News Release

Cabot Oil & Gas Corporation Announces Second Quarter 2014 Financial and Operating Results
 

HOUSTON, July 24, 2014 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today reported its financial and operating results for the second quarter of 2014. Highlights for the quarter include:

  • Production of 127.6 billion cubic feet equivalent (Bcfe), an increase of 34 percent over last year's comparable quarter
  • Liquids production (crude oil/condensate/natural gas liquids) of 961,000 barrels, an increase of 26 percent over last year's comparable quarter as reported and an increase of 64 percent pro forma for last year's Mid-Continent and West Texas asset sales
  • Crude oil and condensate production of 869,000 barrels, an increase of 25 percent over last year's comparable quarter as reported and an increase of 65 percent pro forma for last year's Mid-Continent and West Texas asset sales
  • Net income excluding selected items of $115.3 million, an increase of 21 percent over last year's comparable quarter
  • Discretionary cash flow of $332.3 million, an increase of 12 percent over last year's comparable quarter
  • Total unit costs (including financing) of $2.59 per thousand cubic feet equivalent (Mcfe), a 16 percent improvement over last year's comparable quarter

Second Quarter 2014 Financial Results

Equivalent production in the second quarter of 2014 was 127.6 Bcfe, consisting of 121.8 billion cubic feet (Bcf) of natural gas and 961,000 barrels of liquids. These figures represent increases of 34 percent, 34 percent, and 26 percent, respectively. "Our total liquids volumes increased 40 percent sequentially—with crude oil and condensate volumes increasing 44 percent—due to strong well performance from new Eagle Ford wells that were placed on production during the quarter," commented Dan O. Dinges, Chairman, President, and Chief Executive Officer.

Cash flow from operations in the second quarter of 2014 was $329.6 million, compared to $277.3 million in the second quarter of 2013. Discretionary cash flow in the second quarter of 2014 was $332.3 million, compared to $297.1 million in the second quarter of 2013. Net income in the second quarter of 2014 was $118.4 million, or $0.28 per share, compared to $89.1 million, or $0.21 per share, in the second quarter of 2013. Excluding the effect of selected items (detailed in the table below), net income was $115.3 million, or $0.28 per share, in the second quarter of 2014, compared to $95.0 million, or $0.22 per share, in the second quarter of 2013.

Natural gas price realizations, including the effect of hedges, were $3.47 per thousand cubic feet (Mcf) in the second quarter of 2014, down 15 percent compared to the second quarter of 2013. Excluding the impact of hedges, natural gas price realizations for the quarter were $3.78 per Mcf, representing an $0.89 discount to NYMEX settlement prices. Oil price realizations, including the effect of hedges, were $98.84 per barrel (Bbl), down 3 percent compared to the second quarter of 2013. "Despite lower realized commodity prices, Cabot generated free cash flow during the quarter while growing equivalent production by 34 percent year-over-year," stated Dinges.

Total per unit costs (including financing) decreased to $2.59 per Mcfe in the second quarter of 2014, down 16 percent from $3.10 per Mcfe in the second 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 expense, which increased as a result of slightly higher transportation rates and the commencement of new transportation agreements.

Year-To-Date 2014 Financial Results

Production during the six-month period ended June 30, 2014 was 247.5 Bcfe, consisting of 237.6 Bcf of natural gas and 1.6 million barrels of liquids. These figures represent increases of 34 percent, 35 percent, and 13 percent, respectively, compared to the six-month period ended June 30, 2013.

For the six-month period ended June 30, 2014, cash flow from operations was $584.9 million, compared to $490.0 million for the six-month period ended June 30, 2013. Discretionary cash flow was $651.8 million for the six-month period ended June 30, 2014, compared to $531.5 million for the six-month period ended June 30, 2013.

For the six-month period ended June 30, 2014, net income was $225.5 million, or $0.54 per share, compared to $131.9 million, or $0.32 per share, for the six-month period ended June 30, 2013.  Excluding the effect of selected items (detailed in the table below), net income was $225.0 million, or $0.54 per share, compared to $149.1 million, or $0.36 per share, for the six-month period ended June 30, 2013.

Hedging Update

Effective April 1, 2014, the Company elected to discontinue hedge accounting for its commodity derivatives on a prospective basis. Subsequent to April 1, 2014, the Company's derivative instruments are accounted for on a mark-to-market basis with changes in fair value recognized in earnings; however, these mark-to-market adjustments will have no cash flow impact.  The Company recognized an unrealized mark-to-market gain of $12.9 million in the second quarter of 2014.

Operational Highlights

Marcellus Shale

During the second quarter of 2014, the Company averaged 1,258 million cubic feet (Mmcf) per day of net Marcellus production, an increase of 41 percent over the prior year's comparable quarter.

"Our operations in the Marcellus continue to meet expectations across our acreage position," said Dinges.  "We recently placed on production three pads that encompass the northern and eastern most reaches of our acreage with great success."  Specifically, in aggregate these wells were completed with 191 frac stages and had an initial production (IP) rate of 238 Mmcf per day.  Dinges added, "While all of these wells are early in the production cycle, we expect estimated ultimate recoveries (EURs) per foot to be comparable to the results we disclosed at year-end."

Eagle Ford Shale

Cabot's net production in the Eagle Ford during the second quarter of 2014 was 10,308 barrels of oil equivalent (Boe) per day, an increase of 76 percent over the prior year's comparable quarter. This included 9,784 barrels of liquids per day, an increase of 83 percent over the prior year's comparable quarter.  

During the second quarter of 2014, Cabot placed 10 wells on production that have produced for at least 30 days.  These wells achieved an average 30-day production rate of 840 Boe per day per well with a 92 percent oil cut from an average lateral length of 6,729 feet. "We continue to be pleased with the performance improvements in our Eagle Ford Program, with this most recent group of wells tracking above our 500,000 Boe type curve", explained Dinges.

Financial Position and Liquidity

As of June 30, 2014, the Company's net debt to adjusted capitalization ratio was 32.3 percent, compared to 33.8 percent at December 31, 2013 (detailed in the table below). The Company's total debt was $1,193 million, of which $506 million is outstanding under the Company's revolving credit facility. Total lender commitments under the revolving credit facility are $1.4 billion, with $893 million of available credit under the facility at June 30, 2014.

Conference Call

A conference call is scheduled for Thursday, July 24, 2014, at 9:30 a.m. Eastern Time to discuss second 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


            OPERATING DATA               













Quarter Ended



Six Months Ended



June 30,



June 30,



2014


2013



2014


2013

PRODUCED NATURAL GAS (Bcf) & LIQUIDS (Mbbl)










Natural Gas










  Appalachia


118.4


85.4



231.2


165.2

  Other


3.4


5.3



6.4


10.6

   Total


121.8


90.7



237.6


175.8











Crude/Condensate/NGL


961


763



1,647


1,454











Equivalent Production (Bcfe)


127.6


95.2



247.5


184.5











PRICES(1)










Average Produced Gas Sales Price ($/Mcf)










  Appalachia

$

3.44

$

4.09


$

3.57

$

3.81

  Other

$

4.65

$

3.63


$

4.80

$

3.05

   Total 

$

3.47

$

4.06


$

3.60

$

3.77











Average Crude/Condensate Price ($/Bbl)

$

98.84

$

101.39


$

98.39

$

102.65











WELLS DRILLED 










  Gross


49


51



76


83

  Net


35


44



62


70

  Gross success rate


100%


96%



100%


96%











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













Quarter Ended



Six Months Ended



June 30,



June 30,



2014


2013



2014


2013

     Realized Impacts to Gas Pricing


$ (0.30)


$       -



$ (0.45)


$  0.07

     Realized Impacts to Oil Pricing


$ (1.25)


$  3.02



$ (0.89)


$  3.12











 

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)












Quarter Ended


Six Months Ended



June 30,


June 30,



2014


2013


2014


2013

Operating Revenues









  Natural gas


$ 437,761


$ 368,391


$ 870,571


$ 662,184

  Crude oil and condensate


86,341


70,226


145,485


135,881

  Gain (loss) on derivative instruments


(2,329)


-


(2,329)


-

  Brokered natural gas


8,140


8,244


21,293


19,137

  Other


3,274


2,819


7,970


5,763



533,187


449,680


1,042,990


822,965

Operating Expenses









  Direct operations


35,605


36,978


71,439


68,475

  Transportation and gathering


83,976


52,648


161,741


98,869

  Brokered natural gas


7,031


6,704


18,891


15,093

  Taxes other than income


12,816


11,364


25,860


23,051

  Exploration


4,676


4,529


11,150


8,553

  Depreciation, depletion and amortization


157,563


151,389


304,981


300,042

  General and administrative (excluding stock-based compensation)


13,853


11,565


32,318


28,600

  Stock-based compensation(1)


6,274


10,043


9,445


28,712



321,794


285,220


635,825


571,395

Earnings (loss) on equity method investments


756


290


756


336

Gain (loss) on sale of assets


(1,496)


276


(2,781)


180

Income from Operations


210,653


165,026


405,140


252,086

Interest expense 


16,334


16,991


32,891


33,292

Income before income taxes


194,319


148,035


372,249


218,794

Income tax expense


75,899


58,921


146,798


86,856

Net Income


$  118,420


$    89,114


$  225,451


$  131,938

Earnings per share - Basic


$       0.28


$       0.21


$       0.54


$       0.32

Weighted average common shares outstanding


417,291


420,698


417,097


420,500


(1)

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

 


CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

  (In thousands)






June 30,


December 31,


2014


2013

Assets




Current assets

$    306,096


$       378,899

Properties and equipment, net

4,825,524


4,546,227

Other assets

77,302


55,954

   Total assets

$ 5,208,922


$    4,981,080





Liabilities and Stockholders' Equity




Current liabilities

$    362,147


$       407,905

Long-term debt

1,193,000


1,147,000

Deferred income taxes

1,101,326


1,067,912

Other liabilities

150,510


153,661

Stockholders' equity

2,401,939


2,204,602

   Total liabilities and stockholders' equity

$ 5,208,922


$    4,981,080






CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

  (In thousands)










Quarter Ended


Six Months Ended


June 30,


June 30,


2014


2013


2014


2013

Cash Flows From Operating Activities








Net income

$    118,420


$         89,114


$ 225,451


$ 131,938

Deferred income tax expense

60,850


46,088


118,453


69,662

(Gain) loss on sale of assets

1,496


(276)


2,781


(180)

Exploration expense

114


140


2,154


806

Unrealized (gain) loss on derivative instruments

(12,933)


-


(12,933)


-

Income charges not requiring cash

164,349


162,034


315,922


329,239

Changes in assets and liabilities

(2,726)


(19,818)


(66,880)


(41,498)

Net cash provided by operations

329,570


277,282


584,948


489,967









Cash Flows From Investing Activities








Capital expenditures

(278,912)


(263,887)


(617,613)


(524,056)

Proceeds from sale of assets

(863)


420


(755)


906

Restricted cash

19,712


-


28,094


-

Investment in equity method investments

(16,293)


(3,000)


(22,230)


(4,250)

Net cash used in investing

(276,356)


(266,467)


(612,504)


(527,400)









Cash Flows From Financing Activities








Net increase (decrease) in debt

(29,000)


15,000


46,000


55,000

Dividends paid

(8,347)


(4,206)


(16,679)


(8,407)

Stock-based compensation tax benefit

4,311


5,210


20,354


7,348

Other

1


1


91


33

Net cash provided by (used in) financing

(33,035)


16,005


49,766


53,974









Net increase (decrease) in cash and cash equivalents

$      20,179


$         26,820


$   22,210


$   16,541



















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,



2014


2013


2014


2013

As reported - net income

$        118,420


$          89,114


$  225,451


$  131,938

Reversal of selected items, net of tax:









(Gain) loss on sale of assets

901


(166)


1,674


(109)


Unrealized (gain) loss on derivative instruments (1) 

(7,786)


-


(7,786)


-


Stock-based compensation expense

3,777


6,046


5,686


17,314

Net income excluding selected items

$         115,312


$           94,994


$   225,025


$   149,143

As reported - earnings per share 

$              0.28


$              0.21


$        0.54


$        0.32

  Per share impact of reversing selected items 

-


0.01


-


0.04

Earnings per share including reversal of selected items

$              0.28


$              0.22


$        0.54


$        0.36

Weighted average common shares outstanding

417,291


420,698


417,097


420,500










(1)

Effective April 1, 2014, the Company elected to discontinue hedge accounting for its commodity derivatives on a prospective basis. The unrealized mark-to-market changes of our commodity derivative instruments are recorded in gain (loss) on derivative instruments in the Condensed Consolidated Statement of Operations


Discretionary Cash Flow Calculation and Reconciliation

(In thousands)










Quarter Ended


Six Months Ended


June 30,


June 30,


2014


2013


2014


2013

   Discretionary Cash Flow








   As reported - net income

$        118,420


$          89,114


$  225,451


$  131,938

   Plus (less): 








   Deferred income tax expense

60,850


46,088


118,453


69,662

   (Gain) loss on sale of assets

1,496


(276)


2,781


(180)

   Exploration expense

114


140


2,154


806

   Unrealized (gain) loss on derivative instruments

(12,933)


-


(12,933)


-

   Income charges not requiring cash

164,349


162,034


315,922


329,239

   Discretionary Cash Flow

332,296


297,100


651,828


531,465

   Changes in assets and liabilities

(2,726)


(19,818)


(66,880)


(41,498)

   Net cash provided by operations

$        329,570


$        277,282


$  584,948


$  489,967









Net Debt Reconciliation

(In thousands)






June 30,


December 31,


2014


2013





   Long-term debt

$     1,193,000


$     1,147,000

   Stockholders' equity

2,401,939


2,204,602

        Total Capitalization

$     3,594,939


$     3,351,602





   Total debt

$     1,193,000


$     1,147,000

   Less:  Cash and cash equivalents

(45,610)


(23,400)

        Net Debt

$     1,147,390


$     1,123,600





   Net debt

$     1,147,390


$     1,123,600

   Stockholders' equity

2,401,939


2,204,602

        Total Adjusted Capitalization

$     3,549,329


$     3,328,202





  Total debt to total capitalization ratio

33.2%


34.2%

   Less:  Impact of cash and cash equivalents

0.9%


0.4%

        Net Debt to Adjusted Capitalization Ratio

32.3%


33.8%

SOURCE Cabot Oil & Gas Corporation