DENVER—Dressed in a light gray suit, Cimarex Energy Co.’s (NYSE: XEC) president and CEO Tom Jorden gave a crisp welcome to the crowd and, in his no-nonsense clip, empathized with the blank stares of investors looking for solid ground beneath them.

Perhaps more bluntly than other speakers at EnerCom’s The Oil and Gas Investor Conference in August, Jorden summed up the prospects for the industry as an evolving unknown.

The truth, he said, is he doesn’t know whether oil prices are high or low; or whether gas prices will rise or fall.

“The rescue ship is not coming to save us,” he said. “I don’t look to OPEC to save any of us. I don’t look for macro forces to save us.”

Cimarex has spent time and money building its fallout shelter for the future—underground. The company wants to withstand fluctuating oil and gas prices—chiefly through the study of the downhole physics in its wells and refining its completions work.

“People talk about pounds of proppant per foot of lateral,” Jorden said. “That’s the easiest thing to compare if you have two wells side by side. It’s also probably the single measure that means the least to us.”

Tighten Up

Cimarex has focused on clusters and how to effectively stimulate the entirety of the borehole as near the borehole as possible.

“One of the little known secrets in our business is you can have two wells side by side that can pump the exact same pounds per foot. They can have pumped the same amount of fluid. Those two wells may even produce the same amount,” Jorden said, “and the same pressure response on the surface.”

But what happens beneath the ground and out of sight, Jorden said, is that the rock and pipe interface could be completely different.

“And you wouldn’t know the difference until you start moving them closer and closer together,” he said. “If you get it right and stimulate effectively along the borehole and keep that stimulation close the borehole, you can put those wells very close together.”

Get it wrong and the wells will start interfering with one another, even when they’re within 1,000 ft of one another, he said.

“They may have the same production and the same pressure response on the surface. But if you don’t understand the downhole physics and what happened at that rock to pipe interface, those two wells could be completely different and you wouldn’t know the difference until you start moving them closer and closer together,” Jorden said. “If you get it right, and stimulate effectively along the borehole and keep that stimulation close to the borehole, you can put those wells very close together.”

Cimarex’s results are promising. In Culberson County, Texas, the company drilled five 10,000-ft infill wells that have surpassed the original “parent” wells in two landing zones. Usually “child” wells underperform the original wells in the area.

“That’s a remarkable result,” Jorden said. “Again, it’s a function of understanding that downhole science,” he said. “As we look to configure new infill development projects we are putting wells closer and closer together, better and better well response and getting maximum value out of the premium assets that we have.”

Innovation, technology and corporate culture all matter to Jorden. He says Cimarex fosters debate. It’s on the reasons the company performs an annual review of every well they’ve drilled.

Most recently the company examined about 7,000 wells, asking whether the company really made money drilling the wells and whether its commodity pricing forecast was too optimistic.

“It is an exhausting, humbling exercise. That’s why we do it,” Jorden said.

Modest Goal Line

In August, at EnerCom’s podiums and on large television screens, leaders of E&Ps gave presentations that played out on variations of the same basic notes: capital discipline, high quality assets and staggering well results.

The tension between prudent balance sheets and recent layoffs brushed against one another at the Denver conference.

Christian S. Kendall, president and CEO of Denbury Resources Inc. (NYSE: DNR), described the company’s vast resources, though the company has reduced capex to $250 million from $300 million and a week before EnerCom the company cut its workforce by 15%.

Kendall noted the company is also exploring selling excess CO2, which it uses for well completions, for industrial users and other potential customers. And he said Denbury has sold commercial property in the Houston area that wasn’t of any use.

“Fundamentally… to be sustainable, to be profitable in the long term, Denbury needs to be positioned for a $50 world,” he said. “And we’re working through that right now.”

Jorden said Cimarex is focused on getting its assets to perform and turn a profit, even if a rally never comes and a slump stretches out forever.

“I look for free markets to take action and supply demand fundamentals to tell us what the price of our product is.”

Jorden said Cimarex it isn’t planning any large-scale deals. Cimarex didn’t buy into its positions in the Permian Basin and Oklahoma Stack play.

“We built them,” he said.

The company also has no strategic preference to oil or gas. It simply wants returns.

“By having a balanced portfolio we can redirect capital by simply shifting our weight,” he said. “We haven’t had to do what some of our peers have had to do and that’s make full retail price transactions to reinvent themselves.”

Jorden noted that, had been asked three years ago what Cimarex would look like in a $50 oil environment, “I would have told you we’d be dead in the water.”

He credits the company’s focus on science and efficiency for producing historically high returns on investment.

Cimarex’s passion for downhole physics has helped the company understand and head off well interference.

Cimarex’ other core area — the Oklahoma Stack — is undergoing scientific scrutiny just as the Permian has. While other operators have managed to squeeze nine wells into a section, Jorden said Cimarex has drilled 12 per section with no well-to-well interference.

In its Leon Gundy pilot tests, the company is drilling ten wells per section the Stack, the company is seeing comparable results, with tightly-spaced horizontals so far not interfering with each other.

Jorden said the oil and gas industry is a tough business and to manage a company such as Cimarex requires a combination of pride and humility. Jorden said operators’ survival is dependent on doing their homework; knowing the science; and creating the maximum capital efficiency from their assets.

“Things can go wrong for our business. Sometimes we get our nicks,” he said. “I’m the second CEO of Cimarex, and there will be a third. That’s our goal. We’re building a company for the long haul.”

Darren Barbee can be reached dbarbee@hartenergy.com.