What happened

Shares of Cimarex Energy Co. (NYSE:XEC) rallied about 10% by 2:30 p.m. EST on Wednesday, after the oil and gas producer reported stronger-than-expected third-quarter results.

So what

Cimarex Energy pumped out $189.6 million, or $1.99 per share, of adjusted net income in the third quarter, which was an impressive $0.43 per share ahead of analysts' expectations. Driving that strong showing was oil production, which surged 13% year over year and 4% from the second quarter, fueled by strong drilling results in both the Permian Basin and Mid-Continent region.

Several oil pumps in a row with a bright sun shining on them.

Image source: Getty Images.

The company also reaffirmed its full-year outlook. Cimarex expects to invest $1.6 billion to $1.7 billion this year, which should give it the funds to grow production 17% to 18% compared to 2017's level, with oil expanding at a 21% to 23% year-over-year pace. Meanwhile, with the recent sale of some noncore acreage, the company ended the quarter with $864 million in cash, which pushed its leverage ratio to its lowest level in years. That gives it the financial flexibility to pursue opportunities that might arise in the future.

Now what

Cimarex Energy had been one of the worst-performing oil stocks this year before today's rally. However, even with that pop, it's still cheap given its growth prospects and the earnings and cash flow it can generate at current oil prices. That's why it's still one of the top oil stocks to consider buying these days.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.