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Cabot Oil & Gas Corporation Announces 2010 Results, Record Production of Over 130 Bcfe
 

Cabot Oil & Gas Corporation Announces 2010 Results, Record Production of Over 130 Bcfe

HOUSTON, Feb. 22, 2011 /PRNewswire via COMTEX/ --

Cabot Oil & Gas Corporation (NYSE: COG) today announced its 2010 financial results, including net income of $103.4 million, or $0.99 per share, cash flow from operations of $484.9 million and discretionary cash flow of $457.6 million. These results compare to 2009 net income of $148.3 million, or $1.43 per share, cash flow from operations of $614.1 million and discretionary cash flow of $604.6 million. The full year selected items, detailed in an attached table, net to a reduction of $1.0 million, or $0.01 per share, on reported net income.

"Overall 2010 was a transitional year, as we streamlined our operations in the Marcellus and migrated our South region to 100 percent of its capital allocated towards liquids. Additionally, for 2010, Cabot posted tremendous operational numbers, reported net income of over $100 million for the sixth consecutive year and solidified its balance sheet for the long-term," said Dan O. Dinges, Chairman, President and Chief Executive Officer.

For 2010 equivalent production surpassed the 130 Bcfe level for the first time, establishing a new benchmark for both absolute levels and for year-over-year growth, which totaled 26.8 percent. The price comparison for natural gas realizations was $5.54 per Mcf in 2010 versus $7.47 per Mcf in 2009, while oil increased over 14 percent year-over-year to $97.91 per barrel in 2010. Gains associated with the hedge portfolio once again added significantly to price realizations and improved overall revenues in 2010 by $173 million. In absolute terms, total operating expenses plus interest expense increased 15 percent; with the 26 plus percent improvement in production, the per unit expense comparisons dropped nine percent year-to-year. "We anticipate this trend towards lower unit cost levels to continue in 2011," commented Dinges.

As it relates to the tax provision, due to the increased activity in the Pennsylvania Marcellus, a true-up of deferred taxes was required to reflect a larger portion of activity taking place in higher state tax jurisdictions. "As we continue to expand our programs and presence in Pennsylvania, we will continue to monitor its impact on deferred taxes, making adjustments to deferred taxes when required as part of our annual fourth quarter evaluation," said Dinges. This rate change increased the effective tax rate for the year to 47.9 percent, requiring a 55.8 percent effective tax rate for the fourth quarter. This change and the gain were the large selected items in the fourth quarter.

Fourth Quarter

The reported 2010 fourth quarter figures included net income of $49.1 million, or $0.47 per share, $117.4 million for cash flow from operations and $83.4 million for discretionary cash flow. These compare to net income of $36.4 million, or $0.34 per share, cash flow from operations of $196.9 million and discretionary cash flow of $174.1 million in the previous year. Removing the selected items, which are highlighted in the table, net income would be $20.0 million, or $0.19 per share, for the 2010 fourth quarter versus $53.8 million, or $0.51 per share in the comparable 2009 period. Lower commodity prices and overall higher absolute (but lower per unit) expenses, partially offset by higher production, drove the results.

Balance Sheet

In 2010, the Company placed $175 million of new 10, 12 and 15 year senior notes, repaid $75 million of senior notes that were to mature in 2011 and extended its Credit Facility out five years. "Financially, we continue to have a solid balance sheet, and we retain a significant level of flexibility as evident by our 32.9 percent net debt to adjusted total capital ratio," added Dinges.

Conference Call

Listen in live to Cabot Oil & Gas Corporation's 2010 year-end and fourth quarter financial and operating results discussion with financial analysts on Wednesday, February 23, 2011 at 9:30 a.m. EST (8:30 a.m. CST) at www.cabotog.com. A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), pass code 34679366. The replay will be available through Friday, February 25, 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 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.

OPERATING DATA










Quarter Ended


Twelve Months Ended



December 31,


December 31,



2010


2009


2010


2009

PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)









Natural Gas









North


25.7


13.4


81.0


48.2

South


10.6


11.6


44.5


48.8

Canada


-


-


-


1.0

Total


36.3


25.0


125.5


98.0










Crude/Condensate/Ngl









North


24.0


25.5


100.0


118.4

South


174.0


193.6


759.0


719.6

Canada


-


-


-


6.7

Total


198.0


220.1


859.0


844.7




























Equivalent Production (Bcfe)


37.5


26.3


130.6


103.0










PRICES









Average Produced Gas Sales Price ($/Mcf)









North

$

4.14

$

6.67

$

4.59

$

6.59

South

$

7.19

$

8.94

$

7.26

$

8.42

Canada

$

-

$

-

$

-

$

3.72

Total (1)

$

5.02

$

7.73

$

5.54

$

7.47










Average Crude/Condensate Price ($/Bbl)









North

$

75.06

$

75.16

$

69.31

$

54.11

South

$

102.91

$

96.64

$

101.65

$

90.86

Canada

$

-

$

-

$

-

$

33.97

Total (1)

$

99.53

$

94.23

$

97.91

$

85.52










WELLS DRILLED









Gross


30


24


113


143

Net


20


22


87


119

Gross Success Rate


100%


83%


98%


95%










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












Quarter Ended


Twelve Months Ended



December 31,


December 31,



2010


2009


2010


2009

Realized Impacts to Gas Pricing


$ 1.25


$ 3.47


$ 1.23


$ 3.80

Realized Impacts to Oil Pricing


$ 18.66


$ 21.40


$ 22.31


$ 28.25

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)





















Quarter Ended


Twelve Months Ended



December 31,


December 31,



2010


2009


2010


2009

Operating Revenues









Natural Gas


$ 181,641


$ 191,192


$ 694,577


$ 729,734

Brokered Natural Gas


15,385


21,166


65,281


75,283

Crude Oil and Condensate


18,664


19,910


79,091


69,936

Other


1,185


1,224


5,086


4,323



216,875


233,492


844,035


879,276

Operating Expenses









Brokered Natural Gas Cost


13,124


18,811


56,466


67,030

Direct Operations - Field and Pipeline


25,846


22,421


99,642


93,985

Exploration


14,401


19,526


42,725


50,784

Depreciation, Depletion and Amortization


91,504


62,293


327,083


251,260

Impairment of Oil & Gas Properties


5,114


17,622


40,903


17,622

GeneralandAdministrative(excludingStock-BasedCompensation)


24,018


10,725


64,767


43,236

Stock-Based Compensation (1)


5,484


8,546


14,410


25,138

Taxes Other Than Income


6,759


10,118


37,894


44,649



186,250


170,062


683,890


593,704

Gain (Loss) on Sale of Assets (2)


100,883


(20)


106,294


(3,303)

Income from Operations


131,508


63,410


266,439


282,269

Interest Expense and Other


20,502


14,850


67,941


58,979

Income Before Income Taxes


111,006


48,560


198,498


223,290

Income Tax Expense (3)


61,897


12,196


95,112


74,947

Net Income


$ 49,109


$ 36,364


$ 103,386


$ 148,343

Net Earnings Per Share - Basic


$ 0.47


$ 0.34


$ 0.99


$ 1.43

Weighted-Average Common Shares Outstanding


103,979


103,654


103,911


103,616










(1) Includes the impact of the Company's performance share awards and restricted stock amortization as well as expense related to stock options

and stock appreciation rights. Also includes expense for the Supplemental Employee Incentive Plans which commenced in 2008.

(2) The gain on sale of assets in 2010 primarily relates to a gain from the sale of our Pennsylvania gathering infrastructure, a gain from the sale of our investment in equity securities of Tourmaline, a gain from the sale of certain oil and gas properties in the Texas Panhandle and a gain on the sale of our Woodford shale properties, partially offset by a charge on certain oil and gas properties in Colorado. The loss on sale of assets in 2009 primarily relates to a loss on our April 2009 sale of our Canadian properties, partially offset by a gain on sale of assets from the first quarter 2009 sale of the Thornwood properties in the North.

(3) Income tax expense for the quarter and year ended December 31, 2010 includes an unfavorable adjustment due to a charge to income tax expense to reflect an increase in our state rates used in establishing deferred income taxes mainly due to a shift in our state apportionment factors to higher rate states, primarily in Pennsylvania as a result of our increased focus on development of our Marcellus shale properties.

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(In thousands)






December 31,


December 31,


2010


2009

Assets




Current Assets

$ 203,008


$ 281,502

Property, Equipment and Other Assets

3,802,023


3,401,899

Total Assets

$ 4,005,031


$ 3,683,401





Liabilities and Stockholders' Equity




Current Liabilities

$ 303,835


$ 308,741

Long-Term Debt

975,000


805,000

Deferred Income Taxes

714,953


644,801

Other Liabilities

138,543


112,345

Stockholders' Equity

1,872,700


1,812,514

Total Liabilities and Stockholders' Equity

$ 4,005,031


$ 3,683,401

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(In thousands)


















Quarter Ended


Twelve Months Ended


December 31,


December 31,


2010


2009


2010


2009

Cash Flows From Operating Activities








Net Income

$ 49,109


$ 36,364


$ 103,386


$ 148,343

Unrealized (Gain) Loss on Derivatives

388


1,536


226


1,954

Impairment of Oil and Gas Properties

5,114


17,622


40,903


17,622

Income Charges Not Requiring Cash

97,116


71,958


345,877


280,819

(Gain) Loss on Sale of Assets

(100,883)


20


(106,294)


3,303

Deferred Income Tax Expense

31,344


27,042


61,809


101,815

Changes in Assets and Liabilities

34,047


23,559


27,455


23,202

Stock-Based Compensation Tax Benefit

-


(705)


(108)


(13,790)

Exploration Expense

1,184


19,526


11,657


50,784

Net Cash Provided by Operations

117,419


196,922


484,911


614,052









Cash Flows From Investing Activities








Capital Expenditures

(199,128)


(185,030)


(857,251)


(611,207)

Proceeds from Sale of Assets

222,477


-


243,510


80,180

Net Cash Provided by (Used in) Investing

23,349


(185,030)


(613,741)


(531,027)









Cash Flows From Financing Activities








Net Increase (Decrease) in Debt

(120,000)


(5,000)


170,000


(62,000)

Retirement of Treasury Stock

-


-


-


-

Capitalized Debt Issuance Costs

(125)


-


(13,821)


(10,409)

Stock-Based Compensation Tax Benefit

-


705


108


13,790

Dividends Paid

(3,119)


(3,109)


(12,467)


(12,432)

Other

837


-


801


83

Net Cash Provided by (Used in) Financing

(122,407)


(7,404)


144,621


(70,968)









Net Increase in Cash and Cash Equivalents

$ 18,361


$ 4,488


$ 15,791


$ 12,057

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

(In thousands, except per share amounts)












Quarter Ended


Twelve Months Ended



December 31,


December 31,



2010


2009


2010


2009

As Reported - Net Income

$ 49,109


$ 36,364


$ 103,386


$ 148,343

ReversalofSelectedItems,NetofTax(IfApplicable):









Impairment of Oil & Gas Properties and Other Assets

3,171


11,102


25,360


11,102


(Gain) Loss on Sale of Assets (1)

(62,547)


13


(65,902)


1,283


Stock-Based Compensation Expense

3,400


5,384


8,934


15,798


Pension Expense (2)

4,245


-


8,083


-


PaDEP Settlement and Related Legal Fees (3)

3,409


-


3,409


-


Unrealized (Gain) Loss on Derivatives (4)

241


968


140


1,231


Income Tax Expense (5)

18,973


-


18,973


-

Net Income Excluding Selected Items

$ 20,001


$ 53,831


$ 102,383


$ 177,757

As Reported - Net Earnings Per Share

$ 0.47


$ 0.34


$ 0.99


$ 1.43

Per Share Impact of Reversing Selected Items

$ (0.28)


0.17


(0.01)


0.29

Net Earnings Per Share Including Reversal









of Selected Items

$ 0.19


$ 0.51


$ 0.98


$ 1.72

Weighted-Average Common Shares Outstanding

103,979


103,654


103,911


103,616










(1) The gain on sale of assets in 2010 primarily relates to a gain from the sale of our Pennsylvania gathering infrastructure, a gain from the sale of our investment in equity securities of Tourmaline, a gain from the sale of certain oil and gas properties in the Texas Panhandle and a gain on the sale of our Woodford shale properties, partially offset by a charge on certain oil and gas properties in Colorado. The loss on sale of assets in 2009 primarily relates to a loss on our April 2009 sale of our Canadian properties, partially offset by a gain on sale of assets from the first quarter 2009 sale of the Thornwood properties in the North.


(2) On July 28, 2010, the Company notified its employees of its plan to terminate its qualified and non-qualified pension plans, effective September 30, 2010. This amount represents curtailment losses related to the plan terminations and expenses related to the acceleration of amortization of prior service costs and actuarial losses over the expected amortization period until final distribution of assets from each plan. Pension expense is included in General and Administrative Expense in the Consolidated Statement of Operations.


(3) Represents costs associated with the December 2010 Settlement Agreement and Consent Order with the PaDEP and associated legal fees.


(4) This unrealized (gain) loss is included in Natural Gas Revenues in the Consolidated Statement of Operations and represents the mark to market change related to the Company's natural gas basis swaps.


(5) Represents an unfavorable charge to income tax expense to reflect an increase in our state rates used in establishing deferred income taxes mainly due to a shift in our state apportionment factors to higher rate states, primarily in Pennsylvania as a result of our increased focus on development of our Marcellus shale properties.

Discretionary Cash Flow Calculation and Reconciliation

(In thousands)












Quarter Ended


Twelve Months Ended



December 31,


December 31,



2010


2009


2010


2009

Discretionary Cash Flow








As Reported - Net Income

$ 49,109


$ 36,364


$ 103,386


$ 148,343

Plus / (Less):








Unrealized (Gain) Loss on Derivatives

388


1,536


226


1,954

Impairment of Oil & Gas Properties

5,114


17,622


40,903


17,622

Income Charges Not Requiring Cash

97,116


71,958


345,877


280,819

(Gain) Loss on Sale of Assets

(100,883)


20


(106,294)


3,303

Deferred Income Tax Expense

31,344


27,042


61,809


101,815

Exploration Expense

1,184


19,526


11,657


50,784

Discretionary Cash Flow

83,372


174,068


457,564


604,640

Changes in Assets and Liabilities

34,047


23,559


27,455


23,202

Stock-Based Compensation Tax Benefit

-


(705)


(108)


(13,790)

Net Cash Provided by Operations

$ 117,419


$ 196,922


$ 484,911


$ 614,052

Net Debt Reconciliation

(In thousands)








December 31,


December 31,



2010


2009






Long-Term Debt

975,000


805,000

Stockholders' Equity

1,872,700


1,812,514

Total Capitalization

$ 2,847,700


$ 2,617,514






Total Debt

$ 975,000


$ 805,000

Less: Cash and Cash Equivalents

(55,949)


(40,158)

Net Debt

$ 919,051


$ 764,842






Net Debt

$ 919,051


$ 764,842

Stockholders' Equity

1,872,700


1,812,514

Total Adjusted Capitalization

$ 2,791,751


$ 2,577,356






Total Debt to Total Capitalization Ratio

34.2%


30.8%

Less: Impact of Cash and Cash Equivalents

1.3%


1.1%

Net Debt to Adjusted Capitalization Ratio

32.9%


29.7%

FOR MORE INFORMATION CONTACT

Scott Schroeder (281) 589-4993

SOURCE Cabot Oil & Gas Corporation