News Release

Cabot Oil & Gas Announces Record Third Quarter Financial Results
 

HOUSTON, Oct. 29 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced its best third quarter ever with net income of $22.7 million, or $.70 per share, and discretionary cash flow of $63.9 million. These results compare to net income of $6.1 million, or $.19 per share, and discretionary cash flow of $45.5 million for the 2002 third quarter. Cash flow from operations also reached a third quarter high- water mark at $65.9 million versus $25.3 million in the comparable period for last year.

The significant increases in both net income and cash flow were driven primarily by the continued strength in higher realized commodity prices over last year's comparable third quarter. Realized natural gas prices rose 64 percent for the 2003 third quarter, averaging $4.53 per Mcf, versus $2.77 per Mcf for the same quarter last year. Oil prices were also up with a $28.40 per barrel realization in the third quarter this year compared to $24.97 per barrel during last year's comparable period.

"The higher commodity prices that resulted in record second quarter results continued into the third quarter," said Dan O. Dinges, Chairman and Chief Executive Officer. "We have once again seen the benefits of strong prices and stable production levels that have now allowed us to overcome the first quarter impairment and change in accounting method to post a profit for the nine months year to date."

Consistent with the Company's public guidance, total production of 22,934 Mmcfe during the third quarter was down 1.9 percent compared to the 23,376 Mmcfe recorded in the corresponding period last year. However, production increased 2.7 percent between the second and third quarters of 2003 on the strength of continued drilling success in the East region.

During the course of the third quarter Cabot placed in escrow $15.8 million in proceeds from the sale of certain non-strategic properties. "These funds were placed in escrow to facilitate a potential like-kind exchange transaction," said Dinges.

The transaction involved 57 wells in the East and resulted in a net pretax benefit to the income statement of $1.1 million. This was comprised of a gain of $7.0 million, partially offset by an impairment of $5.9 million required by SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" due to the transaction including a partial field sale.

Year-to-Date

For the nine months ended September 30, 2003, Cabot reported net income of $1.3 million, or $.04 per share, versus $7.4 million, or $.23 per share, in last year's comparable period. The Company also experienced an increase in discretionary cash flow to $194.1 million in 2003 versus $120.7 million in 2002, along with a near doubling in cash flow from operations from $108.3 million to $205.7 million.

As previously stated, the year has experienced certain non-cash items that have impacted earnings including the impact of the Kurten field impairment ($54.4 million after tax, or $1.70 per share), the adoption of SFAS No. 143 "Accounting for Asset Retirement Obligations" ($6.8 million after tax, or $.21 per share), both of which occurred in the first quarter. The Company also recorded a net benefit from the sale of non-strategic properties in the East ($0.7 million after tax, or $.03 per share). Excluding the impact of these non-cash items, Cabot's net income was $61.6 million, or $1.92 per share, for the first nine months.

As of September 30, 2003, the Company's total debt stood at $285 million, reflecting a $19 million decrease during the quarter. This compares to $395 million at the same time last year and $365 million at year end. "This debt reduction is the direct result of higher realized prices and our focus to balance our spending decisions with debt repayment," said Dinges. "This brings Cabot's outstanding balance on its Revolving Credit facility to only $15 million with $235 million of capacity. Additionally, this improvement in financial leverage has come at a time when Cabot is pursuing its second largest capital program ever, excluding acquisitions."

New Hedge Positions

Cabot has entered into five new hedge positions covering approximately 25,000 Mmbtu per day of the Company's 2004 anticipated natural gas production. The two costless collars and three swaps are for 5,000 Mmbtu per day each and will be in effect from January through December 2004, as summarized in the following table:

     Location             Transaction        Price/Mmbtu*
     East                 Swap               $5.15
     East                 Costless collar    $4.75 floor / $6.75 ceiling
     Mid-Continent        Swap               $4.595
     Mid-Continent        Costless collar    $4.50 floor / $5.45 ceiling
     Rocky Mountains      Swap               $4.17
     * Price includes the impact of regional basis differentials.

The Company also entered into an oil hedge covering 1,000 barrels per day for the period January through December 2004. The transaction is in the form of a "range swap" which provides for a fixed price swap at $29.50 per barrel. To receive the premium swap price Cabot agreed to a "fade-out" provision that calls for the Company to receive the market price for the month the crude oil NYMEX contract average is less than $22.00 per barrel.

"This hedge layering strategy enables us to lock in natural gas and oil prices that are above our budgeted economic hurdle rate," said Dinges. "To date we have approximately 47 percent of 2004 anticipated natural gas production hedged and 45 percent of the 2004 oil production covered by range swaps. Going forward we will continue to evaluate the merits of additional hedge positions that would complement existing transactions."

Additionally, in October Cabot placed three hedges for 10,000 Mmbtu per day each covering natural gas production for 2005. The hedges were in the form of swaps and costless collars. Specifically, the Company swapped volumes in its East and Mid-Continent areas at $5.05 per Mmbtu and $4.50 per Mmbtu, respectively. The costless collar provides a floor price of $4.50 per Mmbtu and a ceiling price of $5.00 per Mmbtu for Gulf Coast volumes.

Listen in live to Cabot Oil & Gas Corporation's third quarter earnings discussion with financial analysts on Thursday, October 30 at 9:30 AM EST (8:30 AM CST) at www.cabotog.com . A teleconference replay will also be available at (888) 203-1112 (international (719) 457-0820), reservation number 575063. The audio webcast and teleconference replay will be available beginning October 30 at 12:30 PM EST.

The latest financial guidance, including the Company's hedge position, along with a replay of the webcast, 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 substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid- Continent; and the East. 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.

                                OPERATING DATA

                                         Quarter Ended   Nine Months Ended
                                         September 30,     September 30,
                                         2003     2002     2003     2002
    PRODUCED NATURAL GAS (Bcf) & OIL
     (MBbl)
    Natural Gas
      Gulf Coast                          7.7      8.0     21.8     23.2
      West                                5.9      6.2     18.0     19.0
      East                                4.9      4.5     13.9     13.5
      Total                              18.5     18.7     53.7     55.7

    Crude/Condensate
      Gulf Coast                          683      697    2,027    1,963
      West                                 46       61      146      164
      East                                  7        8       20       24
      Total                               736      766    2,193    2,151

    Natural Gas Liquids                     3       10       38       30

    Equivalent Production (Bcfe)         22.9     23.4     67.1     68.7

    PRICES
    Average Produced Gas Sales Price
     ($/Mcf)
      Gulf Coast                       $ 4.68   $ 3.21   $ 4.83   $ 3.07
      West                             $ 3.75   $ 2.00   $ 3.65   $ 2.18
      East                             $ 5.24   $ 3.04   $ 5.17   $ 3.07
      Total                            $ 4.53   $ 2.77   $ 4.53   $ 2.76

    Crude/Condensate Price ($/Bbl)
      Gulf Coast                       $28.32   $24.76   $29.50   $23.27
      West                             $29.75   $27.29   $30.07   $24.71
      East                             $28.02   $25.90   $28.67   $21.34
      Total                            $28.40   $24.97   $29.53   $23.36

    WELLS DRILLED
      Gross                                55       31      123       85
      Net                                  44       19       99       56
      Gross Success Rate                  87%      90%      90%      93%


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


                                      Quarter Ended    Nine Months Ended
                                       September 30,      September 30,
                                      2003      2002     2003      2002
    Operating Revenues
      Natural Gas Production        $ 84,555 $ 52,029  $242,841  $152,684
      Brokered Natural Gas            18,709   10,838    73,929    40,223
      Crude Oil and Condensate        21,455   20,754    65,098    51,792
      Other                              752    1,928     6,275     5,508
                                     125,471   85,549   388,143   250,207
    Operating Expenses
      Brokered Natural Gas Cost       16,602    9,771    66,402    36,619
      Direct Operations - Field
       and Pipeline                   11,271   11,652    36,022    35,808
      Exploration                     13,999    9,803    43,053    27,683
      Depreciation, Depletion and
       Amortization                   25,984   27,757    77,929    79,094
      Impairment of Long-Lived
       Assets                          5,870      ---    93,796     1,063
      General and Administrative       5,802    5,966    18,569    21,277
      Taxes Other Than Income          9,301    5,273    28,176    18,900
                                      88,829   70,222   363,947   220,444
    Gain (Loss) on Sale of Assets      6,988     (216)    7,593       195
    Income from Operations            43,630   15,111    31,789    29,958
    Interest Expense and Other         6,972    6,314    18,549    18,871
    Income Before Income Taxes        36,658    8,797    13,240    11,087
    Income Tax Expense                13,990    2,672     5,044     3,638
    Net Income Before Cumulative
     Effect of Accounting Change      22,668    6,125     8,196     7,449
    Cumulative Effect of Accounting
     Change (A)                          ---      ---    (6,847)      ---
    Net Income                      $ 22,668 $  6,125  $  1,349  $  7,449
    Net Earnings Per Share - Basic  $   0.70 $   0.19  $   0.04  $   0.23
    Average Common Shares
     Outstanding                      32,179   31,793    32,000    31,712

     (A)  Cumulative effect of accounting change relates to the adoption of
          SFAS 143, "Accounting for Asset Retirement Obligations."


               CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                (In thousands)

                                   September 30,       Dec. 31,
                                       2003              2002
    Assets
    Current Assets                 $  131,369        $   93,121

    Property, Equipment
     and Other Assets                 888,623           978,767
        Total Assets               $1,019,992        $1,071,888

    Liabilities and Stockholders'
     Equity
    Current Liabilities            $  148,787        $  121,890
    Long-Term Debt                    285,000           365,000
    Deferred Income Taxes             174,822           200,207
    Other Liabilities                  55,337            34,134
    Stockholders' Equity              356,046           350,657
        Total Liabilities and
         Stockholders' Equity      $1,019,992        $1,071,888


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

                                      Quarter Ended    Nine Months Ended
                                       September 30,      September 30,
                                       2003     2002     2003      2002
    Cash Flows From Operating
     Activities
    Net Income                       $22,668  $ 6,125   $ 1,349   $ 7,449
    Cumulative Effect of
     Accounting Change                   ---      ---     6,847       ---
    Impairment of Long-Lived Assets    5,870      ---    93,796     1,063
    Income Charges Not Requiring
     Cash                             25,326   26,831    78,797    82,254
    (Gain) Loss on Sale of Assets     (6,988)     216    (7,593)     (195)
    Deferred Income Taxes              3,072    2,492   (22,176)    2,443
    Changes in Assets and
     Liabilities                       1,955  (20,215)   11,633   (12,416)
    Exploration Expense               13,999    9,803    43,053    27,683
    Net Cash Provided by
     Operations                       65,902   25,252   205,706   108,281

    Cash Flows From Investing
     Activities
    Capital Expenditures             (33,985) (15,460)  (85,384)  (86,649)
    Proceeds from Sale of Assets      15,821      228    18,181     3,671
    Restricted Cash                  (15,761)     ---   (15,761)      ---
    Exploration Expense              (13,999)  (9,803)  (43,053)  (27,683)
    Net Cash Used by Investing       (47,924) (25,035) (126,017) (110,661)

    Cash Flows From Financing
     Activities
    Sale of Common Stock Proceeds      3,393       13     5,851     3,150
    Increase (Decrease) in Debt      (19,000)  (2,000)  (80,000)    2,000
    Dividends Paid                    (1,287)  (1,272)   (3,755)   (3,808)
    Net Cash Provided (Used) by
     Financing                       (16,894)  (3,259)  (77,904)    1,342

    Net Increase (Decrease) in
     Cash and Cash Equivalents       $ 1,084  $(3,042)  $ 1,785   $(1,038)

     (*)  Net income plus non-cash charges and exploration.  Excludes net
          proceeds on property sales.


    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,
                                        2003     2002      2003     2002
    As Reported - Net Income          $22,668   $6,125   $ 1,349   $7,449
    Reversal of Selected Items, Net
     of Tax:
      Retirement of Executive Officer     ---      ---       ---    2,205
      Revision of Tax Basis on
      Acquisition                         ---     (790)      ---     (790)
      Impairment of Long-Lived Assets   3,634      ---    58,060      714
      Severance Tax Refund                ---      ---       ---     (695)
      (Gain) Loss on Sale of Assets    (4,326)     151    (4,700)    (131)
      Cumulative Effect of Accounting
       Change                             ---      ---     6,847      ---
    Net Income Including Reversal of
     Selected Items                   $21,976   $5,486   $61,556   $8,752
    As Reported - Net Earnings Per
     Share                            $  0.70   $ 0.19   $  0.04   $ 0.23
    Per Share Impact of Reversing
     Selected Items                     (0.02)   (0.02)     1.88     0.04
    Net Earnings Per Share Including
     Reversal of Selected Items       $  0.68   $ 0.17   $  1.92   $ 0.27
    Average Common Shares Outstanding  32,179   31,793    32,000   31,712


            Discretionary Cash Flow Calculation and Reconciliation
                                (In thousands)

                                        Quarter Ended    Nine Months Ended
                                         September 30,      September 30,
                                        2003     2002      2003      2002
    Discretionary Cash Flow
    As Reported - Net Income          $22,668  $ 6,125  $  1,349  $  7,449
     Plus:
    Cumulative Effect of Accounting
     Change                               ---      ---     6,847       ---
    Impairment of Long-Lived Assets     5,870      ---    93,796     1,063
    Income Charges Not Requiring
     Cash                              25,326   26,831    78,797    82,254
    (Gain) Loss on Sale of Assets      (6,988)     216    (7,593)     (195)
    Deferred Income Taxes               3,072    2,492   (22,176)    2,443
    Exploration Expense                13,999    9,803    43,053    27,683
    Discretionary Cash Flow            63,947   45,467   194,073   120,697
    Plus:  Changes in Assets and
     Liabilities                        1,955  (20,215)   11,633   (12,416)
    Net Cash Provided by Operations   $65,902  $25,252  $205,706  $108,281

SOURCE Cabot Oil & Gas Corporation