CIMAREX ENERGY CO (XEC)

2015 Climate Risk Disclosure Analysis

Industry Group: Oil & Gas

Standard Industrial Classification: Crude Petroleum & Natural Gas

Index Membership: S&P 500, Russell 3000

Financial Year End: Dec 2014

Cimarex Energy Co., a Delaware corporation formed in 2002, is an independent oil and gas exploration and production company. Our operations are located mainly in Oklahoma, Texas and New Mexico. On our website -- www.cimarex.com -- you will find our annual reports, proxy statements and all of our Securities and Exchange Commission (SEC) filings. Our principal business objective is to profitably grow proved reserves and production for the long-term benefit of our shareholders. Our strategy centers on maximizing cash flow from producing properties to reinvest in exploration and development opportunities. We consider merger and acquisition opportunities that enhance our competitive position and we occasionally divest of non-core assets. Key elements to our approach include: · Maintaining a strong financial position · Investment in a diversified portfolio of drilling opportunities with varying geologic characteristics, in different geographic areas and with assorted exposure to oil, natural gas and NGLs · Detailed evaluation and ranking of investment decisions based on rate of return · Tracking predicted versus actual results in a centralized exploration management system, providing feedback to improve results · Attracting quality employees and maintaining integrated teams of geoscientists, landmen and engineers · Maximizing profitability by efficiently operating our properties Conservative use of leverage has long been the key to our financi.. 10-K Filing (2015-02-25)

Disclosure Breakdown

Disclosure Rank

86th percentile in Russell 3000

Disclosure Abstract

item 1a. Risk Factors
17 Relevance:
2%
Factors such as unforeseen poor drilling conditions, title problems, unexpected pressure irregularities, equipment failures, accidents, adverse weather conditions, compliance with environmental and other governmental requirements, bans, moratoria or other restrictions implemented by local governments and the cost of, or shortages or delays in the availability of, drilling and completion services could negatively impact our drilling operations.
23 Relevance:
61%
The adoption of climate change legislation or regulations restricting emission of greenhouse gases could result in increased operating costs and reduced demand for the oil and natural gas we produce.
Studies have suggested that emission of certain gases, commonly referred to as greenhouse gases (GHGs) may be impacting the earth's climate. Methane, a primary component of natural gas, and carbon dioxide, also present in natural gas as a secondary product, sometimes considered an impurity or a by-product of the burning of oil and natural gas, are examples of GHGs. The U.S. Congress and various states have been evaluating, and in some cases implementing, climate-related legislation and other regulatory initiatives that restrict emissions of GHGs. In December 2009, the EPA published its findings that emissions of GHGs present an endangerment to public health and the environment because emissions of such gases are contributing to the warming of the earth's atmosphere and other climatic changes. Based on these findings, the EPA adopted regulations under existing provisions of the Federal Clean Air Act that establish Prevention of Significant Deterioration (PSD) and Title V permit reviews for GHG emissions from certain large stationary sources. Facilities required to obtain PSD and/or Title V permits under EPA s GHG Tailoring Rule for their GHG emissions also may be required to meet "Best Available Control Technology" standards that will be established by the states or, in some cases, by the EPA on a case-by-case basis. The EPA has also adopted rules requiring the monitoring and reporting of GHG emissions from specified sources in the United States, including, among others, certain oil and natural gas production facilities on an annual basis, which includes certain of our operations. In recent proposed rulemaking EPA is widening the scope of annual GHG reporting to include not only activities associated with completion and workover of gas wells with hydraulic fracturing and activities associated with oil and natural gas production operations, but also completions and workovers of oil wells with hydraulic fracturing, gathering and boosting systems, and transmission pipelines.
While Congress has from time to time considered legislation to reduce emissions of GHGs, there has not been significant activity in the form of adopted legislation to reduce GHG emissions at the federal level in recent years. In the absence of such federal climate legislation, a number of state and regional efforts have emerged that are aimed at tracking and/or reducing GHG emissions by means of cap and trade programs that typically require major sources of GHG emissions, such as electric power plants, to acquire and surrender emission allowances in return for emitting those GHGs. In January 2015, President Obama announced a series of administration actions to reduce methane emissions, including rulemaking by the EPA and the BLM as well as updating of standards by the Department of Transportation s Pipeline and Hazardous Materials Administration. The current administration intends to promulgate proposed climate change rulemaking this summer aimed at reducing GHG emissions by 45% by 2025 compared to 2012 levels. The current administration intends to finalize proposed climate change rulemaking by 2016. It is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact our business. Any such future laws and regulations that require reporting of GHGs or otherwise limit emissions of GHGs from our equipment and operations could require us to incur costs to develop and implement best management practices aimed at reducing GHG emissions, install and maintain emissions control technologies, as well as monitor and report on GHG emissions associated with our operations, and such requirements also could adversely affect demand for the oil and natural gas that we produce.

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