News Release

Cabot Oil & Gas Corporation Reports Consecutive Record Year
 

HOUSTON, Jan. 27 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) announced today its second consecutive year of record performance and its eighth consecutive profitable quarter. The Company ended the year with net income available to common shareholders of $23.2 million, or $1.00 per share and discretionary cash flow of $98.4 million, or $4.23 per share. The Company's 1997 performance reflected an 87% increase in earnings and a 23% increase in discretionary cash flow on a recurring basis, excluding the tax benefit received in 1996. Including this benefit in the comparison, 1997 earnings were over 50% higher than 1996 with discretionary cash flow up 18% over 1996.

The growth in earnings and discretionary cash flow was driven by increases in production, higher realized gas prices and lower per unit operating costs. Production grew for the full year to 67.7 Bcfe from 62.3, or an increase of 9% over 1996. Estimated production from the Meadville assets in Appalachia after their sale by Cabot Oil & Gas, effective September 1, 1997, was approximately 1.8 Bcfe, or 3% of the Company's annual production.

Charles P. Siess, Jr., Chairman and Chief Executive Officer, commented, "For two and one-half years we have continued to follow a strategy of drilling, acquiring and marketing, complimented by asset evaluation and sale when appropriate. 1997 shows the value that has been generated from these efforts." Siess added, "As a result of a prolific drilling program and the Equitable Resources acquisition, 1997 equivalent production in the Western region was up 19% over 1996. More than two-thirds of this increase was the direct result of that region's drilling activity. In Appalachia, the drilling effort was just as impressive with production increasing over 5%, excluding the production from Meadville in 1997 and 1996. Natural gas prices also contributed to the results with an 8% improvement over last year. Year-over- year price increases were realized in Appalachia and all three areas in the West."

The 1997 production growth resulted from the Company's expanded drilling program of 225 gross wells and its outstanding overall success rate of 88%. A key factor contributing to this overall rate was the 1997 exploration program with a 67% success rate. 1997 reserve additions resulting from the drilling program are expected to replace in excess of 160% of 1997 production while reserve additions from all sources are expected to replace in excess of 280% of 1997's production. Successes in the drilling program for the year nearly offset the net disposition of reserves from the Company's acquisition and divestiture program in 1997. As a result, the Company's reserve life is approximately 14 years. Finding cost from all sources is expected to be less than $0.70 Mcfe and the drilling finding cost is expected to be less than $0.75.

The combination of the strong operating performance and the disposition of the Meadville assets provided the funds to reduce debt by $49 million during the year. The result was a significant reduction in the debt-to-total capital ratio to 52% from 61% at the end of 1996. The Company's total debt at year end equaled approximately two times 1997 discretionary cash flow. In addition, the October conversion of one of the Company's two issues of preferred stock will provide an annual increase of nearly $2.2 million in bottom line earnings. These events significantly added to Cabot Oil & Gas Corporation's ongoing financial strength.

Fourth Quarter

The Company, in posting its eighth consecutive profitable quarter, realized fourth quarter net income available to common shareholders of $9.3 million, or $0.38 per share, compared with 1996's fourth quarter result of $6.2 million, or $0.27 per share. Discretionary cash flow for the quarter totaled $29.7 million, or $1.21 per share, up from $27.3 million, or $1.20 per share. Contributing to the quarter's success over last year were higher natural gas prices, an increase of 0.8 Bcfe in production and lower unit operating and depreciation costs. The lower cost component results primarily from the sale of the Meadville properties.

Outlook

"Generating growth in production through the drillbit will continue to be our primary focus in 1998," commented Ray R. Seegmiller, President and Chief Operating Officer. "With Cabot Oil & Gas Corporation's 1997 production gains, its strong balance sheet and an inventory of high quality prospects, the Company is well positioned to continue its aggressive drilling program. Planned for 1998 is the drilling of 270 gross wells along with increases in exploration drilling, lease acquisition and geophysical expenditures. As announced yesterday, Cabot Oil & Gas will increase its capital and exploration program, excluding acquisitions, by 17% to $111 million for 1998 compared to $94.6 million in 1997. We are confident that Cabot Oil & Gas has the prospects and the financial flexibility to continue to increase production and to make acquisitions within its core producing areas, as it has in the last two years."

Siess added, "Our success in the past two years has re-established Cabot Oil & Gas as a significant growth oriented company in the mid-cap sector of the E&P industry. In 1998, we will continue the strategies that have been generating these outstanding results."

Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading domestic independent natural gas producer and marketer with substantial interests in the Appalachia, Anadarko, Rocky Mountain and Gulf Coast regions. For additional information about the Company, visit COG's internet home page 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 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.

                                OPERATING DATA

                                          Quarter Ended         Year Ended
                                           December 31,        December 31,
                                          1997     1996       1997     1996
    NATURAL GAS (Bcf) & OIL (MBbl)
    Produced Natural Gas
      Appalachia                            5.4       7.0      25.3      26.8
      West                                 10.7       8.5      38.6      32.0
      Total                                16.1      15.5      63.9      58.8

    Crude/Condensate                        140       117       574       520
    Natural Gas Liquids                      17        15        57        77
    Equivalent Production (Bcfe)           17.1      16.3      67.7      62.3

    PRICES
    Average Produced Gas Sales Price ($/Mcf)
      Appalachia                         $ 3.44    $ 3.05    $ 3.00    $ 2.72
      West                               $ 2.44    $ 2.54    $ 2.22    $ 2.02
      Total                              $ 2.85    $ 2.77    $ 2.53    $ 2.34

    Crude/Condensate Price ($/Bbl)       $19.11    $23.99    $20.13    $21.14

    WELLS DRILLED
      Gross                                  57        51       225       196
      Net                                  30.6      38.5     151.4     154.2
      Gross Success Rate                     83%       67%       88%       79%

          CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                   (In Thousands, Except Per Share Amounts)

                                          Quarter Ended         Year Ended
                                           December 31,        December 31,
                                          1997      1996      1997      1996

    Net Operating Revenues
      Natural Gas Production           $ 45,835  $ 42,961  $161,737  $137,482
      Crude Oil and Condensate            2,617     2,797    11,443    10,992
      Brokered Natural Gas Margin         1,629     1,434     4,113     5,619
      Other                               2,074     1,828     7,834     8,968
                                         52,155    49,020   185,127   163,061
    Operating Expenses
      Operations                          7,793     7,975    29,380    28,361
      Exploration                         4,011     3,585    13,884    12,559
      Taxes Other Than Income             3,857     3,419    14,874    12,826
      Administrative                      5,877     4,791    19,744    16,823
      Depreciation, Depletion
       and Amortization                  10,035    12,813    43,454    45,390
                                         31,573    32,583   121,336   115,959

    Gain (Loss) on Sale of Assets          (288)      229        61     1,685
    Income from Operations               20,294    16,666    63,852    48,787
    Interest Expense                      4,428     4,540    17,961    17,409
    Income Before Income Taxes           15,866    12,126    45,891    31,378
    Income Tax Expense                    5,643     4,561    17,557    10,554
    Net Income                           10,223     7,565    28,334    20,824
    Dividend Requirement on
     Preferred Stock                        928     1,391     5,103     5,566
    Net Income Applicable to Common    $  9,295  $  6,174  $ 23,231  $ 15,258
    Net Income Per Common
     Share - Basic (A)                 $   0.38  $   0.27  $   1.00  $   0.67
    Average Common Shares
     Outstanding                         24,442    22,826    23,272    22,807

    Results from Recurring Operations (B)
      Net Income Applicable to Common  $  9,295  $  6,174  $ 23,231  $ 12,449
     Net Income Per Common Share
      - Basic (A)                      $   0.38  $   0.27  $   1.00  $   0.55
     Discretionary Cash Flow  (DCF)    $ 29,676  $ 27,315  $ 98,421  $ 80,184
     DCF per Common Share              $   1.21  $   1.20  $   4.23  $   3.52

    (A) Basic earnings per share as defined in Statement of Financial
        Accounting Standards No. 128.
    (B) Excludes the $2.8 million net tax impact in 1996 related to a tax
        refund for percentage depletion claimed for certain periods prior to
        1990.

               CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                (In Thousands)
                                             Dec. 31,    Dec. 31,
                                              1997        1996
    Assets
    Current Assets                         $ 70,533    $ 79,637
    Property, Equipment and Other Assets    471,272     481,704
     Total Assets                          $541,805    $561,341

    Liabilities and Stockholders' Equity
    Current Liabilities                    $ 85,872    $ 72,617
    Long-Term Debt                          183,000     248,000
    Deferred Income Taxes                    80,108      69,427
    Other Liabilities                         8,763      10,593
    Stockholders' Equity                    184,062     160,704
     Total Liabilities and
      Stockholders' Equity                 $541,805    $561,341

          CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
                                (In Thousands)

                                          Quarter Ended         Year Ended
                                           December 31,        December 31,
                                          1997      1996      1997      1996

    Cash Flows From Operating Activities
    Net Income                         $ 10,223   $ 7,565  $ 28,334  $ 20,824
    Income Charges Not Requiring Cash    10,557    17,556    55,492    55,897
    Changes in Assets and Liabilities,
     Net                                (18,450)   (5,956)   (2,670)  (13,795)
    Exploration Expense                   4,011     3,585    13,884    12,559
    Net Cash Provided by Operations       6,341    22,750    95,040    75,485

    Cash Flows From Investing Activities
    Capital Expenditures                (59,645)  (22,151) (118,722)  (60,719)
    Proceeds from Sale of Assets         92,911       977    94,162     5,725
    Exploration Expense                  (4,011)   (3,585)  (13,884)  (12,559)
    Net Cash Provided (Used)
     by Investing                        29,255   (24,759)  (38,444)  (67,553)

    Cash Flows From Financing Activities
    Sale of Common Stock                    850       247     2,197       620
    Increase (Decrease) in Debt         (34,000)    4,000   (49,000)   (1,000)
    Preferred Dividends                  (1,470)   (1,391)   (5,644)   (5,566)
    Common Dividends and Other, Net        (987)     (913)   (3,732)   (3,648)
    Net Cash Provided (Used)
     by Financing                       (35,607)    1,943   (56,179)   (9,594)

    Net Increase (Decrease) in Cash
     and Cash Equivalents              $    (11) $    (66) $    417  $ (1,662)

    Discretionary Cash Flow (A)        $ 29,676  $ 27,315  $ 98,421  $ 83,714


    (A) Net income plus non-cash charges and exploration less preferred
        dividends.  Excludes net proceeds on property sales.

SOURCE Cabot Oil & Gas Corporation
CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, 281-589-4993 CNOC: http: //www.prnewswire.com or fax, 800-758-5804, ext. 129660 WEBSITE: http: //www.cabotog.com