Filed by Cimarex Energy Co.
Pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule
14a-12 of the Securities Exchange Act of 1934
Subject Company: Cimarex Energy Co.
Commission File No.:132-02238
Slide 1
HELMERICH & PAYNE
ESTABLISHED 1920
best people, equipment and technology
Slide 2
The information contained within this presentation is forward looking
and involves risks and uncertainties that could significantly impact
expected results. A discussion of these risks and uncertainties is
contained in the Company's Form 10-Q filed with the Securities and Exchange
Commission on August 14, 2002.
Slide 3
FORWARD-LOOKING STATEMENTS
It should be noted that this announcement contains certain statements
that may be deemed to be "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include, without limitation, statements regarding the
consummation of the proposed spin-off and merger, its effect on future
earnings, cash flow or other operating results, the expected closing date
of the proposed spin-off and merger, any other effect or benefit of the
proposed spin-off and merger, the tax treatment of the proposed spin-off
and merger and the combined company, market prospects, and any other
statements that are not historical facts. H&P and Key strongly encourage
readers to note that some or all of the assumptions upon which such
forward-looking statements are based are beyond their ability to control or
estimate precisely, and may in some cases be subject to rapid and material
changes. Such assumptions include, but are not limited to, costs and
difficulties related to the integration of the businesses, costs, delays
and other difficulties related to the proposed spin-off and merger, closing
conditions not being satisfied, general market conditions prevailing in the
exploration for and development and production of oil and gas (including
inflation or lack of availability of goods and services, environmental
risks, drilling risks and regulatory changes), operating hazards and
delays, actions by customers and other third parties, the future price of
oil and gas, and other factors detailed in H&P's filings with the
Securities and Exchange Commission (the "SEC"), which are available free of
charge on the SEC's website at www.sec.gov. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated. H&P and
Key undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or
otherwise.
Slide 4
ADDITIONAL INFORMATION
In connection with the proposed spin-off and merger, Key and Cimarex
filed with the SEC on May 9, 2002, a Registration Statement No. 333-87948
on Form S-4. Investors and security holders are urged to carefully read the
Registration Statement regarding the proposed transaction because it
contains important information. Investors and security holders may obtain a
free copy of the Registration Statement and other documents containing
information about Key and H&P's oil and gas division, without charge, at
the SEC's web site at www.sec.gov. Copies of the Registration Statement and
the SEC filings incorporated by reference therein may also be obtained for
free by directing a request to either: Key Production Company, Inc., 707
Seventeenth Street, Suite 3300, Denver, Colorado 80202, Attention: Sharon
M. Pope, Assistant Corporate Secretary; telephone 303-295-3995, fax:
303-295-3494, or Helmerich & Payne, Inc, Utica at Twenty-First Street,
Tulsa, Oklahoma 74114, Attention: Steven R. Mackey, Corporate Secretary;
telephone 918-742-5531, fax 918-743-2671.
Slide 5
PARTICIPANTS IN SOLICITATION
H&P and Cimarex and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from Key's
shareholders in connection with the proposed merger. Hans Helmerich,
Douglas E. Fears and Steven R. Mackey are currently directors of Cimarex,
and each of them and Steven R. Shaw are currently officers of Cimarex (the
"Cimarex Participants"). None of the Cimarex Participants beneficially owns
any shares of Cimarex common stock. The Cimarex Participants are all
executive officers of H&P. Information concerning H&P's participants in the
solicitation is set forth in H&P's proxy statement dated January 25, 2002,
which is filed with the SEC. Key's shareholders may obtain additional
information about the interests of all such participants in the proposed
merger by reading Registration Statement No. 333-87948 on Form S-4 which
was filed with the SEC on May 9, 2002. Investors should read the
Registration Statement carefully before making any voting or investment
decisions.
Slide 6
A New Look For An 82 Year Old Company
> H&P to Become a "Pure Play"
Contract Drilling Company
> H&P's Total Rig Fleet to 1998 1999 2000 2001 2002E 2003E
Increase by 33% from 2001 90 90 88 96 111 128
To 2003
> Sold $41.5 Million of Portfolio Pro Forma Post Spin Equity Debt
Securities and Arranged $200 Million 82% 18%
of 5, 7, 10, and 12 Year Notes
Slide 7
Helmerich & Payne, Inc.
(pre-transaction)
[GRAPHIC OMITTED]
Contract Drilling
E&P
Portfolio
> - $1.7 billion market cap
> - 50 million shares outstanding
Slide 8
Exploration & Production Division
Spun Off As Cimarex Energy Co.
To H & P
Shareholders
September 30, 2002
Slide 9
Spin/Merge Goals
> Increase focus and visibility
> Use financial strength to enhance shareholder value
> Strengthen E&P division's position
> Capture tax efficiency
Slide 10
Why Key Production?
> Impressive people and organization
> Complementary and overlapping asset base
> Strong balance sheet
> Similar philosophies and cultures
Slide 11
Combined Properties
Helmrich & Payne, Inc.
Proved reserves (Bcfe) 245
% Natural gas 87%
Production (MMcfe/d) 116
Net undeveloped acres 150,401
Key Production Company
Proved reserves (Bcfe) 147
% Natural gas 62%
Production (MMcfe/d) 74
Net undeveloped acres 119,251
Slide 12
Cimarex Energy
($ in millions) Key H&P Combined
YE01 Proved reserves, Bcfe 147 245 392
2002E Production, MMcfe/d 74 116 190
% Gas Production 65% 90% 80%
Slide 13
What makes H&P attractive as a "pure
play" contract drilling company?
> Unique Strategy
> Expanding Rig Fleet
> Strong balance sheet
> Additional analyst coverage and ownership
interest
Slide 14
Helmerich & Payne, Inc.
Total Rigs
33% Increase
1998 1999 2000 2001 2002E 2003E
90 90 88 96 111 128
Slide 15
Rig Locations
Venezuela 14
Colombia 3
Ecuador 8
Bolivia 6
Argentina 2
73 U.S. Rigs
33 International Rigs
106 Total H & P Rigs
4 Management Contracts
Slide 16
Rig Status as of 4 September 2002
Rigs Working /
Available Contracted
US Land, Mobile & FlexRigs(TM) 35 100%
US Land, Conventional 29 72%
US Platform 12 58%
International Land 33 36%
--- ----
Total 109 69%
Slide 17
US Land Rig Activity July 2001 - August 2002
Recent Peak US Land Rigs
1,114 on July 13, 2001
[Graphic Omitted]
Slide 18
US Land Daily Cash Operating Margins
($000's)
H&P Nabors Grey Wolf Patterson
1Q00 1.456 1.435 1.569 1.375
2Q00 2.480 1.860 1.463 1.680
3Q00 2.612 1.975 1.945 2.030
4Q00 3.644 2.550 3.285 2.793
Source - A. Vietor w/Stifel, Nicolaus
Slide 19
Safety - US Land Operations
January 1997 - June 2002
Incidents Per 200,000 mhrs.:
TRIR LTIR
H&P US Land 3.30 0.33
IADC US Land 9.81 2.37
Slide 20
Safety - US Offshore Operations
January 1997 - June 2002
Incidents Per 200,000 mhrs.:
TRIR LTIR
H&P US Offshore 1.11 0.06
IADC US Offshore 3.24 0.6
Slide 21
Distinctive Field Performance
Data for Texas, Louisiana & Oklahoma
Conditions:
Calendar Year 2001
Texas, Oklahoma, Louisiana
All land wells > 8,000'
permitted depth (graphic omitted)
From spud to release
Avg Depth (ft)
H&P
All Rigs A B C D E F G H I J All
All Other Wells Wells
82 Contractors (Less H&P)
# Wells 344 697 115 1,141 151 325 1,867 144 53 158 1,495 6,146
Avg Depth 13,291 11,882 12,032 12,431 10,594 11,643 10,363 10,083 13,801 9,746 10,162 10,982
Source: RigData report Year 2001
Slide 22
US Land Operations
H&P Rig Moves from 1998 to July 2002
1200 HP
Existing 1500 HP
Mobile Rigs FlexRigs 1000 HP 1500 HP 2000 HP 3000 HP
Average Rig Move Days 2.26 2.62 5.8 6.41 8.13 10.05
# Moves 540 360 158 107 96 60
Slide 23
Ten Year Drilling CAPEX 1994 - 2003B
Fiscal Total
Year CAPEX
------ ------
1994 $57
1995 88
1996 80
1997 108
1998 211
1999 72
2000 39
2001 172
2002E 300
2003B 200
TOTAL ----
$1,327 MM
Slide 24
Newest Fleet in Industry
1. Built or Upgraded 1999 Aug 2002 July 2003
1980-1989 44 16 16
1990-1994 20 23 23
1995-1999 25 39 39 )
2000-2003 - 31 50 )70%
___ ___ ___
Total Rigs 89 109 128
2. Electric Rigs (SCR & AC) 90% 92%
3. Varco top drives 58 102
Slide 25
H&P Rig 205
GRAPHIC OMITTED On location in
Gulf of Mexico
Slide 26
H&P Rig 206
GRAPHIC OMITTED On location in
Gulf of Mexico
Slide 27
FlexRig3 Construction Program
25 New Rigs
1. Estimated cost: $10.75 MM per rig
2. First six rigs are working
3. First eight rigs are contracted
4. First eight rigs delivered by 30 September 2002
5. Next 17 rigs delivered by July 2003
6. Deliver two rigs per month
Slide 28
Forecast Economics for FlexRigs
Estimated 10 Year
IRRAT
-----
A. FlexRig1 (1998) 12 to 23%
6 Rigs @ $6.7 MM ea
B. FlexRig2 (2001-2002) 14 to 28%
12 Rigs @ $8.0 MM ea
C. FlexRig3 (2002-2003) 9 to 28%
25 Rigs @ $10.75 MM ea
Slide 29
H&P Rig 211
GRAPHIC OMITTED On location in
South Texas
Slide 30
Capture & Use
Organizational Learnings
[Graphic Omitted]
Slide 31
Apply New Ideas & Technology
[Graphic Omitted]
Slide 32
Inside the Driller's Cabin - H&P FlexRig 211
[Graphic Omitted]
Slide 33
Total H&P Rigs Available
1998 1999 2000 2001 2002E 2003E
Offshore Rigs 11 10 10 10 12 12
Conventional Land Rigs 63 62 61 61 62 62
Mobile & FlexRigs 16 17 17 25 37 54
Total 90 89 88 96 111 128
Slide 34
The Path Ahead
1. Good strategy and good execution are delivering the best value to our
customers
2. Our customers are responding with high activity and high margins
3. The FlexRig3 program is adding leverage
4. Improve activity for platform rigs
5. Improve activity in South America
6. Seek opportunities outside North & South America