Drilling for dollars is better than drilling for Mcfs, according to Paul Korus, vice president and chief financial officer of Denver-based Cimarex Energy Co.

Speaking at the 9th annual oil and gas conference of the New York Society of Security Analysts recently, he said the company bases employee bonuses on the internal rate of return of drilling projects, following rigorous analysis, rather than on other metrics such as finding costs or reserve growth.

"Exceeding our minimum return hurdle is when the bonuses kick in," he said.

The company is one of the few E&P firms around that is not involved in coalbed methane or shale plays, he noted. "Frankly we think it has gotten too competitive, so we are focusing on conventional gas plays."

Cimarex has retained Lehman Brothers to sell its interest in about 40 Main Pass blocks offshore Louisiana, retaining 192 blocks elsewhere in the Gulf of Mexico. Most of these accrued to the company after what Korus calls "the transformative acquisition" of Magnum Hunter Resources in 2005, tripling reserves.

Cimarex will spend about $1 billion in 2006 and drill close to 600 wells, but the company has not finalized its 2007 budget yet "because the uncertainties are higher than usual due to weather, high gas storage and gas-price volatility. Plus, we had a rough year in South Louisiana onshore with our higher-risk exploration portfolio, so our scientists are studying what to do next."

Since 2003, Cimarex has tripled its geological and geophysical staff.

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