Cabot Oil & Gas Announces Third Quarter Results, Liquids Production Doubles Between Third Quarters

Oct 26, 2011, 18:01 ET from Cabot Oil & Gas Corporation

HOUSTON, Oct. 26, 2011 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced third quarter 2011 net income of $28.5 million, or $0.27 per share, compared to $3.9 million, or $0.04 per share, in the comparable 2010 quarter.  Cash flow from operations for the third quarter 2011 totaled $154.7 million, while discretionary cash flow was $165.4 million.  Comparatively, third quarter 2010 cash flow from operations was $124.2 million and discretionary cash flow was $139.3 million.  Excluding the effect of certain selected items as detailed in the tables in this release, third quarter 2011 net income was $35.3 million, or $0.34 per share, compared to $32.3 million, or $0.31 per share, in the comparable 2010 quarter.

Increased production drove the quarter's overall improvement, partially offset by lower realized commodity prices.  Production between comparable quarters grew 39 percent, with liquid volumes up 101 percent and gas volumes up 37 percent.  

"Our production volumes landed at the mid-point of guidance even with all the noise during the quarter surrounding takeaway capacities, weather and project delays," said Dan O. Dinges, Chairman, President and Chief Executive Officer.  Pricing between comparable quarters showed weakness versus last year for both commodities.  Natural gas realized prices fell 17 percent while oil declined just under 12 percent.  Total expenses, including financing, were nearly equal between the two third quarters, while per unit costs continued their downward trend with the ramp in production.

Year-to-Date

For the nine months ended September 30, 2011 Cabot reported net income of $96.0 million, or $0.92 per share, versus $54.3 million, or $0.52 per share, for the same period last year.  The cash flow comparisons for the nine months ended September 30, 2011 and September 30, 2010 respectively, are cash flow from operations of $375.4 million versus $367.5 million and discretionary cash flow of $428.2 million versus $382.2 million. The 2011 nine-month net income figure, after removal of the selected items, was $99.0 million, or $0.95 per share, versus $82.7 million, or $0.80 per share, for the nine-month period ended September 30, 2010.

"The same dynamics that drove the third quarter 2011 results apply to the year-to-date periods – increased production and lower commodity price realizations," stated Dinges. "Production was up just over 42 percent for the nine-month comparable periods while realized natural gas prices fell 21 percent and realized oil prices decreased 8 percent.  Expenses in total trended higher, but on a per unit basis continued to improve between comparable year-to-date periods."

Dinges concluded, "Through September 30, 2011 total equivalent production was 132.7 Bcfe, which is 2.1 Bcfe more than our production for all of 2010.  This is truly remarkable given our organic drilling program and a series of minor asset sales that removed production during the year. During the first week of October, we closed our Rocky Mountain asset sale and repaid debt with the proceeds. This clearly improves the fourth quarter reported debt levels and metrics."

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.

Conference Call

Listen in live to Cabot Oil & Gas Corporation's third quarter financial and operational results discussion with financial analysts on Thursday, October 27, 2011 at 9:30 a.m. EDT (8:30 a.m. CDT) at www.cabotog.com. A teleconference replay will also be available at (855) 859-2056, (U.S./Canada) or (404) 537-3406 (International), pass code 12016217.  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.

FOR MORE INFORMATION CONTACT Scott Schroeder (281) 589-4993

OPERATING DATA

Quarter Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)

Natural Gas

Pennsylvania, West Virginia and Rocky Mountains

39.4

23.7

101.1

55.2

Texas, Oklahoma and Other

8.3

11.1

26.1

34.0

Total

47.7

34.8

127.2

89.2

Crude/Condensate/Ngl

Pennsylvania, West Virginia and Rocky Mountains

19.0

25.0

62.0

75.0

Texas, Oklahoma and Other

372.0

170.0

858.0

585.0

 Total

391.0

195.0

920.0

660.0

Equivalent Production (Bcfe)

50.0

36.0

132.7

93.2

PRICES (1)

Average Produced Gas Sales Price ($/Mcf)

Pennsylvania, West Virginia and Rocky Mountains

$

4.48

$

4.72

$

4.54

$

4.99

Texas, Oklahoma and Other

$

5.05

$

7.20

$

5.00

$

7.38

 Total

$

4.58

$

5.52

$

4.64

$

5.90

Average Crude/Condensate Price ($/Bbl)

Pennsylvania, West Virginia and Rocky Mountains

$

78.41

$

67.15

$

88.99

$

67.47

Texas, Oklahoma and Other

$

87.31

$

102.43

$

89.74

$

101.28

 Total

$

86.89

$

98.26

$

89.69

$

97.43

WELLS DRILLED

 Gross

33

38

85

83

 Net

27

26

67

67

 Gross Success Rate

97%

97%

99%

98%

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

Quarter Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

    Realized Impacts to Gas Pricing

$ 0.44

$   1.13

$ 0.38

$   1.23

    Realized Impacts to Oil Pricing

$ 3.62

$ 26.33

$ 0.64

$ 23.42

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)

Quarter Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Operating Revenues

 Natural Gas

$ 218,521

$ 192,026

$ 588,976

$ 526,424

 Brokered Natural Gas

9,467

11,675

38,947

49,896

 Crude Oil and Condensate

33,158

19,234

79,792

60,427

 Other

971

1,127

4,124

3,901

262,117

224,062

711,839

640,648

Operating Expenses

 Brokered Natural Gas Cost

8,204

10,281

33,362

43,342

 Direct Operations

27,292

26,466

76,878

73,796

 Transportation and Gathering

19,768

4,932

48,710

13,488

 Taxes Other Than Income

7,042

8,489

21,070

31,135

 Exploration

20,190

9,665

31,090

28,324

 Impairment of Oil & Gas Properties

-

35,789

-

35,789

 Depreciation, Depletion and Amortization

90,293

85,355

250,642

235,579

 General and Administrative (excluding Stock-Based Compensation)

17,917

17,254

48,906

40,244

 Stock-Based Compensation (1)

10,032

3,823

29,348

9,431

200,738

202,054

540,006

511,128

Gain (Loss) on Sale of Assets

3,854

265

36,408

5,411

Income from Operations

65,233

22,273

208,241

134,931

Interest Expense and Other

18,517

16,758

53,928

47,439

Income Before Income Taxes

46,716

5,515

154,313

87,492

Income Tax Expense

18,234

1,617

58,268

33,215

Net Income

$   28,482

$     3,898

$   96,045

$   54,277

Earnings Per Share - Basic

$       0.27

$       0.04

$       0.92

$       0.52

Weighted Average Common Shares Outstanding

104,285

103,955

104,232

103,889

(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)

September 30,

December 31,

2011

2010

Assets

Current Assets

$       310,037

$      203,008

Properties and Equipment, Net

4,103,317

3,762,760

Other Assets

59,043

39,263

  Total Assets

$    4,472,397

$   4,005,031

Liabilities and Stockholders' Equity

Current Liabilities

$       288,977

$      303,835

Long-Term Debt, excluding Current Maturities

1,205,000

975,000

Deferred Income Taxes

785,146

714,953

Other Liabilities

150,104

138,543

Stockholders' Equity

2,043,170

1,872,700

  Total Liabilities and Stockholders' Equity

$    4,472,397

$   4,005,031

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(In thousands)

Quarter Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Cash Flows From Operating Activities

Net Income

$         28,482

$          3,898

$  96,045

$  54,277

Unrealized (Gain) Loss on Derivatives

64

193

950

(162)

Impairment of Oil & Gas Properties

-

35,789

-

35,789

Income Charges Not Requiring Cash

106,856

96,328

296,391

256,763

Loss (Gain) on Sale of Assets

(3,854)

(265)

(36,408)

(5,411)

Deferred Income Tax Expense

20,495

1,374

57,381

30,465

Changes in Assets and Liabilities

(10,725)

(14,943)

(52,844)

(14,594)

Stock-based Compensation Tax Benefit

-

(108)

-

(108)

Exploration Expense

13,347

1,969

13,851

10,473

Net Cash Provided by Operations

154,665

124,235

375,366

367,492

Cash Flows From Investing Activities

Capital Expenditures

(264,773)

(203,901)

(668,987)

(658,123)

Proceeds from Sale of Assets

27,773

4,291

82,109

21,033

Net Cash Used in Investing

(237,000)

(199,610)

(586,878)

(637,090)

Cash Flows From Financing Activities

Net Increase in Debt

110,000

80,000

230,000

290,000

Capitalized Debt Issuance Costs

-

(11,710)

(1,025)

(13,696)

Dividends Paid

(3,129)

(3,119)

(9,379)

(9,348)

Other

(922)

107

(1,105)

72

Net Cash Provided by Financing

105,949

65,278

218,491

267,028

Net Increase / (Decrease) in Cash and Cash Equivalents

$         23,614

$      (10,097)

$    6,979

$   (2,570)

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

(In thousands, except per share amounts)

Quarter Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

As Reported - Net Income

$  28,482

$    3,898

$   96,045

$   54,277

Reversal of Selected Items, Net of Tax:

Impairment of Oil & Gas Properties

-

22,189

-

22,189

(Gain) Loss on Sale of Assets (1)

(2,389)

(164)

(22,573)

(3,355)

Stock-Based Compensation Expense

6,220

2,370

18,196

5,847

Pension Expense (2)

2,956

3,838

6,708

3,838

Unrealized Loss (Gain) on Derivatives (3)

40

120

589

(100)

Net Income Excluding Selected Items

$  35,309

$  32,251

$   98,965

$   82,696

As Reported - Earnings Per Share

$      0.27

$      0.04

$       0.92

$       0.52

Per Share Impact of Reversing Selected Items

0.07

0.27

0.03

0.28

Earnings Per Share Including Reversal             of Selected Items

$      0.34

$      0.31

$       0.95

$       0.80

  Weighted Average Common Shares Outstanding

104,285

103,955

104,232

103,889

(1)

The gain on sale of assets in 2011 primarily relates to the sale of certain oil and gas assets in East Texas. The gain on sale of assets in 2010 primarily relates to the sale of the Woodford Shale Prospect offset by a charge related to properties sold in the third quarter.    

(2)

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. The quarter and nine months ended September 30, 2011 and 2010 amounts represent 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.          

(3)

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 derivatives not designated as hedging instruments.    

Discretionary Cash Flow Calculation and Reconciliation

(In thousands)

Quarter Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Discretionary Cash Flow

As Reported - Net Income

$         28,482

$          3,898

$   96,045

$   54,277

Plus / (Less):

Unrealized Loss (Gain) on Derivatives

64

193

950

(162)

Impairment of Oil & Gas Properties

-

35,789

-

35,789

Income Charges Not Requiring Cash

106,856

96,328

296,391

256,763

Loss (Gain) on Sale of Assets

(3,854)

(265)

(36,408)

(5,411)

Deferred Income Tax Expense

20,495

1,374

57,381

30,465

Exploration Expense

13,347

1,969

13,851

10,473

Discretionary Cash Flow

165,390

139,286

428,210

382,194

Changes in Assets and Liabilities

(10,725)

(14,943)

(52,844)

(14,594)

Stock-based Compensation Tax Benefit

-

(108)

-

(108)

Net Cash Provided by Operations

$       154,665

$      124,235

$ 375,366

$ 367,492

Net Debt Reconciliation

(In thousands)

September 30,

December 31,

2011

2010

Long-Term Debt

$    1,205,000

$      975,000

Stockholders' Equity

2,043,170

1,872,700

  Total Capitalization

$    3,248,170

$   2,847,700

Total Debt

$    1,205,000

$      975,000

Less:  Cash and Cash Equivalents

(62,928)

(55,949)

  Net Debt

$    1,142,072

$      919,051

Net Debt

$    1,142,072

$      919,051

Stockholders' Equity

2,043,170

1,872,700

  Total Adjusted Capitalization

$    3,185,242

$   2,791,751

Total Debt to Total Capitalization Ratio

37.1%

34.2%

Less:  Impact of Cash and Cash Equivalents

1.2%

1.3%

  Net Debt to Adjusted Capitalization Ratio

35.9%

32.9%

SOURCE Cabot Oil & Gas Corporation



RELATED LINKS

http://www.cabotog.com