilities as of June 30, 2020 and December 31, 2019:

	June 30, 2020				December 31, 2019
(in thousands)	Book Value		Fair Value		Book Value		Fair Value
Financial Assets (Liabilities):
4.375% Notes due 2024	$	(750,000)	$	(791,175)	$	(750,000)	$	(792,225)
3.90% Notes due 2027	$	(750,000)	$	(758,850)	$	(750,000)	$	(778,050)
4.375% Notes due 2029	$	(500,000)	$	(513,900)	$	(500,000)	$	(530,400)
Derivative instruments — assets	$	71,590	$	71,590	$	18,524	$	18,524
Derivative instruments — liabilities	$	(74,766)	$	(74,766)	$	(17,699)	$	(17,699)

Assessing the significance of a particular input to the fair value measurement requires judgment, including the consideration of factors specific to the asset or liability. The fair value (Level 1) of our fixed rate notes was based on quoted market prices. The fair value of our derivative instruments (Level 2) was estimated using discounted cash flow and option pricing models. These models use certain observable variables including forward prices, volatility curves, interest rates, and credit ratings and spreads. The fair value estimates are adjusted relative to non-performance risk as appropriate. See Note 3 for further information on the fair value of our derivative instruments.

Other Financial Instruments

The carrying amounts of our cash, cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. Included in “Accrued liabilities — Other” at June 30, 2020 are accrued operating expenses (e.g. production, transportation, and gathering expenses) of approximately $70.3 million. Included in “Accrued liabilities — Other” at December 31, 2019 are: (i) accrued operating expenses (e.g. production, transportation, and gathering expenses) of approximately $74.7 million and (ii) accrued general and administrative costs, primarily payroll-related, of approximately $43.3 million.

Most of our accounts receivable balances are uncollateralized and result from transactions with other companies in the oil and gas industry. Concentration of customers may impact our overall credit risk because our customers may be similarly affected by changes in economic or other conditions within the industry. We conduct credit analyses prior to making any sales to new customers or increasing credit for existing customers and may require parent company guarantees, letters of credit, or prepayments when deemed necessary. Pursuant to the operating agreements we have with the co-owners of our operated properties, we have the right to realize amounts due to us from the co-owners by netting the co-owners’ production revenues from those properties.

23

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

We routinely assess the recoverability of all material accounts receivable and accrue a reserve to the allowance for doubtful accounts based on our estimation of expected losses over the life of the receivables. At June 30, 2020 and December 31, 2019, the allowance for doubtful accounts was $4.0 million and $3.6 million, respectively.

5.CAPITAL STOCK

Authorized capital stock consists of 200 million shares of common stock and 15 million shares of preferred stock. At June 30, 2020, there were 102.2 million shares of common stock outstanding and 62.5 thousand shares of 8.125% Series A Cumulative Perpetual Convertible Preferred Stock outstanding (the “Convertible Preferred Stock”). Holders of the Convertible Preferred Stock are entitled to receive, when, as, and if declared by the Board, cumulative cash dividends at an annual rate of 8.125% of each share’s liquidation preference of $1,000. In the event of any liquidation, winding up, or dissolution of Cimarex, each holder will be entitled to receive in respect of its shares, up to each share’s liquidation preference, with the total liquidation preference being $62.5 million in the aggregate, after satisfaction of liabilities and any senior stock (of which there is currently none) and before any payment or distribution to holders of junior stock (including common stock). Each holder has the right at any time, at its option, to convert any or all of such holder’s shares of Convertible Preferred Stock into a certain number of shares of Cimarex common stock based on a conversion rate that adjusts upon the occurrence of certain events, including the payment of cash dividends to common shareholders, plus $471.40 in cash per share of Convertible Preferred Stock. The June 30, 2020 conversion rate was 8.25315 shares of common stock for each share of Convertible Preferred Stock. As a result of the cash component included in the redemption feature of the Convertible Preferred Stock conversion option, with such conversion not solely within our control, the instruments are classified as Redeemable preferred stock in temporary equity on the Condensed Consolidated Balance Sheets.

Dividends

Common Stock

In May 2020, our Board of Directors declared a cash dividend of $0.22 per share of common stock. The dividend is payable on or before September 1, 2020 to stockholders of record on August 14, 2020. Dividends declared are recorded as a reduction of retained earnings to the extent retained earnings are available at the close of the period prior to the date of the declared dividend. Dividends in excess of retained earnings are recorded as a reduction of additional paid-in capital. The $22.6 million dividend declared during the second quarter 2020 was recorded as a reduction of additional paid-in capital and is included as a payable in “Accrued liabilities — Other” on the Condensed Consolidated Balance Sheet at June 30, 2020. Nonforfeitable dividends paid on stock awards that subsequently forfeit are reclassified out of retained earnings or additional paid-in capital, as applicable, to stock compensation expense in the period in which the forfeitures occur. Future dividend payments will depend on our level of earnings, financial requirements, and other factors considered relevant by our Board of Directors.

Preferred Stock

In May 2020, our Board of Directors declared a cash dividend of $20.3125 per share of Convertible Preferred Stock. The dividend was paid in July to stockholders of record on July 1, 2020. This $1.3 million dividend was recorded as a reduction of additional paid-in capital and is included as a payable in “Accrued liabilities — Other” on the Condensed Consolidated Balance Sheet at June 30, 2020.

24

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

6.STOCK-BASED COMPENSATION

We have recognized stock-based compensation cost as shown below for the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Restricted stock awards:
Performance stock awards	$	4,059	$	5,535	$	8,119	$	10,929
Service-based stock awards	6,585		5,993		13,962		13,224
	10,644		11,528		22,081		24,153
Stock option awards	416		396		914		1,018
Total stock compensation cost	11,060		11,924		22,995		25,171
Less amounts capitalized to oil and gas properties	(4,313)		(5,430)		(9,854)		(11,964)
Stock compensation expense	$	6,747	$	6,494	$	13,141	$	13,207

Periodic stock compensation expense will fluctuate based on the grant-date fair value of awards, the number of awards, the requisite service period of the awards, employee forfeitures, and the timing of the awards.  Our accounting policy is to account for forfeitures in compensation cost when they occur.

7.ASSET RETIREMENT OBLIGATIONS

We recognize the present value of the fair value of liabilities for retirement obligations associated with tangible long-lived assets in the period in which there is a legal obligation associated with the retirement of such assets and the amount can be reasonably estimated. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This liability includes costs related to the plugging and abandonment of wells, the removal of facilities and equipment, and site restorations. Subsequent to initial measurement, the asset retirement liability is accreted each period. If there is a change in the estimated cost or timing of retirement, a revision is recorded to both the asset retirement obligation and the capitalized asset retirement cost. Capitalized costs are included as a component of the depreciation and depletion calculations.

The following table reflects the components of the change in the carrying amount of the asset retirement obligation for the six months ended June 30, 2020:

(in thousands)	Six Months Ended June 30, 2020
Asset retirement obligation at January 1, 2020	$	181,869
Liabilities incurred	2,088
Liability settlements and disposals	(21,935)
Accretion expense	3,796
Revisions of estimated liabilities	2,800
Asset retirement obligation at June 30, 2020	168,618
Less current obligation	(18,244)
Long-term asset retirement obligation	$	150,374

25

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

8.EARNINGS (LOSS) PER SHARE

The calculations of basic and diluted net earnings (loss) per common share under the two-class method are presented below for the periods indicated:

	Three Months Ended June 30,
	2020					2019
(in thousands, except per share information)	Income (Numerator)		Shares (Denominator)	Per-Share Amount		Income (Numerator)		Shares (Denominator)	Per-Share Amount
Net (loss) income	$	(925,147)				$	109,309
Less: dividends and net income attributable to participating securities (1)	(569)					(1,596)
Less: preferred stock dividends	(1,269)					(1,270)
Basic (loss) earnings per share
(Loss) income available to common stockholders	(926,985)		99,880	$	(9.28)	106,443		99,658	$	1.07
Effects of dilutive securities
Options (2)	—		—			—		7
Diluted (loss) earnings per share
(Loss) income available to common stockholders and assumed conversions	$	(926,985)	99,880	$	(9.28)	$	106,443	99,665	$	1.07

	Six Months Ended June 30,
	2020					2019
(in thousands, except per share information)	Income (Numerator)		Shares (Denominator)	Per-Share Amount		Income (Numerator)		Shares (Denominator)	Per-Share Amount
Net (loss) income	$	(1,699,429)				$	135,625
Less: dividends and net income attributable to participating securities (1)	(1,119)					(2,067)
Less: preferred stock dividends	(2,538)					(2,539)
Basic (loss) earnings per share
(Loss) income available to common stockholders	(1,703,086)		99,861	$	(17.05)	131,019		97,800	$	1.34
Effects of dilutive securities
Options (2)	$	—	—			$	—	9
Diluted (loss) earnings per share
(Loss) income available to common stockholders and assumed conversions	$	(1,703,086)	99,861	$	(17.05)	$	131,019	97,809	$	1.34

________________________________________

(1)Participating securities do not have a contractual obligation to share in the losses of the entity, therefore, net losses are not attributable to participating securities.

26

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

(2)Inclusion of certain potential common shares would have an anti-dilutive effect, therefore, these shares were excluded from the calculations of diluted earnings (loss) per share. Excluded from the calculation for the three months ended June 30, 2020 were 456.6 thousand potential common shares from the assumed exercise of employee stock options, 515.8 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock, and 8.8 thousand potential common shares from the assumed vesting of incremental shares of unvested restricted stock awards. Excluded from the calculation for the three months ended June 30, 2019 were 387.5 thousand potential common shares from the assumed exercise of employee stock options and 502.6 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock. Excluded from the calculation for the six months ended June 30, 2020 were 456.6 thousand potential common shares from the assumed exercise of employee stock options, 515.8 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock, and 8.8 thousand potential common shares from the assumed vesting of incremental shares of unvested restricted stock awards. Excluded from the calculation for the six months ended June 30, 2019 were 391.1 thousand potential common shares from the assumed exercise of employee stock options and 502.6 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock.

9.INCOME TAXES

The components of our provision for income taxes and our combined federal and state effective income tax rates were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Current tax expense (benefit)	$	37		$	—		$	(161)		$	—
Deferred tax (benefit) expense	(271,543)			34,046			(287,900)			42,119
	$	(271,506)		$	34,046		$	(288,061)		$	42,119
Combined federal and state effective income tax rate	22.7		%	23.7		%	14.5		%	23.7		%

At December 31, 2019, we had a U.S. net tax operating loss carryforward of approximately $1.93 billion; $1.79 billion of which will expire in tax years 2032 through 2039 and $140.0 million of which that will not expire. We believe that the carryforward will be utilized before it expires. We also had enhanced oil recovery and marginal well credits of $3.9 million at December 31, 2019.

On March 1, 2019, we completed the acquisition of Resolute. For federal income tax purposes, the acquisition was a tax-free merger whereby Cimarex acquired carryover tax basis in Resolute’s tax assets and liabilities. As of December 31, 2019, we recorded a net deferred tax liability of $31.1 million to reflect the difference between the fair value of Resolute’s assets and liabilities recorded in the acquisition and the income tax basis of the assets and liabilities assumed. See Note 13 for more information regarding the purchase price allocation. The net deferred tax liability includes certain deferred tax assets net of valuation allowances. The acquired tax attributes include federal net operating loss, capital loss, and enhanced oil recovery tax credit carryforwards. The carryforwards are subject to an annual limitation under Internal Revenue Code Section 382.

At June 30, 2020, we had no unrecognized tax benefits that would impact our effective tax rate and have made no provisions for interest or penalties related to uncertain tax positions. The tax years 2016 through 2018 remain open to examination by the Internal Revenue Service of the United States. We file tax returns with various state taxing authorities, which remain open to examination for tax years 2015 through 2018.

27

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

Our combined federal and state effective income tax rates differ from the U.S. federal statutory rate of 21% primarily due to state income taxes and non-deductible expenses. The combined federal and state effective income tax rate for the six months ended June 30, 2020 is impacted by the tax effects of the impairment of the non-deductible goodwill recorded as a discrete item during the first quarter 2020. As such, we believe our effective tax rate will be higher in subsequent periods. In addition, if future ceiling test impairments cause our deferred tax balance to change from a net deferred tax liability to a net deferred tax asset, we may be required to establish a valuation allowance against the net deferred tax asset at that time.

10.COMMITMENTS AND CONTINGENCIES

At June 30, 2020, we had estimated commitments of approximately: (i) $209.5 million to finish drilling, completing, or performing other work on wells and various other infrastructure projects in progress and (ii) $6.8 million to finish gathering system and water facilities construction in progress.

At June 30, 2020, we had firm sales contracts to deliver approximately 522.5 Bcf of gas over the next 11.0 years. If we do not deliver this gas, our estimated financial commitment, calculated using July 2020 index prices, would be approximately $499.3 million. The value of this commitment will fluctuate due to price volatility and actual volumes delivered.

In connection with gas gathering and processing agreements, we have volume commitments over the next 8.5 years. If we do not deliver the committed gas or NGLs, as the case may be, the estimated maximum amount that would be payable under these commitments, calculated as of June 30, 2020, would be approximately $676.6 million.

We have minimum volume delivery commitments associated with agreements to reimburse connection costs to various pipelines. If we do not deliver this gas or oil, as the case may be, the estimated maximum amount that would be payable under these commitments, calculated as of June 30, 2020, would be approximately $106.6 million. Of this total, we have accrued a liability of $4.3 million, representing the estimated amount we will have to pay due to insufficient forecasted volumes at particular connection points.

At June 30, 2020, we have various firm transportation agreements for gas and oil pipeline capacity with end dates ranging from 2021 - 2025 under which we will have to pay an estimated $20.9 million over the remaining terms of the agreements.

All of the noted commitments were routine and made in the ordinary course of our business.

Litigation

We have various litigation matters related to the ordinary course of our business. We assess the probability of estimable amounts related to these matters in accordance with authoritative accounting guidance and adjust our accruals accordingly. Though some of the related claims may be significant, we believe the resolution of them, individually or in the aggregate, would not have a material adverse effect on our financial condition or results of operations after consideration of current accruals.

28

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

11. SUPPLEMENTAL CASH FLOW INFORMATION

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Cash paid during the period for:
Interest (net of capitalized amounts of $18,145, $19,381, $25,473 and $20,121, respectively) (1)	$	14,050	$	14,396	$	19,609	32,984
Income taxes	$	—	$	1,200	$	—	$	1,206
Cash received for income tax refunds	$	280	$	335	$	484	$	336

________________________________________

(1)The six months ended June 30, 2019 includes $17.6 million in interest paid upon the redemption of Resolute’s senior notes and credit facility on March 1, 2019.

12.RELATED PARTY TRANSACTIONS

Helmerich & Payne, Inc. (“H&P”) provides contract drilling services to Cimarex. Cimarex incurred drilling costs of approximately $7.8 million and $23.4 million related to these services during the three and six months ended June 30, 2020 and $22.1 million and $46.6 million during the three and six months ended June 30, 2019. Hans Helmerich, a director of Cimarex, is Chairman of the Board of Directors of H&P.

13.ACQUISITIONS

On March 1, 2019, we completed the acquisition of Resolute Energy Corporation, an independent oil and gas company focused on the acquisition and development of unconventional oil and gas properties in the Delaware Basin area of the Permian Basin of west Texas. The principal factors considered by management in making this acquisition included: (i) our expectation that Resolute’s assets’ attractive returns are competitive with those in our existing portfolio, (ii) the opportunity to apply our experience and learnings from already operating in this area to generating productivity gains from Resolute’s properties, (iii) the ability to increase our acreage position in the Delaware Basin, and (iv) the expectation that the acquisition will be financially accretive.

We acquired 100% of the outstanding common shares and voting interests of Resolute in a cash and stock transaction. The acquisition date fair value of the consideration transferred totaled $820.3 million, which consisted of cash, common stock, and a newly created series of preferred stock (see Note 5 for more information on the preferred stock) as follows:

(in thousands)	Fair Value of Consideration Transferred
Cash	$	325,677
Common stock (5,652 shares issued)	413,015
Preferred stock (63 shares issued)	81,620
	$	820,312

The fair value of the common stock issued as part of the consideration was determined on the basis of the closing market price of Cimarex common stock on the acquisition date. The fair value of the preferred stock issued as part of the consideration was determined using a multiple probability simulation model.

29

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

Purchase Price Allocation

The Resolute acquisition has been accounted for as a business combination, using the acquisition method. The following table presents the allocation of the Resolute purchase price to the identifiable assets acquired and liabilities assumed based on the fair values at the acquisition date, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded to goodwill. The table also presents the adjustments made to the purchase price allocation during the 12-month period following the acquisition date. The purchase price allocation was finalized during the three months ended March 31, 2020. The most significant adjustment was made to reduce the fair value of the unproved oil and gas properties acquired by $30.3 million based on the finalization of the quantity of acres acquired. The tax effect of this adjustment reduced the related deferred income taxes by $6.9 million. The completion of the final Resolute tax returns provided the underlying tax basis of Resolute’s assets and liabilities and net operating losses and resulted in a reduction of the deferred tax liability of $24.4 million. The remaining adjustments were related to finalization of working capital balances. The offset to all of the adjustments was goodwill.

The following table sets forth the purchase price allocation:

(in thousands)	March 1, 2019		Adjustments		March 1, 2020
Cash	$	41,236	$	—	$	41,236
Accounts receivable	50,739		11,521		62,260
Other current assets	13,280		(1,176)		12,104
Proved oil and gas properties	692,600		—		692,600
Unproved oil and gas properties	1,054,200		(30,314)		1,023,886
Fixed assets	5,355		(32)		5,323
Goodwill	107,341		(13,126)		94,215
Other assets	142		—		142
Current liabilities	(202,735)		1,790		(200,945)
Long-term debt	(870,000)		—		(870,000)
Deferred income taxes	(62,409)		31,337		(31,072)
Asset retirement obligation	(9,437)		—		(9,437)
Total identifiable net assets	$	820,312	$	—	$	820,312

In connection with the acquisition, we assumed, and immediately repaid, $870.0 million principal amount of long-term debt consisting of $600.0 million of senior notes and $270.0 million of credit facility borrowings. On March 1, 2019, we repaid Resolute’s credit facility borrowings, delivered a notice of optional redemption of Resolute’s senior notes for an April 1, 2019 redemption date, and irrevocably deposited with a trustee the full amount of funds to repay the aggregate outstanding senior notes principal balance plus accrued and unpaid interest, incurring a $4.3 million loss on early extinguishment of debt. The cash consideration transferred and the repayment of Resolute’s long-term debt was funded using cash on hand and borrowings on our Credit Facility. We subsequently repaid the borrowings on our Credit Facility using the net proceeds from the March 8, 2019 issuance of $500 million aggregate principal amount of 4.375% senior unsecured notes.

Goodwill of $94.2 million was recognized in the purchase price allocation principally as a result of recording net deferred tax liabilities arising from the difference between the tax basis and the purchase price allocated to Resolute’s assets and liabilities, and anticipated opportunities for cost savings through administrative and operational synergies. We concluded that goodwill was impaired at March 31, 2020 (see Note 1 for more information regarding the goodwill impairment).

30

CIMAREX ENERGY CO.

Notes to Condensed Consolidated Financial Statements

June 30, 2020

(Unaudited)

Acquisition-related costs incurred in the three and six months ended June 30, 2019 were $0.1 million and $8.4 million, respectively. These costs, which were comprised primarily of advisory and legal fees, are included in the “Other operating expense, net” line item in the Condensed Consolidated Statement of Operations and Comprehensive Income.

Pro Forma Financial Information

The results of Resolute’s operations have been included in our consolidated financial statements since the March 1, 2019 acquisition date. The following supplemental pro forma information for the three and six months ended June 30, 2019 has been prepared to give effect to the Resolute acquisition as if it had occurred on January 1, 2018. The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including (i) the depletion of the combined company’s proved oil and gas properties, (ii) the capitalization of interest expense, and (iii) the estimated tax impacts of the pro forma adjustments. Additionally, pro forma earnings were adjusted to exclude acquisition-related costs incurred by Cimarex of $8.4 million and transaction-related costs incurred by Resolute of $60.0 million. The pro forma results of operations do not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been or will be incurred by Cimarex to integrate the Resolute assets. The pro forma financial data has not been adjusted to reflect any other acquisitions or dispositions made during the period presented as their results were not deemed material.

The pro forma information is not necessarily indicative of the results that might have occurred had the transaction actually taken place on January 1, 2018 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected in the following pro forma information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities, and other factors.

(in thousands, except per share information)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Revenue	$	546,463	$	1,176,556
Net income	$	109,365	$	121,909
Net income per common share:
Basic	$	1.07	$	1.18
Diluted	$	1.07	$	1.18

31

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Cimarex is an independent oil and gas exploration and production company. Our operations are entirely located in the United States, mainly in Texas, New Mexico, and Oklahoma. Currently our operations are focused in two main areas: the Permian Basin and the Mid-Continent. Our Permian Basin region encompasses west Texas and southeast New Mexico. Our Mid-Continent region consists of Oklahoma and the Texas Panhandle.

Our principal business objective is to increase shareholder value through the profitable long-term growth of our proved reserves and production while seeking to minimize our impact on the communities in which we operate for the long-term. Our strategy centers on maximizing cash flow from producing properties so that we can reinvest in exploration and development opportunities and provide cash returns to shareholders through dividends. We consider merger and acquisition opportunities that enhance our competitive position and we occasionally divest non-strategic assets.

On March 1, 2019, we completed the acquisition of Resolute Energy Corporation (“Resolute”), an independent oil and gas company focused on the acquisition and development of unconventional oil and gas properties in the Delaware Basin area of the Permian Basin of west Texas. See Note 13 to the Condensed Consolidated Financial Statements for more information on the acquisition.

We believe that detailed technical analysis, operational focus, and a disciplined capital investment process mitigate risk and position us to continue to achieve profitable increases in proved reserves and production. Our drilling inventory and limited long-term commitments provide the flexibility to respond quickly to industry volatility. Our investments are generally funded with cash flow provided by operating activities together with cash on hand, bank borrowings, sales of non-strategic assets, and, from time to time, public financing based on our monitoring of capital markets and our balance sheet.

Market Conditions

The oil and gas industry is cyclical and commodity prices can fluctuate significantly. We expect this volatility to persist. Commodity prices are affected by many factors outside of our control, including changes in market supply and demand, inventory storage levels, weather conditions, and other factors. Local market prices for oil and gas can be impacted by pipeline capacity constraints limiting takeaway and increasing basis differentials.

The reduction in economic activity from the COVID-19 pandemic resulted in unprecedented demand destruction and inventory increases for oil and natural gas liquids. WTI oil prices dropped from an average of $57.53 per barrel in January 2020 to $16.70 per barrel in April 2020. Since April 2020, average oil prices have risen to $38.31 per barrel in June 2020. The oil price improvement and or stabilization has coincided with some recovery of global economic activity, lower supply from major oil producing countries, and moderating inventory levels.

In response to the decline in oil prices in the second quarter 2020, we took immediate steps to reduce our capital investment, including releasing all but one drilling rig by mid-May and deferring completion activity. This resulted in a reduction in capital investments from $248.7 million in the first quarter of 2020 to $83.8 million in the second quarter of 2020. Further, as a result of low oil prices we curtailed approximately 20% of our production in the month of May; however, with the subsequent improvement in oil prices we did not curtail volumes in June, and we are not currently curtailing volumes. At current price levels we have added two drilling rigs and expect to add one additional rig over the remainder of the year, exiting 2020 with four rigs. We also expect to begin completing wells starting in September with two completion crews. As a result, total capital expenditures for 2020 are expected to be approximately $600 million.

32

The table below shows average NYMEX prices and our company-wide average realized prices and price differentials for the periods indicated. Our average realized prices have declined for all products in the 2020 periods as compared to the 2019 periods, with the exception of the average realized gas price in the second quarter of 2020. Average NYMEX prices have declined for all products in the 2020 periods as compared to the 2019 periods. However, our price differentials have improved for all products in the 2020 periods as compared to the 2019 periods, with the exception of our oil price differential in the second quarter of 2020.

	Three Months Ended June 30,				Variance Between 2020 / 2019	Six Months Ended June 30,				Variance Between 2020 / 2019
	2020		2019			2020		2019
Average NYMEX price
Oil — per barrel	$	27.85	$	59.82	(53)%	$	37.01	$	57.36	(35)%
Gas — per Mcf	$	1.71	$	2.64	(35)%	$	1.83	$	2.90	(37)%
Average realized price
Oil — per barrel	$	19.57	$	54.24	(64)%	$	32.74	$	51.64	(37)%
Gas — per Mcf	$	0.91	$	0.50	82%	$	0.72	$	1.19	(39)%
NGL — per barrel	$	7.52	$	13.08	(43)%	$	8.71	$	14.67	(41)%
Average price differential
Oil — per barrel	$	(8.28)	$	(5.58)	(48)%	$	(4.27)	$	(5.72)	25%
Gas — per Mcf	$	(0.80)	$	(2.14)	63%	$	(1.11)	$	(1.71)	35%

The average price differentials that we realized in our two primary areas of operation are shown in the table below for the periods indicated.

	Average Price Differentials
	2020						2019
	Year-to-date		Second Quarter		First Quarter		Year		Fourth Quarter		Third Quarter		Second Quarter		First Quarter
Oil
Permian Basin	$	(4.17)	$	(8.12)	$	(2.00)	$	(4.48)	$	(2.18)	$	(3.76)	$	(5.80)	$	(6.90)
Mid-Continent	$	(5.18)	$	(9.53)	$	(2.02)	$	(3.14)	$	(2.05)	$	(3.72)	$	(4.39)	$	(2.17)
Total Company	$	(4.27)	$	(8.28)	$	(1.99)	$	(4.26)	$	(2.16)	$	(3.74)	$	(5.58)	$	(6.03)
Gas
Permian Basin	$	(1.48)	$	(1.09)	$	(1.85)	$	(2.14)	$	(1.67)	$	(1.83)	$	(3.10)	$	(1.91)
Mid-Continent	$	(0.44)	$	(0.31)	$	(0.57)	$	(0.68)	$	(0.74)	$	(0.66)	$	(0.86)	$	(0.46)
Total Company	$	(1.11)	$	(0.80)	$	(1.40)	$	(1.52)	$	(1.31)	$	(1.35)	$	(2.14)	$	(1.24)

Pipeline expansion projects in the Permian Basin are expected to ease capacity constraints as they come online over the next few years, which is reflected in the current futures markets that show narrowing differentials. In addition, as a result of current market expectations for lower near-term production volumes from the basin, gas differentials have recently improved. However, if pipeline projects are delayed or canceled, production resumes or increases faster than capacity increases, the basin experiences pipeline disruptions or other constraints, higher differentials will persist or potentially worsen. Our revenue, profitability, and future growth are highly dependent on the prices we receive for our oil and gas production and can be adversely affected by realized price decreases. See RESULTS OF OPERATIONS Revenues below for further information regarding our realized commodity prices.

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See RISK FACTORS in Item 1A of this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2019, for a discussion of risk factors that affect our business, financial condition, and results of operations. Also, see CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS in this report for important information about these types of statements.

Summary of Operating and Financial Results for the Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019:

•Total production volumes remained flat at 48.3 MMBOE.

•Oil volumes increased 3% to 83.9 MBbls per day.

•Gas volumes increased 3% to 675.2 MMcf per day.

•NGL volumes decreased 10% to 69.3 MBbls per day.

•Total production revenue decreased 37%, or $406.5 million, to $698.5 million.

•Cash flow provided by operating activities decreased 32%, or $210.6 million, to $453.5 million.

•Exploration and development expenditures decreased 52%, or $360.6 million, to $332.4 million.

•Net loss was $1.699 billion, or $17.05 per diluted share, for the first six months of 2020, as compared to net income of $135.6 million, or $1.34 per diluted share, for the first six months of 2019.

RESULTS OF OPERATIONS

Three and Six Months Ended June 30, 2020 Compared to Three and Six Months Ended June 30, 2019

Revenues

Our revenues are derived from sales of our oil, gas, and NGL production.  Increases or decreases in our revenues, profitability, and future production growth are highly dependent on the commodity prices we receive.  Prices are market driven and we expect that future prices will continue to fluctuate due to supply and demand factors, availability of transportation, seasonality, and geopolitical and economic factors. See QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK for more information regarding the sensitivity of our revenues to price fluctuations.

Production volumes were lower for all products during the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. This was due to strategic curtailment or shut in of production in certain areas during the three months ended June 30, 2020 as a result of the unprecedented demand destruction and inventory increases for oil and NGLs, and resulting severe price decreases, stemming from the COVID-19 pandemic. Realized prices were lower for oil and NGLs, while realized prices for gas were higher during the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. Gas price differentials improved during the 2020 period as compared to the 2019 period. For the six months ended June 30, 2020, average realized prices were lower for all products as compared to average realized prices for the six months ended June 30, 2019, while production volumes for oil and gas were higher and production volumes for NGLs were lower. Our revenue decreased 56%, or $298.7 million, during the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. Our revenue decreased 37%, or $406.5 million, during the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The following tables show our production revenue for the periods indicated as well as the change in revenue due to changes in volumes and prices.

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	Three Months Ended June 30,				Variance Between 2020 / 2019			Price/Volume Variance
Production Revenue (in thousands)	2020		2019					Price		Volume		Total
Oil sales	$	138,817	$	411,766	$	(272,949)	(66)%	$	(245,949)	$	(27,000)	$	(272,949)
Gas sales	54,154		30,362		23,792		78%	24,474		(682)		23,792
NGL sales	46,107		95,682		(49,575)		(52)%	(34,103)		(15,472)		(49,575)
	$	239,078	$	537,810	$	(298,732)	(56)%	$	(255,578)	$	(43,154)	$	(298,732)

	Six Months Ended June 30,				Variance Between 2020 / 2019			Price/Volume Variance
Production Revenue (in thousands)	2020		2019					Price		Volume		Total
Oil sales	$	499,797	$	761,072	$	(261,275)	(34)%	$	(288,508)	$	27,233	$	(261,275)
Gas sales	88,984		140,338		(51,354)		(37)%	(57,752)		6,398		(51,354)
NGL sales	109,758		203,621		(93,863)		(46)%	(75,118)		(18,745)		(93,863)
	$	698,539	$	1,105,031	$	(406,492)	(37)%	$	(421,378)	$	14,886	$	(406,492)

The table below presents our production volumes by region.

	Three Months Ended June 30,		Six Months Ended June 30,
Production Volumes	2020	2019	2020	2019
Oil (Bbls per day)
Permian Basin	68,791	70,669	74,198	67,835
Mid-Continent	9,063	12,623	9,502	13,419
Other	102	138	173	179
	77,956	83,430	83,873	81,433
Gas (MMcf per day)
Permian Basin	417.8	379.3	433.4	360.1
Mid-Continent	237.3	285.5	240.7	291.3
Other	0.9	1.0	1.1	1.1
	656.0	665.8	675.2	652.5
NGL (Bbls per day)
Permian Basin	47,291	54,813	48,111	50,567
Mid-Continent	20,068	25,496	21,089	26,060
Other	43	53	51	53
	67,402	80,362	69,251	76,680
Total (BOE per day)
Permian Basin	185,717	188,703	194,548	178,413
Mid-Continent	68,675	85,696	70,705	88,028
Other	295	368	396	427
	254,687	274,767	265,649	266,868

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The table below presents our production volumes by commodity, our average realized commodity prices, and certain major U.S. index prices.  The sale of our Permian Basin oil production is typically tied to the WTI Midland benchmark price and the sale of our Mid-Continent oil production is typically tied to the WTI Cushing benchmark price.  During the six months ended June 30, 2020, approximately 88% of our oil production was in the Permian Basin, up from approximately 83% during the six months ended June 30, 2019. Our realized prices do not include settlements of commodity derivative contracts.

	Three Months Ended June 30,						Variance Between 2020 / 2019	Six Months Ended June 30,						Variance Between 2020 / 2019
	2020			2019				2020			2019
Oil
Total volume — MBbls	7,094			7,592			(7)%	15,265			14,739			4%
Total volume — MBbls per day	78.0			83.4			(7)%	83.9			81.4			3%
Percentage of total production	31		%	30		%		32		%	30		%
Average realized price — per barrel	$	19.57		$	54.24		(64)%	$	32.74		$	51.64		(37)%
Average WTI Midland price — per barrel	$	28.06		$	57.72		(51)%	$	37.55		$	54.35		(31)%
Average WTI Cushing price — per barrel	$	27.85		$	59.82		(53)%	$	37.01		$	57.36		(35)%
Gas
Total volume — MMcf	59,694			60,592			(1)%	122,877			118,108			4%
Total volume — MMcf per day	656.0			665.8			(1)%	675.2			652.5			3%
Percentage of total production	43		%	41		%		42		%	41		%
Average realized price — per Mcf	$	0.91		$	0.50		82%	$	0.72		$	1.19		(39)%
Average Henry Hub price — per Mcf	$	1.71		$	2.64		(35)%	$	1.83		$	2.90		(37)%
NGL
Total volume — MBbls	6,134			7,313			(16)%	12,604			13,879			(9)%
Total volume — MBbls per day	67.4			80.4			(16)%	69.3			76.7			(10)%
Percentage of total production	26		%	29		%		26		%	29		%
Average realized price — per barrel	$	7.52		$	13.08		(43)%	$	8.71		$	14.67		(41)%
Total
Total production — MBOE	23,177			25,004			(7)%	48,348			48,303			—%
Total production — MBOE per day	254.7			274.8			(7)%	265.6			266.9			—%
Average realized price — per BOE	$	10.32		$	21.51		(52)%	$	14.45		$	22.88		(37)%

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Other revenues

We transport, process, and market some third-party gas that is associated with our equity gas.  We market and sell gas for other working interest owners under short-term agreements and may earn a fee for such services.  The table below reflects revenues from third-party gas gathering and processing and our net marketing margin for marketing third-party gas. 

	Three Months Ended June 30,				Variance Between 2020 / 2019		Six Months Ended June 30,				Variance Between 2020 / 2019
Gas Gathering and Marketing Revenues (in thousands)	2020		2019				2020		2019
Gas gathering and other	$	11,589	$	9,769	$	1,820	$	25,172	$	20,031	$	5,141
Gas marketing	$	(1,284)	$	(1,116)	$	(168)	$	(1,498)	$	(1,642)	$	144

Fluctuations in revenues from gas gathering and gas marketing activities are a function of increases and decreases in volumes, commodity prices, and gathering rate charges.

Operating Costs and Expenses

Costs associated with producing oil and gas are substantial.  Among other factors, some of these costs vary with commodity prices, some trend with the volume of production, some are a function of the number of wells we own, some depend on the prices charged by service companies, and some fluctuate based on a combination of the foregoing. 

Total operating costs and expenses for the three months ended June 30, 2020 were higher by 260%, or $1.035 billion, compared to the three months ended June 30, 2019.  The primary reasons for the increase were: (i) the $941.2 million ceiling test impairment incurred during the three months ended June 30, 2020 and (ii) the $164.7 million increase in net losses on derivative instruments.

	Three Months Ended June 30,				Variance Between 2020 / 2019		Per BOE
Operating Costs and Expenses (in thousands, except per BOE)	2020		2019				2020		2019
Impairment of oil and gas properties	$	941,198	$	—	$	941,198	N/A		N/A
Depreciation, depletion, and amortization	194,954		213,327		(18,373)		$	8.41	$	8.53
Asset retirement obligation	1,661		2,157		(496)		$	0.07	$	0.09
Production (1)	64,337		88,995		(24,658)		$	2.78	$	3.56
Transportation, processing, and other operating (1)	53,282		54,107		(825)		$	2.30	$	2.16
Gas gathering and other (1)	3,526		6,560		(3,034)		$	0.15	$	0.26
Taxes other than income	16,486		41,033		(24,547)		$	0.71	$	1.64
General and administrative	26,226		24,911		1,315		$	1.13	$	1.00
Stock compensation	6,747		6,494		253		$	0.29	$	0.26
Loss (gain) on derivative instruments, net	123,885		(40,768)		164,653		N/A		N/A
Other operating expense, net	130		590		(460)		N/A		N/A
	$	1,432,432	$	397,406	$	1,035,026

________________________________________

(1) In order to conform with the 2020 presentation, the 2019 amount presented reflects the reclassification of certain “Gas gathering and other” expenses to “Transportation, processing, and other operating” expenses and “Production” expense. These reclassifications were made to reflect an allocation of the costs incurred to operate our gas gathering facilities as a cost to transport our equity share of gas produced and operate our wells. See

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Note 1 to the Condensed Consolidated Financial Statements for further information regarding these prior year reclassifications.

Total operating costs and expenses for the six months ended June 30, 2020 were higher by 190%, or $1.761 billion, compared to the six months ended June 30, 2019. The primary reasons for the increase were: (i) the $1.275 billion in ceiling test impairments incurred during the six months ended June 30, 2020 and (ii) the $714.4 million impairment of goodwill incurred during the six months ended June 30, 2020, partially offset by (iii) the $177.7 million increase in net gains on derivative instruments.

	Six Months Ended June 30,				Variance Between 2020 / 2019		Per BOE
Operating Costs and Expenses (in thousands, except per BOE)	2020		2019				2020		2019
Impairment of oil and gas properties	$	1,274,849	$	—	$	1,274,849	N/A		N/A
Depreciation, depletion, and amortization	410,040		403,744		6,296		$	8.48	$	8.36
Asset retirement obligation	6,385		4,206		2,179		$	0.13	$	0.09
Impairment of goodwill	714,447		—		714,447		N/A		N/A
Production (1)	151,573		167,399		(15,826)		$	3.14	$	3.47
Transportation, processing, and other operating (1)	108,204		113,682		(5,478)		$	2.24	$	2.35
Gas gathering and other (1)	11,824		11,742		82		$	0.24	$	0.24
Taxes other than income	47,447		74,727		(27,280)		$	0.98	$	1.55
General and administrative	51,735		53,995		(2,260)		$	1.07	$	1.12
Stock compensation	13,141		13,207		(66)		$	0.27	$	0.27
(Gain) loss on derivative instruments, net	(103,055)		74,684		(177,739)		N/A		N/A
Other operating expense, net	381		8,916		(8,535)		N/A		N/A
	$	2,686,971	$	926,302	$	1,760,669

________________________________________

(1) In order to conform with the 2020 presentation, the 2019 amount presented reflects the reclassification of certain “Gas gathering and other” expenses to “Transportation, processing, and other operating” expenses and “Production” expense. These reclassifications were made to reflect an allocation of the costs incurred to operate our gas gathering facilities as a cost to transport our equity share of gas produced and operate our wells. See Note 1 to the Condensed Consolidated Financial Statements for further information regarding these prior year reclassifications.

Impairment of Oil and Gas Properties

We use the full cost method of accounting for our oil and gas operations. Under this method, we are required to perform quarterly ceiling test calculations to test our oil and gas properties for possible impairment.  If the net capitalized cost of our oil and gas properties, as adjusted for income taxes, exceeds the ceiling limitation, the excess is charged to expense.  The ceiling limitation is equal to the sum of: (i) the present value discounted at 10% of estimated future net revenues from proved reserves, (ii) the cost of properties not being amortized, and (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, as adjusted for income taxes.  We currently do not have any unproven properties that are being amortized. Estimated future net revenues are determined based on trailing twelve-month average commodity prices and estimated proved reserve quantities, operating costs, and capital expenditures.

The quarterly ceiling test is primarily impacted by commodity prices, changes in estimated reserve quantities, reserves produced, overall exploration and development costs, depletion expense, and deferred taxes.  If pricing conditions decline, or if there is a negative impact on one or more of the other components of the calculation, we may incur a full cost ceiling test impairment. The calculated ceiling limitation is not intended to be indicative of the fair market value of our proved reserves or future results.  Impairment charges do not affect cash flow from

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operating activities, but do adversely affect our net income and various components of our balance sheet.  Any impairment of oil and gas properties is not reversible at a later date. 

For the six months ended June 30, 2020, we incurred ceiling test impairments totaling $1.275 billion ($941.2 million for the three months ended June 30, 2020 and $333.7 million for the three months ended March 31, 2020). These impairments resulted primarily from the impact of decreases in the 12-month average trailing prices for oil, gas, and NGLs as well as significant basis differentials utilized in determining the estimated future net cash flows from proved reserves. We expect these conditions to continue at least through September 30, 2020 and possibly beyond and, therefore, expect to incur another ceiling test impairment at September 30, 2020.

Depreciation, Depletion, and Amortization

Depletion of our producing properties is computed using the units-of-production method. The economic life of each producing well depends upon the estimated proved reserves for that well, which in turn depend upon the assumed realized sales price for future production. Therefore, fluctuations in oil and gas prices will impact the level of proved reserves used in the calculation. Higher prices generally have the effect of increasing reserves, which reduces depletion expense. Conversely, lower prices generally have the effect of decreasing reserves, which increases depletion expense. The cost of replacing production also impacts our depletion expense. In addition, changes in estimates of reserve quantities, estimates of operating and future development costs, reclassifications of properties from unproved to proved, and impairments of oil and gas properties will also impact depletion expense. Our depletion expense decreased during the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 primarily due to a decrease in our depletable basis mostly due to ceiling test impairments recognized at December 31, 2019 and March 31, 2020 and secondarily due to a decrease in our production as a result of strategic curtailments and shut ins in the three months ended June 30, 2020 stemming from the demand destruction and inventory buildups caused by the COVID-19 pandemic. These causes for decreased depletion were partially offset by a decrease in our reserves primarily due to a decrease in the trailing twelve month prices used to calculate reserves. Depletion expense increased slightly during the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. This is primarily due to the decrease in our reserves as a result of a decrease in the trailing twelve month prices, mostly offset by a decreased depletable basis, primarily as a result of ceiling test impairments recognized at December 31, 2019 and March 31, 2020.

Fixed assets consist primarily of gathering and plant facilities, vehicles, airplanes, office furniture, and computer equipment and software.  These items are recorded at cost and are depreciated to depreciation expense on the straight-line method based on the expected lives of the individual assets, which range from 3 to 30 years.  Also included in our depreciation expense is the depreciation of our finance lease gathering system right-of-use asset. The increase in depreciation expense during the three and six months ended June 30, 2020 as compared to the three and six months ended June 30, 2019 is primarily due to increased depreciation on our gathering and plant facilities due to ongoing expenditures on this infrastructure. Depreciation, depletion, and amortization (“DD&A”) consisted of the following for the periods indicated:

	Three Months Ended June 30,				Variance Between 2020 / 2019		Per BOE
DD&A Expense (in thousands, except per BOE)	2020		2019				2020		2019
Depletion	$	177,136	$	196,899	$	(19,763)	$	7.64	$	7.87
Depreciation	17,818		16,428		1,390		0.77		0.66
	$	194,954	$	213,327	$	(18,373)	$	8.41	$	8.53

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	Six Months Ended June 30,				Variance Between 2020 / 2019		Per BOE
DD&A Expense (in thousands, except per BOE)	2020		2019				2020		2019
Depletion	$	375,262	$	371,611	$	3,651	$	7.76	$	7.69
Depreciation	34,778		32,133		2,645		0.72		0.67
	$	410,040	$	403,744	$	6,296	$	8.48	$	8.36

Impairment of Goodwill

We concluded that goodwill was impaired at March 31, 2020 and expensed the entire balance of $714.4 million at that time. See Note 1 to the Condensed Consolidated Financial Statements for additional information regarding the impairment of goodwill.

Production

Production expense generally consists of costs for labor, equipment, maintenance, saltwater disposal, compression, power, treating, and miscellaneous other costs (lease operating expense). Production expense also includes well workover activity necessary to maintain production from existing wells. Production expense consisted of lease operating expense and workover expense as follows:

	Three Months Ended June 30,				Variance Between 2020 / 2019		Per BOE
Production Expense (in thousands, except per BOE)	2020		2019				2020		2019
Lease operating expense	$	58,427	$	73,047	$	(14,620)	$	2.52	$	2.92
Workover expense	5,910		15,948		(10,038)		0.26		0.64
	$	64,337	$	88,995	$	(24,658)	$	2.78	$	3.56

	Six Months Ended June 30,				Variance Between 2020 / 2019		Per BOE
Production Expense (in thousands, except per BOE)	2020		2019				2020		2019
Lease operating expense	$	132,896	$	136,626	$	(3,730)	$	2.75	$	2.83
Workover expense	18,677		30,773		(12,096)		0.39		0.64
	$	151,573	$	167,399	$	(15,826)	$	3.14	$	3.47

Lease operating expense for the second quarter of 2020 decreased 20%, or $14.6 million, compared to the second quarter of 2019. Lease operating expense for the six months ended June 30, 2020 decreased 3%, or $3.7 million, compared to the six months ended June 30, 2019. The decreases in the 2020 periods as compared to the 2019 periods are primarily related to the reduction in activity, which has reduced: (i) saltwater disposal costs due to the reduction in production as a result of shut ins and decreased drilling and completion, (ii) labor costs, due to releasing contract workers as well as employees volunteering for an early retirement incentive program, (iii) rental equipment costs due to decreased drilling and completion, and (iv) repair and maintenance costs as non-essential work has been delayed.

Workover expense for the second quarter of 2020 decreased 63%, or $10.0 million, compared to the second quarter of 2019. Workover expense for the six months ended June 30, 2020 decreased 39%, or $12.1 million, compared to the six months ended June 30, 2019. We had fewer workover projects during the 2020 periods as compared to the 2019 periods as a result of a concerted effort to reduce activity and delay non-essential work. We expect workover expense to increase from the second quarter of 2020 levels going forward in 2020.

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Transportation, Processing, and Other Operating

Transportation, processing, and other operating costs principally consist of expenditures to prepare and transport production from the wellhead, including gathering, fuel, compression, and processing costs. Costs vary by region and will fluctuate with increases or decreases in production volumes, contractual fees, changes in fuel and compression costs, and the structure of sales contracts. If the sales contract transfers control of the product at the wellhead, transportation and processing costs are included as a reduction in the revenue we record and are not included in transportation, processing, and other operating costs. Transportation, processing, and other operating costs for the second quarter of 2020 were 2%, or $0.8 million, lower than the same costs in the second quarter of 2019. Transportation, processing, and other operating costs for the six months ended June 30, 2020 were 5%, or $5.5 million, lower than the same costs in the six months ended June 30, 2019.

Gas Gathering and Other

Gas gathering and other includes costs associated with operating our gas gathering and processing infrastructure, including product costs and operating and maintenance expenses. A portion of these costs are reclassified to “Transportation, processing, and other operating” expense and “Production” expense in order to reflect an allocation of the costs incurred to operate our gas gathering facilities as a cost of transporting our equity share of gas produced and operating our wells. Gas gathering and other in the three months ended June 30, 2020 was 46%, or $3.0 million, lower than gas gathering and other in the three months ended June 30, 2019 resulting primarily from decreases in compression and other third-party costs. Gas gathering and other in the six months ended June 30, 2020 was consistent with gas gathering and other in the six months ended June 30, 2019.

Taxes Other than Income

Taxes other than income consist of production (or severance) taxes, ad valorem taxes, and other taxes.  State and local taxing authorities assess these taxes, with production taxes being based on the volume or value of production and ad valorem taxes being based on the value of properties.  

	Three Months Ended June 30,						Variance Between 2020 / 2019		Six Months Ended June 30,						Variance Between 2020 / 2019
Taxes Other than Income (in thousands)	2020			2019					2020			2019
Production	$	6,868		$	29,648		$	(22,780)	$	28,455		$	56,739		$	(28,284)
Ad valorem	9,232			11,093			(1,861)		18,451			17,534			917
Other	386			292			94		541			454			87
	$	16,486		$	41,033		$	(24,547)	$	47,447		$	74,727		$	(27,280)
Taxes other than income as a percentage of production revenue	6.9		%	7.6		%			6.8		%	6.8		%

Taxes other than income decreased $24.5 million, or 60%, in the second quarter of 2020 as compared to the second quarter of 2019 and decreased $27.3 million, or 37%, in the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. Production taxes typically make up the majority of our taxes other than income and they decreased significantly primarily due to decreased revenues as a result of decreased prices and volumes. Ad valorem tax accruals are based on the most recent actual taxes paid with adjustments made based on expected valuations and as better information, including actual valuations, is received. Other taxes other than income are comprised of franchise and consumer use and sales taxes.

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General and Administrative

General and administrative (“G&A”) expense consists primarily of salaries and related benefits, office rent, legal and consulting fees, systems costs, and other administrative costs incurred. Our G&A expense is reported net of amounts reimbursed to us by working interest owners of the oil and gas properties we operate and net of amounts capitalized pursuant to the full cost method of accounting. The amount of expense capitalized varies and depends on whether the cost incurred can be directly identified with acquisition, exploration, and development activities. The percentage of gross G&A capitalized ranged from 35% to 47% during the periods presented in the table below, which shows our G&A costs.

	Three Months Ended June 30,				Variance Between 2020 / 2019		Six Months Ended June 30,				Variance Between 2020 /2019
General and Administrative Expense (in thousands)	2020		2019				2020		2019
Gross G&A	$	40,466	$	46,930	$	(6,464)	$	83,267	$	96,166	$	(12,899)
Less amounts capitalized to oil and gas properties	(14,240)		(22,019)		7,779		(31,532)		(42,171)		10,639
G&A expense	$	26,226	$	24,911	$	1,315	$	51,735	$	53,995	$	(2,260)

G&A expense for the second quarter of 2020 was 5%, or $1.3 million, higher than G&A expense for the second quarter of 2019. G&A expense for the six months ended June 30, 2020 was 4%, or $2.3 million, lower than G&A expense for the six months ended June 30, 2019. Salaries and wages, annual bonus accrual expense, and profit sharing accrual expense are lower in the 2020 periods as compared to the 2019 periods. In January and March 2020, we offered employees who met certain eligibility criteria the opportunity to participate in a voluntary early retirement incentive program. As a result of this program, we recognized severance expense of $3.6 million and $14.5 million in G&A expense during the three and six months ended June 30, 2020, respectively. We expect to recognize a total of $17.0 million in severance expense for this program. In response to current low oil prices, we have reduced our acquisition, exploration, and development activities, and, therefore, the percentage of gross G&A capitalized has decreased from prior periods and we expect this trend to continue in future quarters until activity increases.

Stock Compensation

Stock compensation expense consists of non-cash charges resulting from the amortization of the cost of restricted stock and stock option awards, net of amounts capitalized to oil and gas properties. We have recognized stock-based compensation cost as follows:

	Three Months Ended June 30,				Variance Between 2020 / 2019		Six Months Ended June 30,				Variance Between 2020 / 2019
Stock Compensation Expense (in thousands)	2020		2019				2020		2019
Restricted stock awards:
Performance stock awards	$	4,059	$	5,535	$	(1,476)	$	8,119	$	10,929	$	(2,810)
Service-based stock awards	6,585		5,993		592		13,962		13,224		738
	10,644		11,528		(884)		22,081		24,153		(2,072)
Stock option awards	416		396		20		914		1,018		(104)
Total stock compensation cost	11,060		11,924		(864)		22,995		25,171		(2,176)
Less amounts capitalized to oil and gas properties	(4,313)		(5,430)		1,117		(9,854)		(11,964)		2,110
Stock compensation expense	$	6,747	$	6,494	$	253	$	13,141	$	13,207	$	(66)

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Periodic stock compensation expense will fluctuate based on the grant-date fair value of awards, the number of awards, the requisite service period of the awards, employee forfeitures, and the timing of the awards.  

Loss (Gain) on Derivative Instruments, Net

The following table presents the components of “Loss (gain) on derivative instruments, net” for the periods indicated. See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding our derivative instruments.

	Three Months Ended June 30,				Variance Between 2020 / 2019		Six Months Ended June 30,				Variance Between 2020 / 2019
Loss (Gain) on Derivative Instruments, Net (in thousands)	2020		2019				2020		2019
Decrease (increase) in fair value of derivative instruments, net:
Gas contracts	$	19,826	$	(6,370)	$	26,196	$	32,319	$	(16,216)	$	48,535
Oil contracts	168,000		(28,161)		196,161		(28,319)		88,086		(116,405)
	187,826		(34,531)		222,357		4,000		71,870		(67,870)
Cash (receipts) payments on derivative instruments, net:
Gas contracts	(5,870)		(21,176)		15,306		(17,589)		(17,412)		(177)
Oil contracts	(58,071)		14,939		(73,010)		(89,466)		20,226		(109,692)
	(63,941)		(6,237)		(57,704)		(107,055)		2,814		(109,869)
Loss (gain) on derivative instruments, net	$	123,885	$	(40,768)	$	164,653	$	(103,055)	$	74,684	$	(177,739)

Other Operating Expense, Net

Other operating expense, net during the six months ended June 30, 2019 included $8.4 million in acquisition-related costs incurred to effect the Resolute acquisition. These costs consisted primarily of advisory and legal fees.

Other Income and Expense

	Three Months Ended June 30,				Variance Between 2020 / 2019		Six Months Ended June 30,				Variance Between 2020 / 2019
Other Income and Expense (in thousands)	2020		2019				2020		2019
Interest expense	$	23,047	$	24,674	$	(1,627)	$	46,228	$	45,079	$	1,149
Capitalized interest	(12,939)		(16,805)		3,866		(26,121)		(25,547)		(574)
Loss on early extinguishment of debt	—		—		—		—		4,250		(4,250)
Other, net	3,496		(2,167)		5,663		2,625		(4,408)		7,033
	$	13,604	$	5,702	$	7,902	$	22,732	$	19,374	$	3,358

The majority of our interest expense relates to interest on our senior unsecured notes. Also included in interest expense is interest expense on our Credit Facility borrowings, the amortization of debt issuance costs and discounts, and miscellaneous interest expense.  See LIQUIDITY AND CAPITAL RESOURCES Long-term Debt below for further information regarding our debt. The $4.3 million loss on early extinguishment of debt incurred during the six months ended June 30, 2019 was associated with the $600 million of 8.5% senior notes we acquired with Resolute and elected to immediately repay. The maturity date of the Resolute notes was May 1, 2020.

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We capitalize interest on non-producing leasehold costs, the in-progress costs of drilling and completing wells, and constructing midstream and water facility assets. Capitalized interest will fluctuate based primarily on the amount of costs subject to interest capitalization and based on the rates applicable to borrowings outstanding during the period. The amount of interest capitalized was lower for the three months ended June 30, 2020 than it was for the three months ended June 30, 2019 due to a decrease in costs subject to interest capitalization primarily as a result of a decrease in the balance of non-producing leasehold acquired in the Resolute acquisition. Since the March 1, 2019 acquisition, the balance of these assets has declined due to purchase price adjustments and transfers to proved properties. The amount of interest capitalized was slightly higher for the six months ended June 30, 2020 than it was for the six months ended June 30, 2019 due to an increase in costs subject to interest capitalization primarily as a result of the balance of non-producing leasehold acquired in the Resolute acquisition being subject to capitalization for the entirety of the six months ended June 30, 2020 as compared to four months of the six months ended June 30, 2019. This increase in costs subject to capitalization was partially offset by reduced in-progress costs of drilling and completing wells during 2020 as compared to 2019.

Components of “Other, net” consist of miscellaneous income and expense items that vary from period to period, including interest income, gain or loss related to the sale or value of oil and gas well equipment and supplies, gain or loss on miscellaneous asset sales, and income and expense associated with other non-operating activities.

Income Tax (Benefit) Expense

The components of our provision for income taxes and our combined federal and state effective income tax rates were as follows:

	Three Months Ended June 30,						Variance Between 2020 / 2019		Six Months Ended June 30,						Variance Between 2020 / 2019
Income Tax (Benefit) Expense (in thousands)	2020			2019					2020			2019
Current tax expense (benefit)	$	37		$	—		$	37	$	(161)		$	—		$	(161)
Deferred tax (benefit) expense	(271,543)			34,046			(305,589)		(287,900)			42,119			(330,019)
	$	(271,506)		$	34,046		$	(305,552)	$	(288,061)		$	42,119		$	(330,180)
Combined federal and state effective income tax rate	22.7		%	23.7		%			14.5		%	23.7		%

Our combined federal and state effective income tax rates differ from the U.S. federal statutory rate of 21% primarily due to state income taxes and non-deductible expenses. The combined federal and state effective income tax rate for the six months ended June 30, 2020 is impacted by the tax effects of the impairment of the non-deductible goodwill recorded as a discrete item during the first quarter 2020. As such, we believe our effective tax rate will be higher in subsequent periods. In addition, if future ceiling test impairments cause our deferred tax balance to change from a net deferred tax liability to a net deferred tax asset, we may be required to establish a valuation allowance against the net deferred tax asset at that time. See Note 9 to the Condensed Consolidated Financial Statements for additional information regarding our income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Overview

We strive to maintain an adequate liquidity level to address volatility and risk. Sources of liquidity include our cash flow from operations, cash on hand, available borrowing capacity under our revolving credit facility, proceeds from sales of non-strategic assets, and, from time to time, public financings based on our monitoring of capital markets and our balance sheet.

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Our liquidity is highly dependent on prices we receive for the oil, gas, and NGLs we produce. Prices we receive are determined by prevailing market conditions and greatly influence our revenue, cash flow, profitability, access to capital, and future rate of growth. See RESULTS OF OPERATIONS Revenues above for further information regarding the impact realized prices have had on our earnings. Low oil prices will lead to lower production revenues and could lead to payment being required where we fail to deliver oil, gas, and NGLs to meet minimum volume commitments.

We address volatility in commodity prices primarily by maintaining flexibility in our capital investment program. We have a balanced and abundant drilling inventory and limited long-term commitments, which enables us to respond quickly to industry volatility. In response to the decline in oil prices in the second quarter 2020, we took immediate steps to reduce our capital investment, including releasing all but one drilling rig by mid-May and deferring completion activity. However, with the subsequent improvement in oil prices we have added two drilling rigs and expect to add one additional rig over the remainder of the year, exiting 2020 with four rigs. We also expect to begin completing wells starting in September with two completion crews. As a result, total capital expenditures for 2020 are expected to be approximately $600 million. See Capital Expenditures below for information regarding our E&D activities for the three and six months ended June 30, 2020 and 2019 and our plans to fund 2020 capital expenditures.

We periodically use derivative instruments to mitigate volatility in commodity prices. At June 30, 2020, we had derivative contracts covering a portion of our 2020 - 2022 production. Depending on changes in oil and gas futures markets and management’s view of underlying supply and demand trends, we may increase or decrease our derivative positions from current levels. See Note 3 to the Condensed Consolidated Financial Statements for information regarding our derivative instruments.

Cash and cash equivalents at June 30, 2020 were $43.8 million. At June 30, 2020, our long-term debt consisted of $2.0 billion of senior unsecured notes, with $750 million 4.375% notes due in 2024, $750 million 3.90% notes due in 2027, and $500 million 4.375% notes due in 2029. At June 30, 2020, we had no borrowings and $2.5 million in letters of credit outstanding under our credit facility, leaving an unused borrowing availability of $1.248 billion. See Long-term Debt below for more information regarding our debt.

We may, from time to time, seek to repurchase our outstanding preferred stock through cash repurchases and/or exchanges for equity securities, privately negotiated transactions, or otherwise. Such activities, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.

We expect our operating cash flow and other capital resources to be adequate to meet our needs for planned capital expenditures, working capital, debt service, and dividends declared for the next twelve months.

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Analysis of Cash Flow Changes

The following table presents the totals of the major cash flow classification categories from our Condensed Consolidated Statements of Cash Flows for the periods indicated.

	Six Months Ended June 30,
(in thousands)	2020		2019
Net cash provided by operating activities	$	453,497	$	664,083
Net cash used by investing activities	$	(454,614)	$	(1,022,672)
Net cash used by financing activities	$	(49,763)	$	(422,663)

Net cash provided by operating activities for the six months ended June 30, 2020 was $453.5 million, down $210.6 million, or 32%, from $664.1 million for the six months ended June 30, 2019. The $210.6 million decrease resulted primarily from a decrease in revenues in the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 due to the price collapses and demand destruction seen in 2020 as a result of the COVID-19 pandemic and actions of the Organization of Petroleum Exporting Countries (“OPEC”) and other countries in the first quarter of 2020. This decrease was partially offset by increased cash inflows for settlements of derivative instruments, decreased operating expenses, and a decreased investment in working capital during the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. See RESULTS OF OPERATIONS above for more information regarding the changes in revenues and expenses.

Net cash used by investing activities for the six months ended June 30, 2020 and 2019 was $454.6 million and $1.023 billion, respectively. The majority of our cash flows used by investing activities are for oil and gas capital expenditures, which totaled $418.6 million and $711.8 million for the six months ended June 30, 2020 and 2019, respectively. Net cash used by investing activities in the six months ended June 30, 2019 included the $325.7 million cash portion of the consideration paid for the Resolute acquisition, net of the $41.2 million in cash acquired with Resolute. The remaining investing cash outflows are primarily for midstream asset expenditures. Included in net cash used by investing activities are the proceeds of miscellaneous asset sales, including non-strategic oil and gas properties.

Net cash used by financing activities was $49.8 million and $422.7 million during the six months ended June 30, 2020 and 2019, respectively. During the six months ended June 30, 2020, we borrowed and repaid an aggregate of $161.0 million on our credit facility to meet cash requirements as needed. During the six months ended June 30, 2020, we amended our credit facility, paying $1.5 million in financing costs. During the six months ended June 30, 2019, we issued $500 million aggregate principal amount of 4.375% senior unsecured notes due March 15, 2029 at 99.862% of par for proceeds of $499.3 million, paying $4.6 million in underwriting fees and financing costs. Additionally, we borrowed and repaid an aggregate of $1.211 billion on our credit facility during the six months ended June 30, 2019 to assist in funding the Resolute acquisition. In connection with the acquisition of Resolute, we assumed $870.0 million in principal amount of long-term debt that we immediately repaid, incurring a redemption fee of $4.3 million. During the six months ended June 30, 2019, we amended our credit facility, paying $3.0 million in financing costs. Net cash used by financing activities during both periods included: (i) the payment of dividends, (ii) the payment of income tax withholdings made on behalf of our employees upon the net settlement of employee stock awards, and (iii) finance lease payments. During the six months ended June 30, 2020, we paid one $0.20 per share dividend and one $0.22 per share dividend on our common stock and two $20.3125 per share dividends on our preferred stock, totaling $45.2 million. During the six months ended June 30, 2019, we paid one $0.18 per share dividend and one $0.20 per share dividend on our common stock and one $20.3125 per share dividend on our preferred stock, totaling $38.6 million. Future dividend payments will depend on our level of earnings, financial requirements, and other factors considered relevant by our Board of Directors.

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Capital Expenditures

The following table presents capitalized expenditures for oil and gas acquisition, exploration, and development activities. The table also presents the amounts, net of applicable purchase price adjustments, removed from our oil and gas properties balance due to property sales.

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Acquisitions:
Proved	$	—	$	1,200	$	7,250	$	693,800
Unproved	—		1,000		—		1,051,782
	—		2,200		7,250		1,745,582
Exploration and development:
Land and seismic	12,116		14,552		26,040		24,079
Exploration and development	71,666		310,428		306,394		668,919
	83,782		324,980		332,434		692,998
Property sales:
Proved	—		(22,058)		—		(18,028)
Unproved	—		(6,253)		(830)		(9,754)
	—		(28,311)		(830)		(27,782)
	$	83,782	$	298,869	$	338,854	$	2,410,798

Amounts in the table above are presented on an accrual basis. The Condensed Consolidated Statements of Cash Flows reflect activities on a cash basis, when payments are made and proceeds received.

On March 1, 2019, we completed the acquisition of Resolute Energy Corporation, an independent oil and gas company focused on the acquisition and development of unconventional oil and gas properties in the Delaware Basin area of the Permian Basin of west Texas. The fair value of the proved and unproved properties recorded in the preliminary purchase price allocation for this acquisition as of June 30, 2019 was $692.6 million and $1.05 billion, respectively, as included in the table above.

Our 2020 total capital expenditures were originally projected to range from $1.25-$1.35 billion, with the majority expected to be invested in the Permian Basin. In response to the decline in oil prices in the second quarter 2020, we took immediate steps to reduce our capital investment, including releasing all but one drilling rig by mid-May and deferring completion activity. However, with the subsequent improvement in oil prices we have added two drilling rigs and expect to add one additional rig over the remainder of the year, exiting 2020 with four rigs. We also expect to begin completing wells starting in September with two completion crews. As a result, total capital expenditures for 2020 are expected to be approximately $600 million. As has been our historical practice, we regularly review our capital expenditures throughout the year and will adjust our investments based on increases or decreases in commodity prices, service costs, and drilling success. We have the flexibility to adjust our capital expenditures based upon market conditions.

We intend to continue to fund our 2020 capital investment program with cash flow from our operating activities, cash on hand, and periodic borrowings under our credit facility. Sales of non-strategic assets and possible capital markets transactions may also be used to supplement funding of capital expenditures and acquisitions. The timing of capital expenditures and the receipt of cash flows do not necessarily match, which may cause us to borrow and repay funds under our credit facility from time to time. See Long-term Debt—Bank Debt below for further information regarding our credit facility.

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The following table reflects wells completed by region during the periods indicated.

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Gross wells
Permian Basin	17	44	52	56
Mid-Continent	20	66	39	92
	37	110	91	148
Net wells
Permian Basin	11.1	31.9	30.9	36.9
Mid-Continent	1.4	7.8	1.7	10.7
	12.5	39.7	32.6	47.6

As of June 30, 2020, we had 1 gross (0.9 net) well in the process of being drilled. This well is in the Permian Basin. As of June 30, 2020, we had 73 gross (31.1 net) wells waiting on completion: 47 gross (31.1 net) in the Permian Basin and 26 gross (less than 1 net) in the Mid-Continent region. By mid-May 2020, we had released all but one rig and placed completion activities on hold due to economic conditions at the time. Since that time, we have added two drilling rigs and expect to add one additional rig over the remainder of the year, exiting 2020 with four rigs. We also expect to begin completing wells starting in September with two completion crews. We maintain flexibility to adjust our activity as conditions change.

We have made, and will continue to make, expenditures to comply with environmental and safety regulations and requirements. These costs are considered a normal recurring cost of our ongoing operations. While we expect current pending legislation or regulations to increase the cost of business, we do not anticipate that we will be required to expend amounts that will have a material adverse effect on our financial position or operations, nor are we aware of any pending regulatory changes that would have a material impact, based on current laws and regulations. However, compliance with new legislation or regulations could increase our costs or adversely affect demand for oil or gas and result in a material adverse effect on our financial position or operations. See our Form 10-K for the year ended December 31, 2019, Item 1A Risk Factors, and Part II, Item 1A, Risk Factors, of this Form 10-Q for a description of risks related to current and potential future environmental and safety regulations and requirements that could adversely affect our operations and financial condition.

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Long-term Debt

Long-term debt at June 30, 2020 and December 31, 2019 consisted of the following:

	June 30, 2020						December 31, 2019
(in thousands)	Principal		Unamortized Debt Issuance Costs and Discounts (1)		Long-term Debt, net		Principal		Unamortized Debt Issuance Costs and Discounts (1)		Long-term Debt, net
4.375% Notes due 2024	$	750,000	$	(3,099)	$	746,901	$	750,000	$	(3,535)	$	746,465
3.90% Notes due 2027	750,000		(5,919)		744,081		750,000		(6,289)		743,711
4.375% Notes due 2029	500,000		(4,711)		495,289		500,000		(4,930)		495,070
	$	2,000,000	$	(13,729)	$	1,986,271	$	2,000,000	$	(14,754)	$	1,985,246

________________________________________

(1)The 4.375% Notes due 2024 were issued at par, therefore, the amounts shown in the table are for unamortized debt issuance costs only. At June 30, 2020, the unamortized debt issuance costs and discount related to the 3.90% Notes due 2027 were $4.6 million and $1.4 million, respectively. At June 30, 2020, the unamortized debt issuance costs and discount related to the 4.375% Notes due 2029 were $4.1 million and $0.6 million, respectively. At December 31, 2019, the unamortized debt issuance costs and discount related to the 3.90% Notes due 2027 were $4.8 million and $1.5 million, respectively. At December 31, 2019, the unamortized debt issuance costs and discount related to the 4.375% Notes due 2029 were $4.3 million and $0.6 million, respectively.

Bank Debt

On June 3, 2020, we entered into the First Amendment to Amended and Restated Credit Agreement (the “First Amendment”) dated as of February 5, 2019 for our senior unsecured revolving credit facility (“Credit Facility”). The Credit Facility has aggregate commitments of $1.25 billion with an option for us to increase the aggregate commitments to $1.5 billion, and matures on February 5, 2024. There is no borrowing base subject to the discretion of the lenders based on the value of our proved reserves under the Credit Facility. The First Amendment, among other things: (i) allows up to $3.5 billion of non-cash impairment charge add-backs to Shareholders’ Equity for covenant calculation purposes, (ii) institutes traditional anti-cash hoarding provisions at a consolidated cash threshold of $175.0 million, (iii) reduces the priority lien debt basket from 15% of Consolidated Net Tangible Assets (as defined in the credit agreement) to a $50.0 million cap, and (iv) adds an acknowledgement and consent to European Union bail-in legislation. As of June 30, 2020, we had no bank borrowings outstanding under the Credit Facility, but did have letters of credit of $2.5 million outstanding, leaving an unused borrowing availability of $1.248 billion. During the three and six months ended June 30, 2020, we borrowed and repaid an aggregate of $60.0 million and $161.0 million, respectively, on the Credit Facility to meet cash requirements as needed.

At our option, borrowings under the Credit Facility may bear interest at either (a) LIBOR (or an alternate rate determined by the administrative agent for the Credit Facility in accordance with the Credit Facility when LIBOR is no longer available) plus 1.125 – 2.0% based on the credit rating for our senior unsecured long-term debt, or (b) a base rate (as defined in the credit agreement) plus 0.125 – 1.0%, based on the credit rating for our senior unsecured long-term debt. Unused borrowings are subject to a commitment fee of 0.125 – 0.35%, based on the credit rating for our senior unsecured long-term debt.

The Credit Facility contains representations, warranties, covenants, and events of default that are customary for investment grade, senior unsecured bank credit agreements, including a financial covenant for the maintenance of a defined total debt-to-capitalization ratio of no greater than 65%. As of June 30, 2020, we were in compliance with all of the financial covenants.

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At June 30, 2020 and December 31, 2019, we had $5.0 million and $4.0 million, respectively, of unamortized debt issuance costs associated with our Credit Facility, which were recorded as assets and included in “Other assets” on our Condensed Consolidated Balance Sheets. We incurred $1.5 million in fees paid to the creditor and third-party costs for the First Amendment. These costs are being amortized to interest expense ratably over the life of the Credit Facility.

Senior Notes

On March 8, 2019, we issued $500 million aggregate principal amount of 4.375% senior unsecured notes due March 15, 2029 at 99.862% of par to yield 4.392% per annum.  We received $494.7 million in net cash proceeds, after deducting underwriters’ fees, discount, and debt issuance costs.  The notes bear an annual interest rate of 4.375% and interest is payable semiannually on March 15 and September 15, with the first payment made on September 15, 2019.  We used the net proceeds to repay borrowings outstanding under our Credit Facility that were used to help fund the Resolute acquisition on March 1, 2019. The effective interest rate on these notes, including the amortization of debt issuance costs and discount, is 4.50%.

In April 2017, we issued $750 million aggregate principal amount of 3.90% senior unsecured notes at 99.748% of par to yield 3.93% per annum. These notes are due May 15, 2027 and interest is payable semiannually on May 15 and November 15. The effective interest rate on these notes, including the amortization of debt issuance costs and discount, is 4.01%.

In June 2014, we issued $750 million aggregate principal amount of 4.375% senior unsecured notes at par. These notes are due June 1, 2024 and interest is payable semiannually on June 1 and December 1. The effective interest rate on these notes, including the amortization of debt issuance costs, is 4.50%.

Our senior unsecured notes are governed by indentures containing certain covenants, events of default, and other restrictive provisions with which we were in compliance as of June 30, 2020.

Working Capital Analysis

At June 30, 2020, we had a working capital deficit of $80.7 million, a decrease of $56.5 million or 41% from a working capital deficit of $137.1 million at December 31, 2019. Our working capital deficit decreased primarily as a result of the following:

Working Capital Increases

•Operations-related accounts payable and accrued liabilities decreased by $192.4 million, primarily due to a decrease in revenue payable due to declines in prices, a decrease in trade accounts payable due to decreased activity, and a decrease in taxes other than income due to ad valorem tax payments made at the beginning of the year and due to declines in prices lowering our production taxes payable;

•A decrease in our exploration and development and midstream capital accruals of $86.3 million as a result of our decision to reduce our capital investment in response to the decline in oil prices in the second quarter 2020;

•An increase of $18.8 million in our net current asset derivative position; and

•A $10.0 million decrease in our lease liabilities.

Working Capital Decreases

•Accounts receivable decreased by $203.8 million, primarily due to declines in prices lowering our oil and gas sales receivable; and

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•A $50.9 million decrease in our cash and cash equivalents. See Analysis of Cash Flow Changes above for further information on the change in our cash balance.

Accounts receivable are a major component of our working capital and include amounts due from a diverse group of companies comprised of major energy companies, pipeline companies, local distribution companies, and other end-users. We conduct credit analyses prior to making any sales to new customers or increasing credit for existing customers and may require parent company guarantees, letters of credit, or prepayments when deemed necessary. Pursuant to the operating agreements we have with the co-owners of our operated properties, we have the right to realize amounts due to us from the co-owners by netting the co-owners’ production revenues from those properties. We routinely assess the recoverability of all material accounts receivable and accrue a reserve to the allowance for doubtful accounts based on our estimation of expected losses over the life of the receivables. Historically, losses associated with uncollectible receivables have not been significant. However, most of our accounts receivable balances are uncollateralized and result from transactions with other companies in the oil and gas industry. Concentration of customers may impact our overall credit risk because our customers may be similarly affected by changes in economic or other conditions within the industry, such as those currently impacting the industry as a result of the COVID-19 pandemic and low commodity prices.

Dividends

A quarterly cash dividend has been paid on our common stock every quarter since the first quarter of 2006. In May 2020, our Board of Directors declared a cash dividend of $0.22 per common share, totaling $22.6 million, which is payable on or before September 1, 2020 to stockholders of record on August 14, 2020. Also in May 2020, our Board of Directors declared a cash dividend of $20.3125 per preferred share, totaling $1.3 million. The dividend was paid in July to preferred stockholders of record on July 1, 2020. Future dividend payments will depend on our level of earnings, financial requirements, and other factors considered relevant by our Board of Directors.

Off-Balance Sheet Arrangements

We may enter into off-balance sheet arrangements and transactions that can give rise to material off-balance sheet obligations. As of June 30, 2020, our material off-balance sheet arrangements consisted of operating lease agreements with lease terms at commencement of 12 months or less. As an accounting policy, we have elected not to apply the recognition requirements of Topic 842 to these leases. As such, we have not recorded any lease liabilities associated with these leases.

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Contractual Obligations and Material Commitments

At June 30, 2020, we had the following contractual obligations and material commitments:

	Payments Due by Period
Contractual obligations (in thousands)	Total		07/01/20 - 06/30/21		07/01/21 - 06/30/23			07/01/23 - 06/30/25			07/01/25 and Thereafter
Long-term debt—principal (1)	$	2,000,000	$	—	$	—		$	750,000		$	1,250,000
Long-term debt—interest (1)	532,937		81,868		167,875			135,063			148,131
Operating leases (2)	80,319		20,443		24,875			22,641			12,360
Unconditional purchase obligations (3)	23,408		10,711		6,273			6,167			257
Derivative liabilities	74,766		51,556		23,210			—			—
Asset retirement obligation (4)	168,618		18,244		—		(4)	—		(4)	—		(4)
Other long-term liabilities (5)	45,249		3,695		9,124			3,500			28,930
	$	2,925,297	$	186,517	$	231,357		$	917,371		$	1,439,678

________________________________________

(1)The interest payments presented above include the accrued interest payable on our long-term debt as of June 30, 2020 as well as future payments calculated using the long-term debt’s fixed rates, stated maturity dates, and principal amounts outstanding as of June 30, 2020. See Note 2 to the Condensed Consolidated Financial Statements for additional information regarding our debt.

(2)Operating leases include the estimated remaining contractual payments under lease agreements as of June 30, 2020. These lease agreements are primarily comprised of leases for commercial real estate, which consists primarily of office space, and compressor equipment.

(3)Of the total unconditional purchase obligations, $20.9 million represents obligations for firm transportation agreements for gas and oil pipeline capacity.

(4)We have excluded the presentation of the timing of the cash flows associated with our long-term asset retirement obligations because we cannot make a reasonably reliable estimate of the future period of cash settlement. The long-term asset retirement obligation is included in the total asset retirement obligation presented.

(5)Other long-term liabilities include contractual obligations associated with our employee supplemental savings plan, gas balancing liabilities, and other miscellaneous liabilities. All of these liabilities are accrued on our Condensed Consolidated Balance Sheet. The current portion associated with these long-term liabilities is also presented in the table above.

The following discusses various commercial commitments that we have made that may include potential future cash payments if we fail to meet various performance obligations. These are not reflected in the table above, unless otherwise noted.

At June 30, 2020, we had estimated commitments of approximately: (i) $209.5 million to finish drilling, completing, or performing other work on wells and various other infrastructure projects in progress and (ii) $6.8 million to finish gathering system and water facilities construction in progress.

At June 30, 2020, we had firm sales contracts to deliver approximately 522.5 Bcf of gas over the next 11.0 years. If we do not deliver this gas, our estimated financial commitment, calculated using July 2020 index prices, would be approximately $499.3 million. The value of this commitment will fluctuate due to price volatility and actual volumes delivered. However, we believe no financial commitment will be due based on our current proved reserves and production levels and our ability to make market purchases to fulfill these volumetric obligations.

In connection with gas gathering and processing agreements, we have volume commitments over the next 8.5 years. If we do not deliver the committed gas or NGLs, as the case may be, the estimated maximum amount that would be payable under these commitments, calculated as of June 30, 2020, would be approximately $676.6 million.

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With the current commodity price environment we curtailed some production and reduced drilling activity during the second quarter 2020 and may again curtail production and further reduce drilling activity in the future; however, at this time we do not believe any financial commitment resulting from potential future volume commitment shortfalls will be material.

We have minimum volume delivery commitments associated with agreements to reimburse connection costs to various pipelines. If we do not deliver this gas, or oil, as the case may be, the estimated maximum amount that would be payable under these commitments, calculated as of June 30, 2020, would be approximately $106.6 million. Of this total, we have accrued a liability of $4.3 million representing the estimated amount we will have to pay due to insufficient forecasted volumes at particular connection points. This accrual is reflected in the table above in Other long-term liabilities. With the current commodity price environment we curtailed some production and reduced drilling activity during the second quarter 2020 and may again curtail production and further reduce drilling activity in the future; however, at this time we do not believe any financial commitment resulting from potential future minimum volume delivery commitment shortfalls will be material.

All of the noted commitments were routine and made in the ordinary course of our business.

Taking into account current commodity prices and anticipated levels of production, we believe that our net cash flow generated from operations and our other capital resources will be adequate to meet future obligations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We consider accounting policies and estimates related to oil and gas reserves, full cost accounting, and income taxes to be critical accounting policies and estimates. These are summarized in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk including the risk of loss arising from adverse changes in commodity prices and interest rates.

Price Fluctuations

Our major market risk is pricing applicable to our oil, gas, and NGL production. The prices we receive for our production are based on prevailing market conditions and are influenced by many factors that are beyond our control. Pricing for oil, gas, and NGL production has been volatile and unpredictable. For the three months ended June 30, 2020, our total production revenue was comprised of approximately 58% oil sales, 23% gas sales, and 19% NGL sales. For the six months ended June 30, 2020, our total production revenue was comprised of approximately 71% oil sales, 13% gas sales, and 16% NGL sales. The following table shows how hypothetical changes in the realized prices we receive for our commodity sales may have impacted revenue for the period indicated.

			Impact on Revenue
	Change in Realized Price		Three Months Ended June 30, 2020	Six Months Ended June 30, 2020
			(in thousands)
Oil	± $1.00	per barrel	± $7,094	± $15,265
Gas	± $0.10	per Mcf	± $5,969	± $12,288
NGL	± $1.00	per barrel	± $6,134	± $12,604
			± $19,197	± $40,157

We periodically enter into financial derivative contracts to hedge a portion of our price risk associated with our future oil and gas production. At June 30, 2020, we had oil and gas derivatives covering a portion of our 2020 - 2022 production, which were recorded as current assets and current and non-current liabilities. At June 30, 2020, our oil and gas derivatives had a gross asset fair value of $71.6 million and a gross liability fair value of $74.8 million. See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding our derivative instruments.

While these contracts limit the downside risk of adverse price movements, they may also limit future cash flow from favorable price movements. The following table shows how a hypothetical ± 10% change in the underlying forward prices used to calculate the fair value of our derivatives may have impacted the fair value as of June 30, 2020.

		Impact on Fair Value
	Change in Forward Price	June 30, 2020
		(in thousands)
Oil	-10%	$	60,666
Oil	+10%	$	(61,390)
Gas	-10%	$	16,992
Gas	+10%	$	(17,113)

Interest Rate Risk

At June 30, 2020, our long-term debt consisted of $750 million of 4.375% senior unsecured notes that mature on June 1, 2024, $750 million of 3.90% senior unsecured notes that mature on May 15, 2027, and $500 million of 4.375% senior unsecured notes that mature on March 15, 2029. Because all of our outstanding long-term debt is at a fixed rate, we consider our interest rate exposure to be minimal. See Note 2 to the Condensed Consolidated Financial Statements for additional information regarding our debt.

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ITEM 4. CONTROLS AND PROCEDURES 

Evaluation of Disclosure Controls and Procedures

Cimarex’s management, under the supervision and with the participation of the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), have evaluated the effectiveness of Cimarex’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2020.  Based on that evaluation, the CEO and CFO concluded that the disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods required by the U.S. Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including the CEO and CFO, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

The information set forth under the heading “Litigation” in Note 10 to the Condensed Consolidated Financial Statements is incorporated by reference in response to this item.

ITEM 1A. RISK FACTORS  

The following risks and uncertainties, together with other information set forth in this Form 10-Q and our Form 10-K for the year ended December 31, 2019, should be carefully considered by current and future investors in our securities. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties presently unknown to us or currently deemed immaterial also may impair our business operations. The occurrence of one or more of these risks or uncertainties could materially and adversely affect our business, financial condition, and results of operations, which in turn could negatively impact the value of our securities. Many of these risks relate to the current COVID-19 pandemic; however, there are many other impacts of the pandemic or outbreaks of other communicable diseases that may become material. Given the unpredictable and unprecedented nature of the current situation it is impractical to identify all potential risks and estimate the ultimate adverse impact on our business. All the risks disclosed in this Form 10-Q and our Form 10-K may be amplified by the COVID-19 outbreak and its unpredictable nature. These risk factors speak only as of the filing date of this Form 10-Q and are subject to change without notice as we cannot predict all risk relating to this quickly evolving set of events.

Risks Concerning Cimarex and its Operations

Outbreaks of communicable diseases could adversely affect our business, financial condition, and results of operations.

Global or national health concerns, including a widespread outbreak of contagious disease, can negatively impact the global economy, reduce demand and pricing for oil, gas, and NGLs, lead to operational disruptions and limit our ability to execute on our business plan, which could materially and adversely affect our business, financial condition, and results of operations. Furthermore, uncertainty regarding the impact of any contagious disease outbreak could lead to increased volatility in oil, gas, and NGL prices. For example, the current pandemic involving COVID-19 and the measures being taken to address and limit the spread of the virus have adversely affected the economies and financial markets of many countries, resulting in an economic downturn that has negatively impacted, and may continue to negatively impact, global demand and prices for oil, gas, and NGLs. If the COVID-19 outbreak worsens, we may also experience further disruptions to the commodities markets, as well as disruptions to the equipment supply chains and the availability of our workforce as well as the workforces of contractors and regulators, any of which could adversely affect our ability to conduct our business and operations. There currently are too many variables and uncertainties regarding the COVID-19 pandemic, such as the ultimate geographic spread, duration, and severity of the outbreak and the extent and duration of governmental restrictions and business closures, to fully assess the potential impact on our business and operations; however, the potential impact could materially and adversely affect our business, financial condition, and results of operations.

Oil, gas, and NGL prices fluctuate due to a number of factors beyond our control, creating a component of uncertainty in our development plans and overall operations. Declines in prices adversely affect our financial results and rate of growth in proved reserves and production.

Oil and gas markets are volatile. We cannot predict future prices. The prices we receive for our production heavily influence our revenue, profitability, access to capital, and future rate of growth. The prices we receive depend on numerous factors beyond our control. These factors include, but are not limited to, changes in domestic and global supply and demand for oil and gas, the level of domestic and global oil and gas exploration and production activity, pipeline capacity constraints limiting takeaway and increasing basis differentials, geopolitical instability, the actions of OPEC and other cooperating countries, global or national health concerns including the outbreak of pandemic or contagious diseases such as COVID-19, weather conditions, technological advances

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affecting energy consumption, governmental regulations and taxes, and the price and technological advancement of alternative fuels. Demand for oil and gas has severely diminished because of the COVID-19 pandemic and the resulting closure of factories and businesses, the significant travel restrictions and the stay-at-home orders, causing lower commodity prices. Oil prices also can decrease if OPEC increases supply, as it did in the first quarter of 2020 at a time when global demand was also decreasing. If any of these conditions persist, our financial results could be adversely affected by the reduction in production revenues and our inability to collect amounts owed by purchasers of our production or counterparties to our hedging transactions whose businesses also are impacted by these same conditions.

Our proved oil and gas reserves and production volumes will decrease unless those reserves are replaced with new discoveries or acquisitions. Accordingly, for the foreseeable future, we expect to make substantial capital investments for the exploration and development of new oil and gas reserves. Historically, we have paid for these types of capital expenditures with cash flow provided by our production operations, our revolving credit facility, and proceeds from the sale of senior notes or equity. Low prices reduce our cash flow and the amount of oil and gas that we can economically produce and may cause us to curtail, delay, or defer certain exploration and development projects. Moreover, low prices may impact our ability to raise additional debt or equity capital to fund acquisitions.

If commodity prices remain at current levels or decline further, we will be required to take additional write-downs of the carrying value of our oil and gas properties.

Accounting rules require that we periodically review the carrying value of our oil and gas properties for possible impairment. We recognized ceiling test impairments of $941.2 million and $333.7 million in the three months ended June 30, 2020 and March 31, 2020, respectively, and $618.7 million in year ended December 31, 2019. The impairments resulted primarily from the impact of decreases in the trailing twelve-month average prices for oil, gas, and NGLs utilized in determining the estimated future net cash flows from proved reserves. We expect to incur another ceiling test impairment at September 30, 2020 and, if commodity pricing conditions stay at current levels or decline further, we may incur further ceiling test impairments in future quarters. Because the ceiling calculation uses trailing twelve-month average commodity prices, the effect of declining prices is a lower ceiling value each quarter. This will result in ongoing impairments each quarter until prices stabilize or improve. Impairment charges do not affect cash flow from operating activities, but do adversely affect our net income and various components of our balance sheet.

Ineffective internal controls could impact our business and financial results.

Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and financial results could be harmed and we could fail to meet our financial reporting obligations. For example, as of December 31, 2019, management concluded that we did not have an effective process and control in place to periodically evaluate the quantitative effect associated with the inclusion or exclusion of certain inputs, such as skim oil and drip liquids, in the Company’s oil and gas reserve database used in the ceiling test impairment calculations, depletion calculations, and the preparation of the related disclosures included in the supplemental information on oil and gas producing activities (unaudited), which represented a material weakness in our internal control over financial reporting and, therefore, that we did not maintain effective internal control over financial reporting as of December 31, 2019, as reported in our Form 10-K for the year ended December 31, 2019. For a description of the material weakness identified by management and the remediation plan for that material weakness, see Part II, Item 9A Controls and Procedures in our Form 10-K for the year ended December 31, 2019. If the new controls implemented to address the material weakness and to strengthen the overall internal control related to the reserve reporting process are not designed or do not operate effectively, or if we are unsuccessful in following these new controls, this may result in untimely or inaccurate reporting of our financial statements.

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U.S. or global financial markets may impact our business and financial condition.

A credit crisis or other turmoil in the U.S. or global financial system may have a negative impact on our business and our financial condition. Our ability to access the capital markets may be restricted at a time when we would like, or need, to raise financing. This could have an impact on our flexibility to react to changing economic and business conditions. Deteriorating economic conditions, including those resulting from the COVID-19 pandemic, could have a negative impact on our lenders, our hedging counterparties, the purchasers of our oil and gas production, and the working interest owners in properties we operate, causing them to fail to meet their obligations to us.

Our business depends on oil and gas pipeline and transportation facilities, some of which are owned by others.

In addition to the existence of adequate markets, our oil and gas production depends in large part on the proximity and capacity of pipeline systems, as well as storage, transportation, processing, and fractionation facilities, most of which are owned by third parties. Oil, refined products, and gas storage remain at historically high levels due to reduced demand from the COVID-19 pandemic which places commodity price pressure across all commodities. We do not anticipate the inability to transport our commodities; however, should that occur, the company’s production could be curtailed which would impact drilling plans. Curtailments of production could lead to payment being required where we fail to deliver oil, gas, and NGLs to meet minimum volume commitments. These availability and capacity issues are more likely to occur in remote areas with less established infrastructure, such as our Delaware Basin area where we have significant oil and gas production. Any of these availability or capacity issues, whether resulting from the COVID-19 pandemic, construction delays, weather, fire, or other reasons, could negatively affect our operations and revenues.

Many of our properties are in areas that may have been partially depleted or drained by offset wells and certain of our wells may be adversely affected by actions other operators may take when drilling, completing, or operating wells that they own.

Many of our properties are in areas that may have been partially depleted or drained by earlier offset drilling. The owners of leasehold interests adjoining any of our properties could take actions, such as drilling and completing additional wells, which could adversely affect our operations. When a new well is completed and produced, the pressure differential in the vicinity of the well causes the migration of reservoir fluids toward the new wellbore (and potentially away from existing wellbores), which could cause a depletion of our proved reserves and may inhibit our ability to further develop our proved reserves. The possibility for these impacts may increase as we shut in wells in response to lower commodity prices or the lack of pipeline and storage capacity relating to the COVID-19 pandemic. In addition, completion operations and other activities conducted on nearby wells could cause us, in order to protect our existing wells, to shut in production for indefinite periods of time, which could result in increased costs and could adversely affect the production and reserves from such shut in wells after they re-commence production. We have no control over the operations or activities of offsetting operators.

We may be subject to information technology system failures, network disruptions, and breaches in data security and our business, financial position, results of operations, and cash flows could be negatively affected by such security threats and disruptions.

As an oil and gas producer, we face various security threats, including cybersecurity threats such as attempts to gain unauthorized access to sensitive information or to render data or systems unusable; threats to the security of our facilities and infrastructure or third-party facilities and infrastructure, such as gathering and processing facilities, pipelines and refineries; and threats from terrorist acts. Cybersecurity attacks are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data, and “ransomware” attacks where data is locked unless a payment is made, any of which could have an adverse effect on our reputation, business, financial condition, results of operations, or cash flows. While we have not suffered any material losses relating to such attacks, there can be no assurance that we will not suffer such losses in the future.

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We rely heavily on our information systems, and the availability and integrity of these systems are essential for us to conduct our business and operations. In addition to cybersecurity and data security threats, other information system failures and network disruptions could have a material adverse effect on our ability to conduct our business. We could experience system failures due to power or telecommunications failures, human error, natural disasters, fire, sabotage, hardware or software malfunction or defects, computer viruses, intentional acts of vandalism or terrorism and similar acts or occurrences. Such system failures could result in the unanticipated disruption of our operations, communications, or processing of transactions, as well as loss of, or damage to, sensitive information, facilities, infrastructure and systems essential to our business and operations, the failure to meet regulatory standards and the reporting of our financial results, and other disruptions to our operations, which, in turn, could have a material adverse effect on our business, financial position, results of operations, and cash flows.

A cyber attack involving our information systems and related infrastructure, or those of our business associates, could disrupt our business and negatively impact our operations in a variety of ways, including but not limited to:

•unauthorized access to seismic data, reserves information, strategic information, or other sensitive or proprietary information could have a negative impact on our ability to compete for oil and gas resources;

•data corruption or operational disruption of production-related infrastructure could result in a loss of production, or accidental discharge;

•a cyber attack on a vendor or service provider could result in supply chain disruptions, which could delay or halt our major development projects;

•a cyber attack on third-party gathering, pipeline, or rail transportation systems could delay or prevent us from transporting and marketing our production, resulting in a loss of revenues; and

•a cyber attack on our accounting or accounts payable systems could expose us to liability to employees and third parties if their personal identifying information is obtained.

These events could damage our reputation and lead to financial losses from remedial actions, loss of business, or potential liability, which could have a material adverse effect on our financial condition, results of operations, or cash flows.

While management has taken steps to address these concerns by implementing network security and internal control measures to monitor and mitigate security threats and to increase security for our information, facilities, and infrastructure, our implementation of such procedures and controls may result in increased costs, and there can be no assurance that a system failure or data security breach will not occur and have a material adverse effect on our business, financial condition, and results of operations. In addition, as cybersecurity threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate or remediate any cybersecurity or information technology infrastructure vulnerabilities. With large numbers of employees industry-wide and at Cimarex working from home during the COVID-19 pandemic, there may be heightened vulnerability to cyber attacks.

We may not be able to generate enough cash flow to meet our debt obligations.

At June 30, 2020, our long-term debt consisted of $750 million of 4.375% senior notes due in 2024, $750 million of 3.90% senior notes due in 2027, and $500 million of 4.375% senior notes due in 2029. In addition to interest expense and principal on our long-term debt, we have demands on our cash resources including, among others, capital expenditures, operating expenses, and contractual commitments.

Our ability to pay the principal and interest on our long-term debt and to satisfy our other liabilities will depend upon future performance and our ability to repay or refinance our debt as it becomes due. Our future operating performance and ability to refinance will be affected by economic and capital market conditions, results of operations, and other factors, many of which are beyond our control. The current COVID-19 pandemic has resulted

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in limited availability of public debt markets. Our ability to meet our debt service obligations also may be impacted by changes in prevailing interest rates, as borrowing under our existing revolving credit facility bears interest at floating rates.

We may not generate sufficient cash flow from operations. Without sufficient cash flow, there may not be adequate future sources of capital to enable us to service our indebtedness or to fund our other liquidity needs. Our cash flow has been impacted by the reduced commodity prices and lower production resulting from diminished demand caused by the COVID-19 pandemic. If we are unable to service our indebtedness and fund our operating costs, we will be forced to adopt alternative strategies that may include:

•reducing or delaying capital expenditures;

•seeking additional debt financing or equity capital;

•selling assets; or

•restructuring or refinancing debt.

We may be unable to complete any such strategies on satisfactory terms, if at all. Our inability to generate sufficient cash flows to satisfy our debt obligations or contractual commitments, or to refinance our indebtedness on commercially reasonable terms, would materially and adversely affect our financial condition and results of operations.

The instruments governing our indebtedness contain various covenants limiting the discretion of our management in operating our business.

The indenture governing our senior notes and our credit agreement contain various restrictive covenants that may limit management’s discretion in certain respects. In particular, these agreements limit Cimarex’s and its subsidiaries’ ability to, among other things:

•create certain liens;

•consolidate, merge, or transfer all, or substantially all, of our assets and our restricted subsidiaries; or

•enter into sale and leaseback transactions. 

In addition, our revolving credit agreement requires us to maintain a total debt-to-capitalization ratio (as defined in the credit agreement) of not more than 65%. While we were in compliance with this covenant at June 30, 2020, net losses in the future driven by ceiling test impairments could cause us to exceed this ratio.

If we fail to comply with the restrictions in the indenture governing our senior notes or the agreement governing our credit facility or any other subsequent financing agreements, a default may allow the creditors, if the agreements so provide, to accelerate the related indebtedness as well as any other indebtedness to which a cross-acceleration or cross-default provision applies. In addition, lenders may be able to terminate any commitments they had made to make available further funds.

We may lose leases if production is not established within the time periods specified in the leases or if we do not maintain production in paying quantities.

Unless production is established within the units covering undeveloped leasehold acres, those leases could expire, and the amounts we spent for those leases could be lost. In addition, we could lose leases under certain circumstances if we do not maintain production in paying quantities or meet other lease requirements. As we shut in wells in response to lower commodity prices or a lack of pipeline and storage capacity as a result of the COVID-19 pandemic, we may face claims that we are not complying with lease provisions. The combined net acreage expiring in the next three years represents approximately 4.0% of our total net undeveloped acreage at December 31, 2019. At that date, we had leases representing 166,227 net acres expiring in 2020, 21,226 net acres expiring in 2021, and

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35,457 net acres expiring in 2022. Our actual drilling activities may materially differ from those presently identified, which could adversely affect our business.

We are involved in various legal proceedings, the outcome of which could have an adverse effect on our liquidity.

In the normal course of business, we are involved with various lawsuits and related disputed claims, including but not limited to claims concerning title, validity of leases, royalty payments, environmental issues, personal injuries, and contractual issues. Although we currently believe the resolution of these lawsuits and claims, individually or in the aggregate, would not have a material adverse effect on our financial condition or results of operations, our assessment of our current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against us not presently known to us or determinations by judges, juries, or other finders of fact that are not in accord with our evaluation of the possible liability or outcome of such proceedings. Therefore, there can be no assurance that outcomes of future legal proceedings would not have an adverse effect on our liquidity and capital resources.

We are subject to complex laws and regulations that can adversely affect the cost, manner, and feasibility of doing business.

Exploration, production, and the sale of oil and gas are subject to extensive laws and regulations, including those implemented to protect the environment, human health and safety, and wildlife. Federal, state, and local regulatory agencies frequently require permitting and impose conditions on our activities. During the permitting process, these regulatory agencies often exercise considerable discretion in both the timing and scope of the permits, and the public, including special interest groups, often has an opportunity to influence the timing and outcome of the process. The requirements or conditions imposed by these agencies can be costly and can delay the commencement of our operations. In addition, a number of initiatives were put forth by the Obama administration in the form of Presidential or Secretarial Memoranda, which are still in effect, and have the potential to impact the cost of doing business or could result in substantial delays in permitting, drilling, and other oil and gas activities. A change in administration could lead to additional impacts on the cost of doing business and additional delays in permitting, drilling and other oil and gas activities on federal as well as tribal, state, and private lands. Permits and other regulatory approvals also may be negatively impacted by the impact of COVID-19 restrictions on regulatory employees responsible for regulatory approvals.

Failing to comply with any of the applicable laws and regulations, or Presidential initiatives, could result in the suspension or termination of our operations and subject us to administrative, civil, and criminal liabilities and penalties. Such costs could have a material adverse effect on both our financial condition and operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table sets forth information regarding repurchases of our common stock during the three months ended June 30, 2020. The shares repurchased represent shares of our common stock that employees elected to surrender to satisfy their tax withholding obligations upon the vesting of shares of restricted stock. Cimarex does not consider this a share buyback program.

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
April 1-30, 2020	1,160	$	20.53	—	—
May 1-31, 2020	—	—		—	—
June 1-30, 2020	—	—		—	—
Total	1,160	$	20.53	—	—

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ITEM 6. EXHIBITS

Exhibits not incorporated by reference to a prior filing are designated by an asterisk (*) and are filed herewith.

Exhibit Number	Description
10.1	Form of Severance Compensation Agreement (filed as Exhibit 10.1 to the Current Report on Form 8-K filed March 13, 2020 (Commission File No. 001-31446) and incorporated herein by reference).
10.2	Form of Notice of Grant of Performance Stock Units and Award Agreement (Performance Award) (filed as Exhibit 10.2 to the Current Report on Form 8-K filed March 13, 2020 (Commission File No. 001-31446) and incorporated herein by reference).
10.3	Form of Amendment to Severance Compensation Agreement (filed as Exhibit 10.2 to the Current Report on Form 8-K/A filed May 12, 2020 (Commission File No. 001-31446) and incorporated herein by reference).
10.4	First Amendment to Amended and Restated Credit Agreement, dated June 3, 2020, among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, Wells Fargo Bank, N.A., as syndication agent, the co-documentation agents party thereto, J.P. Morgan Chase Bank, N.A. and Wells Fargo Securities, LLC, as lead arrangers and bookrunners, and the lenders party thereto. (filed as Exhibit 10.1 to the Current Report on Form 8-K/A filed June 4, 2020 (Commission File No. 001-31446) and incorporated herein by reference).
10.5	Amended and Restated Credit Agreement, dated February 5, 2019, among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, Wells Fargo Bank, N.A., as syndication agent, the co-documentation agents party thereto, J.P. Morgan Chase Bank, N.A. and Wells Fargo Securities, LLC, as lead arrangers and bookrunners, and the lenders party thereto. (filed as Exhibit 10.1 to the Current Report on Form 8-K filed February 7, 2019 (Commission File No. 001-31446) and incorporated herein by reference).
10.6	Succession Agreement dated July 1, 2020 between Cimarex Energy Co. and Joseph R. Albi (filed as Exhibit 10.1 to the Current Report on Form 8-K/A filed July 2, 2020 (Commission File No. 001-31446) and incorporated herein by reference).
31.1	Certification of Thomas E. Jorden, Chief Executive Officer of Cimarex Energy Co., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2	Certification of G. Mark Burford, Chief Financial Officer of Cimarex Energy Co., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1	Certification of Thomas E. Jorden, Chief Executive Officer of Cimarex Energy Co., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. *
32.2	Certification of G. Mark Burford, Chief Financial Officer of Cimarex Energy Co., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. *
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

62

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

August 7, 2020
	CIMAREX ENERGY CO.
	/s/ G. Mark Burford
	G. Mark Burford
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)
	/s/ Timothy A. Ficker
	Timothy A. Ficker
	Vice President, Controller, and Chief Accounting Officer
	(Principal Accounting Officer)

63

EX-31.1

Exhibit 31.1

I, Thomas E. Jorden, certify that:

1)I have reviewed this quarterly report on Form 10-Q of Cimarex Energy Co.;

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance  with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 7, 2020
	/s/ Thomas E. Jorden
	Name:	Thomas E. Jorden
	Title:	Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, G. Mark Burford, certify that:

1)I have reviewed this quarterly report on Form 10-Q of Cimarex Energy Co.;

2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have;

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance  with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 7, 2020
	/s/ G. Mark Burford
	Name:	G. Mark Burford
	Title:	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification

        Pursuant to 18 U.S.C. § 1350, the undersigned officer of Cimarex Energy Co. (the Company), hereby certifies, to such officer’s knowledge, that the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 (the Report) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 7, 2020
	/s/ Thomas E. Jorden
	Name:	Thomas E. Jorden
	Title:	Chairman, President and Chief Executive Officer

        The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as a separate disclosure document.

EX-32.2

Exhibit 32.2

Certification

        Pursuant to 18 U.S.C. § 1350, the undersigned officer of Cimarex Energy Co. (the Company), hereby certifies, to such officer’s knowledge, that the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 (the Report) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 7, 2020
	/s/ G. Mark Burford
	Name:	G. Mark Burford
	Title:	Senior Vice President and Chief Financial Officer

        The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as a separate disclosure document.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2020	Jul. 31, 2020
Cover [Abstract]
Entity Central Index Key	0001168054
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-31446
Entity Registrant Name	CIMAREX ENERGY CO
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-0466694
Entity Address, Address Line One	1700 Lincoln Street, Suite 3700
Entity Address, City or Town	Denver
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80203
City Area Code	303
Local Phone Number	295-3995
Title of 12(b) Security	Common Stock ($0.01 par value)
Trading Symbol	XEC
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		102,048,311

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 43,842	$ 94,722
Accounts receivable, net of allowance:
Trade	58,572	57,879
Oil and gas sales	180,912	384,707
Gas gathering, processing, and marketing	5,342	5,998
Oil and gas well equipment and supplies	51,184	47,893
Derivative instruments	71,590	17,944
Prepaid expenses	10,250	10,759
Other current assets	2,410	1,584
Total current assets	424,102	621,486
Oil and gas properties at cost, using the full cost method of accounting:
Proved properties	21,014,098	20,678,334
Unproved properties and properties under development, not being amortized	1,258,002	1,255,908
Gross oil and gas properties	22,272,100	21,934,242
Less—accumulated depreciation, depletion, amortization, and impairment	(18,373,655)	(16,723,544)
Net oil and gas properties	3,898,445	5,210,698
Fixed assets, net of accumulated depreciation of $423,873 and $389,458, respectively	478,553	519,291
Goodwill	0	716,865
Derivative instruments	0	580
Other assets	68,688	71,109
Total assets	4,869,788	7,140,029
Accounts payable:
Trade	13,746	36,280
Gas gathering, processing, and marketing	11,286	12,740
Accrued liabilities:
Exploration and development	30,205	112,228
Taxes other than income	33,427	54,446
Other	204,830	252,304
Derivative instruments	51,556	16,681
Revenue payable	102,824	207,939
Operating leases	56,901	66,003
Total current liabilities	504,775	758,621
Long-term debt principal	2,000,000	2,000,000
Less—unamortized debt issuance costs and discounts	(13,729)	(14,754)
Long-term debt, net	1,986,271	1,985,246
Deferred income taxes	50,524	338,424
Asset retirement obligation	150,374	154,045
Derivative instruments	23,210	1,018
Operating leases	155,023	184,172
Other liabilities	67,144	60,742
Total liabilities	2,937,321	3,482,268
Commitments and contingencies (Note 10)
Redeemable preferred stock - 8.125% Series A Cumulative Perpetual Convertible Preferred Stock, $0.01 par value, 62,500 shares authorized and issued (Note 5)	81,620	81,620
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 102,151,096 and 102,144,577 shares issued, respectively	1,022	1,021
Additional paid-in capital	3,241,244	3,243,325
(Accumulated deficit) retained earnings	(1,391,419)	331,795
Total stockholders’ equity	1,850,847	3,576,141
Total liabilities and stockholders' equity	$ 4,869,788	$ 7,140,029

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Accumulated depreciation on fixed assets	$ 423,873	$ 389,458
Redeemable preferred stock dividend rate (as a percent)	8.125%	8.125%
Redeemable preferred stock, par value (USD per share)	$ 0.01	$ 0.01
Redeemable preferred stock authorized (shares)	62,500	62,500
Redeemable preferred stock issued (shares)	62,500	62,500
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock authorized (shares)	200,000,000	200,000,000
Common stock issued (shares)	102,151,096	102,144,577

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues:
Revenues	$ 249,383	$ 546,463	$ 722,213	$ 1,123,420
Costs and expenses:
Impairment of oil and gas properties	941,198	0	1,274,849	0
Depreciation, depletion, and amortization	194,954	213,327	410,040	403,744
Asset retirement obligation	1,661	2,157	6,385	4,206
Impairment of goodwill	0	0	714,447	0
Production	64,337	88,995	151,573	167,399
Transportation, processing, and other operating	53,282	54,107	108,204	113,682
Gas gathering and other	3,526	6,560	11,824	11,742
Taxes other than income	16,486	41,033	47,447	74,727
General and administrative	26,226	24,911	51,735	53,995
Stock compensation	6,747	6,494	13,141	13,207
Loss (gain) on derivative instruments, net	123,885	(40,768)	(103,055)	74,684
Other operating expense, net	130	590	381	8,916
Total costs and expenses	1,432,432	397,406	2,686,971	926,302
Operating (loss) income	(1,183,049)	149,057	(1,964,758)	197,118
Other (income) and expense:
Interest expense	23,047	24,674	46,228	45,079
Capitalized interest	(12,939)	(16,805)	(26,121)	(25,547)
Loss on early extinguishment of debt	0	0	0	4,250
Other, net	3,496	(2,167)	2,625	(4,408)
(Loss) income before income tax	(1,196,653)	143,355	(1,987,490)	177,744
Income tax (benefit) expense	(271,506)	34,046	(288,061)	42,119
Net (loss) income	$ (925,147)	$ 109,309	$ (1,699,429)	$ 135,625
Earnings (loss) per share to common stockholders:
Basic (USD per share)	$ (9.28)	$ 1.07	$ (17.05)	$ 1.34
Diluted (USD per share)	$ (9.28)	$ 1.07	$ (17.05)	$ 1.34
Comprehensive (loss) income:
Net (loss) income	$ (925,147)	$ 109,309	$ (1,699,429)	$ 135,625
Other comprehensive income:
Change in fair value of investments, net of tax of $0, $89, $0 and $428, respectively	0	304	0	1,453
Total comprehensive (loss) income	(925,147)	109,613	(1,699,429)	137,078
Oil sales
Revenues:
Revenues	138,817	411,766	499,797	761,072
Gas and NGL sales
Revenues:
Revenues	100,261	126,044	198,742	343,959
Gas gathering and other
Revenues:
Revenues	11,589	9,769	25,172	20,031
Gas marketing
Revenues:
Revenues	$ (1,284)	$ (1,116)	$ (1,498)	$ (1,642)

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Change in fair value investments, tax	$ 0	$ 89	$ 0	$ 428

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net (loss) income	$ (925,147)	$ 109,309	$ (1,699,429)	$ 135,625
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Impairment of oil and gas properties			1,274,849	0
Depreciation, depletion, and amortization	194,954	213,327	410,040	403,744
Asset retirement obligation	1,661	2,157	6,385	4,206
Impairment of goodwill	0	0	714,447	0
Deferred income taxes	(271,543)	34,046	(287,900)	42,119
Stock compensation			13,141	13,207
(Gain) loss on derivative instruments, net	123,885	(40,768)	(103,055)	74,684
Settlements on derivative instruments			107,055	(2,814)
Loss on early extinguishment of debt	0	0	0	4,250
Amortization of debt issuance costs and discounts			1,602	1,502
Changes in non-current assets and liabilities			7,019	2,749
Other, net			6,795	8,152
Changes in operating assets and liabilities:
Accounts receivable			204,615	117,692
Other current assets			1,495	(761)
Accounts payable and other current liabilities			(203,562)	(140,272)
Net cash provided by operating activities			453,497	664,083
Cash flows from investing activities:
Acquisition of Resolute Energy, net of cash acquired (Note 13)			0	(284,441)
Oil and gas capital expenditures			(418,580)	(711,757)
Other capital expenditures			(38,052)	(40,141)
Sales of oil and gas assets			830	13,233
Sales of other assets			1,188	434
Net cash used by investing activities			(454,614)	(1,022,672)
Cash flows from financing activities:
Borrowings of long-term debt			161,000	1,710,310
Repayments of long-term debt			(161,000)	(2,081,000)
Financing, underwriting, and debt redemption fees			(1,557)	(11,791)
Finance lease payments			(2,808)	(1,555)
Dividends paid			(45,209)	(38,647)
Employee withholding taxes paid upon the net settlement of equity-classified stock awards			(189)	(654)
Proceeds from exercise of stock options			0	674
Net cash used by financing activities			(49,763)	(422,663)
Net change in cash and cash equivalents			(50,880)	(781,252)
Cash and cash equivalents at beginning of period			94,722	800,666
Cash and cash equivalents at end of period	$ 43,842	$ 19,414	$ 43,842	$ 19,414

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income
Balance at beginning of period (shares) at Dec. 31, 2018		95,756
Balance at beginning of period at Dec. 31, 2018	$ 3,329,786	$ 958	$ 2,785,188	$ 542,885	$ 755
Increase (Decrease) in Stockholders' Equity
Dividends paid on stock awards subsequently forfeited	2			2
Dividends declared on common stock	(20,308)			(20,308)
Dividends declared on redeemable preferred stock	(1,269)			(1,269)
Net (loss) income	26,316			26,316
Issuance of stock for Resolute Energy acquisition (Note 13) (shares)		5,652
Issuance of stock for Resolute Energy acquisition (Note 13)	413,015	$ 56	412,959
Unrealized change in fair value of investments, net of tax	1,149				1,149
Issuance of restricted stock awards (shares)		11
Common stock reacquired and retired (shares)		(10)
Common stock reacquired and retired	(654)		(654)
Restricted stock forfeited and retired (shares)		(4)
Exercise of stock options (shares)		3
Exercise of stock options	80		80
Stock-based compensation	13,245		13,245
Balance at end of period (shares) at Mar. 31, 2019		101,408
Balance at end of period at Mar. 31, 2019	3,761,362	$ 1,014	3,210,818	547,626	1,904
Balance at beginning of period (shares) at Dec. 31, 2018		95,756
Balance at beginning of period at Dec. 31, 2018	3,329,786	$ 958	2,785,188	542,885	755
Increase (Decrease) in Stockholders' Equity
Net (loss) income	135,625
Unrealized change in fair value of investments, net of tax	1,453
Balance at end of period (shares) at Jun. 30, 2019		101,473
Balance at end of period at Jun. 30, 2019	3,861,893	$ 1,015	3,223,331	635,339	2,208
Balance at beginning of period (shares) at Mar. 31, 2019		101,408
Balance at beginning of period at Mar. 31, 2019	3,761,362	$ 1,014	3,210,818	547,626	1,904
Increase (Decrease) in Stockholders' Equity
Dividends paid on stock awards subsequently forfeited	5		1	4
Dividends declared on common stock	(20,330)			(20,330)
Dividends declared on redeemable preferred stock	(1,270)			(1,270)
Net (loss) income	109,309			109,309
Unrealized change in fair value of investments, net of tax	304				304
Issuance of restricted stock awards (shares)		54
Issuance of restricted stock awards		$ 1	(1)
Restricted stock forfeited and retired (shares)		(4)
Exercise of stock options (shares)		15
Exercise of stock options	594		594
Stock-based compensation	11,919		11,919
Balance at end of period (shares) at Jun. 30, 2019		101,473
Balance at end of period at Jun. 30, 2019	3,861,893	$ 1,015	3,223,331	635,339	$ 2,208
Balance at beginning of period (shares) at Dec. 31, 2019		102,145
Balance at beginning of period at Dec. 31, 2019	3,576,141	$ 1,021	3,243,325	331,795
Increase (Decrease) in Stockholders' Equity
Dividends paid on stock awards subsequently forfeited	29		6	23
Dividends declared on common stock	(22,548)			(22,548)
Dividends declared on redeemable preferred stock	(1,269)			(1,269)
Net (loss) income	(774,282)			(774,282)
Common stock reacquired and retired (shares)		(12)
Common stock reacquired and retired	(165)		(165)
Restricted stock forfeited and retired (shares)		(31)
Stock-based compensation	11,594		11,594
Balance at end of period (shares) at Mar. 31, 2020		102,102
Balance at end of period at Mar. 31, 2020	2,789,500	$ 1,021	3,254,760	(466,281)
Balance at beginning of period (shares) at Dec. 31, 2019		102,145
Balance at beginning of period at Dec. 31, 2019	3,576,141	$ 1,021	3,243,325	331,795
Increase (Decrease) in Stockholders' Equity
Net (loss) income	(1,699,429)
Unrealized change in fair value of investments, net of tax	0
Balance at end of period (shares) at Jun. 30, 2020		102,151
Balance at end of period at Jun. 30, 2020	1,850,847	$ 1,022	3,241,244	(1,391,419)
Balance at beginning of period (shares) at Mar. 31, 2020		102,102
Balance at beginning of period at Mar. 31, 2020	2,789,500	$ 1,021	3,254,760	(466,281)
Increase (Decrease) in Stockholders' Equity
Dividends paid on stock awards subsequently forfeited	8		1	7
Dividends declared on common stock	(22,559)		(22,561)	2
Dividends declared on redeemable preferred stock	(1,269)		(1,269)
Net (loss) income	(925,147)			(925,147)
Unrealized change in fair value of investments, net of tax	0
Issuance of restricted stock awards (shares)		66
Issuance of restricted stock awards		$ 1	(1)
Common stock reacquired and retired (shares)		(2)
Common stock reacquired and retired	(24)		(24)
Restricted stock forfeited and retired (shares)		(15)
Stock-based compensation	10,338		10,338
Balance at end of period (shares) at Jun. 30, 2020		102,151
Balance at end of period at Jun. 30, 2020	$ 1,850,847	$ 1,022	$ 3,241,244	$ (1,391,419)

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Common Stock
Dividends declared per common share (USD per share)	$ 0.22	$ 0.22	$ 0.20	$ 0.20
Preferred Stock
Dividends declared per preferred share (USD per share)	$ 20.3125	$ 20.3125	$ 20.3125	$ 20.3125

XML

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

Cimarex Energy Co. (“Cimarex,” “we,” or “us”), a Delaware corporation, is an independent oil and gas exploration and production company. Our operations are mainly located in Texas, Oklahoma, and New Mexico. The accompanying unaudited financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures required by accounting principles generally accepted in the United States and normally included in Annual Reports on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with the financial statements, summary of significant accounting policies, and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2019.

In the opinion of management, the accompanying financial statements reflect all adjustments necessary to fairly present our financial position, results of operations, and cash flows for the periods and as of the dates shown. The accounts of Cimarex and its subsidiaries are presented in the accompanying financial statements, with intercompany balances and transactions eliminated in consolidation.

On March 1, 2019, we acquired Resolute Energy Corporation (“Resolute”) in a cash and stock transaction. The results of Resolute’s operations have been included in our consolidated financial statements since the March 1, 2019 acquisition date. See Note 13 for more information on this transaction.

Use of Estimates

Areas of significance requiring the use of management’s judgments include the estimation of proved oil and gas reserves used in calculating depletion, the estimation of future net revenues used in computing ceiling test limitations, the estimation of future abandonment obligations used in recording asset retirement obligations, and the assessment of goodwill. Estimates and judgments also are required in determining allowances for doubtful accounts, impairments of unproved properties and other assets, valuation of deferred tax assets, fair value measurements, lease liabilities, and contingencies.

Prior Year Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform to the 2020 financial statement presentation. These reclassifications include reclassifying certain “Gas gathering and other” expenses to “Transportation, processing, and other operating” expense and “Production” expense. These reclassifications were made to reflect an allocation of the costs incurred to operate our gas gathering facilities as a cost to transport our equity share of gas produced and operate our wells. The following table shows the reclassifications made:

	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
(in thousands)	Prior Year Presentation		Current Year Reclassifications		Current Year Presentation		Prior Year Presentation		Current Year Reclassifications		Current Year Presentation
Production	$	87,726	$	1,269	$	88,995	$	164,959	$	2,440	$	167,399
Transportation, processing, and other operating	$	48,331	5,776		$	54,107	$	101,939	11,743		$	113,682
Gas gathering and other	$	13,605	(7,045)		$	6,560	$	25,925	(14,183)		$	11,742
			$	—					$	—

Oil and Gas Well Equipment and Supplies

Our oil and gas well equipment and supplies are valued at the lower of cost and net realizable value, where net realizable value is estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Declines in the price of oil and gas well equipment and supplies in future periods could cause us to recognize impairments on these assets. An impairment would not affect cash flow from operating activities, but would adversely affect our net income and stockholders’ equity.

Oil and Gas Properties

We use the full cost method of accounting for our oil and gas operations. All costs associated with property acquisition, exploration, and development activities are capitalized. Under the full cost method of accounting, we are required to perform a quarterly ceiling test calculation to test our oil and gas properties for possible impairment. If the net capitalized cost of our oil and gas properties, as adjusted for income taxes, exceeds the ceiling limitation, the excess is charged to expense. The ceiling limitation is equal to the sum of: (i) the present value discounted at 10% of estimated future net revenues from proved reserves, (ii) the cost of properties not being amortized, and (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, as adjusted for income taxes. We currently do not have any unproven properties that are being amortized. Estimated future net revenues are determined based on trailing twelve-month average commodity prices and estimated proved reserve quantities, operating costs, and capital expenditures.

The quarterly ceiling test is primarily impacted by commodity prices, changes in estimated reserve quantities, overall exploration and development costs, and deferred taxes.  If pricing conditions decline, or if there is a negative impact on one or more of the other components of the calculation, we may incur a full cost ceiling test impairment. The calculated ceiling limitation is not intended to be indicative of the fair market value of our proved reserves or future results. Impairment charges do not affect cash flow from operating activities, but do adversely affect our net income and various components of our balance sheet.  Any impairment of oil and gas properties is not reversible at a later date. 

For the six months ended June 30, 2020, we incurred ceiling test impairments totaling $1.275 billion ($941.2 million for the three months ended June 30, 2020 and $333.7 million for the three months ended March 31, 2020). These impairments resulted primarily from the impact of decreases in the 12-month average trailing prices for oil, gas, and NGLs as well as significant basis differentials utilized in determining the estimated future net cash flows from proved reserves. We expect these conditions to continue at least through September 30, 2020 and possibly beyond and, therefore, expect to incur another ceiling test impairment at September 30, 2020.

Goodwill

Goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment at least annually. In performing the goodwill test, we compare the fair value of our reporting unit with its carrying amount. If the carrying amount of the reporting unit were to exceed its fair value, an impairment charge would be recognized in the amount of this excess, limited to the total amount of goodwill allocated to that reporting unit. We evaluate our goodwill for impairment in the fourth quarter of each year and whenever events or changes in circumstances indicate the possibility that goodwill may be impaired. Based upon our assessment as of October 31, 2019, goodwill was not impaired. However, during the three months ended March 31, 2020 the company’s market capitalization declined significantly, caused by macroeconomic and geopolitical conditions including the collapse of oil prices driven by surplus supply and decreased demand caused by the COVID-19 pandemic. In addition, the uncertainty related to oil demand significantly impacted our investment and operating decisions. Based on those events, we concluded that a triggering event had occurred, which required us to perform an interim quantitative impairment test for goodwill as of March 31, 2020. As a result of that quantitative impairment test, which utilized quoted market prices for our common stock as a basis for determining fair value, we concluded that goodwill was fully impaired at March 31, 2020.

The following table reflects components of the change in the carrying amount of goodwill for the six months ended June 30, 2020:

(in thousands)	Six Months Ended June 30, 2020
Goodwill balance at January 1, 2020	$	716,865
Resolute acquisition purchase price adjustments (Note 13)	(2,418)
Impairment	(714,447)
Goodwill balance at June 30, 2020	$	—

Revenue Recognition

Oil, Gas, and NGL Sales

Revenue is recognized from the sales of oil, gas, and NGLs when the customer obtains control of the product, when we have no further obligations to perform related to the sale, and when collectability is probable. All of our sales of oil, gas, and NGLs are made under contracts with customers, which typically include variable consideration based on monthly pricing tied to local indices and monthly volumes delivered. The nature of our contracts with customers does not require us to constrain that variable consideration or to estimate the amount of transaction price attributable to future performance obligations for accounting purposes. As of June 30, 2020, we had open contracts with customers with terms of one month to multiple years, as well as “evergreen” contracts that renew on a periodic basis if not canceled by us or the customer. Performance obligations under our contracts with customers are typically satisfied at a point-in-time through monthly delivery of oil, gas, and/or NGLs. Our contracts with customers typically require payment within one month of delivery.

Our gas is sold under various contracts. Under these contracts the gas and its components, including residue gas and NGLs, may be sold to a single purchaser or separate purchasers. Regardless of the contract, we are compensated for the value of the residue gas and NGLs at current market prices for each product. Depending on the specific contract terms, certain gathering, treating, transportation, processing, and other charges may be deducted against the prices we receive for the products. Our oil typically is sold at specific delivery points under contract terms that also are common in our industry.

Gas Gathering

When we transport and/or process third-party gas associated with our equity gas, we recognize revenue for the fees charged to third-parties for such services.

Gas Marketing

When we market and sell gas for other working interest owners, we act as agent under short-term sales and supply agreements and may earn a fee for such services. Revenues from such services are recognized as gas is delivered.

Gas Imbalances

Revenue from the sale of gas is recorded on the basis of gas actually sold by or for us. If our aggregate sales volumes for a well are greater (or less) than our proportionate share of production from the well, a liability (or receivable) is established to the extent there are insufficient proved reserves available to make-up the overproduced (or underproduced) imbalance. Imbalances have not been significant in the periods presented.

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LONG-TERM DEBT

6 Months Ended

Jun. 30, 2020

Long-term Debt, Unclassified [Abstract]

LONG-TERM DEBT

LONG-TERM DEBT

Long-term debt at June 30, 2020 and December 31, 2019 consisted of the following:

	June 30, 2020						December 31, 2019
(in thousands)	Principal		Unamortized Debt Issuance Costs and Discounts (1)		Long-term Debt, net		Principal		Unamortized Debt Issuance Costs and Discounts (1)		Long-term Debt, net
4.375% Notes due 2024	$	750,000	$	(3,099)	$	746,901	$	750,000	$	(3,535)	$	746,465
3.90% Notes due 2027	750,000		(5,919)		744,081		750,000		(6,289)		743,711
4.375% Notes due 2029	500,000		(4,711)		495,289		500,000		(4,930)		495,070
	$	2,000,000	$	(13,729)	$	1,986,271	$	2,000,000	$	(14,754)	$	1,985,246

________________________________________

(1)The 4.375% Notes due 2024 were issued at par, therefore, the amounts shown in the table are for unamortized debt issuance costs only. At June 30, 2020, the unamortized debt issuance costs and discount related to the 3.90% Notes due 2027 were $4.6 million and $1.4 million, respectively. At June 30, 2020, the unamortized debt issuance costs and discount related to the 4.375% Notes due 2029 were $4.1 million and $0.6 million, respectively. At December 31, 2019, the unamortized debt issuance costs and discount related to the 3.90% Notes due 2027 were $4.8 million and $1.5 million, respectively. At December 31, 2019, the unamortized debt issuance costs and discount related to the 4.375% Notes due 2029 were $4.3 million and $0.6 million, respectively.

Bank Debt

On June 3, 2020, we entered into the First Amendment to Amended and Restated Credit Agreement (the “First Amendment”) dated as of February 5, 2019 for our senior unsecured revolving credit facility (“Credit Facility”). The Credit Facility has aggregate commitments of $1.25 billion with an option for us to increase the aggregate commitments to $1.5 billion, and matures on February 5, 2024. There is no borrowing base subject to the discretion of the lenders based on the value of our proved reserves under the Credit Facility. The First Amendment, among other things: (i) allows up to $3.5 billion of non-cash impairment charge add-backs to Shareholders’ Equity for covenant calculation purposes, (ii) institutes traditional anti-cash hoarding provisions at a consolidated cash threshold of $175.0 million, (iii) reduces the priority lien debt basket from 15% of Consolidated Net Tangible Assets (as defined in the credit agreement) to a $50.0 million cap, and (iv) adds an acknowledgement and consent to European Union bail-in legislation. As of June 30, 2020, we had no bank borrowings outstanding under the Credit Facility, but did have letters of credit of $2.5 million outstanding, leaving an unused borrowing availability of $1.248 billion. During the three and six months ended June 30, 2020, we borrowed and repaid an aggregate of $60.0 million and $161.0 million, respectively, on the Credit Facility to meet cash requirements as needed.

At our option, borrowings under the Credit Facility may bear interest at either (a) LIBOR (or an alternate rate determined by the administrative agent for the Credit Facility in accordance with the Credit Facility when LIBOR is no longer available) plus 1.125 – 2.0% based on the credit rating for our senior unsecured long-term debt, or (b) a base rate (as defined in the credit agreement) plus 0.125 – 1.0%, based on the credit rating for our senior unsecured long-term debt. Unused borrowings are subject to a commitment fee of 0.125 – 0.35%, based on the credit rating for our senior unsecured long-term debt.

The Credit Facility contains representations, warranties, covenants, and events of default that are customary for investment grade, senior unsecured bank credit agreements, including a financial covenant for the maintenance of a defined total debt-to-capitalization ratio of no greater than 65%. As of June 30, 2020, we were in compliance with all of the financial covenants.

At June 30, 2020 and December 31, 2019, we had $5.0 million and $4.0 million, respectively, of unamortized debt issuance costs associated with our Credit Facility, which were recorded as assets and included in “Other assets” on our Condensed Consolidated Balance Sheets. During the three months ended June 30, 2020, we incurred $1.5 million in fees paid to the creditor and third-party costs for the First Amendment. These costs are being amortized to interest expense ratably over the life of the Credit Facility.

Senior Notes

On March 8, 2019, we issued $500 million aggregate principal amount of 4.375% senior unsecured notes due March 15, 2029 at 99.862% of par to yield 4.392% per annum. We received $494.7 million in net cash proceeds, after deducting underwriters’ fees, discount, and debt issuance costs. The notes bear an annual interest rate of 4.375% and interest is payable semiannually on March 15 and September 15, with the first payment made on September 15, 2019.  We used the net proceeds to repay borrowings outstanding under our Credit Facility that were used to help fund the Resolute acquisition on March 1, 2019. The effective interest rate on these notes, including the amortization of debt issuance costs and discount, is 4.50%.

In April 2017, we issued $750 million aggregate principal amount of 3.90% senior unsecured notes at 99.748% of par to yield 3.93% per annum. These notes are due May 15, 2027 and interest is payable semiannually on May 15 and November 15. The effective interest rate on these notes, including the amortization of debt issuance costs and discount, is 4.01%.

In June 2014, we issued $750 million aggregate principal amount of 4.375% senior unsecured notes at par. These notes are due June 1, 2024 and interest is payable semiannually on June 1 and December 1. The effective interest rate on these notes, including the amortization of debt issuance costs, is 4.50%.

Our senior unsecured notes are governed by indentures containing certain covenants, events of default, and other restrictive provisions with which we were in compliance as of June 30, 2020.

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DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedges, Assets [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

We periodically use derivative instruments to mitigate volatility in commodity prices.  While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future cash flow from favorable price changes. Depending on changes in oil and gas futures markets and management’s view of underlying supply and demand trends, we may increase or decrease our derivative positions from current levels. 

As of June 30, 2020, we have entered into oil and gas collars, oil basis swaps, and oil “roll differential” swaps. We also occasionally enter into fixed price swaps. Under our collars, we receive the difference between the published index price and a floor price if the index price is below the floor price or we pay the difference between the ceiling price and the index price if the index price is above the ceiling price.  No amounts are paid or received if the index price is between the floor and the ceiling prices. By using a collar, we have fixed the minimum and maximum prices we can receive on the underlying production. Our basis swaps are settled based on the difference between a published index price plus or minus a fixed differential, as applicable, and the applicable local index price under which the underlying production is sold. By using a basis swap, we have fixed the differential between the published index price and certain of our physical pricing points. For our Permian oil production, the basis swaps fix the price differential between the WTI NYMEX (Cushing, Oklahoma) price and the WTI Midland price. For our Permian and Mid-Continent gas production, the contract prices in our collars are consistent with the index prices used to sell our production. Our oil roll differential swaps are settled based on the difference between the monthly roll differential and a fixed price per Bbl. The monthly roll differential is calculated as the sum of 2/3 of the difference in the WTI NYMEX closing settlement price for the first nearby month futures contract minus the second nearby futures contract and 1/3 of the difference in the WTI NYMEX closing settlement price for the first nearby

month futures contract minus the third nearby month futures contract. By using a roll differential swap, we have fixed the differential in pricing between the WTI NYMEX calendar month average and the physical crude oil delivery month. Under our fixed price swaps, we receive the difference between the fixed price and the published index price if the published index price is below the fixed price and we pay the difference between the fixed price and the published index price if the published index price is above the fixed price. The following tables summarize our outstanding derivative contracts as of June 30, 2020:

Oil Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
WTI (1)
Volume (Bbls)	—		—		3,772,000		3,772,000		7,544,000
Weighted Avg Price - Floor	$	—	$	—	$	40.91	$	40.91	$	40.91
Weighted Avg Price - Ceiling	$	—	$	—	$	49.84	$	49.84	$	49.84
2021:
WTI (1)
Volume (Bbls)	3,600,000		2,730,000		1,932,000		1,932,000		10,194,000
Weighted Avg Price - Floor	$	38.06	$	34.23	$	31.48	$	31.48	$	34.54
Weighted Avg Price - Ceiling	$	46.45	$	42.25	$	39.67	$	39.67	$	42.75
2022:
WTI (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Price - Floor	$	35.00	$	—	$	—	$	—	$	35.00
Weighted Avg Price - Ceiling	$	45.28	$	—	$	—	$	—	$	45.28

________________________________________

(1)The index price for these collars is West Texas Intermediate (“WTI”) as quoted on the New York Mercantile Exchange (“NYMEX”).

Gas Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
PEPL (1)
Volume (MMBtu)	—		—		9,200,000		9,200,000		18,400,000
Weighted Avg Price - Floor	$	—	$	—	$	1.78	$	1.78	$	1.78
Weighted Avg Price - Ceiling	$	—	$	—	$	2.21	$	2.21	$	2.21
Perm EP (2)
Volume (MMBtu)	—		—		6,440,000		6,440,000		12,880,000
Weighted Avg Price - Floor	$	—	$	—	$	1.36	$	1.36	$	1.36
Weighted Avg Price - Ceiling	$	—	$	—	$	1.64	$	1.64	$	1.64
Waha (3)
Volume (MMBtu)	—		—		6,440,000		6,440,000		12,880,000
Weighted Avg Price - Floor	$	—	$	—	$	1.43	$	1.43	$	1.43
Weighted Avg Price - Ceiling	$	—	$	—	$	1.73	$	1.73	$	1.73
2021:
PEPL (1)
Volume (MMBtu)	7,200,000		6,370,000		4,600,000		4,600,000		22,770,000
Weighted Avg Price - Floor	$	1.76	$	1.75	$	1.80	$	1.80	$	1.77
Weighted Avg Price - Ceiling	$	2.18	$	2.16	$	2.23	$	2.23	$	2.19
Perm EP (2)
Volume (MMBtu)	5,400,000		5,460,000		3,680,000		3,680,000		18,220,000
Weighted Avg Price - Floor	$	1.44	$	1.44	$	1.58	$	1.58	$	1.49
Weighted Avg Price - Ceiling	$	1.72	$	1.72	$	1.90	$	1.90	$	1.79
Waha (3)
Volume (MMBtu)	6,300,000		6,370,000		4,600,000		4,600,000		21,870,000
Weighted Avg Price - Floor	$	1.43	$	1.43	$	1.58	$	1.58	$	1.49
Weighted Avg Price - Ceiling	$	1.73	$	1.73	$	1.89	$	1.89	$	1.80
2022:
PEPL (1)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.90	$	—	$	—	$	—	$	1.90
Weighted Avg Price - Ceiling	$	2.36	$	—	$	—	$	—	$	2.36
Perm EP (2)
Volume (MMBtu)	900,000		—		—		—		900,000
Weighted Avg Price - Floor	$	1.80	$	—	$	—	$	—	$	1.80
Weighted Avg Price - Ceiling	$	2.19	$	—	$	—	$	—	$	2.19
Waha (3)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.70	$	—	$	—	$	—	$	1.70
Weighted Avg Price - Ceiling	$	2.10	$	—	$	—	$	—	$	2.10

________________________________________

(1)The index price for these collars is Panhandle Eastern Pipe Line, Tex/OK Mid-Continent Index (“PEPL”) as quoted in Platt’s Inside FERC.

(2)The index price for these collars is El Paso Natural Gas Company, Permian Basin Index (“Perm EP”) as quoted in Platt’s Inside FERC.

(3)The index price for these collars is Waha West Texas Natural Gas Index (“Waha”) as quoted in Platt’s Inside FERC.

Oil Basis Swaps	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
WTI Midland (1)
Volume (Bbls)	—		—		2,944,000		2,944,000		5,888,000
Weighted Avg Differential (2)	$	—	$	—	$	0.18	$	0.18	$	0.18
2021:
WTI Midland (1)
Volume (Bbls)	2,790,000		2,275,000		1,840,000		1,840,000		8,745,000
Weighted Avg Differential (2)	$	0.03	$	(0.10)	$	(0.38)	$	(0.38)	$	(0.18)
2022:
WTI Midland (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Differential (2)	$	0.11	$	—	$	—	$	—	$	0.11

________________________________________

(1)The index price we pay under these basis swaps is WTI Midland as quoted by Argus Americas Crude.

(2)The index price we receive under these basis swaps is WTI as quoted on the NYMEX plus or minus, as applicable, the weighted average differential shown in the table.

Oil Roll Differential Swaps	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2021:
WTI (1)
Volume (Bbls)	630,000		637,000		644,000		644,000		2,555,000
Weighted Avg Price	$	(0.24)	$	(0.24)	$	(0.24)	$	(0.24)	$	(0.24)
2022:
WTI (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Price	$	(0.24)	$	—	$	—	$	—	$	(0.24)

________________________________________

(1)The index price used to determine the settlement “roll” is WTI as quoted on the NYMEX.

The following tables summarize our derivative contracts entered into subsequent to June 30, 2020 through July 31, 2020:

Gas Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2021:
PEPL (1)
Volume (MMBtu)	1,800,000		1,820,000		1,840,000		1,840,000		7,300,000
Weighted Avg Price - Floor	$	2.10	$	2.10	$	2.10	$	2.10	$	2.10
Weighted Avg Price - Ceiling	$	2.44	$	2.44	$	2.44	$	2.44	$	2.44
Perm EP (2)
Volume (MMBtu)	900,000		910,000		920,000		920,000		3,650,000
Weighted Avg Price - Floor	$	1.90	$	1.90	$	1.90	$	1.90	$	1.90
Weighted Avg Price - Ceiling	$	2.18	$	2.18	$	2.18	$	2.18	$	2.18
Waha (3)
Volume (MMBtu)	1,800,000		1,820,000		1,840,000		1,840,000		7,300,000
Weighted Avg Price - Floor	$	1.84	$	1.84	$	1.84	$	1.84	$	1.84
Weighted Avg Price - Ceiling	$	2.20	$	2.20	$	2.20	$	2.20	$	2.20
2022:
PEPL (1)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	2.10	$	—	$	—	$	—	$	2.10
Weighted Avg Price - Ceiling	$	2.44	$	—	$	—	$	—	$	2.44
Perm EP (2)
Volume (MMBtu)	900,000		—		—		—		900,000
Weighted Avg Price - Floor	$	1.90	$	—	$	—	$	—	$	1.90
Weighted Avg Price - Ceiling	$	2.18	$	—	$	—	$	—	$	2.18
Waha (3)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.84	$	—	$	—	$	—	$	1.84
Weighted Avg Price - Ceiling	$	2.20	$	—	$	—	$	—	$	2.20

________________________________________

(1)The index price for these collars is PEPL as quoted in Platt’s Inside FERC.

(2)The index price for these collars is Perm EP as quoted in Platt’s Inside FERC.

(3)The index price for these collars is Waha as quoted in Platt’s Inside FERC.

Derivative Gains and Losses

Net gains and losses on our derivative instruments are a function of fluctuations in the underlying commodity index prices as compared to the contracted prices and the monthly cash settlements (if any) of the instruments. We have elected not to designate our derivatives as hedging instruments for accounting purposes and, therefore, we do not apply hedge accounting treatment to our derivative instruments. Consequently, changes in the fair value of our derivative instruments and cash settlements on the instruments are included as a component of operating costs and expenses as either a net gain or loss on derivative instruments. Cash settlements of our contracts are included in cash flows from operating activities in our statements of cash flows. The following table presents the components of “Loss (gain) on derivative instruments, net” for the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Decrease (increase) in fair value of derivative instruments, net:
Gas contracts	$	19,826	$	(6,370)	$	32,319	$	(16,216)
Oil contracts	168,000		(28,161)		(28,319)		88,086
	187,826		(34,531)		4,000		71,870
Cash (receipts) payments on derivative instruments, net:
Gas contracts	(5,870)		(21,176)		(17,589)		(17,412)
Oil contracts	(58,071)		14,939		(89,466)		20,226
	(63,941)		(6,237)		(107,055)		2,814
Loss (gain) on derivative instruments, net	$	123,885	$	(40,768)	$	(103,055)	$	74,684

Derivative Fair Value

Our derivative contracts are carried at their fair value on our balance sheet using Level 2 inputs and are subject to master netting arrangements, which allow us to offset recognized asset and liability fair value amounts on contracts with the same counterparty. Our accounting policy is to not offset asset and liability positions in our balance sheets.

The following tables present the amounts and classifications of our derivative assets and liabilities as of June 30, 2020 and December 31, 2019, as well as the potential effect of netting arrangements on our recognized derivative asset and liability amounts.

		June 30, 2020
(in thousands)	Balance Sheet Location	Asset		Liability
Oil contracts	Current assets — Derivative instruments	$	69,208	$	—
Gas contracts	Current assets — Derivative instruments	2,382		—
Oil contracts	Current liabilities — Derivative instruments	—		38,443
Gas contracts	Current liabilities — Derivative instruments	—		13,113
Oil contracts	Non-current liabilities — Derivative instruments	—		17,747
Gas contracts	Non-current liabilities — Derivative instruments	—		5,463
Total gross amounts presented in the balance sheet		71,590		74,766
Less: gross amounts not offset in the balance sheet		(57,678)		(57,678)
Net amount		$	13,912	$	17,088
		December 31, 2019
(in thousands)	Balance Sheet Location	Asset		Liability
Oil contracts	Current assets — Derivative instruments	$	1,624	$	—
Gas contracts	Current assets — Derivative instruments	16,320		—
Oil contracts	Non-current assets — Derivative instruments	580		—
Oil contracts	Current liabilities — Derivative instruments	—		16,681
Oil contracts	Non-current liabilities — Derivative instruments	—		824
Gas contracts	Non-current liabilities — Derivative instruments	—		194
Total gross amounts presented in the balance sheet		18,524		17,699
Less: gross amounts not offset in the balance sheet		(9,865)		(9,865)
Net amount		$	8,659	$	7,834

We are exposed to financial risks associated with our derivative contracts from non-performance by our counterparties. We mitigate our exposure to any single counterparty by contracting with a number of financial institutions, each of which has a high credit rating and is a member of our bank credit facility. Our member banks do not require us to post collateral for our derivative liability positions, nor do we require our counterparties to post collateral for our benefit. In the future we may enter into derivative instruments with counterparties outside our bank group to obtain competitive terms and to spread counterparty risk.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Authoritative accounting guidance has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable.

The following table provides fair value measurement information for certain assets and liabilities as of June 30, 2020 and December 31, 2019:

	June 30, 2020				December 31, 2019
(in thousands)	Book Value		Fair Value		Book Value		Fair Value
Financial Assets (Liabilities):
4.375% Notes due 2024	$	(750,000)	$	(791,175)	$	(750,000)	$	(792,225)
3.90% Notes due 2027	$	(750,000)	$	(758,850)	$	(750,000)	$	(778,050)
4.375% Notes due 2029	$	(500,000)	$	(513,900)	$	(500,000)	$	(530,400)
Derivative instruments — assets	$	71,590	$	71,590	$	18,524	$	18,524
Derivative instruments — liabilities	$	(74,766)	$	(74,766)	$	(17,699)	$	(17,699)

Assessing the significance of a particular input to the fair value measurement requires judgment, including the consideration of factors specific to the asset or liability. The fair value (Level 1) of our fixed rate notes was based on quoted market prices. The fair value of our derivative instruments (Level 2) was estimated using discounted cash flow and option pricing models. These models use certain observable variables including forward prices, volatility curves, interest rates, and credit ratings and spreads. The fair value estimates are adjusted relative to non-performance risk as appropriate. See Note 3 for further information on the fair value of our derivative instruments.

Other Financial Instruments

The carrying amounts of our cash, cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. Included in “Accrued liabilities — Other” at June 30, 2020 are accrued operating expenses (e.g. production, transportation, and gathering expenses) of approximately $70.3 million. Included in “Accrued liabilities — Other” at December 31, 2019 are: (i) accrued operating expenses (e.g. production, transportation, and gathering expenses) of approximately $74.7 million and (ii) accrued general and administrative costs, primarily payroll-related, of approximately $43.3 million.

Most of our accounts receivable balances are uncollateralized and result from transactions with other companies in the oil and gas industry. Concentration of customers may impact our overall credit risk because our customers may be similarly affected by changes in economic or other conditions within the industry. We conduct credit analyses prior to making any sales to new customers or increasing credit for existing customers and may require parent company guarantees, letters of credit, or prepayments when deemed necessary. Pursuant to the operating agreements we have with the co-owners of our operated properties, we have the right to realize amounts due to us from the co-owners by netting the co-owners’ production revenues from those properties.

We routinely assess the recoverability of all material accounts receivable and accrue a reserve to the allowance for doubtful accounts based on our estimation of expected losses over the life of the receivables. At June 30, 2020 and December 31, 2019, the allowance for doubtful accounts was $4.0 million and $3.6 million, respectively.

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CAPITAL STOCK

6 Months Ended

Jun. 30, 2020

Stockholders' Equity Note [Abstract]

CAPITAL STOCK

CAPITAL STOCK

Authorized capital stock consists of 200 million shares of common stock and 15 million shares of preferred stock. At June 30, 2020, there were 102.2 million shares of common stock outstanding and 62.5 thousand shares of 8.125% Series A Cumulative Perpetual Convertible Preferred Stock outstanding (the “Convertible Preferred Stock”). Holders of the Convertible Preferred Stock are entitled to receive, when, as, and if declared by the Board, cumulative cash dividends at an annual rate of 8.125% of each share’s liquidation preference of $1,000. In the event of any liquidation, winding up, or dissolution of Cimarex, each holder will be entitled to receive in respect of its shares, up to each share’s liquidation preference, with the total liquidation preference being $62.5 million in the aggregate, after satisfaction of liabilities and any senior stock (of which there is currently none) and before any payment or distribution to holders of junior stock (including common stock). Each holder has the right at any time, at its option, to convert any or all of such holder’s shares of Convertible Preferred Stock into a certain number of shares of Cimarex common stock based on a conversion rate that adjusts upon the occurrence of certain events, including the payment of cash dividends to common shareholders, plus $471.40 in cash per share of Convertible Preferred Stock. The June 30, 2020 conversion rate was 8.25315 shares of common stock for each share of Convertible Preferred Stock. As a result of the cash component included in the redemption feature of the Convertible Preferred Stock conversion option, with such conversion not solely within our control, the instruments are classified as Redeemable preferred stock in temporary equity on the Condensed Consolidated Balance Sheets.

Dividends

Common Stock

In May 2020, our Board of Directors declared a cash dividend of $0.22 per share of common stock. The dividend is payable on or before September 1, 2020 to stockholders of record on August 14, 2020. Dividends declared are recorded as a reduction of retained earnings to the extent retained earnings are available at the close of the period prior to the date of the declared dividend. Dividends in excess of retained earnings are recorded as a reduction of additional paid-in capital. The $22.6 million dividend declared during the second quarter 2020 was recorded as a reduction of additional paid-in capital and is included as a payable in “Accrued liabilities — Other” on the Condensed Consolidated Balance Sheet at June 30, 2020. Nonforfeitable dividends paid on stock awards that subsequently forfeit are reclassified out of retained earnings or additional paid-in capital, as applicable, to stock compensation expense in the period in which the forfeitures occur. Future dividend payments will depend on our level of earnings, financial requirements, and other factors considered relevant by our Board of Directors.

Preferred Stock

In May 2020, our Board of Directors declared a cash dividend of $20.3125 per share of Convertible Preferred Stock. The dividend was paid in July to stockholders of record on July 1, 2020. This $1.3 million dividend was recorded as a reduction of additional paid-in capital and is included as a payable in “Accrued liabilities — Other” on the Condensed Consolidated Balance Sheet at June 30, 2020.

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

Retirement Benefits [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

We have recognized stock-based compensation cost as shown below for the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Restricted stock awards:
Performance stock awards	$	4,059	$	5,535	$	8,119	$	10,929
Service-based stock awards	6,585		5,993		13,962		13,224
	10,644		11,528		22,081		24,153
Stock option awards	416		396		914		1,018
Total stock compensation cost	11,060		11,924		22,995		25,171
Less amounts capitalized to oil and gas properties	(4,313)		(5,430)		(9,854)		(11,964)
Stock compensation expense	$	6,747	$	6,494	$	13,141	$	13,207

Periodic stock compensation expense will fluctuate based on the grant-date fair value of awards, the number of awards, the requisite service period of the awards, employee forfeitures, and the timing of the awards.  Our accounting policy is to account for forfeitures in compensation cost when they occur.

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ASSET RETIREMENT OBLIGATIONS

6 Months Ended

Jun. 30, 2020

Asset Retirement Obligation [Abstract]

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS

We recognize the present value of the fair value of liabilities for retirement obligations associated with tangible long-lived assets in the period in which there is a legal obligation associated with the retirement of such assets and the amount can be reasonably estimated. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This liability includes costs related to the plugging and abandonment of wells, the removal of facilities and equipment, and site restorations. Subsequent to initial measurement, the asset retirement liability is accreted each period. If there is a change in the estimated cost or timing of retirement, a revision is recorded to both the asset retirement obligation and the capitalized asset retirement cost. Capitalized costs are included as a component of the depreciation and depletion calculations.

The following table reflects the components of the change in the carrying amount of the asset retirement obligation for the six months ended June 30, 2020:

(in thousands)	Six Months Ended June 30, 2020
Asset retirement obligation at January 1, 2020	$	181,869
Liabilities incurred	2,088
Liability settlements and disposals	(21,935)
Accretion expense	3,796
Revisions of estimated liabilities	2,800
Asset retirement obligation at June 30, 2020	168,618
Less current obligation	(18,244)
Long-term asset retirement obligation	$	150,374

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EARNINGS (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

EARNINGS (LOSS) PER SHARE

The calculations of basic and diluted net earnings (loss) per common share under the two-class method are presented below for the periods indicated:

	Three Months Ended June 30,
	2020					2019
(in thousands, except per share information)	Income (Numerator)		Shares (Denominator)	Per-Share Amount		Income (Numerator)		Shares (Denominator)	Per-Share Amount
Net (loss) income	$	(925,147)				$	109,309
Less: dividends and net income attributable to participating securities (1)	(569)					(1,596)
Less: preferred stock dividends	(1,269)					(1,270)
Basic (loss) earnings per share
(Loss) income available to common stockholders	(926,985)		99,880	$	(9.28)	106,443		99,658	$	1.07
Effects of dilutive securities
Options (2)	—		—			—		7
Diluted (loss) earnings per share
(Loss) income available to common stockholders and assumed conversions	$	(926,985)	99,880	$	(9.28)	$	106,443	99,665	$	1.07

	Six Months Ended June 30,
	2020					2019
(in thousands, except per share information)	Income (Numerator)		Shares (Denominator)	Per-Share Amount		Income (Numerator)		Shares (Denominator)	Per-Share Amount
Net (loss) income	$	(1,699,429)				$	135,625
Less: dividends and net income attributable to participating securities (1)	(1,119)					(2,067)
Less: preferred stock dividends	(2,538)					(2,539)
Basic (loss) earnings per share
(Loss) income available to common stockholders	(1,703,086)		99,861	$	(17.05)	131,019		97,800	$	1.34
Effects of dilutive securities
Options (2)	$	—	—			$	—	9
Diluted (loss) earnings per share
(Loss) income available to common stockholders and assumed conversions	$	(1,703,086)	99,861	$	(17.05)	$	131,019	97,809	$	1.34

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(1)Participating securities do not have a contractual obligation to share in the losses of the entity, therefore, net losses are not attributable to participating securities.

(2)Inclusion of certain potential common shares would have an anti-dilutive effect, therefore, these shares were excluded from the calculations of diluted earnings (loss) per share. Excluded from the calculation for the three months ended June 30, 2020 were 456.6 thousand potential common shares from the assumed exercise of employee stock options, 515.8 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock, and 8.8 thousand potential common shares from the assumed vesting of incremental shares of unvested restricted stock awards. Excluded from the calculation for the three months ended June 30, 2019 were 387.5 thousand potential common shares from the assumed exercise of employee stock options and 502.6 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock. Excluded from the calculation for the six months ended June 30, 2020 were 456.6 thousand potential common shares from the assumed exercise of employee stock options, 515.8 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock, and 8.8 thousand potential common shares from the assumed vesting of incremental shares of unvested restricted stock awards. Excluded from the calculation for the six months ended June 30, 2019 were 391.1 thousand potential common shares from the assumed exercise of employee stock options and 502.6 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock.

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INCOME TAXES

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The components of our provision for income taxes and our combined federal and state effective income tax rates were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Current tax expense (benefit)	$	37		$	—		$	(161)		$	—
Deferred tax (benefit) expense	(271,543)			34,046			(287,900)			42,119
	$	(271,506)		$	34,046		$	(288,061)		$	42,119
Combined federal and state effective income tax rate	22.7		%	23.7		%	14.5		%	23.7		%

At December 31, 2019, we had a U.S. net tax operating loss carryforward of approximately $1.93 billion; $1.79 billion of which will expire in tax years 2032 through 2039 and $140.0 million of which that will not expire. We believe that the carryforward will be utilized before it expires. We also had enhanced oil recovery and marginal well credits of $3.9 million at December 31, 2019.

On March 1, 2019, we completed the acquisition of Resolute. For federal income tax purposes, the acquisition was a tax-free merger whereby Cimarex acquired carryover tax basis in Resolute’s tax assets and liabilities. As of December 31, 2019, we recorded a net deferred tax liability of $31.1 million to reflect the difference between the fair value of Resolute’s assets and liabilities recorded in the acquisition and the income tax basis of the assets and liabilities assumed. See Note 13 for more information regarding the purchase price allocation. The net deferred tax liability includes certain deferred tax assets net of valuation allowances. The acquired tax attributes include federal net operating loss, capital loss, and enhanced oil recovery tax credit carryforwards. The carryforwards are subject to an annual limitation under Internal Revenue Code Section 382.

At June 30, 2020, we had no unrecognized tax benefits that would impact our effective tax rate and have made no provisions for interest or penalties related to uncertain tax positions. The tax years 2016 through 2018 remain open to examination by the Internal Revenue Service of the United States. We file tax returns with various state taxing authorities, which remain open to examination for tax years 2015 through 2018.

Our combined federal and state effective income tax rates differ from the U.S. federal statutory rate of 21% primarily due to state income taxes and non-deductible expenses. The combined federal and state effective income tax rate for the six months ended June 30, 2020 is impacted by the tax effects of the impairment of the non-deductible goodwill recorded as a discrete item during the first quarter 2020. As such, we believe our effective tax rate will be higher in subsequent periods. In addition, if future ceiling test impairments cause our deferred tax balance to change from a net deferred tax liability to a net deferred tax asset, we may be required to establish a valuation allowance against the net deferred tax asset at that time.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

At June 30, 2020, we had estimated commitments of approximately: (i) $209.5 million to finish drilling, completing, or performing other work on wells and various other infrastructure projects in progress and (ii) $6.8 million to finish gathering system and water facilities construction in progress.

At June 30, 2020, we had firm sales contracts to deliver approximately 522.5 Bcf of gas over the next 11.0 years. If we do not deliver this gas, our estimated financial commitment, calculated using July 2020 index prices, would be approximately $499.3 million. The value of this commitment will fluctuate due to price volatility and actual volumes delivered.

In connection with gas gathering and processing agreements, we have volume commitments over the next 8.5 years. If we do not deliver the committed gas or NGLs, as the case may be, the estimated maximum amount that would be payable under these commitments, calculated as of June 30, 2020, would be approximately $676.6 million.

We have minimum volume delivery commitments associated with agreements to reimburse connection costs to various pipelines. If we do not deliver this gas or oil, as the case may be, the estimated maximum amount that would be payable under these commitments, calculated as of June 30, 2020, would be approximately $106.6 million. Of this total, we have accrued a liability of $4.3 million, representing the estimated amount we will have to pay due to insufficient forecasted volumes at particular connection points.

At June 30, 2020, we have various firm transportation agreements for gas and oil pipeline capacity with end dates ranging from 2021 - 2025 under which we will have to pay an estimated $20.9 million over the remaining terms of the agreements.

All of the noted commitments were routine and made in the ordinary course of our business.

Litigation

We have various litigation matters related to the ordinary course of our business. We assess the probability of estimable amounts related to these matters in accordance with authoritative accounting guidance and adjust our accruals accordingly. Though some of the related claims may be significant, we believe the resolution of them, individually or in the aggregate, would not have a material adverse effect on our financial condition or results of operations after consideration of current accruals.

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SUPPLEMENTAL CASH FLOW INFORMATION

6 Months Ended

Jun. 30, 2020

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Cash paid during the period for:
Interest (net of capitalized amounts of $18,145, $19,381, $25,473 and $20,121, respectively) (1)	$	14,050	$	14,396	$	19,609	32,984
Income taxes	$	—	$	1,200	$	—	$	1,206
Cash received for income tax refunds	$	280	$	335	$	484	$	336

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(1)The six months ended June 30, 2019 includes $17.6 million in interest paid upon the redemption of Resolute’s senior notes and credit facility on March 1, 2019.

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RELATED PARTY TRANSACTIONS	6 Months Ended
	Jun. 30, 2020
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONSHelmerich & Payne, Inc. (“H&P”) provides contract drilling services to Cimarex. Cimarex incurred drilling costs of approximately $7.8 million and $23.4 million related to these services during the three and six months ended June 30, 2020 and $22.1 million and $46.6 million during the three and six months ended June 30, 2019. Hans Helmerich, a director of Cimarex, is Chairman of the Board of Directors of H&P.

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ACQUISITIONS

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

On March 1, 2019, we completed the acquisition of Resolute Energy Corporation, an independent oil and gas company focused on the acquisition and development of unconventional oil and gas properties in the Delaware Basin area of the Permian Basin of west Texas. The principal factors considered by management in making this acquisition included: (i) our expectation that Resolute’s assets’ attractive returns are competitive with those in our existing portfolio, (ii) the opportunity to apply our experience and learnings from already operating in this area to generating productivity gains from Resolute’s properties, (iii) the ability to increase our acreage position in the Delaware Basin, and (iv) the expectation that the acquisition will be financially accretive.

We acquired 100% of the outstanding common shares and voting interests of Resolute in a cash and stock transaction. The acquisition date fair value of the consideration transferred totaled $820.3 million, which consisted of cash, common stock, and a newly created series of preferred stock (see Note 5 for more information on the preferred stock) as follows:

(in thousands)	Fair Value of Consideration Transferred
Cash	$	325,677
Common stock (5,652 shares issued)	413,015
Preferred stock (63 shares issued)	81,620
	$	820,312

The fair value of the common stock issued as part of the consideration was determined on the basis of the closing market price of Cimarex common stock on the acquisition date. The fair value of the preferred stock issued as part of the consideration was determined using a multiple probability simulation model.

Purchase Price Allocation

The Resolute acquisition has been accounted for as a business combination, using the acquisition method. The following table presents the allocation of the Resolute purchase price to the identifiable assets acquired and liabilities assumed based on the fair values at the acquisition date, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded to goodwill. The table also presents the adjustments made to the purchase price allocation during the 12-month period following the acquisition date. The purchase price allocation was finalized during the three months ended March 31, 2020. The most significant adjustment was made to reduce the fair value of the unproved oil and gas properties acquired by $30.3 million based on the finalization of the quantity of acres acquired. The tax effect of this adjustment reduced the related deferred income taxes by $6.9 million. The completion of the final Resolute tax returns provided the underlying tax basis of Resolute’s assets and liabilities and net operating losses and resulted in a reduction of the deferred tax liability of $24.4 million. The remaining adjustments were related to finalization of working capital balances. The offset to all of the adjustments was goodwill.

The following table sets forth the purchase price allocation:

(in thousands)	March 1, 2019		Adjustments		March 1, 2020
Cash	$	41,236	$	—	$	41,236
Accounts receivable	50,739		11,521		62,260
Other current assets	13,280		(1,176)		12,104
Proved oil and gas properties	692,600		—		692,600
Unproved oil and gas properties	1,054,200		(30,314)		1,023,886
Fixed assets	5,355		(32)		5,323
Goodwill	107,341		(13,126)		94,215
Other assets	142		—		142
Current liabilities	(202,735)		1,790		(200,945)
Long-term debt	(870,000)		—		(870,000)
Deferred income taxes	(62,409)		31,337		(31,072)
Asset retirement obligation	(9,437)		—		(9,437)
Total identifiable net assets	$	820,312	$	—	$	820,312

In connection with the acquisition, we assumed, and immediately repaid, $870.0 million principal amount of long-term debt consisting of $600.0 million of senior notes and $270.0 million of credit facility borrowings. On March 1, 2019, we repaid Resolute’s credit facility borrowings, delivered a notice of optional redemption of Resolute’s senior notes for an April 1, 2019 redemption date, and irrevocably deposited with a trustee the full amount of funds to repay the aggregate outstanding senior notes principal balance plus accrued and unpaid interest, incurring a $4.3 million loss on early extinguishment of debt. The cash consideration transferred and the repayment of Resolute’s long-term debt was funded using cash on hand and borrowings on our Credit Facility. We subsequently repaid the borrowings on our Credit Facility using the net proceeds from the March 8, 2019 issuance of $500 million aggregate principal amount of 4.375% senior unsecured notes.

Goodwill of $94.2 million was recognized in the purchase price allocation principally as a result of recording net deferred tax liabilities arising from the difference between the tax basis and the purchase price allocated to Resolute’s assets and liabilities, and anticipated opportunities for cost savings through administrative and operational synergies. We concluded that goodwill was impaired at March 31, 2020 (see Note 1 for more information regarding the goodwill impairment).

Acquisition-related costs incurred in the three and six months ended June 30, 2019 were $0.1 million and $8.4 million, respectively. These costs, which were comprised primarily of advisory and legal fees, are included in the “Other operating expense, net” line item in the Condensed Consolidated Statement of Operations and Comprehensive Income.

Pro Forma Financial Information

The results of Resolute’s operations have been included in our consolidated financial statements since the March 1, 2019 acquisition date. The following supplemental pro forma information for the three and six months ended June 30, 2019 has been prepared to give effect to the Resolute acquisition as if it had occurred on January 1, 2018. The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including (i) the depletion of the combined company’s proved oil and gas properties, (ii) the capitalization of interest expense, and (iii) the estimated tax impacts of the pro forma adjustments. Additionally, pro forma earnings were adjusted to exclude acquisition-related costs incurred by Cimarex of $8.4 million and transaction-related costs incurred by Resolute of $60.0 million. The pro forma results of operations do not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been or will be incurred by Cimarex to integrate the Resolute assets. The pro forma financial data has not been adjusted to reflect any other acquisitions or dispositions made during the period presented as their results were not deemed material.

The pro forma information is not necessarily indicative of the results that might have occurred had the transaction actually taken place on January 1, 2018 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected in the following pro forma information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities, and other factors.

(in thousands, except per share information)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Revenue	$	546,463	$	1,176,556
Net income	$	109,365	$	121,909
Net income per common share:
Basic	$	1.07	$	1.18
Diluted	$	1.07	$	1.18

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATIONCimarex Energy Co. (“Cimarex,” “we,” or “us”), a Delaware corporation, is an independent oil and gas exploration and production company. Our operations are mainly located in Texas, Oklahoma, and New Mexico. The accompanying unaudited financial statements have been prepared pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures required by accounting principles generally accepted in the United States and normally included in Annual Reports on Form 10-K have been omitted. Although management believes that our disclosures in these interim financial statements are adequate, they should be read in conjunction with the financial statements, summary of significant accounting policies, and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, the accompanying financial statements reflect all adjustments necessary to fairly present our financial position, results of operations, and cash flows for the periods and as of the dates shown. The accounts of Cimarex and its subsidiaries are presented in the accompanying financial statements, with intercompany balances and transactions eliminated in consolidation.

Use of Estimates

Use of Estimates

Areas of significance requiring the use of management’s judgments include the estimation of proved oil and gas reserves used in calculating depletion, the estimation of future net revenues used in computing ceiling test limitations, the estimation of future abandonment obligations used in recording asset retirement obligations, and the assessment of goodwill. Estimates and judgments also are required in determining allowances for doubtful accounts, impairments of unproved properties and other assets, valuation of deferred tax assets, fair value measurements, lease liabilities, and contingencies.

Oil and Gas Well Equipment and Supplies and Oil and Gas Properties

Oil and Gas Well Equipment and Supplies

Our oil and gas well equipment and supplies are valued at the lower of cost and net realizable value, where net realizable value is estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Declines in the price of oil and gas well equipment and supplies in future periods could cause us to recognize impairments on these assets. An impairment would not affect cash flow from operating activities, but would adversely affect our net income and stockholders’ equity.

Oil and Gas Properties

We use the full cost method of accounting for our oil and gas operations. All costs associated with property acquisition, exploration, and development activities are capitalized. Under the full cost method of accounting, we are required to perform a quarterly ceiling test calculation to test our oil and gas properties for possible impairment. If the net capitalized cost of our oil and gas properties, as adjusted for income taxes, exceeds the ceiling limitation, the excess is charged to expense. The ceiling limitation is equal to the sum of: (i) the present value discounted at 10% of estimated future net revenues from proved reserves, (ii) the cost of properties not being amortized, and (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, as adjusted for income taxes. We currently do not have any unproven properties that are being amortized. Estimated future net revenues are determined based on trailing twelve-month average commodity prices and estimated proved reserve quantities, operating costs, and capital expenditures.

The quarterly ceiling test is primarily impacted by commodity prices, changes in estimated reserve quantities, overall exploration and development costs, and deferred taxes.  If pricing conditions decline, or if there is a negative impact on one or more of the other components of the calculation, we may incur a full cost ceiling test impairment. The calculated ceiling limitation is not intended to be indicative of the fair market value of our proved reserves or future results. Impairment charges do not affect cash flow from operating activities, but do adversely affect our net income and various components of our balance sheet.  Any impairment of oil and gas properties is not reversible at a later date.

Goodwill

GoodwillGoodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired and is tested for impairment at least annually. In performing the goodwill test, we compare the fair value of our reporting unit with its carrying amount. If the carrying amount of the reporting unit were to exceed its fair value, an impairment charge would be recognized in the amount of this excess, limited to the total amount of goodwill allocated to that reporting unit. We evaluate our goodwill for impairment in the fourth quarter of each year and whenever events or changes in circumstances indicate the possibility that goodwill may be impaired. Based upon our assessment as of October 31, 2019, goodwill was not impaired. However, during the three months ended March 31, 2020 the company’s market capitalization declined significantly, caused by macroeconomic and geopolitical conditions including the collapse of oil prices driven by surplus supply and decreased demand caused by the COVID-19 pandemic. In addition, the uncertainty related to oil demand significantly impacted our investment and operating decisions. Based on those events, we concluded that a triggering event had occurred, which required us to perform an interim quantitative impairment test for goodwill as of March 31, 2020.

Revenue Recognition

Revenue Recognition

Oil, Gas, and NGL Sales

Revenue is recognized from the sales of oil, gas, and NGLs when the customer obtains control of the product, when we have no further obligations to perform related to the sale, and when collectability is probable. All of our sales of oil, gas, and NGLs are made under contracts with customers, which typically include variable consideration based on monthly pricing tied to local indices and monthly volumes delivered. The nature of our contracts with customers does not require us to constrain that variable consideration or to estimate the amount of transaction price attributable to future performance obligations for accounting purposes. As of June 30, 2020, we had open contracts with customers with terms of one month to multiple years, as well as “evergreen” contracts that renew on a periodic basis if not canceled by us or the customer. Performance obligations under our contracts with customers are typically satisfied at a point-in-time through monthly delivery of oil, gas, and/or NGLs. Our contracts with customers typically require payment within one month of delivery.

Our gas is sold under various contracts. Under these contracts the gas and its components, including residue gas and NGLs, may be sold to a single purchaser or separate purchasers. Regardless of the contract, we are compensated for the value of the residue gas and NGLs at current market prices for each product. Depending on the specific contract terms, certain gathering, treating, transportation, processing, and other charges may be deducted against the prices we receive for the products. Our oil typically is sold at specific delivery points under contract terms that also are common in our industry.

Gas Gathering

When we transport and/or process third-party gas associated with our equity gas, we recognize revenue for the fees charged to third-parties for such services.

Gas Marketing

When we market and sell gas for other working interest owners, we act as agent under short-term sales and supply agreements and may earn a fee for such services. Revenues from such services are recognized as gas is delivered.

Gas Imbalances

Revenue from the sale of gas is recorded on the basis of gas actually sold by or for us. If our aggregate sales volumes for a well are greater (or less) than our proportionate share of production from the well, a liability (or receivable) is established to the extent there are insufficient proved reserves available to make-up the overproduced (or underproduced) imbalance. Imbalances have not been significant in the periods presented.

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BASIS OF PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Reclassifications

The following table shows the reclassifications made:

	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
(in thousands)	Prior Year Presentation		Current Year Reclassifications		Current Year Presentation		Prior Year Presentation		Current Year Reclassifications		Current Year Presentation
Production	$	87,726	$	1,269	$	88,995	$	164,959	$	2,440	$	167,399
Transportation, processing, and other operating	$	48,331	5,776		$	54,107	$	101,939	11,743		$	113,682
Gas gathering and other	$	13,605	(7,045)		$	6,560	$	25,925	(14,183)		$	11,742
			$	—					$	—

Schedule of Changes in Carrying Amount of Goodwill

The following table reflects components of the change in the carrying amount of goodwill for the six months ended June 30, 2020:

(in thousands)	Six Months Ended June 30, 2020
Goodwill balance at January 1, 2020	$	716,865
Resolute acquisition purchase price adjustments (Note 13)	(2,418)
Impairment	(714,447)
Goodwill balance at June 30, 2020	$	—

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LONG-TERM DEBT (Tables)

6 Months Ended

Jun. 30, 2020

Long-term Debt, Unclassified [Abstract]

Schedule of Long-Term Debt

Long-term debt at June 30, 2020 and December 31, 2019 consisted of the following:

	June 30, 2020						December 31, 2019
(in thousands)	Principal		Unamortized Debt Issuance Costs and Discounts (1)		Long-term Debt, net		Principal		Unamortized Debt Issuance Costs and Discounts (1)		Long-term Debt, net
4.375% Notes due 2024	$	750,000	$	(3,099)	$	746,901	$	750,000	$	(3,535)	$	746,465
3.90% Notes due 2027	750,000		(5,919)		744,081		750,000		(6,289)		743,711
4.375% Notes due 2029	500,000		(4,711)		495,289		500,000		(4,930)		495,070
	$	2,000,000	$	(13,729)	$	1,986,271	$	2,000,000	$	(14,754)	$	1,985,246

________________________________________

(1)The 4.375% Notes due 2024 were issued at par, therefore, the amounts shown in the table are for unamortized debt issuance costs only. At June 30, 2020, the unamortized debt issuance costs and discount related to the 3.90% Notes due 2027 were $4.6 million and $1.4 million, respectively. At June 30, 2020, the unamortized debt issuance costs and discount related to the 4.375% Notes due 2029 were $4.1 million and $0.6 million, respectively. At December 31, 2019, the unamortized debt issuance costs and discount related to the 3.90% Notes due 2027 were $4.8 million and $1.5 million, respectively. At December 31, 2019, the unamortized debt issuance costs and discount related to the 4.375% Notes due 2029 were $4.3 million and $0.6 million, respectively.

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DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedges, Assets [Abstract]

Schedule of Outstanding Hedging Contracts Relative to Future Production

The following tables summarize our outstanding derivative contracts as of June 30, 2020:

Oil Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
WTI (1)
Volume (Bbls)	—		—		3,772,000		3,772,000		7,544,000
Weighted Avg Price - Floor	$	—	$	—	$	40.91	$	40.91	$	40.91
Weighted Avg Price - Ceiling	$	—	$	—	$	49.84	$	49.84	$	49.84
2021:
WTI (1)
Volume (Bbls)	3,600,000		2,730,000		1,932,000		1,932,000		10,194,000
Weighted Avg Price - Floor	$	38.06	$	34.23	$	31.48	$	31.48	$	34.54
Weighted Avg Price - Ceiling	$	46.45	$	42.25	$	39.67	$	39.67	$	42.75
2022:
WTI (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Price - Floor	$	35.00	$	—	$	—	$	—	$	35.00
Weighted Avg Price - Ceiling	$	45.28	$	—	$	—	$	—	$	45.28

________________________________________

(1)The index price for these collars is West Texas Intermediate (“WTI”) as quoted on the New York Mercantile Exchange (“NYMEX”).

Gas Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
PEPL (1)
Volume (MMBtu)	—		—		9,200,000		9,200,000		18,400,000
Weighted Avg Price - Floor	$	—	$	—	$	1.78	$	1.78	$	1.78
Weighted Avg Price - Ceiling	$	—	$	—	$	2.21	$	2.21	$	2.21
Perm EP (2)
Volume (MMBtu)	—		—		6,440,000		6,440,000		12,880,000
Weighted Avg Price - Floor	$	—	$	—	$	1.36	$	1.36	$	1.36
Weighted Avg Price - Ceiling	$	—	$	—	$	1.64	$	1.64	$	1.64
Waha (3)
Volume (MMBtu)	—		—		6,440,000		6,440,000		12,880,000
Weighted Avg Price - Floor	$	—	$	—	$	1.43	$	1.43	$	1.43
Weighted Avg Price - Ceiling	$	—	$	—	$	1.73	$	1.73	$	1.73
2021:
PEPL (1)
Volume (MMBtu)	7,200,000		6,370,000		4,600,000		4,600,000		22,770,000
Weighted Avg Price - Floor	$	1.76	$	1.75	$	1.80	$	1.80	$	1.77
Weighted Avg Price - Ceiling	$	2.18	$	2.16	$	2.23	$	2.23	$	2.19
Perm EP (2)
Volume (MMBtu)	5,400,000		5,460,000		3,680,000		3,680,000		18,220,000
Weighted Avg Price - Floor	$	1.44	$	1.44	$	1.58	$	1.58	$	1.49
Weighted Avg Price - Ceiling	$	1.72	$	1.72	$	1.90	$	1.90	$	1.79
Waha (3)
Volume (MMBtu)	6,300,000		6,370,000		4,600,000		4,600,000		21,870,000
Weighted Avg Price - Floor	$	1.43	$	1.43	$	1.58	$	1.58	$	1.49
Weighted Avg Price - Ceiling	$	1.73	$	1.73	$	1.89	$	1.89	$	1.80
2022:
PEPL (1)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.90	$	—	$	—	$	—	$	1.90
Weighted Avg Price - Ceiling	$	2.36	$	—	$	—	$	—	$	2.36
Perm EP (2)
Volume (MMBtu)	900,000		—		—		—		900,000
Weighted Avg Price - Floor	$	1.80	$	—	$	—	$	—	$	1.80
Weighted Avg Price - Ceiling	$	2.19	$	—	$	—	$	—	$	2.19
Waha (3)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.70	$	—	$	—	$	—	$	1.70
Weighted Avg Price - Ceiling	$	2.10	$	—	$	—	$	—	$	2.10

________________________________________

(1)The index price for these collars is Panhandle Eastern Pipe Line, Tex/OK Mid-Continent Index (“PEPL”) as quoted in Platt’s Inside FERC.

(2)The index price for these collars is El Paso Natural Gas Company, Permian Basin Index (“Perm EP”) as quoted in Platt’s Inside FERC.

(3)The index price for these collars is Waha West Texas Natural Gas Index (“Waha”) as quoted in Platt’s Inside FERC.

Oil Basis Swaps	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2020:
WTI Midland (1)
Volume (Bbls)	—		—		2,944,000		2,944,000		5,888,000
Weighted Avg Differential (2)	$	—	$	—	$	0.18	$	0.18	$	0.18
2021:
WTI Midland (1)
Volume (Bbls)	2,790,000		2,275,000		1,840,000		1,840,000		8,745,000
Weighted Avg Differential (2)	$	0.03	$	(0.10)	$	(0.38)	$	(0.38)	$	(0.18)
2022:
WTI Midland (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Differential (2)	$	0.11	$	—	$	—	$	—	$	0.11

________________________________________

(1)The index price we pay under these basis swaps is WTI Midland as quoted by Argus Americas Crude.

(2)The index price we receive under these basis swaps is WTI as quoted on the NYMEX plus or minus, as applicable, the weighted average differential shown in the table.

Oil Roll Differential Swaps	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2021:
WTI (1)
Volume (Bbls)	630,000		637,000		644,000		644,000		2,555,000
Weighted Avg Price	$	(0.24)	$	(0.24)	$	(0.24)	$	(0.24)	$	(0.24)
2022:
WTI (1)
Volume (Bbls)	630,000		—		—		—		630,000
Weighted Avg Price	$	(0.24)	$	—	$	—	$	—	$	(0.24)

________________________________________

(1)The index price used to determine the settlement “roll” is WTI as quoted on the NYMEX.

Schedule of Derivative Contracts Entered into Subsequent to Balance Sheet Date

The following tables summarize our derivative contracts entered into subsequent to June 30, 2020 through July 31, 2020:

Gas Collars	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
2021:
PEPL (1)
Volume (MMBtu)	1,800,000		1,820,000		1,840,000		1,840,000		7,300,000
Weighted Avg Price - Floor	$	2.10	$	2.10	$	2.10	$	2.10	$	2.10
Weighted Avg Price - Ceiling	$	2.44	$	2.44	$	2.44	$	2.44	$	2.44
Perm EP (2)
Volume (MMBtu)	900,000		910,000		920,000		920,000		3,650,000
Weighted Avg Price - Floor	$	1.90	$	1.90	$	1.90	$	1.90	$	1.90
Weighted Avg Price - Ceiling	$	2.18	$	2.18	$	2.18	$	2.18	$	2.18
Waha (3)
Volume (MMBtu)	1,800,000		1,820,000		1,840,000		1,840,000		7,300,000
Weighted Avg Price - Floor	$	1.84	$	1.84	$	1.84	$	1.84	$	1.84
Weighted Avg Price - Ceiling	$	2.20	$	2.20	$	2.20	$	2.20	$	2.20
2022:
PEPL (1)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	2.10	$	—	$	—	$	—	$	2.10
Weighted Avg Price - Ceiling	$	2.44	$	—	$	—	$	—	$	2.44
Perm EP (2)
Volume (MMBtu)	900,000		—		—		—		900,000
Weighted Avg Price - Floor	$	1.90	$	—	$	—	$	—	$	1.90
Weighted Avg Price - Ceiling	$	2.18	$	—	$	—	$	—	$	2.18
Waha (3)
Volume (MMBtu)	1,800,000		—		—		—		1,800,000
Weighted Avg Price - Floor	$	1.84	$	—	$	—	$	—	$	1.84
Weighted Avg Price - Ceiling	$	2.20	$	—	$	—	$	—	$	2.20

________________________________________

(1)The index price for these collars is PEPL as quoted in Platt’s Inside FERC.

(2)The index price for these collars is Perm EP as quoted in Platt’s Inside FERC.

(3)The index price for these collars is Waha as quoted in Platt’s Inside FERC.

Schedule of Net (Gains) Losses from Settlements and Changes of Derivative Contracts

The following table presents the components of “Loss (gain) on derivative instruments, net” for the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Decrease (increase) in fair value of derivative instruments, net:
Gas contracts	$	19,826	$	(6,370)	$	32,319	$	(16,216)
Oil contracts	168,000		(28,161)		(28,319)		88,086
	187,826		(34,531)		4,000		71,870
Cash (receipts) payments on derivative instruments, net:
Gas contracts	(5,870)		(21,176)		(17,589)		(17,412)
Oil contracts	(58,071)		14,939		(89,466)		20,226
	(63,941)		(6,237)		(107,055)		2,814
Loss (gain) on derivative instruments, net	$	123,885	$	(40,768)	$	(103,055)	$	74,684

Schedule of Derivative Assets and Liabilities

The following tables present the amounts and classifications of our derivative assets and liabilities as of June 30, 2020 and December 31, 2019, as well as the potential effect of netting arrangements on our recognized derivative asset and liability amounts.

		June 30, 2020
(in thousands)	Balance Sheet Location	Asset		Liability
Oil contracts	Current assets — Derivative instruments	$	69,208	$	—
Gas contracts	Current assets — Derivative instruments	2,382		—
Oil contracts	Current liabilities — Derivative instruments	—		38,443
Gas contracts	Current liabilities — Derivative instruments	—		13,113
Oil contracts	Non-current liabilities — Derivative instruments	—		17,747
Gas contracts	Non-current liabilities — Derivative instruments	—		5,463
Total gross amounts presented in the balance sheet		71,590		74,766
Less: gross amounts not offset in the balance sheet		(57,678)		(57,678)
Net amount		$	13,912	$	17,088
		December 31, 2019
(in thousands)	Balance Sheet Location	Asset		Liability
Oil contracts	Current assets — Derivative instruments	$	1,624	$	—
Gas contracts	Current assets — Derivative instruments	16,320		—
Oil contracts	Non-current assets — Derivative instruments	580		—
Oil contracts	Current liabilities — Derivative instruments	—		16,681
Oil contracts	Non-current liabilities — Derivative instruments	—		824
Gas contracts	Non-current liabilities — Derivative instruments	—		194
Total gross amounts presented in the balance sheet		18,524		17,699
Less: gross amounts not offset in the balance sheet		(9,865)		(9,865)
Net amount		$	8,659	$	7,834

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurement Information for Certain Assets and Liabilities

The following table provides fair value measurement information for certain assets and liabilities as of June 30, 2020 and December 31, 2019:

	June 30, 2020				December 31, 2019
(in thousands)	Book Value		Fair Value		Book Value		Fair Value
Financial Assets (Liabilities):
4.375% Notes due 2024	$	(750,000)	$	(791,175)	$	(750,000)	$	(792,225)
3.90% Notes due 2027	$	(750,000)	$	(758,850)	$	(750,000)	$	(778,050)
4.375% Notes due 2029	$	(500,000)	$	(513,900)	$	(500,000)	$	(530,400)
Derivative instruments — assets	$	71,590	$	71,590	$	18,524	$	18,524
Derivative instruments — liabilities	$	(74,766)	$	(74,766)	$	(17,699)	$	(17,699)

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2020

Retirement Benefits [Abstract]

Schedule of Recognition of Non-Cash Stock-Based Compensation Costs

We have recognized stock-based compensation cost as shown below for the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Restricted stock awards:
Performance stock awards	$	4,059	$	5,535	$	8,119	$	10,929
Service-based stock awards	6,585		5,993		13,962		13,224
	10,644		11,528		22,081		24,153
Stock option awards	416		396		914		1,018
Total stock compensation cost	11,060		11,924		22,995		25,171
Less amounts capitalized to oil and gas properties	(4,313)		(5,430)		(9,854)		(11,964)
Stock compensation expense	$	6,747	$	6,494	$	13,141	$	13,207

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ASSET RETIREMENT OBLIGATIONS (Tables)

6 Months Ended

Jun. 30, 2020

Asset Retirement Obligation [Abstract]

Schedule of Asset Retirement Obligations

The following table reflects the components of the change in the carrying amount of the asset retirement obligation for the six months ended June 30, 2020:

(in thousands)	Six Months Ended June 30, 2020
Asset retirement obligation at January 1, 2020	$	181,869
Liabilities incurred	2,088
Liability settlements and disposals	(21,935)
Accretion expense	3,796
Revisions of estimated liabilities	2,800
Asset retirement obligation at June 30, 2020	168,618
Less current obligation	(18,244)
Long-term asset retirement obligation	$	150,374

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EARNINGS (LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of Calculations of Basic and Diluted Net Earnings (Loss) per Common Share

The calculations of basic and diluted net earnings (loss) per common share under the two-class method are presented below for the periods indicated:

	Three Months Ended June 30,
	2020					2019
(in thousands, except per share information)	Income (Numerator)		Shares (Denominator)	Per-Share Amount		Income (Numerator)		Shares (Denominator)	Per-Share Amount
Net (loss) income	$	(925,147)				$	109,309
Less: dividends and net income attributable to participating securities (1)	(569)					(1,596)
Less: preferred stock dividends	(1,269)					(1,270)
Basic (loss) earnings per share
(Loss) income available to common stockholders	(926,985)		99,880	$	(9.28)	106,443		99,658	$	1.07
Effects of dilutive securities
Options (2)	—		—			—		7
Diluted (loss) earnings per share
(Loss) income available to common stockholders and assumed conversions	$	(926,985)	99,880	$	(9.28)	$	106,443	99,665	$	1.07

	Six Months Ended June 30,
	2020					2019
(in thousands, except per share information)	Income (Numerator)		Shares (Denominator)	Per-Share Amount		Income (Numerator)		Shares (Denominator)	Per-Share Amount
Net (loss) income	$	(1,699,429)				$	135,625
Less: dividends and net income attributable to participating securities (1)	(1,119)					(2,067)
Less: preferred stock dividends	(2,538)					(2,539)
Basic (loss) earnings per share
(Loss) income available to common stockholders	(1,703,086)		99,861	$	(17.05)	131,019		97,800	$	1.34
Effects of dilutive securities
Options (2)	$	—	—			$	—	9
Diluted (loss) earnings per share
(Loss) income available to common stockholders and assumed conversions	$	(1,703,086)	99,861	$	(17.05)	$	131,019	97,809	$	1.34

________________________________________

(1)Participating securities do not have a contractual obligation to share in the losses of the entity, therefore, net losses are not attributable to participating securities.

(2)Inclusion of certain potential common shares would have an anti-dilutive effect, therefore, these shares were excluded from the calculations of diluted earnings (loss) per share. Excluded from the calculation for the three months ended June 30, 2020 were 456.6 thousand potential common shares from the assumed exercise of employee stock options, 515.8 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock, and 8.8 thousand potential common shares from the assumed vesting of incremental shares of unvested restricted stock awards. Excluded from the calculation for the three months ended June 30, 2019 were 387.5 thousand potential common shares from the assumed exercise of employee stock options and 502.6 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock. Excluded from the calculation for the six months ended June 30, 2020 were 456.6 thousand potential common shares from the assumed exercise of employee stock options, 515.8 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock, and 8.8 thousand potential common shares from the assumed vesting of incremental shares of unvested restricted stock awards. Excluded from the calculation for the six months ended June 30, 2019 were 391.1 thousand potential common shares from the assumed exercise of employee stock options and 502.6 thousand potential common shares from the assumed conversion of the Convertible Preferred Stock.

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Schedule of Components of the Provision for Income Taxes

The components of our provision for income taxes and our combined federal and state effective income tax rates were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Current tax expense (benefit)	$	37		$	—		$	(161)		$	—
Deferred tax (benefit) expense	(271,543)			34,046			(287,900)			42,119
	$	(271,506)		$	34,046		$	(288,061)		$	42,119
Combined federal and state effective income tax rate	22.7		%	23.7		%	14.5		%	23.7		%

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

6 Months Ended

Jun. 30, 2020

Supplemental Cash Flow Elements [Abstract]

Schedule of Supplemental Cash Flow Information

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Cash paid during the period for:
Interest (net of capitalized amounts of $18,145, $19,381, $25,473 and $20,121, respectively) (1)	$	14,050	$	14,396	$	19,609	32,984
Income taxes	$	—	$	1,200	$	—	$	1,206
Cash received for income tax refunds	$	280	$	335	$	484	$	336

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(1)The six months ended June 30, 2019 includes $17.6 million in interest paid upon the redemption of Resolute’s senior notes and credit facility on March 1, 2019.

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ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Schedule of Consideration Transferred in Acquisition

The acquisition date fair value of the consideration transferred totaled $820.3 million, which consisted of cash, common stock, and a newly created series of preferred stock (see Note 5 for more information on the preferred stock) as follows:

(in thousands)	Fair Value of Consideration Transferred
Cash	$	325,677
Common stock (5,652 shares issued)	413,015
Preferred stock (63 shares issued)	81,620
	$	820,312

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table sets forth the purchase price allocation:

(in thousands)	March 1, 2019		Adjustments		March 1, 2020
Cash	$	41,236	$	—	$	41,236
Accounts receivable	50,739		11,521		62,260
Other current assets	13,280		(1,176)		12,104
Proved oil and gas properties	692,600		—		692,600
Unproved oil and gas properties	1,054,200		(30,314)		1,023,886
Fixed assets	5,355		(32)		5,323
Goodwill	107,341		(13,126)		94,215
Other assets	142		—		142
Current liabilities	(202,735)		1,790		(200,945)
Long-term debt	(870,000)		—		(870,000)
Deferred income taxes	(62,409)		31,337		(31,072)
Asset retirement obligation	(9,437)		—		(9,437)
Total identifiable net assets	$	820,312	$	—	$	820,312

Schedule of Pro Forma information

(in thousands, except per share information)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Revenue	$	546,463	$	1,176,556
Net income	$	109,365	$	121,909
Net income per common share:
Basic	$	1.07	$	1.18
Diluted	$	1.07	$	1.18

XML

BASIS OF PRESENTATION - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Oil and Gas, Delivery Commitment [Line Items]
Discount rate for calculating present value of estimated future net revenues from proved reserves (as a percent)				10.00%
Impairment of oil and gas properties	$ 941,198	$ 333,700	$ 0	$ 1,274,849	$ 0
Minimum
Oil and Gas, Delivery Commitment [Line Items]
Oil and gas delivery commitments and contracts, period				1 month

XML

BASIS OF PRESENTATION - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Production	$ 64,337	$ 88,995	$ 151,573	$ 167,399
Transportation, processing, and other operating	53,282	54,107	108,204	113,682
Gas gathering and other	$ 3,526	6,560	$ 11,824	11,742
Prior Year Presentation
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Production		87,726		164,959
Transportation, processing, and other operating		48,331		101,939
Gas gathering and other		13,605		25,925
Current Year Reclassifications
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Production		1,269		2,440
Transportation, processing, and other operating		5,776		11,743
Gas gathering and other		(7,045)		(14,183)
Total reclassifications		$ 0		$ 0

XML

BASIS OF PRESENTATION - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Goodwill [Roll Forward]
Goodwill balance at beginning of period			$ 716,865
Resolute acquisition purchase price adjustments (Note 13)			(2,418)
Impairment	$ 0	$ 0	(714,447)	$ 0
Goodwill balance at end of period	$ 0		$ 0

XML

LONG-TERM DEBT - Long-Term Debt Outstanding (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019	Mar. 08, 2019	Apr. 30, 2017	Sep. 30, 2014
Debt Instrument
Long-term debt principal	$ 2,000,000,000	$ 2,000,000,000
Unamortized debt issuance costs and discount	(13,729,000)	(14,754,000)
Long-term debt, net	1,986,271,000	1,985,246,000
4.375% Notes due 2024
Debt Instrument
Long-term debt principal	750,000,000	750,000,000
Unamortized debt issuance costs and discount	(3,099,000)	(3,535,000)
Long-term debt, net	$ 746,901,000	746,465,000
4.375% Notes due 2024 | Senior Notes
Debt Instrument
Stated interest rate of debt instrument (as a percent)	4.375%				4.375%
Long-term debt principal					$ 750,000,000
3.90% Notes due 2027
Debt Instrument
Long-term debt principal	$ 750,000,000	750,000,000
Unamortized debt issuance costs and discount	(5,919,000)	(6,289,000)
Long-term debt, net	$ 744,081,000	743,711,000
3.90% Notes due 2027 | Senior Notes
Debt Instrument
Stated interest rate of debt instrument (as a percent)	3.90%			3.90%
Long-term debt principal				$ 750,000,000
Unamortized debt issuance costs	$ 4,600,000	4,800,000
Unamortized discount	1,400,000	1,500,000
4.375% Notes due 2029
Debt Instrument
Long-term debt principal	500,000,000	500,000,000
Unamortized debt issuance costs and discount	(4,711,000)	(4,930,000)
Long-term debt, net	$ 495,289,000	495,070,000
4.375% Notes due 2029 | Senior Notes
Debt Instrument
Stated interest rate of debt instrument (as a percent)	4.375%
Long-term debt principal			$ 500,000,000
Unamortized debt issuance costs	$ 4,100,000	4,300,000
Unamortized discount	$ 600,000	$ 600,000

XML

LONG-TERM DEBT - Bank Debt Narrative (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Feb. 05, 2019
Line of Credit Facility [Line Items]
Unamortized debt issuance costs and discount	$ 13,729,000	$ 13,729,000	$ 14,754,000
Creditor fees and third-party costs incurred	1,500,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Aggregate commitments under credit facility				$ 1,250,000,000
Maximum borrowing capacity including accordion feature				$ 1,500,000,000
Maximum additional non-cash impairment charge add-backs	3,500,000,000	3,500,000,000
Consolidated cash threshold	$ 175,000,000.0	$ 175,000,000.0
Property lien debt basket (as a percent)	15.00%	15.00%
Consolidated Net Tangible Assets cap	$ 50,000,000.0	$ 50,000,000.0
Borrowings outstanding	0	0
Unused borrowing availability	1,248,000,000	1,248,000,000
Credit facility borrowings during period	60,000,000.0	161,000,000.0
Credit facility repayments during period	60,000,000.0	$ 161,000,000.0
Debt-to-capital ratio (as a percent)		65.00%
Unamortized debt issuance costs and discount	5,000,000.0	$ 5,000,000.0	$ 4,000,000.0
Letter of Credit
Line of Credit Facility [Line Items]
Borrowings outstanding	$ 2,500,000	$ 2,500,000
Minimum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Commitment fee rate (as a percent)		0.125%
Maximum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Commitment fee rate (as a percent)		0.35%
London Interbank Offered Rate (LIBOR) | Minimum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate margin (as a percent)		1.125%
London Interbank Offered Rate (LIBOR) | Maximum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate margin (as a percent)		2.00%
Base Rate | Minimum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate margin (as a percent)		0.125%
Base Rate | Maximum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate margin (as a percent)		1.00%

XML

LONG-TERM DEBT - Senior Notes Narrative (Details) - USD ($)		1 Months Ended	6 Months Ended
	Mar. 08, 2019	Apr. 30, 2017	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Sep. 30, 2014
Debt Instrument
Principal amount			$ 2,000,000,000		$ 2,000,000,000
Proceeds from issuance of long-term debt			161,000,000	$ 1,710,310,000
4.375% Notes due 2029
Debt Instrument
Principal amount			500,000,000		500,000,000
3.90% Notes due 2027
Debt Instrument
Principal amount			750,000,000		750,000,000
4.375% Notes due 2024
Debt Instrument
Principal amount			$ 750,000,000		$ 750,000,000
Senior Notes | 4.375% Notes due 2029
Debt Instrument
Principal amount	$ 500,000,000
Stated interest rate of debt instrument (as a percent)			4.375%
Issuance price relative to par value (as a percent)	99.862%
Effective rate (as a percent)	4.392%		4.50%
Proceeds from issuance of long-term debt	$ 494,700,000
Senior Notes | 3.90% Notes due 2027
Debt Instrument
Principal amount		$ 750,000,000
Stated interest rate of debt instrument (as a percent)		3.90%	3.90%
Issuance price relative to par value (as a percent)		99.748%
Effective rate (as a percent)		3.93%	4.01%
Senior Notes | 4.375% Notes due 2024
Debt Instrument
Principal amount						$ 750,000,000
Stated interest rate of debt instrument (as a percent)			4.375%			4.375%
Effective rate (as a percent)			4.50%

XML

DERIVATIVE INSTRUMENTS - Derivative Contracts (Details)	6 Months Ended
	Jun. 30, 2020 MMBTU $ / bbl $ / MMBTU bbl
Oil Collar WTI Index | 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	7,544,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	40.91
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	49.84
Oil Collar WTI Index | Third Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	3,772,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	40.91
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	49.84
Oil Collar WTI Index | Fourth Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	3,772,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	40.91
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	49.84
Oil Collar WTI Index | 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	10,194,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	34.54
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	42.75
Oil Collar WTI Index | First Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	3,600,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	38.06
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	46.45
Oil Collar WTI Index | Second Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	2,730,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	34.23
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	42.25
Oil Collar WTI Index | Third Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	1,932,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	31.48
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	39.67
Oil Collar WTI Index | Fourth Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	1,932,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	31.48
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	39.67
Oil Collar WTI Index | 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	630,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	35.00
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	45.28
Oil Collar WTI Index | First Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	630,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	35.00
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	45.28
Oil Collar WTI Index | Second Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	0
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	0
Oil Collar WTI Index | Third Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	0
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	0
Oil Collar WTI Index | Fourth Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit) | $ / bbl	0
Weighted Avg Price - Ceiling (USD per unit) | $ / bbl	0
Gas Collar PEPL Index | 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	18,400,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.78
Weighted Avg Price - Ceiling (USD per unit)	2.21
Gas Collar PEPL Index | Third Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	9,200,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.78
Weighted Avg Price - Ceiling (USD per unit)	2.21
Gas Collar PEPL Index | Fourth Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	9,200,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.78
Weighted Avg Price - Ceiling (USD per unit)	2.21
Gas Collar PEPL Index | 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	22,770,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.77
Weighted Avg Price - Ceiling (USD per unit)	2.19
Gas Collar PEPL Index | 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	7,300,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	2.10
Weighted Avg Price - Ceiling (USD per unit)	2.44
Gas Collar PEPL Index | First Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	7,200,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.76
Weighted Avg Price - Ceiling (USD per unit)	2.18
Gas Collar PEPL Index | First Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	2.10
Weighted Avg Price - Ceiling (USD per unit)	2.44
Gas Collar PEPL Index | Second Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	6,370,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.75
Weighted Avg Price - Ceiling (USD per unit)	2.16
Gas Collar PEPL Index | Second Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,820,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	2.10
Weighted Avg Price - Ceiling (USD per unit)	2.44
Gas Collar PEPL Index | Third Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	4,600,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.80
Weighted Avg Price - Ceiling (USD per unit)	2.23
Gas Collar PEPL Index | Third Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,840,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	2.10
Weighted Avg Price - Ceiling (USD per unit)	2.44
Gas Collar PEPL Index | Fourth Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	4,600,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.80
Weighted Avg Price - Ceiling (USD per unit)	2.23
Gas Collar PEPL Index | Fourth Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,840,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	2.10
Weighted Avg Price - Ceiling (USD per unit)	2.44
Gas Collar PEPL Index | 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.36
Gas Collar PEPL Index | 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	2.10
Weighted Avg Price - Ceiling (USD per unit)	2.44
Gas Collar PEPL Index | First Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.36
Gas Collar PEPL Index | First Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	2.10
Weighted Avg Price - Ceiling (USD per unit)	2.44
Gas Collar PEPL Index | Second Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar PEPL Index | Second Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar PEPL Index | Third Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar PEPL Index | Third Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar PEPL Index | Fourth Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar PEPL Index | Fourth Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Perm EP | 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	12,880,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.36
Weighted Avg Price - Ceiling (USD per unit)	1.64
Gas Collar Perm EP | Third Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	6,440,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.36
Weighted Avg Price - Ceiling (USD per unit)	1.64
Gas Collar Perm EP | Fourth Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	6,440,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.36
Weighted Avg Price - Ceiling (USD per unit)	1.64
Gas Collar Perm EP | 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	18,220,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.49
Weighted Avg Price - Ceiling (USD per unit)	1.79
Gas Collar Perm EP | 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	3,650,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.18
Gas Collar Perm EP | First Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	5,400,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.44
Weighted Avg Price - Ceiling (USD per unit)	1.72
Gas Collar Perm EP | First Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	900,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.18
Gas Collar Perm EP | Second Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	5,460,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.44
Weighted Avg Price - Ceiling (USD per unit)	1.72
Gas Collar Perm EP | Second Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	910,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.18
Gas Collar Perm EP | Third Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	3,680,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.58
Weighted Avg Price - Ceiling (USD per unit)	1.90
Gas Collar Perm EP | Third Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	920,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.18
Gas Collar Perm EP | Fourth Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	3,680,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.58
Weighted Avg Price - Ceiling (USD per unit)	1.90
Gas Collar Perm EP | Fourth Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	920,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.18
Gas Collar Perm EP | 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	900,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.80
Weighted Avg Price - Ceiling (USD per unit)	2.19
Gas Collar Perm EP | 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	900,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.18
Gas Collar Perm EP | First Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	900,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.80
Weighted Avg Price - Ceiling (USD per unit)	2.19
Gas Collar Perm EP | First Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	900,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.90
Weighted Avg Price - Ceiling (USD per unit)	2.18
Gas Collar Perm EP | Second Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Perm EP | Second Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Perm EP | Third Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Perm EP | Third Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Perm EP | Fourth Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Perm EP | Fourth Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Waha | 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	12,880,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.43
Weighted Avg Price - Ceiling (USD per unit)	1.73
Gas Collar Waha | Third Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	6,440,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.43
Weighted Avg Price - Ceiling (USD per unit)	1.73
Gas Collar Waha | Fourth Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	6,440,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.43
Weighted Avg Price - Ceiling (USD per unit)	1.73
Gas Collar Waha | 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	21,870,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.49
Weighted Avg Price - Ceiling (USD per unit)	1.80
Gas Collar Waha | 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	7,300,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.84
Weighted Avg Price - Ceiling (USD per unit)	2.20
Gas Collar Waha | First Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	6,300,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.43
Weighted Avg Price - Ceiling (USD per unit)	1.73
Gas Collar Waha | First Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.84
Weighted Avg Price - Ceiling (USD per unit)	2.20
Gas Collar Waha | Second Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	6,370,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.43
Weighted Avg Price - Ceiling (USD per unit)	1.73
Gas Collar Waha | Second Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,820,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.84
Weighted Avg Price - Ceiling (USD per unit)	2.20
Gas Collar Waha | Third Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	4,600,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.58
Weighted Avg Price - Ceiling (USD per unit)	1.89
Gas Collar Waha | Third Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,840,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.84
Weighted Avg Price - Ceiling (USD per unit)	2.20
Gas Collar Waha | Fourth Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	4,600,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.58
Weighted Avg Price - Ceiling (USD per unit)	1.89
Gas Collar Waha | Fourth Quarter - 2021 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,840,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.84
Weighted Avg Price - Ceiling (USD per unit)	2.20
Gas Collar Waha | 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.70
Weighted Avg Price - Ceiling (USD per unit)	2.10
Gas Collar Waha | 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.84
Weighted Avg Price - Ceiling (USD per unit)	2.20
Gas Collar Waha | First Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.70
Weighted Avg Price - Ceiling (USD per unit)	2.10
Gas Collar Waha | First Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	1,800,000
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	1.84
Weighted Avg Price - Ceiling (USD per unit)	2.20
Gas Collar Waha | Second Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Waha | Second Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Waha | Third Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Waha | Third Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Waha | Fourth Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Gas Collar Waha | Fourth Quarter - 2022 | Subsequent at end of period
Fair values of derivative assets and liabilities
Volume (MMBtu) | MMBTU	0
Weighted Average Price
Weighted Avg Price - Floor (USD per unit)	0
Weighted Avg Price - Ceiling (USD per unit)	0
Oil Basis Swaps WTI Midland Index | 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	5,888,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0.18
Oil Basis Swaps WTI Midland Index | Third Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	2,944,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0.18
Oil Basis Swaps WTI Midland Index | Fourth Quarter - 2020 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	2,944,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0.18
Oil Basis Swaps WTI Midland Index | 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	8,745,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	(0.18)
Oil Basis Swaps WTI Midland Index | First Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	2,790,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0.03
Oil Basis Swaps WTI Midland Index | Second Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	2,275,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	(0.10)
Oil Basis Swaps WTI Midland Index | Third Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	1,840,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	(0.38)
Oil Basis Swaps WTI Midland Index | Fourth Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	1,840,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	(0.38)
Oil Basis Swaps WTI Midland Index | 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	630,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0.11
Oil Basis Swaps WTI Midland Index | First Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	630,000
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0.11
Oil Basis Swaps WTI Midland Index | Second Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0
Oil Basis Swaps WTI Midland Index | Third Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0
Oil Basis Swaps WTI Midland Index | Fourth Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Differential (USD per Bbl) | $ / bbl	0
Oil Roll Differential Swaps WTI Index | 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	2,555,000
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	(0.24)
Oil Roll Differential Swaps WTI Index | First Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	630,000
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	(0.24)
Oil Roll Differential Swaps WTI Index | Second Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	637,000
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	(0.24)
Oil Roll Differential Swaps WTI Index | Third Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	644,000
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	(0.24)
Oil Roll Differential Swaps WTI Index | Fourth Quarter - 2021 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	644,000
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	(0.24)
Oil Roll Differential Swaps WTI Index | 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	630,000
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	(0.24)
Oil Roll Differential Swaps WTI Index | First Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	630,000
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	(0.24)
Oil Roll Differential Swaps WTI Index | Second Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	0
Oil Roll Differential Swaps WTI Index | Third Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	0
Oil Roll Differential Swaps WTI Index | Fourth Quarter - 2022 | Outstanding at end of period
Fair values of derivative assets and liabilities
Volume (Bbls) | bbl	0
Weighted Average Price
Weighted Avg Price (USD per unit) | $ / bbl	0

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DERIVATIVE INSTRUMENTS - (Gain) Loss on Derivative Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Derivative [Line Items]
Decrease (increase) in fair value of derivative instruments, net:	$ 187,826	$ (34,531)	$ 4,000	$ 71,870
Cash (receipts) payments on derivative instruments, net:	(63,941)	(6,237)	(107,055)	2,814
Loss (gain) on derivative instruments, net	123,885	(40,768)	(103,055)	74,684
Gas contracts
Derivative [Line Items]
Decrease (increase) in fair value of derivative instruments, net:	19,826	(6,370)	32,319	(16,216)
Cash (receipts) payments on derivative instruments, net:	(5,870)	(21,176)	(17,589)	(17,412)
Oil contracts
Derivative [Line Items]
Decrease (increase) in fair value of derivative instruments, net:	168,000	(28,161)	(28,319)	88,086
Cash (receipts) payments on derivative instruments, net:	$ (58,071)	$ 14,939	$ (89,466)	$ 20,226

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DERIVATIVE INSTRUMENTS - Derivative Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Asset
Total gross amounts presented in the balance sheet	$ 71,590	$ 17,944
Liability
Total gross amounts presented in the balance sheet	51,556	16,681
Not Designated as Hedging Instrument
Asset
Total gross amounts presented in the balance sheet	71,590	18,524
Less: gross amounts not offset in the balance sheet	(57,678)	(9,865)
Net amount	13,912	8,659
Liability
Total gross amounts presented in the balance sheet	74,766	17,699
Less: gross amounts not offset in the balance sheet	(57,678)	(9,865)
Net amount	17,088	7,834
Current assets — Derivative instruments | Not Designated as Hedging Instrument | Oil contracts
Asset
Total gross amounts presented in the balance sheet	69,208	1,624
Current assets — Derivative instruments | Not Designated as Hedging Instrument | Gas contracts
Asset
Total gross amounts presented in the balance sheet	2,382	16,320
Non-current assets — Derivative instruments | Not Designated as Hedging Instrument | Oil contracts
Asset
Total gross amounts presented in the balance sheet		580
Current liabilities — Derivative instruments | Not Designated as Hedging Instrument | Oil contracts
Liability
Total gross amounts presented in the balance sheet	38,443	16,681
Current liabilities — Derivative instruments | Not Designated as Hedging Instrument | Gas contracts
Liability
Total gross amounts presented in the balance sheet	13,113
Non-current liabilities — Derivative instruments | Not Designated as Hedging Instrument | Oil contracts
Liability
Total gross amounts presented in the balance sheet	17,747	824
Non-current liabilities — Derivative instruments | Not Designated as Hedging Instrument | Gas contracts
Liability
Total gross amounts presented in the balance sheet	$ 5,463	$ 194

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FAIR VALUE MEASUREMENTS - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Apr. 30, 2017	Sep. 30, 2014
Financial Assets (Liabilities):
Derivative instruments — assets	$ 71,590	$ 17,944
Derivative instruments — liabilities	$ (51,556)	(16,681)
4.375% Notes due 2024 | Senior Notes
Financial Assets (Liabilities):
Stated interest rate of debt instrument (as a percent)	4.375%			4.375%
3.90% Notes due 2027 | Senior Notes
Financial Assets (Liabilities):
Stated interest rate of debt instrument (as a percent)	3.90%		3.90%
4.375% Notes due 2029 | Senior Notes
Financial Assets (Liabilities):
Stated interest rate of debt instrument (as a percent)	4.375%
Book Value
Financial Assets (Liabilities):
Derivative instruments — assets	$ 71,590	18,524
Derivative instruments — liabilities	(74,766)	(17,699)
Book Value | 4.375% Notes due 2024
Financial Assets (Liabilities):
Long-term debt	(750,000)	(750,000)
Book Value | 3.90% Notes due 2027
Financial Assets (Liabilities):
Long-term debt	(750,000)	(750,000)
Book Value | 4.375% Notes due 2029
Financial Assets (Liabilities):
Long-term debt	(500,000)	(500,000)
Fair Value
Financial Assets (Liabilities):
Derivative instruments — assets	71,590	18,524
Derivative instruments — liabilities	(74,766)	(17,699)
Fair Value | 4.375% Notes due 2024
Financial Assets (Liabilities):
Long-term debt	(791,175)	(792,225)
Fair Value | 3.90% Notes due 2027
Financial Assets (Liabilities):
Long-term debt	(758,850)	(778,050)
Fair Value | 4.375% Notes due 2029
Financial Assets (Liabilities):
Long-term debt	$ (513,900)	$ (530,400)

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FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Other Financial Instruments
Accrued operating expenses	$ 70.3	$ 74.7
Accrued payroll related general and administrative expenses		43.3
Allowance for Trade Receivables
Other Financial Instruments
Aggregate allowance for doubtful accounts	$ 4.0	$ 3.6

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CAPITAL STOCK - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended				6 Months Ended	12 Months Ended
	May 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Dec. 31, 2019
Class of Stock [Line Items]
Common stock authorized (shares)		200,000,000				200,000,000	200,000,000
Preferred stock authorized (shares)		15,000,000				15,000,000
Common stock outstanding (shares)		102,200,000				102,200,000
Preferred stock dividend rate (as a percent)						8.125%	8.125%
Preferred stock liquidation preference per share (USD per share)		$ 1,000				$ 1,000
Preferred stock, liquidation preference		$ 62,500				$ 62,500
Price received per share upon conversion (USD per share)		$ 471.40				$ 471.40
Stock issued upon conversion of preferred stock (shares)		8.25315				8.25315
Dividends
Dividends declared per common share (USD per share)	$ 0.22
Dividends declared from retained earnings		$ 22,559	$ 22,548	$ 20,330	$ 20,308
Dividends declared per preferred share (USD per share)	$ 20.3125
Preferred stock cash dividends	$ 1,300
Series A Preferred Stock
Class of Stock [Line Items]
Preferred stock authorized (shares)		62,500				62,500

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STOCK-BASED COMPENSATION - Summary (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Options, Restricted Stock and Unit Awards
Stock compensation cost	$ 11,060	$ 11,924	$ 22,995	$ 25,171
Less amounts capitalized to oil and gas properties	(4,313)	(5,430)	(9,854)	(11,964)
Stock compensation expense	6,747	6,494	13,141	13,207
Restricted stock awards:
Options, Restricted Stock and Unit Awards
Stock compensation cost	10,644	11,528	22,081	24,153
Performance stock awards
Options, Restricted Stock and Unit Awards
Stock compensation cost	4,059	5,535	8,119	10,929
Service-based stock awards
Options, Restricted Stock and Unit Awards
Stock compensation cost	6,585	5,993	13,962	13,224
Stock option awards
Options, Restricted Stock and Unit Awards
Stock compensation cost	$ 416	$ 396	$ 914	$ 1,018

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ASSET RETIREMENT OBLIGATIONS - Summary (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Asset Retirement Obligations
Balance at beginning of year	$ 181,869
Liabilities incurred	2,088
Liability settlements and disposals	(21,935)
Accretion expense	3,796
Revisions of estimated liabilities	2,800
Balance at end of year	168,618
Less current obligation	(18,244)
Long-term asset retirement obligation	$ 150,374	$ 154,045

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EARNINGS (LOSS) PER SHARE - Summary (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Income (Numerator)
Net (loss) income	$ (925,147)	$ (774,282)	$ 109,309	$ 26,316	$ (1,699,429)	$ 135,625
Less: dividends and net income attributable to participating securities	(569)		(1,596)		(1,119)	(2,067)
Less: preferred stock dividends	(1,269)		(1,270)		(2,538)	(2,539)
Basic EPS - (Loss) income available to common stockholders	(926,985)		106,443		(1,703,086)	131,019
Diluted EPS - (Loss) income available to common stockholders and assumed conversions	$ (926,985)		$ 106,443		$ (1,703,086)	$ 131,019
Shares (Denominator)
Basic EPS - (Loss) income available to common stockholders (shares)	99,880,000		99,658,000		99,861,000	97,800,000
Effects of dilutive securities - options (shares)	0		7,000		0	9,000
Diluted EPS - (Loss) income available to common stockholders and assumed conversions (shares)	99,880,000		99,665,000		99,861,000	97,809,000
Per-Share Amount
Basic EPS - (Loss) income available to common stockholders (USD per share)	$ (9.28)		$ 1.07		$ (17.05)	$ 1.34
Diluted EPS - (Loss) income available to common stockholders and assumed conversions (USD per share)	$ (9.28)		$ 1.07		$ (17.05)	$ 1.34
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded antidilutive securities (shares)	456,600		387,500		456,600	391,100
Convertible Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded antidilutive securities (shares)	515,800		502,600		515,800	502,600
Restricted Stock Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Excluded antidilutive securities (shares)	8,800				8,800

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INCOME TAXES - Components of the Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Expense (Benefit)
Current tax expense (benefit)	$ 37	$ 0	$ (161)	$ 0
Deferred tax (benefit) expense	(271,543)	34,046	(287,900)	42,119
Income tax expense (benefit)	$ (271,506)	$ 34,046	$ (288,061)	$ 42,119
Combined federal and state effective income tax rate (as a percent)	22.70%	23.70%	14.50%	23.70%

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INCOME TAXES - Narrative (Details) - USD ($)		3 Months Ended	12 Months Ended
	Mar. 01, 2019	Mar. 31, 2020	Mar. 01, 2020	Jun. 30, 2020	Dec. 31, 2019
Income Tax Contingency [Line Items]
U.S. net tax operating loss carryforward					$ 1,930,000,000
U.S. net tax operating loss carryforward subject to expiration					1,790,000,000
U.S. net tax operating loss carryforward not subject to expiration					140,000,000.0
Unrecognized tax benefits that would impact the entity's effective rate				$ 0
Provisions for interest or penalties related to uncertain tax positions				$ 0
Resolute Energy Corporation
Income Tax Contingency [Line Items]
Deferred tax liability	$ 62,409,000		$ 31,072,000		31,100,000
Adjustment to deferred income taxes	$ (6,900,000)	$ (24,400,000)	$ (31,337,000)
Oil Recovery and Marginal Well Credits
Income Tax Contingency [Line Items]
Tax credit carryforward					$ 3,900,000

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COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($) Bcf
Drilling Commitments
Construction, Drilling and Purchase Commitments
Commitments for purchases and other expenditures	$ 209.5
Gathering System Construction
Construction, Drilling and Purchase Commitments
Commitments for purchases and other expenditures	$ 6.8
Natural Gas Sales Contracts
Construction, Drilling and Purchase Commitments
Oil and gas delivery commitments and contracts, remaining contractual volume (bcf) | Bcf	522.5
Oil and gas delivery commitments and contracts, period	11 years
Maximum financial commitment resulting from inability to meet gas delivery commitments	$ 499.3
Gas Gathering and Processing Agreements
Construction, Drilling and Purchase Commitments
Oil and gas delivery commitments and contracts, period	8 years 6 months
Maximum financial commitment resulting from inability to meet gas delivery commitments	$ 676.6
Minimum Volume Agreement
Construction, Drilling and Purchase Commitments
Maximum financial commitment resulting from inability to meet gas delivery commitments	106.6
Commitment liability	4.3
Other Transportation and Delivery Commitments and Facilities Commitments
Construction, Drilling and Purchase Commitments
Maximum financial commitment resulting from inability to meet gas delivery commitments	$ 20.9

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SUPPLEMENTAL CASH FLOW INFORMATION - Summary (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Mar. 01, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Cash paid during the period for:
Interest (net of capitalized amounts)		$ 14,050	$ 14,396	$ 19,609	$ 32,984
Income taxes		0	1,200	0	1,206
Cash received for income tax refunds		280	335	484	336
Capitalized interest		$ 18,145	$ 19,381	$ 25,473	$ 20,121
Resolute Energy Corporation
Cash paid during the period for:
Capitalized interest	$ 17,600

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RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Helmerich & Payne
Related Party Transaction [Line Items]
Contract drilling service costs	$ 7.8	$ 22.1	$ 23.4	$ 46.6

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ACQUISITIONS - Narrative (Details) - USD ($)		3 Months Ended			6 Months Ended		12 Months Ended	13 Months Ended
	Mar. 01, 2019	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Mar. 01, 2020	Mar. 31, 2020	Dec. 31, 2019	Mar. 08, 2019
Business Acquisition [Line Items]
Purchase price allocation period			12 months
Loss on early extinguishment of debt	$ (4,300,000)	$ 0		$ 0	$ 0	$ (4,250,000)
Goodwill		0			0				$ 716,865,000
Resolute Energy Corporation
Business Acquisition [Line Items]
Proportion of voting interests acquired (as a percent)	100.00%
Total consideration transferred	$ 820,312,000
Increase (decrease) in fair value of unproved oil and gas properties							$ (30,314,000)	$ (30,300,000)
Adjustment to deferred income taxes acquired	(6,900,000)		$ (24,400,000)				(31,337,000)
Long-term debt acquired	870,000,000						870,000,000
Goodwill	107,341,000	$ 94,200,000			$ 94,200,000		$ 94,215,000
Acquisition-related costs	8,400,000			$ 100,000		$ 8,400,000
Senior Notes | Resolute Energy Corporation
Business Acquisition [Line Items]
Long-term debt acquired	600,000,000.0
Senior Notes | 4.375% Notes due 2029
Business Acquisition [Line Items]
Senior notes principal										$ 500,000,000
Stated interest rate of debt instrument (as a percent)		4.375%			4.375%
Credit Facility | Resolute Energy Corporation
Business Acquisition [Line Items]
Long-term debt acquired	270,000,000.0
Resolute Energy Corporation
Business Acquisition [Line Items]
Acquisition-related costs	$ 60,000,000.0

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ACQUISITIONS - Consideration Transferred (Details) - Resolute Energy Corporation shares in Thousands, $ in Thousands	Mar. 01, 2019 USD ($) shares
Business Acquisition [Line Items]
Cash	$ 325,677
Total consideration transferred	820,312
Common stock (5,652 shares issued)
Business Acquisition [Line Items]
Stock	$ 413,015
Stock issued in acquisition (shares) | shares	5,652
Preferred stock (63 shares issued)
Business Acquisition [Line Items]
Stock	$ 81,620
Stock issued in acquisition (shares) | shares	63

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ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended	12 Months Ended	13 Months Ended
	Mar. 01, 2019	Mar. 31, 2020	Jun. 30, 2020	Mar. 01, 2020	Mar. 31, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Goodwill			$ 0			$ 716,865
Adjustments
Goodwill			(2,418)
Resolute Energy Corporation
Business Acquisition [Line Items]
Cash	$ 41,236			$ 41,236
Accounts receivable	50,739			62,260
Other current assets	13,280			12,104
Proved oil and gas properties	692,600			692,600
Unproved oil and gas properties	1,054,200			1,023,886
Fixed assets	5,355			5,323
Goodwill	107,341		$ 94,200	94,215
Other assets	142			142
Current liabilities	(202,735)			(200,945)
Long-term debt	(870,000)			(870,000)
Deferred income taxes	(62,409)			(31,072)		$ (31,100)
Asset retirement obligation	(9,437)			(9,437)
Total identifiable net assets	820,312			820,312
Adjustments
Cash				0
Accounts receivable				11,521
Other current assets				(1,176)
Proved oil and gas properties				0
Unproved oil and gas properties				(30,314)	$ (30,300)
Fixed assets				(32)
Goodwill				(13,126)
Other assets				0
Current liabilities				1,790
Long-term debt				0
Deferred income taxes	$ 6,900	$ 24,400		31,337
Asset retirement obligation				0
Total identifiable net assets				$ 0

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ACQUISITIONS - Pro Forma Information (Details) - Resolute Energy Corporation - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2020
Business Acquisition, Pro Forma Information [Abstract]
Revenue	$ 546,463	$ 1,176,556
Net income	$ 109,365	$ 121,909
Net income per common share:
Basic (USD per share)	$ 1.07	$ 1.18
Diluted (USD per share)	$ 1.07	$ 1.18