Market Overview

Cabot Oil & Gas Corporation Announces Third Quarter Results

Year-To-Date Equivalent Production Grew 42 Percent Year-Over-Year

HOUSTON, Oct. 25, 2012 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today reported financial results for the third quarter of 2012. Highlights for the third quarter of 2012 include:

  • Production of 66.5 billion cubic feet equivalent (Bcfe), an increase of 33 percent over last year's comparable quarter.
  • Net income of $36.6 million, or $0.17 per share.
  • Net income excluding selected items of $43.1 million, or $0.21 per share.
  • Cash flow from operations of $164.0 million and discretionary cash flow of $175.7 million.

"Our year-to-date production growth relative to last year further highlights the prolific nature of our wells in the Marcellus, even in the face of continued delays in permitting for gathering lines," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Based on our plans to connect (or begin producing) 45 additional wells in the fourth quarter, we expect a ramp in production above our previous highs."

Third Quarter 2012

Production during the third quarter of 2012 was 66.5 Bcfe, with 62.7 Bcf of natural gas production and 629 thousand barrels of liquids production. These figures represent a 31 percent increase in gas production and a 61 percent increase in liquids production compared to the third quarter of 2011.

The Company reported net income of $36.6 million, or $0.17 per share, for the third quarter of 2012, compared to $28.5 million, or $0.14 per share, for the third quarter of 2011. Excluding the effect of selected items (which are detailed in the table below), net income was $43.1 million, or $0.21 per share, for the third quarter of 2012, compared to $35.3 million, or $0.17 per share, for the third quarter of 2011. Higher equivalent production and higher realized crude oil prices drove the quarter's overall improvement, partially offset by lower realized natural gas prices and increased operating expenses associated with higher production.

Cash flow from operations for the third quarter of 2012 was $164.0 million, compared to the third quarter of 2011 when cash flow from operations was $154.7 million. Discretionary cash flow for the third quarter of 2012 was $175.7 million, compared to the third quarter of 2011 when discretionary cash flow was $165.4 million.

Including the effect of hedges, natural gas price realizations were $3.68 per thousand cubic feet (Mcf) for the third quarter of 2012, down 20 percent compared to the third quarter of 2011. Oil price realizations were $101.34 per barrel, up 17 percent compared to the third quarter of 2011.

On an absolute basis, depreciation, depletion and amortization increased due to higher equivalent production volumes, partially offset by a decrease in amortization of unproved properties. Transportation expense increased as a result of new gathering arrangements, primarily in northeast Pennsylvania, and greater volumes.  Exploration, general and administrative (excluding stock-based compensation) and interest and other expenses all declined compared to the third quarter of 2011. While total expenses trended higher between the comparable third quarters driven by higher production volumes, the aggregate per unit cost continues to decline. "Our industry leading cost structure continues to result in decreasing per unit costs over time. For example, direct operating expenses for the third quarter declined 22 percent per unit to $0.43 per Mcfe compared to 2011," added Dinges.

Year-to-Date 2012

Production during the nine-month period ended September 30, 2012, was 188.9 Bcfe, with 178.4 Bcf of natural gas production and 1.8 million barrels of liquids production. These figures represent increases of 42 percent, 40 percent, and 91 percent, respectively, compared to the nine-month period ended September 30, 2011.  "Our current year-to-date production already exceeds full-year 2011 levels," stated Dinges.  "Taking into account last year's fourth quarter sale of our Rocky Mountain properties, our pro forma year-to-date production growth is 51 percent."

For the nine-month period ended September 30, 2012, net income was $90.9 million, or $0.43 per share, compared to net income of $96.0 million, or $0.46 per share, for the nine-month period ended September 30, 2011.

Excluding the effect of selected items (which are detailed in the table below), net income was $81.8 million, or $0.39 per share, for the nine-month period ended September 30, 2012, compared to $99.0 million, or $0.47 per share, for the nine-month period ended September 30, 2011.  Lower natural gas price realizations and increased absolute operating expenses, partially offset by higher equivalent production and higher realized crude oil prices, resulted in lower earnings.

For the nine-month period ended September 30, 2012, cash flow from operations was $455.1 million, compared to cash flow from operations of $375.4 million for the nine-month period ended September 30, 2011. Discretionary cash flow was $456.3 million for the nine-month period ended September 30, 2012, compared to discretionary cash flow of $428.2 million for the nine-month period ended September 30, 2011.

Financial Position and Liquidity

At September 30, 2012, the Company's total debt was $1,062 million, of which $300 million were borrowings outstanding under the Company's credit facility. Total lender commitments under the Company's credit facility are $900 million, with $599 million of available credit under its facility at September 30, 2012.

As of September 30, 2012, the Company's net debt to adjusted capitalization ratio was 32.8%, compared to 30.4% as of December 31, 2011 (see attached table for the calculation).

Conference Call

Listen in live to Cabot Oil & Gas Corporation's third quarter financial and operating results discussion with financial analysts on Friday, October 26, 2012, at 9:30 a.m. EDT (8:30 a.m. CDT) at www.cabotog.com. 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

September 30,



Nine Months Ended

September 30,





2012


2011



2012


2011

PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)










Natural Gas











Appalachia


56.1


39.4



158.1


101.1

Other


6.6


8.3



20.3


26.1

Total


62.7


47.7



178.4


127.2













Crude/Condensate/NGL


629


391



1,760


920













Equivalent Production (Bcfe)


66.5


50.0



188.9


132.7













PRICES(1)











Average Produced Gas Sales Price ($/Mcf)











Appalachia

$

3.80

$

4.48


$

3.70

$

4.54

Other

$

2.65

$

5.05


$

2.60

$

5.00

Total


$

3.68

$

4.58


$

3.57

$

4.64













Average Crude/Condensate Price ($/Bbl)

$

101.34

$

86.89


$

100.30

$

89.69













WELLS DRILLED











Gross


38


33



104


85

Net


30


27



81


67

Gross Success Rate


95%


97%



97%


99%













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

















Quarter Ended

September 30,



Nine Months Ended

September 30,





2012


2011



2012


2011

Realized Impacts to Gas Pricing



$ 0.91


$ 0.44



$ 1.03


$ 0.38

Realized Impacts to Oil Pricing



$ 6.65


$ 3.62



$ 3.39


$ 0.64

 

 


 

 

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)


(In thousands, except per share amounts)






























Quarter Ended


Nine Months Ended






September 30,


September 30,






2012


2011


2012


2011


Operating Revenues











  Natural Gas


$ 231,896


$ 218,521


$ 639,729


$ 588,976


  Crude Oil and Condensate


57,870


33,158


165,317


79,792


  Brokered Natural Gas


5,238


9,467


23,831


38,947


  Other


1,870


971


5,790


4,124






296,874


262,117


834,667


711,839


Operating Expenses











Direct Operations


28,269


27,292


84,895


76,878


Transportation and Gathering


34,430


19,768


97,827


48,710


Brokered Natural Gas


4,258


8,204


20,380


33,362


Taxes Other Than Income


10,436


7,042


39,873


21,070


Exploration


9,303


20,190


29,548


31,090


Depreciation, Depletion   and Amortization


110,448


90,293


335,421


250,642


General and Administrative (excluding

  Stock-Based Compensation) 


13,440


17,917


69,808


48,906


Stock-Based Compensation(1)


10,389


10,032


23,441


29,348






220,973


200,738


701,193


540,006


Gain (Loss) on Sale of Assets


(126)


3,854


67,042


36,408


Income from Operations


75,775


65,233


200,516


208,241


Interest Expense and Other 


16,219


18,517


51,631


53,928


Income Before Income Taxes


59,556


46,716


148,885


154,313


Income Tax Expense


22,948


18,234


58,021


58,268


Net Income


$   36,608


$   28,482


$   90,864


$   96,045


Earnings Per Share - Basic(2)


$       0.17


$       0.14


$       0.43


$       0.46


Weighted Average Common Shares Outstanding(2)


209,656


208,570


209,433


208,463


(1)

Includes the impact of the Company's performance share awards, restricted stock amortization, stock appreciation rights and expense associated with the Supplemental Employee Incentive Plan.

(2)

All Earnings Per Share and Weighted Average Common Share figures have been retroactively adjusted for the 2-for-1 split of the Company's common stock effective January 25, 2012.

 

 


CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)


  (In thousands)










































September 30,


December 31,













2012


2011



Assets















Current Assets

$           224,674


$           345,800



Properties and Equipment, Net

4,218,921


3,934,584



Other Assets

39,342


51,109



   Total Assets

$        4,482,937


$        4,331,493


















Liabilities and Stockholders' Equity









Current Liabilities

$           412,790


$           343,344



Long-Term Debt, excluding Current Maturities

987,000


950,000



Deferred Income Taxes

837,319


802,592



Other Liabilities

145,541


130,789



Stockholders' Equity

2,100,287


2,104,768



   Total Liabilities and Stockholders' Equity

$        4,482,937


$        4,331,493

















 


 


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

  (In thousands)




Quarter Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011

Cash Flows From Operating Activities








Net Income

$      36,608


$     28,482


$       90,864


$       96,045

Deferred Income Tax Expense

15,641


20,495


42,714


57,381

Loss (Gain) on Sale of Assets

126


(3,854)


(67,042)


(36,408)

Exploration Expense

1,193


13,347


12,118


13,851

Unrealized (Gain) Loss on Derivatives

149


64


449


950

Income Charges Not Requiring Cash

121,942


106,856


377,239


296,391

Changes in Assets and Liabilities

(11,692)


(10,725)


(1,230)


(52,844)

Net Cash Provided by Operations

163,967


154,665


455,112


375,366









Cash Flows From Investing Activities








Capital Expenditures

(257,871)


(264,773)


(669,198)


(668,987)

Proceeds from Sale of Assets

25


27,773


132,740


82,109

Investment in Equity Method Investment

(2,400)


-


(4,488)


-

Net Cash Used in Investing

(260,246)


(237,000)


(540,946)


(586,878)









Cash Flows From Financing Activities








Net Increase (Decrease) in Debt

90,000


110,000


112,000


230,000

Capitalized Debt Issuance Costs

-


-


(5,005)


(1,025)

Dividends Paid

(4,193)


(3,129)


(12,561)


(9,379)

Other

(671)


(922)


(1,010)


(1,105)

Net Cash (Used in) Provided by Financing

85,136


105,949


93,424


218,491









Net Increase (Decrease) in Cash and Cash Equivalents

$     (11,143)


$      23,614


$         7,590


$         6,979













 

 

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,


2012


2011


2012


2011

As Reported - Net Income

$    36,608


$    28,482


$   90,864


$   96,045

Reversal of Selected Items, Net of Tax:









(Gain) Loss on Sale of Assets (1)

77


(2,389)


(41,030)


(22,573)


Stock-Based Compensation Expense

6,358


6,220


14,346


18,196


Pension Expense(2)

-


2,956


12,294


6,708


Unrealized Loss (Gain) on Derivatives(3)

91


40


275


589


Pennsylvania Impact Fee(4)

-


-


5,067


-

Net Income Excluding Selected Items

$      43,134


$     35,309


$   81,816


$   98,965

As Reported - Earnings Per Share(5)

$          0.17


$         0.14


$       0.43


$       0.46


Per Share Impact of Reversing Selected Items (5)

0.04


0.03


(0.04)


0.01

   Earnings Per Share Including Reversal









of Selected Items(5)

$         0.21


$       0.17


$       0.39


$       0.47

   Weighted Average Common Shares Outstanding(5)

209,656


208,570


209,433


208,463


(1)

The gain on sale in 2012 primarily relates to the sale of certain of our Pearsall shale undeveloped leaseholds in south Texas in the second quarter of 2012. The gain on sale of assets in 2011 primarily relates to the sale of certain oil and gas assets in East Texas.

(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. These amounts represent pension expenses related to the plan termination, including settlement costs and expenses related to the acceleration of amortization of prior service costs and actuarial losses over the period. Final settlement of the pension plan occurred as of the end of the second quarter 2012. 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 change in fair value related to derivatives not designated as hedging instruments.

(4)

In February 2012, the Pennsylvania state legislature authorized the assessment of an impact fee on Marcellus shale production. This amount represents the initial year accrual related to our 2011 and prior wells. Expense associated with the impact fee are included in Taxes Other Than Income in the Condensed Consolidated Statement of Operations.

(5)

All Earnings Per Share and Weighted Average Common Share figures have been retroactively adjusted for the 2-for-1 split of the Company's common stock effective January 25, 2012.

 


 

Discretionary Cash Flow Calculation and Reconciliation

(In thousands)










Quarter Ended


Nine Months Ended


September 30,


September 30,


2012


2011


2012


2011

   Discretionary Cash Flow








   As Reported - Net Income

$    36,608


$    28,482


$   90,864


$   96,045

   Plus / (Less): 








   Deferred Income Tax Expense

15,641


20,495


42,714


57,381

   Loss (Gain) on Sale of Assets

126


(3,854)


(67,042)


(36,408)

   Exploration Expense

1,193


13,347


12,118


13,851

   Unrealized Loss (Gain) on Derivatives

149


64


449


950

   Income Charges Not Requiring Cash

121,942


106,856


377,239


296,391

   Discretionary Cash Flow

175,659


165,390


456,342


428,210

   Changes in Assets and Liabilities

(11,692)


(10,725)


(1,230)


(52,844)

   Net Cash Provided by Operations

$    163,967


$    154,665


$  455,112


$   375,366

















































Net Debt Reconciliation

(In thousands)
















September 30,


December 31,






2012


2011













   Current Portion of Long-Term Debt

$           75,000


$                   -





   Long-Term Debt

$         987,000


$       950,000





   Total Debt

$      1,062,000


$       950,000





   Stockholders' Equity

2,100,287


2,104,768





        Total Capitalization

$      3,162,287


$    3,054,768













   Total Debt

$     1,062,000


$       950,000





   Less:  Cash and Cash Equivalents

(37,501)


(29,911)





        Net Debt

$     1,024,499


$       920,089













   Net Debt

$     1,024,499


$       920,089





   Stockholders' Equity

2,100,287


2,104,768





        Total Adjusted Capitalization

$      3,124,786


$    3,024,857













  Total Debt to Total Capitalization Ratio

33.6%


31.1%





   Less:  Impact of Cash and Cash Equivalents

0.8%


0.7%





        Net Debt to Adjusted Capitalization Ratio

32.8%


30.4%





















 

SOURCE Cabot Oil & Gas Corporation

 

Around the Web, We're Loving...

Partner Network

Get Benzinga's News Delivered Free

Benzinga Professional