News Release

Cabot Oil & Gas Announces First Quarter Profits
 

Cabot Oil & Gas Announces First Quarter Profits

HOUSTON, April 27, 2011 /PRNewswire via COMTEX/ --

Cabot Oil & Gas Corporation (NYSE: COG) today reported that for the first quarter of 2011 the Company posted net income of $12.9 million, or $0.12 per share, cash flow from operations of $91.2 million and discretionary cash flow of $108.6 million. This compares to the first quarter of 2010 when the Company announced $28.7 million, or $0.28 per share, of net income, $116.1 million for cash flow from operations and $131.4 million of discretionary cash flow.

After eliminating the impact of selected items (detailed in the attached tables), the net income comparisons would have been $20.7 million, or $0.20 per share, for 2011 versus $30.6 million, or $0.30 per share, in 2010. The selected items are comprised of gains and losses related to the sale of assets, stock compensation and derivatives in both periods, along with pension termination related expenses in 2011.

The relative comparisons between quarterly periods were once again driven by lower natural gas and oil price realizations somewhat offset by higher production volumes from both natural gas and oil. Natural gas price realizations were $4.68 per Mcf in 2011 versus $6.71 per Mcf in 2010 for the quarter comparison. This year's quarter experienced a $0.37 per Mcf pick-up from the Company's natural gas hedge position, where last year's impact was $1.12 per Mcf. While oil comprises a small portion of Cabot's production, the hedge per unit impact lowered the realized price by $1.42 per barrel for the first quarter 2011 versus an increase of $22.36 per barrel in the first quarter 2010. The realized price of $87.15 per barrel was 11 percent below last year's first quarter.

"Even with these significant price reductions between first quarters, we were able to hold production revenue essentially flat," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "This is on the strength of the positive news coming out of the quarter of 41 percent growth in equivalent production volumes between first quarters, at the top end of equivalent guidance." The Company reported equivalent volumes of 37.7 Bcfe for 2011. "We still remain constrained on takeaway in the north region but with visibility for significant infrastructure commissioning in the near-term," added Dinges. "Last year at this time we had a first quarter exit rate in Marcellus of 107 Mmcf gross per day. This year, our Marcellus production exit rate for the first quarter is 320 Mmcf gross per day."

Effective in 2011, the Company began reflecting the financial impact of its transportation and gathering arrangements in operating expenses. With the advent of a new third party aggregate for Marcellus, the significant firm transportation arrangements and the growing production base, the magnitude of these categories warranted detailed disclosure. Historically, the total cost of this category was small and captured in Cabot's realized price calculation. Going forward these costs will all be captured, company-wide, in this new expense line, and realized prices will be higher. From a net perspective, there is no impact to the bottom line, just additional details on the income statement.

"With the higher level of production and only a slight trend upward in expenses due to our activity, we were able to reduce unit costs, including financing, by $1.42 per Mcfe or by about 22 percent over last year's first quarter," commented Dinges.

"Additionally, this year appears to be shaping up as another year of $4.00 to $5.00 natural gas prices, and as such, we have to maintain our discipline around our total investment level, which remains at $600 million."

Conference Call

Listen in live to Cabot Oil & Gas Corporation's first quarter financial and operating results discussion with financial analysts on Thursday, April 28, 2011 at 9:30 a.m. EDT (8:30 a.m. CDT) at http://www.cabotog.com/. A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), pass code 59961803. The replay will be available through Saturday, April 30, 2011. 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 http://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 http://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



March 31,



2011


2010

PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)





Natural Gas





North


27.1


14.4

South


9.3


11.0

Total


36.4


25.4






Crude/Condensate/Ngl





North


21.0


23.0

South


205.0


194.0

Total


226.0


217.0
















Equivalent Production (Bcfe)


37.7


26.7






PRICES





Average Produced Gas Sales Price ($/Mcf)





North

$

4.62

$

5.80

South

$

4.85

$

7.91

Total (1)

$

4.68

$

6.71






Average Crude/Condensate Price ($/Bbl)





North

$

90.45

$

68.04

South

$

86.87

$

100.86

Total (1)

$

87.15

$

97.40






WELLS DRILLED





Gross


24


24

Net


17


20

Gross Success Rate


100%


96%






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



Quarter Ended



March 31,



2011


2010

Realized Impacts to Gas Pricing

$ 0.37


$ 1.12

Realized Impacts to Oil Pricing

$ (1.42)


$ 22.36

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)
















Quarter Ended




March 31,




2011


2010

Operating Revenues





Natural Gas


$ 170,098


$ 169,870

Brokered Natural Gas


18,408


24,873

Crude Oil and Condensate


18,592


19,982

Other


1,928


1,620




209,026


216,345

Operating Expenses





Brokered Natural Gas Cost


15,362


21,268

Direct Operations


27,007


22,983

Exploration


6,308


8,426

Transportation and Gathering


12,868


3,789

Depreciation, Depletion and Amortization


77,124


73,498

General and Administrative (excluding Stock-Based Compensation)


16,161


12,522

Stock-Based Compensation (1)


8,138


3,224

Taxes Other Than Income


8,151


10,805




171,119


156,515

Gain (Loss) on Sale of Assets


(1,517)


759

Income from Operations


36,390


60,589

Interest Expense and Other


17,367


14,912

Income Before Income Taxes


19,023


45,677

Income Tax Expense


6,137


16,981

Net Income


$ 12,886


$ 28,696

Earnings Per Share - Basic


$ 0.12


$ 0.28

Weighted Average Common Shares Outstanding.


104,144


103,794






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

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(In thousands)








March 31,


December 31,



2011


2010

Assets





Current Assets .

$ 161,538


$ 203,008

Property, Equipment and Other Assets

3,886,869


3,802,023

Total Assets

$ 4,048,407


$ 4,005,031






Liabilities and Stockholders' Equity





Current Liabilities

$ 241,702


$ 303,835

Long-Term Debt, excluding Current Maturities

1,055,000


975,000

Deferred Income Taxes

722,369


714,953

Other Liabilities

143,316


138,543

Stockholders' Equity

1,886,020


1,872,700

Total Liabilities and Stockholders' Equity

$ 4,048,407


$ 4,005,031











CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(In thousands)













Quarter Ended



March 31,



2011


2010

Cash Flows From Operating Activities





Net Income

$ 12,886


$ 28,696

Unrealized (Gain) Loss on Derivatives

(17)


587

Income Charges Not Requiring Cash

87,180


78,776

Loss (Gain) on Sale of Assets

1,517


(759)

Deferred Income Tax Expense

6,543


15,716

Changes in Assets and Liabilities

(17,389)


(15,345)

Exploration Expense

493


8,426

Net Cash Provided by Operations

91,213


116,097






Cash Flows From Investing Activities





Capital Expenditures

(203,169)


(235,403)

Proceeds from Sale of Assets

5,043


803

Net Cash Used in Investing

(198,126)


(234,600)






Cash Flows From Financing Activities





Net Increase in Debt

80,000


110,000

Dividends Paid

(3,122)


(3,112)

Other

(1,018)


(38)

Net Cash Provided by Financing

75,860


106,850






Net Increase / (Decrease) in Cash and Cash Equivalents.

$ (31,053)


$ (11,653)

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

(In thousands, except per share amounts)








Quarter Ended



March 31,



2011


2010

As Reported - Net Income

$ 12,886


$ 28,696

Reversal of Selected Items, Net of Tax:





(Gain) Loss on Sale of Assets

941


(474)


Stock-Based Compensation Expense

5,046


2,015


Pension Expense (1)

1,872


-


Unrealized Loss (Gain) on Derivatives (2)

(11)


367

Net Income Excluding Selected Items

$ 20,734


$ 30,604

As Reported - Earnings Per Share

$ 0.12


$ 0.28

Per Share Impact of Reversing Selected Items

0.08


0.02

Earnings Per Share Including Reversal





of Selected Items

$ 0.20


$ 0.30

Weighted Average Common Shares Outstanding

104,144


103,794






(1)

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



March 31,



2011


2010

Discretionary Cash Flow




As Reported - Net Income

$ 12,886


$ 28,696

Plus / (Less):




Unrealized Loss (Gain) on Derivatives

(17)


587

Income Charges Not Requiring Cash

87,180


78,776

Loss (Gain) on Sale of Assets

1,517


(759)

Deferred Income Tax Expense

6,543


15,716

Exploration Expense

493


8,426

Discretionary Cash Flow

108,602


131,442

Changes in Assets and Liabilities

(17,389)


(15,345)

Net Cash Provided by Operations

$ 91,213


$ 116,097











Net Debt Reconciliation

(In thousands)








March 31,


December 31,



2011


2010






Long-Term Debt

$ 1,055,000


$ 975,000

Stockholders' Equity

1,886,020


1,872,700

Total Capitalization

$ 2,941,020


$ 2,847,700






Total Debt

$ 1,055,000


$ 975,000

Less: Cash and Cash Equivalents

(24,896)


(55,949)

Net Debt

$ 1,030,104


$ 919,051






Net Debt

$ 1,030,104


$ 919,051

Stockholders' Equity

1,886,020


1,872,700

Total Adjusted Capitalization

$ 2,916,124


$ 2,791,751






Total Debt to Total Capitalization Ratio

35.9%


34.2%

Less: Impact of Cash and Cash Equivalents

0.6%


1.3%

Net Debt to Adjusted Capitalization Ratio

35.3%


32.9%

SOURCE Cabot Oil & Gas Corporation