Cabot Oil & Gas Corporation Announces Third Quarter 2014 Financial and Operating Results, Provides Update on 2015 Guidance and Share Repurchase Program

HOUSTON, Oct. 24, 2014 /PRNewswire/ -- Cabot Oil & Gas Corporation COG today reported continued strong financial and operating results for the third quarter of 2014 including establishing new record highs for several key metrics. Highlights for the quarter include:

• Production of 132.4 billion cubic feet equivalent (Bcfe), an increase of 24 percent over last year's comparable quarter
• Liquids production (crude oil/condensate/natural gas liquids) of 961,000 barrels (Bbls), an increase of 7 percent over last year's comparable quarter as reported and an increase of 32 percent pro forma for last year's Mid-Continent and West Texas asset sales
• Net income excluding selected items of $85.0 million, an increase of 14 percent over last year's comparable quarter
• Cash flow from operations of $358.3 million, an increase of 29 percent over last year's comparable quarter
• Total unit costs (including financing) of $2.53 per thousand cubic feet equivalent (Mcfe), a 15 percent improvement over last year's comparable quarter

Third Quarter 2014 Financial Results

"The results posted in the most recently completed quarter once again highlight the quality of our operations and assets," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "We made improvements in every key category, even in the face of strong headwinds."

Equivalent production in the third quarter of 2014 was 132.4 Bcfe, consisting of 126.7 billion cubic feet (Bcf) of natural gas and 961,000 Bbls of liquids. These figures represent increases of 24 percent, 25 percent, and 7 percent, respectively.

Net income in the third quarter of 2014 was $100.8 million, or $0.24 per share, compared to $69.9 million, or $0.17 per share, in the third quarter of 2013. Excluding the effect of selected items (detailed in the table below), net income was $85.0 million, or $0.20 per share, in the third quarter of 2014, compared to $74.6 million, or $0.18 per share, in the third quarter of 2013.

Cash flow from operations in the third quarter of 2014 was $358.3 million, compared to $276.7 million in the third quarter of 2013. Discretionary cash flow in the third quarter of 2014 was $296.0 million, compared to $282.3 million in the third quarter of 2013.

Natural gas price realizations, including the effect of hedges, were $3.06 per thousand cubic feet (Mcf) in the third quarter of 2014, down 9 percent compared to the third quarter of 2013. Excluding the impact of hedges, natural gas price realizations for the quarter were $2.92 per Mcf, representing a $1.14 discount to NYMEX settlement prices. Oil price realizations, including the effect of hedges, were $94.79 per Bbl, down 9 percent compared to the third quarter of 2013.

Total per unit costs (including financing) decreased to $2.53 per Mcfe in the third quarter of 2014, a 15 percent improvement compared to $2.98 per Mcfe in the third quarter of 2013. All operating expense categories decreased on a per unit basis relative to last year's comparable quarter except for transportation and gathering, which increased as a result of slightly higher transportation rates and the commencement of new transportation agreements, and exploration expense.

Year-To-Date 2014 Financial Results

"The year-to-date results set many records for a nine-month period including production, net income and cash flow from operations," remarked Dinges. "We continue to post our best results even in the face of a challenged commodity price environment."

Production during the nine-month period ended September 30, 2014 was 379.9 Bcfe, consisting of 364.3 Bcf of natural gas and 2.6 million Bbls of liquids. These figures represent increases of 30 percent, 31 percent, and 11 percent, respectively, compared to the nine-month period ended September 30, 2013.

For the nine-month period ended September 30, 2014, net income was $326.2 million, or $0.78 per share, compared to $201.8 million, or $0.48 per share, for the nine-month period ended September 30, 2013.  Excluding the effect of selected items (detailed in the table below), net income was $310.0 million, or $0.74 per share, compared to $223.8 million, or $0.53 per share, for the nine-month period ended September 30, 2013.

For the nine-month period ended September 30, 2014, cash flow from operations was $943.3 million, compared to $766.7 million for the nine-month period ended September 30, 2013. Discretionary cash flow was $947.8 million for the nine-month period ended September 30, 2014, compared to $813.7 million for the nine-month period ended September 30, 2013.

Operational Highlights

Marcellus Shale

During the third quarter of 2014, the Company averaged 1,298 million cubic feet (Mmcf) per day of net Marcellus production, an increase of 30 percent over the prior year's comparable quarter. "Our Marcellus volumes increased three percent sequentially relative to the second quarter and were slightly ahead of the guidance we provided a month ago," commented Dinges. "We continue to remain confident in our production outlook for the fourth quarter based on a robust schedule of wells to be placed on production between now and the end of the year."

Eagle Ford Shale

Cabot's net production in the Eagle Ford during the third quarter of 2014 was 10,347 barrels of oil equivalent (Boe) per day, an increase of 37 percent over the prior year's comparable quarter. This included 9,788 Bbls of liquids per day, an increase of 45 percent over the prior year's comparable quarter.

During the third quarter of 2014, Cabot placed 10 wells on production that have produced for at least 30 days, all of which were placed on production during the second half of the quarter. These wells achieved an average 30-day production rate of 751 Boe per day per well with a 91 percent oil cut. "Our oil production for the third quarter was relatively flat compared to the second quarter due to the timing of when our pads were placed on production during the quarter and downtime associated with well shut-ins for offset completions," stated Dinges. "We anticipate a meaningful ramp-up in oil production in the fourth quarter as we plan to place approximately 15 wells on production before year-end, with the majority of those wells coming online in December providing a strong exit rate for the year."

Earlier this year, Cabot initiated a 300-foot downspacing pilot program in the Eagle Ford, which has yielded encouraging results to date. The initial two wells in the pilot program have combined to produce approximately 230,000 Bbls of oil during the first 180 days of production. "We are pleased with the early results of our downspacing program and plan to test more 300-foot downspaced wells this year," noted Dinges. "Our Eagle Ford drilling inventory would increase to approximately 1,000 gross locations assuming the success of this program."

Financial Position and Liquidity

As of September 30, 2014, the Company's net debt to adjusted capitalization ratio was 35.5 percent, compared to 33.8 percent at December 31, 2013 (detailed in the table below). As of September 30, 2014, the Company had $1.4 billion available for future borrowings under its revolving credit facility and no borrowings outstanding.

Share Repurchase Program Update

Since the Company's last update, Cabot has repurchased an additional 1.6 million shares, for a total of 4.3 million shares repurchased year-to-date and 9.1 million shares repurchased since the fourth quarter of 2013. The Company has approximately 10.1 million shares remaining under its share repurchase program.

2015 Hedging Update

During the third quarter of 2014, Cabot added 20 natural gas derivative contracts for 2015. The Company now has approximately 194 Mmcf per day of natural gas volumes hedged for 2015 at a weighted average floor of $3.99 per Mcf.

2015 Guidance

The Company has reaffirmed its 2015 production growth guidance range of 20 to 30 percent. This production growth range is based on an average gross Marcellus production rate range of 1.8 to 2.0 Bcf per day and an average net liquids production range of 18,000 to 20,000 Bbls per day, of which approximately 88 percent is crude oil. The Company's capital budget for 2015 is $1.53 to $1.60 billion. Drilling and completion capital will account for $1.25 to $1.32 billion of the capital budget, with approximately 52 percent allocated to the Marcellus Shale, 46 percent allocated to the Eagle Ford Shale, and 2 percent allocated to other drilling areas. The capital budget assumes five operated rigs in the Marcellus Shale (down from the current level of six) and four operated rigs in the Eagle Ford Shale. The Company expects to drill 180 to 190 net wells in 2015, including 95 to 100 net wells in the Marcellus Shale and 80 to 85 net wells in the Eagle Ford Shale. The Company's budget for 2015 assumes commodity price realizations of $2.80 per Mcf for natural gas, which is slightly below Cabot's unhedged price realizations for the most recently completed quarter, and $88.00 per Bbl for oil.  Cabot's typical Marcellus Shale and Eagle Ford Shale wells generate rates of return greater than 80 percent and 60 percent, respectively, at the 2015 budget price realizations.

"This program demonstrates the quality of our assets with the ability to generate impressive production growth, cash flow growth and top-tier finding and development costs, all while maintaining an investment grade balance sheet despite the lower commodity price assumptions," said Dinges.

Conference Call

A conference call is scheduled for Friday, October 24, 2014, at 9:30 a.m. Eastern Time to discuss third quarter 2014 financial and operating results. To access the live audio webcast, please visit the Investor Relations section of the Company's website at www.cabotog.com. A replay of the call will also be available on the Company's website. The latest financial guidance, including the Company's hedge positions, is also available in the Investor Relations section of the Company's website.

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 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

Matt Kerin (281) 589-4642

 

 

 

 

 

 

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-announces-third-quarter-2014-financial-and-operating-results-provides-update-on-2015-guidance-and-share-repurchase-program-371083952.html

SOURCE Cabot Oil & Gas Corporation