Cabot Oil & Gas Announces Second Quarter Results, 47.5 Percent Production Growth Leads Operational Gains

News provided by

Cabot Oil & Gas

Jul 27, 2011, 05:31 ET

HOUSTON, July 27, 2011 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today reported its second quarter results that included an overall growth in production of 47.5 percent between comparable second quarter periods.  “This production growth clearly was the leading driver of our financial results and operational gains,” said Dan O. Dinges, Chairman, President and Chief Executive Officer.  “An indicator of our significant momentum on this front was not only the 49.1 percent increase in natural gas but also the 21.7 percent increase in crude/condensate/NGL volumes, which resulted in Cabot’s highest quarterly production.”

Second quarter net income was $54.7 million, or $0.53 per share, as compared to net income of $21.7 million, or $0.21 per share, in the second quarter of 2010.  Removing selected items in both periods (which are detailed in the Selected Items Table and include the impact of the sale of assets, stock compensation, pension and derivatives), the 2011 quarter’s net income was $42.9 million, or $0.41 per share, as compared to $19.9 million, or $0.19 per share, for the second quarter of 2010.

Cash flow from operations for the 2011 second quarter totaled $129.5 million, while discretionary cash flow was $146.9 million. Comparatively, 2010 second quarter cash flow from operations was $127.1 million, and discretionary cash flow was $109.5 million.

For the quarter, realized prices for both natural gas and oil were below last year’s second quarter postings.  Natural gas was $4.67 per Mcf, down 17.3 percent from last year’s $5.65 per Mcf, while oil was off slightly at $95.17 per barrel versus $96.70 per barrel.  Operating expenses and financing cost, in absolute terms, together increased 11 percent between comparable second quarters.  

“However, on the strength of Cabot’s record quarterly production volumes, we have realized a 25 percent reduction in these costs per unit between second quarters,” commented Dinges.

Year-to-Date

In the six months ended June 30, 2011, Cabot reported net income of $67.6 million, or $0.65 per share, compared to $50.4 million, or $0.49 per share, for the same period last year.  The cash flow comparisons for the six months ended June 30, 2011 and June 30, 2010, respectively, are cash flow from operations of $220.7 million versus $243.2 million and discretionary cash flow of $255.5 million versus $241.0 million.  The 2011 six-month net income figure, after removal of the selected items, was $63.7 million, or $0.61 per share, versus $50.4 million, or $0.49 per share, for the six-month period ended June 30, 2010.

“The same dynamic that drove the second quarter results applies to the year-to-date periods – increased production and lower natural gas price realizations,” stated Dinges. “Production was up approximately 45 percent for the six-month comparable periods while natural gas prices fell 24.1 percent and oil prices dropped 5 percent.”

From a balance sheet perspective, the Company’s net debt to adjusted capital stands at 34.9% as of June 30, 2011.  So far this year, Cabot has added $120 million to its outstanding borrowings to fund its investment efforts. “With our assets sales helping to fund our 2011 program, we have spent a net $350 million through six months,” commented Dinges.  “And with our ongoing asset rationalization efforts, our full year net 2011 program will remain at, or below, original expectations.”

Conference Call

Listen in live to Cabot Oil & Gas Corporation's second quarter financial and operational results discussion with financial analysts on Thursday, July 28, 2011 at 9:30 a.m. EDT (8:30 a.m. CDT) at www.cabotog.com.   A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), pass code 75438015.  The replay will be available for 48 hours.  The latest financial guidance, including the Company's hedge positions, along with a replay of the web cast, which will be archived for one year, are available in the investor relations section of the Company's website at www.cabotog.com.

Cabot Oil & Gas Corporation, headquartered in Houston, Texas is a leading independent natural gas producer with its entire resource base located in the continental United States.  For additional information, visit the Company’s Internet homepage at www.cabotog.com.

The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs, and other factors detailed in the Company's Securities and Exchange Commission filings.

FOR MORE INFORMATION CONTACT

Scott Schroeder (281) 589-4993











OPERATING DATA
















Quarter Ended

Six Months Ended




June 30,

June 30,




2011

2010

2011

2010

PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)








Natural Gas








 North

34.6

17.1

61.7

31.5

 South

8.5

11.8

17.8

22.8

 Total

43.1

28.9

79.5

54.3











Crude/Condensate/Ngl








 North

22.0

28.0

43.0

51.0

 South

281.0

221.0

486.0

416.0

 Total

303.0

249.0

529.0

467.0

































Equivalent Production (Bcfe)

45.0

30.5

82.7

57.1











PRICES (1)








Average Produced Gas Sales Price ($/Mcf)








 North

$

4.56

$

4.68

4.58

$

5.19

 South

$

5.12

$

7.05

4.98

$

7.47

 Total


$

4.67

$

5.65

4.67

$

6.15











Average Crude/Condensate Price ($/Bbl)








 North

$

97.00

$

67.27

94.08

$

67.63

 South

$

95.03

$

100.65

91.62

$

100.75

 Total


$

95.17

$

96.70

91.80

$

97.04











WELLS DRILLED










 Gross

28

21

52

45

 Net


22

21

40

41

 Gross Success Rate

100%

100%

100%

98%











(1)  These realized prices include the realized impact of derivative instrument settlements.  




Quarter Ended

Six Months Ended




June 30,

June 30,




2011

2010

2011

2010

    Realized Impacts to Gas Pricing

$  0.32

$   1.44

$  0.34

$   1.29

    Realized Impacts to Oil Pricing

$ (1.74)

$ 21.82

$ (1.61)

$ 22.09











CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)



(In thousands, except per share amounts)





























Quarter Ended

Six Months Ended




June 30,

June 30,




2011

2010

2011

2010

Operating Revenues








 Natural Gas.

$ 200,357

$ 164,528

$ 370,455

$ 334,399

 Brokered Natural Gas

11,072

13,348

29,480

38,221

 Crude Oil and Condensate

28,042

21,211

46,634

41,193

 Other.

1,225

1,154

3,153

2,774




240,696

200,241

449,722

416,587

Operating Expenses








 Brokered Natural Gas Cost

9,796

11,793

25,158

33,061

 Direct Operations


22,579

24,347

49,586

47,330

 Transportation and Gathering

16,074

4,767

28,942

8,557

 Taxes Other Than Income


5,877

11,841

14,028

22,646

 Exploration


4,592

10,233

10,900

18,659

 Depreciation, Depletion and Amortization


83,225

76,726

160,349

150,224

 General and Administrative (excluding Stock-Based Compensation)


14,828

10,469

30,989

22,991

 Stock-Based Compensation (1)


11,178

2,384

19,316

5,608




168,149

152,560

339,268

309,076

 Gain (Loss) on Sale of Assets  

34,071

4,387

32,554

5,146

 Income from Operations

106,618

52,068

143,008

112,657

 Interest Expense and Other  

18,044

15,769

35,411

30,681

 Income Before Income Taxes

88,574

36,299

107,597

81,976

 Income Tax Expense

33,897

14,617

40,034

31,598

 Net Income


$   54,677

$   21,682

$   67,563

$   50,378

 Earnings Per Share - Basic


$       0.53

$       0.21

$       0.65

$       0.49

 Weighted Average Common Shares Outstanding


104,264

103,915

104,204

103,855











(1)

Includes the impact of the Company's performance share awards and restricted stock amortization as well as expense related to stock options and stock appreciation rights.  Also includes expense for the Supplemental Employee Incentive Plans.









CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)


 (In thousands)













June 30,

December 31,





2011


2010





Assets







Current Assets .

$    235,838

$      203,008



Properties and Equipment, Net

3,967,716

3,762,760



Other Assets

46,606

39,263



  Total Assets

$ 4,250,160

$   4,005,031












Liabilities and Stockholders' Equity







Current Liabilities

$    286,724

$      303,835



Long-Term Debt, excluding Current Maturities

1,095,000

975,000



Deferred Income Taxes

757,612

714,953



Other Liabilities

144,625

138,543



Stockholders' Equity

1,966,199

1,872,700



  Total Liabilities and Stockholders' Equity

$ 4,250,160

$   4,005,031





















CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)


(In thousands)






















Quarter Ended

Six Months Ended


June 30,

June 30,


2011

2010

2011

2010

Cash Flows From Operating Activities







Net Income

$      54,677

$        21,682

$  67,563

$  50,378

Unrealized (Gain) Loss on Derivatives .

903

(942)

886

(355)

Income Charges Not Requiring Cash

94,998

79,802

182,178

158,579

Loss (Gain) on Sale of Assets

(34,071)

(4,387)

(32,554)

(5,146)

Deferred Income Tax Expense

30,343

13,375

36,886

29,091

Changes in Assets and Liabilities

(17,373)

17,551

(34,762)

2,205

Exploration Expense

11

-

504

8,426

Net Cash Provided by Operations

129,488

127,081

220,701

243,178









Cash Flows From Investing Activities







Capital Expenditures

(201,045)

(218,741)

(404,214)

(454,143)

Proceeds from Sale of Assets

49,293

15,940

54,336

16,742

Net Cash Used in Investing

(151,752)

(202,801)

(349,878)

(437,401)









Cash Flows From Financing Activities







Net Increase in Debt

40,000

100,000

120,000

210,000

Dividends Paid

(3,128)

(3,117)

(6,250)

(6,228)

Other

(190)

(1,983)

(1,208)

(2,022)

Net Cash Provided by Financing

36,682

94,900

112,542

201,750









Net Increase / (Decrease) in Cash and Cash Equivalents

$      14,418

$        19,180

$ (16,635)

$    7,527










Selected Item Review and Reconciliation of Net Income and Earnings Per Share



(In thousands, except per share amounts)
















Quarter Ended

Six Months Ended



June 30,

June 30,



2011

2010

2011

2010

  As Reported - Net Income

$             54,677

$         21,682

$    67,563

$    50,378

  Reversal of Selected Items, Net of Tax:








(Gain) Loss on Sale of Assets

(21,124)

(2,720)

(20,183)

(3,191)

Stock-Based Compensation Expense

6,930

1,478

11,976

3,477

Pension Expense (1)

1,879

-

3,751

-

Unrealized Loss (Gain) on Derivatives (2)

560

(584)

549

(220)

  Net Income Excluding Selected Items

$             42,922

$         19,856

$    63,656

$    50,444

  As Reported - Earnings Per Share

$                 0.53

$             0.21

$        0.65

$        0.49

  Per Share Impact of Reversing Selected Items

(0.12)

(0.02)

(0.04)

-

  Earnings Per Share Including Reversal








of Selected Items

$                 0.41

$             0.19

$        0.61

$        0.49

  Weighted Average Common Shares Outstanding

104,264

103,915

104,204

103,855










(1)

On July 28, 2010, the Company notified its employees of its plan to terminate its qualified and non-qualified pension plans, effective September 30, 2010. This amount represents pension expenses related to the plan terminations and expenses related to the acceleration of amortization of prior service costs and actuarial losses over the expected amortization period until final distribution of assets from each plan. Pension expense is included in General and Administrative Expense in the Condensed Consolidated Statement of Operations.    

(2)

This unrealized loss (gain) is included in Natural Gas Revenues in the Condensed Consolidated Statement of Operations and represents the mark to market change related to the Company's natural gas basis swaps.  











Discretionary Cash Flow Calculation and Reconciliation



(In thousands)






Quarter Ended

Six Months Ended



June 30,

June 30,



2011

2010

2011

2010

  Discretionary Cash Flow







  As Reported - Net Income

$             54,677

$         21,682

$    67,563

$    50,378

  Plus / (Less):









  Unrealized Loss (Gain) on Derivatives

903

(942)

886

(355)

  Income Charges Not Requiring Cash

94,998

79,802

182,178

158,579

  Loss (Gain) on Sale of Assets

(34,071)

(4,387)

(32,554)

(5,146)

  Deferred Income Tax Expense

30,343

13,375

36,886

29,091

  Exploration Expense

11

-

504

8,426

  Discretionary Cash Flow

146,861

109,530

255,463

240,973

  Changes in Assets and Liabilities

(17,373)

17,551

(34,762)

2,205

  Net Cash Provided by Operations

$           129,488

$       127,081

$  220,701

$  243,178




















Net Debt Reconciliation



(In thousands)
















June 30,

December 31,






2011

2010













  Long-Term Debt

$        1,095,000

$       975,000



  Stockholders' Equity

1,966,199

1,872,700



       Total Capitalization

$        3,061,199

$    2,847,700













  Total Debt

$        1,095,000

$       975,000



  Less:  Cash and Cash Equivalents

(39,314)

(55,949)



       Net Debt

$        1,055,686

$       919,051













  Net Debt

$        1,055,686

$       919,051



  Stockholders' Equity

1,966,199

1,872,700



       Total Adjusted Capitalization

$        3,021,885

$    2,791,751













 Total Debt to Total Capitalization Ratio

35.8%

34.2%



  Less:  Impact of Cash and Cash Equivalents

0.9%

1.3%



       Net Debt to Adjusted Capitalization Ratio

34.9%

32.9%



SOURCE Cabot Oil & Gas

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