07.08.2013 12:00:00
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Cimarex Reports Second Quarter 2013 Results
DENVER, Aug. 7, 2013 /PRNewswire/ -- Cimarex Energy Co. (NYSE: XEC) today reported 2013 second quarter net income of $129.6 million, or $1.49 per diluted share. Current quarter net income includes a non-cash hedging gain of $12.6 million ($0.09 per share after tax) and a gain on the sale of midstream assets of $4.3 million ($0.03 per share after tax). This compares to net income of $64.3 million, or $0.74 per diluted share, reported in the second quarter of 2012.
Second quarter production grew 16 percent, averaging 686.8 million cubic feet equivalent (MMcfe) per day compared to 2012 second quarter output of 590.1 MMcfe per day. Oil production grew 29 percent and averaged 36,878 barrels per day. Current quarter volumes were comprised of 50 percent gas, 32 percent oil and 18 percent NGL.
Natural gas prices increased 69 percent to an average $4.08 per Mcf in the second quarter of 2013. Realized oil prices averaged $90.72 per barrel, up three percent over last year, and NGL prices averaged $27.76 per barrel, down four percent.
Revenues from the sale of oil, gas and NGLs totaled $483.3 million in the second quarter versus $343.2 million for the same period in 2012. Adjusted cash flow from operations for the quarter was $346.3 million versus $240.5 million a year ago(1).
Cimarex invested $390 million on exploration and development in the second quarter of 2013, bringing total spending year to date to $799 million. Second quarter expenditures were allocated 65 percent toward Permian Basin projects and 29 percent to projects in the Mid-Continent.
At June 30, 2013, long-term debt totaled $892 million and was comprised of $750 million of senior unsecured notes and $142 million of bank debt. Debt was 20 percent of total capitalization on June 30(2).
2013 Outlook
The midpoint of full year production guidance is unchanged at 690 MMcfe per day with a narrowed range of 680-700 MMcfe per day, an increase of 9 to 12 percent over 2012. Factoring in estimated ethane rejection, third-quarter volumes are forecast between 675-700 MMcfe per day.
Permian and Mid-Continent volumes are projected to grow 12 to 15 percent over 2012, averaging 660-676 MMcfe per day. Third quarter 2013 Permian and Mid-Continent volumes are forecasted to average 661-676 MMcfe/d.
Full year 2013 capital expenditures are expected to approximate $1.5 billion. Nearly all the 2013 capital is directed towards drilling oil and liquids-rich gas wells in the Permian and Cana-Woodford.
Expenses for 2013 are expected to fall within the following ranges:
($/Mcfe): | ||
Production | $1.10 - $1.22 | |
Transportation and other operating | 0.30 - 0.35 | |
DD&A and ARO accretion | 2.40 - 2.55 | |
General and administrative | 0.25 - 0.30 | |
Taxes other than income (% of oil and gas revenue) | 6.0% - 6.5% |
Permian Basin Update
Production from the Permian Basin averaged 319.6 MMcfe per day for the second quarter, an increase of 29 percent over second quarter 2012. Oil volumes increased 39 percent to 30,137 barrels per day.
Cimarex drilled and completed 55 gross (32 net) Permian Basin wells during the second quarter, bringing the total for 2013 to 90 gross wells (59 net). All but one well drilled in the second quarter were completed as producers. At June 30, 16 gross (8 net) wells were awaiting completion. Drilling took place in the Delaware Basin of Texas and southeast New Mexico, mainly targeting the Bone Spring and Wolfcamp formations.
Year-to-date, 42 gross (23 net) New Mexico Bone Spring wells have been drilled and completed. Per well first 30-day gross production from these wells averaged approximately 650 barrels of oil equivalent (BOE) per day (85 percent oil). Year-to-date Ward County, Texas, Third Bone Spring drilling totaled 21 gross (15 net) wells with per well first 30-day average gross production rates of approximately 965 BOE per day (80 percent oil).
In the Culberson area, Cimarex is drilling both horizontal Bone Spring and Wolfcamp wells. Year-to-date nine gross (six net) Bone Spring wells have been drilled and completed with per well first 30-day average gross production of 850 BOE per day (58 percent oil). Cimarex has also drilled eight gross (six net) horizontal Wolfcamp wells in Culberson County in 2013, bringing total Wolfcamp wells in the area to 39 gross (35 net). Per well first 30-day production rates on all of the Wolfcamp wells drilled-to-date in the area have averaged 6.2 MMcfe per day, comprised of 43 percent gas, 27 percent oil and 30 percent NGL (assuming full NGL recovery). The company has seen improvement in its Wolfcamp results. In particular, recent wells drilled to the Wolfcamp D in Culberson County have per well first-30 day production rates averaging 6.6 MMcfe per day.
In Reeves County, Texas, Cimarex has drilled and completed two gross (two net) Wolfcamp A tests with per well first 30-day production rates averaging 925 BOE per day (63 percent oil, 20 percent NGL and 17 percent gas). Since December 31, 2012, Cimarex has increased its net acreage position in Reeves County from 35,000 to 40,000 acres with an average working interest of 84 percent. Cimarex currently has one well drilling and one well waiting on completion.
Mid-Continent Update
Mid-Continent production averaged 343.2 MMcfe per day for the second quarter of 2013, a 14 percent increase over the second quarter 2012 average of 300.2 MMcfe per day. Cana-Woodford represented 216.1 MMcfe per day of the second quarter 2013 total, a 38 percent increase versus the same period last year. Year-to-date, Cimarex has drilled and completed 87 gross (35 net) wells, 74 gross (31 net) of which were in the Cana-Woodford shale play. All were completed as producers. At June 30, 67 gross (20 net) wells were awaiting completion.
Wells Drilled and Completed by Region | ||||||
For the Three Months | For the Six Months | |||||
Ended June 30, | Ended June 30, | |||||
2013 | 2012 | 2013 | 2012 | |||
Gross wells | ||||||
Permian Basin | 55 | 55 | 90 | 94 | ||
Mid-Continent | 35 | 31 | 87 | 64 | ||
Gulf Coast/Other | 2 | 1 | 2 | 2 | ||
92 | 87 | 179 | 160 | |||
Net wells | ||||||
Permian Basin | 32 | 37 | 59 | 64 | ||
Mid-Continent | 15 | 14 | 35 | 26 | ||
Gulf Coast/Other | 1 | - | 1 | 1 | ||
48 | 51 | 95 | 91 | |||
% Gross wells completed as producers | 97% | 97% | 98% | 96% |
Cimarex's average daily production by commodity and region is summarized below:
For the Three Months Ended | For the Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
2013 | 2012 | 2013 | 2012 | ||||||
Gas (Mcf per day) | |||||||||
Permian Basin | 96,306 | 79,409 | 89,573 | 77,252 | |||||
Mid-Continent | 231,428 | 214,339 | 233,811 | 215,582 | |||||
Gulf Coast/Other | 13,519 | 23,577 | 13,666 | 25,814 | |||||
341,253 | 317,325 | 337,050 | 318,648 | ||||||
Oil (Barrels per day) | |||||||||
Permian Basin | 30,137 | 21,694 | 27,997 | 21,747 | |||||
Mid-Continent | 5,745 | 5,392 | 6,017 | 5,642 | |||||
Gulf Coast/Other | 996 | 1,600 | 1,012 | 1,735 | |||||
36,878 | 28,686 | 35,026 | 29,124 | ||||||
NGL (Barrels per day) | |||||||||
Permian Basin | 7,079 | 6,317 | 6,661 | 6,029 | |||||
Mid-Continent | 12,881 | 8,914 | 13,658 | 9,598 | |||||
Gulf Coast/Other | 745 | 1,539 | 812 | 1,602 | |||||
20,705 | 16,770 | 21,131 | 17,229 | ||||||
Total Equivalent (Mcfe per day) | |||||||||
Permian Basin | 319,602 | 247,475 | 297,521 | 243,908 | |||||
Mid-Continent | 343,184 | 300,175 | 351,861 | 307,022 | |||||
Gulf Coast/Other | 23,969 | 42,410 | 24,614 | 45,833 | |||||
686,755 | 590,060 | 673,996 | 596,763 | ||||||
Other
General and administrative expense in the second quarter includes $7.0 million for university endowments established in honor of Cimarex founder, F.H. Merelli, and a $1.0 million contribution made for tornado relief in Oklahoma.
Cimarex has oil swaps and collars covering 12,000 barrels per day through December 2013 and Mid-Continent natural gas collars on 80,000 MMBTU per day through December 2014. The following table summarizes the current open hedge positions:
Oil Contracts
Weighted Average Price | ||||||||||||||
Period | Type | Barrels/day | Index(3) | Floor | Ceiling | Swap | ||||||||
July-December 13 | Swaps | 6,000 | WTI | NA | NA | $ | 96.13 | |||||||
July-December 13 | Collar | 6,000 | WTI | $ | 85.00 | $ | 102.31 | $ | NA | |||||
12,000 |
Gas Contracts
Weighted Average Price | ||||||||||||||
Period | Type | MMBTU/day | Index(2) | Floor | Ceiling | |||||||||
July 13 –December 14 | Collar | 80,000 | PEPL | $ | 3.51 | $ | 4.57 | |||||||
Cimarex accounts for commodity contracts using the mark-to-market (through income) accounting method. Second quarter 2013 had a realized gain of $1.1 million in cash received from oil swaps.
Conference call and webcast
Cimarex will host a conference call and webcast today at 11:00 a.m. Mountain Time (1:00 p.m. Eastern Time). The call will be webcast and accessible on the Cimarex website at www.cimarex.com. To participate in the live, interactive call, please dial 877-270-2148 ten minutes before the scheduled start time (international callers dial 1-412-902-6510). A replay will be available for one week following the call and can be accessed by dialing 877-344-7529 (international callers dial 1-412-317-0088); conference I.D. 10031564.
About Cimarex Energy
Denver-based Cimarex Energy Co. is an independent oil and gas exploration and production company with principal operations in the Mid-Continent and Permian Basin areas of the U.S.
This communication contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are more fully described in SEC reports filed by Cimarex. While Cimarex makes these forward-looking statements in good faith, management cannot guarantee that anticipated future results will be achieved. Cimarex assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
(1) | Cash flow from operations is a non-GAAP financial measure. See below for a reconciliation of the related amounts. |
(2) | Reconciliation of debt to total capitalization, which is a non-GAAP measure, is: long-term debt of $892 million divided by long-term debt of $892 million plus stockholders' equity of $3,679 million. |
(3) | WTI refers to West Texas Intermediate oil price as quoted on the New York Mercantile Exchange. PEPL refers to Panhandle Eastern Pipe Line, Tex/Ok Mid-Continent index as quoted in Platt's Inside FERC. |
RECONCILIATION OF ADJUSTED CASH FLOW FROM OPERATIONS | |||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
2013 | 2012 | 2013 | 2012 | ||||||
(in thousands) | |||||||||
Net cash provided by operating activities | $ | 322,708 | $ | 323,040 | $ | 569,786 | $ | 574,932 | |
Change in operating assets and liabilities | |||||||||
23,601 | (82,530) | 68,944 | (31,466) | ||||||
Adjusted cash flow from operations | $ | 346,309 | $ | 240,510 | $ | 638,730 | $ | 543,466 |
Management believes that the non-GAAP measure of adjusted cash flow from operations is useful information for investors because it is used internally and is accepted by the investment community as a means of measuring the company's ability to fund its capital program, without fluctuations caused by changes in current assets and liabilities, which are included in the GAAP measure of cash flow from operating activities. It is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry. |
PRICE AND PRODUCTION DATA | |||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
2013 | 2012 | 2013 | 2012 | ||||||
Total gas production - Mcf | 31,053,997 | 28,876,597 | 61,006,098 | 57,993,914 | |||||
Gas volume - Mcf per day | 341,253 | 317,325 | 337,050 | 318,648 | |||||
Gas price - per Mcf | $4.08 | $2.42 | $3.73 | $2.67 | |||||
Total oil production - barrels | 3,355,922 | 2,610,407 | 6,339,760 | 5,300,547 | |||||
Oil volume - barrels per day | 36,878 | 28,686 | 35,026 | 29,124 | |||||
Oil price - per barrel | $90.72 | $87.81 | $88.65 | $93.63 | |||||
Total NGL production - barrels | 1,884,189 | 1,526,067 | 3,824,763 | 3,135,614 | |||||
NGL volume - barrels per day | 20,705 | 16,770 | 21,131 | 17,229 | |||||
NGL price - per barrel | $27.76 | $29.02 | $28.55 | $32.94 |
OIL AND GAS CAPITALIZED EXPENDITURES | |||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
2013 | 2012 | 2013 | 2012 | ||||||
(in thousands) | |||||||||
Acquisitions: | |||||||||
Proved | $ | 923 | $ | 240 | $ | 923 | $ | 291 | |
Unproved | 3,415 | 4,791 | 3,665 | 6,713 | |||||
4,338 | 5,031 | 4,588 | 7,004 | ||||||
Exploration and development: | |||||||||
Land and Seismic | 36,719 | 21,175 | 68,029 | 58,387 | |||||
Exploration and development | 353,594 | 365,101 | 730,891 | 730,460 | |||||
390,313 | 386,276 | 798,920 | 788,847 | ||||||
Sale proceeds: | |||||||||
Proved | (37,061) | (14) | (37,879) | (185) | |||||
Unproved | (960) | (146) | (1,041) | (1,088) | |||||
(38,021) | (160) | (38,920) | (1,273) | ||||||
$ | 356,630 | $ | 391,147 | $ | 764,588 | $ | 794,578 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited) | ||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(in thousands, except per share data) | ||||||||||||||
Revenues: | ||||||||||||||
Gas sales | $ | 126,547 | $ | 69,741 | $ | 227,668 | $ | 154,894 | ||||||
Oil sales | 304,466 | 229,210 | 561,998 | 496,294 | ||||||||||
NGL sales | 52,309 | 44,286 | 109,184 | 103,300 | ||||||||||
Gas gathering, processing and other, net | 10,435 | 9,885 | 21,263 | 21,670 | ||||||||||
493,757 | 353,122 | 920,113 | 776,158 | |||||||||||
Costs and expenses: | ||||||||||||||
Depreciation, depletion, amortization and accretion | 150,115 | 123,678 | 288,952 | 245,465 | ||||||||||
Production | 69,433 | 62,494 | 138,819 | 130,119 | ||||||||||
Transportation and other operating | 22,022 | 13,169 | 40,656 | 26,485 | ||||||||||
Gas gathering and processing | 5,184 | 4,955 | 11,340 | 9,806 | ||||||||||
Taxes other than income | 27,807 | 23,483 | 52,935 | 48,643 | ||||||||||
General and administrative | 22,836 | 12,634 | 38,413 | 26,781 | ||||||||||
Stock compensation | 3,507 | 4,684 | 7,112 | 9,218 | ||||||||||
Gain on derivative instruments, net | (13,660) | (10,078) | (12,057) | (5,990) | ||||||||||
Other operating, net | 2,365 | 2,719 | 5,297 | 5,059 | ||||||||||
289,609 | 237,738 | 571,467 | 495,586 | |||||||||||
Operating income | 204,148 | 115,384 | 348,646 | 280,572 | ||||||||||
Other (income) and expense: | ||||||||||||||
Interest expense | 13,097 | 12,702 | 25,283 | 20,661 | ||||||||||
Amortization of deferred financing costs | 1,015 | 977 | 2,035 | 1,686 | ||||||||||
Capitalized interest | (7,387) | (9,119) | (16,582) | (16,923) | ||||||||||
Loss on early extinguishment of debt | — | 16,214 | — | 16,214 | ||||||||||
Other, net | (8,758) | (7,829) | (11,374) | (12,555) | ||||||||||
Income before income tax | 206,181 | 102,439 | 349,284 | 271,489 | ||||||||||
Income tax expense | 76,616 | 38,137 | 129,792 | 101,080 | ||||||||||
Net income | $ | 129,565 | $ | 64,302 | $ | 219,492 | $ | 170,409 | ||||||
Earnings per share to common stockholders: | ||||||||||||||
Basic | $ | 1.50 | $ | 0.75 | $ | 2.54 | $ | 1.98 | ||||||
Diluted | $ | 1.49 | $ | 0.74 | $ | 2.53 | $ | 1.97 | ||||||
Dividends per share | $ | 0.14 | $ | 0.12 | $ | 0.28 | $ | 0.24 | ||||||
Shares attributable to common stockholders: | ||||||||||||||
Unrestricted common shares outstanding | 84,942 | 83,984 | 84,942 | 83,984 | ||||||||||
Diluted common shares | 85,054 | 84,319 | 85,043 | 84,337 | ||||||||||
Shares attributable to common stockholders and participating securities: | ||||||||||||||
Basic shares outstanding | 86,512 | 86,046 | 86,512 | 86,046 | ||||||||||
Fully diluted shares | 86,624 | 86,381 | 86,613 | 86,399 | ||||||||||
Comprehensive income: | ||||||||||||||
Net income | $ | 129,565 | $ | 64,302 | $ | 219,492 | $ | 170,409 | ||||||
Other comprehensive income: | ||||||||||||||
Change in fair value of investments, net of tax | 19 | (135) | 99 | 264 | ||||||||||
Total comprehensive income | $ | 129,584 | $ | 64,167 | $ | 219,591 | $ | 170,673 |
CONDENSED CASH FLOW STATEMENTS (unaudited) | ||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 129,565 | $ | 64,302 | $ | 219,492 | $ | 170,409 | ||||||||
Adjustment to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation, depletion, amortization and accretion | 150,115 | 123,678 | 288,952 | 245,465 | ||||||||||||
Deferred income taxes | 76,616 | 38,137 | 129,792 | 101,080 | ||||||||||||
Stock compensation | 3,507 | 4,684 | 7,112 | 9,218 | ||||||||||||
Derivative instruments, net | (12,621) | (10,078) | (10,292) | (5,990) | ||||||||||||
Loss on early extinguishment of debt | 16,214 | — | 16,214 | |||||||||||||
Changes in non-current assets and liabilities | 2,416 | 2,876 | 5,790 | 5,115 | ||||||||||||
Amortization of deferred financing costs and other, net | (3,289) | 697 | (2,116) | 1,955 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
(Increase) decrease in receivables, net | (24,484) | 109,978 | (55,060) | 107,834 | ||||||||||||
(Increase) decrease in other current assets | 5,697 | (4,979) | 14,840 | (4,910) | ||||||||||||
(Decrease) in accounts payable and accrued liabilities | (4,814) | (22,469) | (28,724) | (71,458) | ||||||||||||
Net cash provided by operating activities | 322,708 | 323,040 | 569,786 | 574,932 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Oil and gas expenditures | (385,469) | (357,645) | (776,138) | (758,608) | ||||||||||||
Sales of oil and gas assets | 13,508 | 160 | 14,407 | 1,273 | ||||||||||||
Sales of other assets | 31,081 | 199 | 31,157 | 408 | ||||||||||||
Other expenditures | (5,952) | (15,787) | (25,475) | (26,087) | ||||||||||||
Net cash used by investing activities | (346,832) | (373,073) | (756,049) | (783,014) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Net increase (decrease) in bank debt | 22,000 | (222,000) | 142,000 | (55,000) | ||||||||||||
Increase in other long-term debt | — | 750,000 | — | 750,000 | ||||||||||||
Decrease in other long-term debt | — | (363,595) | — | (363,595) | ||||||||||||
Financing costs incurred | — | (12,200) | — | (12,692) | ||||||||||||
Dividends paid | (12,092) | (10,293) | (22,448) | (18,869) | ||||||||||||
Issuance of common stock and other | 216 | 647 | 1,705 | 2,764 | ||||||||||||
Net cash provided by financing activities | 10,124 | 142,559 | 121,257 | 302,608 | ||||||||||||
Net change in cash and cash equivalents | (14,000) | 92,526 | (65,006) | 94,526 | ||||||||||||
Cash and cash equivalents at beginning of period | 18,532 | 4,406 | 69,538 | 2,406 | ||||||||||||
Cash and cash equivalents at end of period | $ | 4,532 | $ | 96,932 | $ | 4,532 | $ | 96,932 |
CONDENSED BALANCE SHEETS (unaudited) | ||||||||||
June 30, | December 31, | |||||||||
Assets | 2013 | 2012 | ||||||||
(in thousands, except share data) | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 4,532 | $ | 69,538 | ||||||
Receivables, net | 381,634 | 302,974 | ||||||||
Oil and gas well equipment and supplies | 66,902 | 81,029 | ||||||||
Deferred income taxes | 18,111 | 8,477 | ||||||||
Derivative instruments | 7,956 | — | ||||||||
Other current assets | 7,406 | 8,119 | ||||||||
Total current assets | 486,541 | 470,137 | ||||||||
Oil and gas properties at cost, using the full cost method of accounting: | ||||||||||
Proved properties | 12,097,102 | 11,258,748 | ||||||||
Unproved properties and properties under development, not being amortized | 567,178 | 645,078 | ||||||||
12,664,280 | 11,903,826 | |||||||||
Less – accumulated depreciation, depletion and amortization | (7,166,038) | (6,899,057) | ||||||||
Net oil and gas properties | 5,498,242 | 5,004,769 | ||||||||
Fixed assets, net | 135,367 | 152,605 | ||||||||
Goodwill | 620,232 | 620,232 | ||||||||
Other assets, net | 55,988 | 57,409 | ||||||||
$ | 6,796,370 | $ | 6,305,152 | |||||||
Liabilities and Stockholders' Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 82,690 | $ | 103,653 | ||||||
Accrued liabilities | 416,111 | 392,909 | ||||||||
Derivative instruments | 59 | — | ||||||||
Revenue payable | 172,956 | 149,300 | ||||||||
Total current liabilities | 671,816 | 645,862 | ||||||||
Long-term debt | 892,000 | 750,000 | ||||||||
Deferred income taxes | 1,260,836 | 1,121,353 | ||||||||
Other liabilities | 292,721 | 313,201 | ||||||||
Total liabilities | 3,117,373 | 2,830,416 | ||||||||
Stockholders' equity: | ||||||||||
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued | — | — | ||||||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 86,503,109 and 86,595,976 shares issued, respectively | 865 | 866 | ||||||||
Paid-in capital | 1,948,381 | 1,939,628 | ||||||||
Retained earnings | 1,729,178 | 1,533,768 | ||||||||
Accumulated other comprehensive income | 573 | 474 | ||||||||
3,678,997 | 3,474,736 | |||||||||
$ | 6,796,370 | $ | 6,305,152 |
SOURCE Cimarex Energy Co.
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