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News Release

Cabot Oil & Gas Corporation Announces 1998 Year-End Financial and Reserve Results
 

HOUSTON, Jan. 25 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced another profitable year, despite operating in a very challenging price environment. Reserve replacement from all sources totaled in excess of 250% compared to 1998 production, resulting in year-end proved reserves of 1,043 Bcfe. Annual production also improved slightly to 68.6 Bcfe. These increases in proved reserves and production set record highs for Cabot Oil & Gas.

The Company reported 1998 net income available to common shareholders of $1.9 million, or $.08 per share, and discretionary cash flow of $74.3 million, or $3.00 per share. These results were lower than last year's record performance primarily due to a $.37 per Mcf decline in realized natural gas prices, along with higher expenses from the Company's expanded exploration effort designed to provide future growth opportunities. Comparable results in 1997 were $23.2 million, or $1.00 per share, for net income available to common shareholders and $98.4 million, or $4.23 per share, for discretionary cash flow.

"Strategically, 1998 was a success," commented Ray R. Seegmiller, President and CEO. "Our drilling efforts continued to add reserves while Cabot Oil & Gas was also active in the acquisition arena. This past year, we participated in drilling 205 wells with an overall 89% success rate generating a drilling reserve replacement of 146% when measured against production. We were also successful in acquiring reserves in three of our four core areas, adding 96.3 Bcfe of proved reserves. The greatest acquisition impact was in the Gulf Coast region where proved reserves more than doubled to 125.5 Bcfe, while adding a three to four year prospect inventory."

Total proved reserves increased 104 Bcfe after replacing production. The timing of the acquisition increased the Company's reserve to production ratio from 14 to 15 years. In terms of pre-tax PV-10 value, Cabot Oil & Gas Corporation experienced a 12% decrease, from $839 million to $739 million primarily due to a $.36 per Mcf decline in the underlying natural gas price assumption to $2.20 per Mcf and an $8.66 per barrel decline in the oil price assumption to $10.25 per barrel from the prior year.

Fourth quarter results in 1998 fell short of last year's primarily due to prices realized for natural gas. In 1998, the Company realized a fourth quarter natural gas price of $2.16 per Mcf, down 24% from last year. This translated into a net loss applicable to common shareholders of $851,000, or $.03 per share, compared to last year's profit of $9.3 million, or $.38 per share. Discretionary cash flow for the comparable periods was $16.3 million, or $.66 per share in 1998, versus $29.7 million, or $1.21 per share last year.

Contributing to the full year and fourth quarter results was an $885,000 pretax charge in December related to a company-wide reorganization that was instituted last week, reducing employment levels by 6%. On a per share basis this charge reduced the quarterly and full year earnings results by $.02 per share. Going forward this will result in annual savings of $1.5 million.

Year-end debt totaled $343 million (up from $199 million the prior year- end) as the Company utilized the lower price environment to acquire reserves and leases at economic prices. Specifically, Cabot Oil & Gas spent $83.6 million on producing property acquisitions (at a cost of $.87 per Mcfe for proved reserves) along with $19.6 million for lease acquisitions and seismic.

"These late year expenditures had minimal impact on 1998 production, but are anticipated to add significantly to our growth in 1999 and beyond," stated Seegmiller. "Historically we have spent very little to enhance our long-term prospect inventory. The downside of these lease and seismic expenditures is the impact on current year finding costs. For 1998, finding cost from all sources is expected to total $1.22 per Mcfe, increasing our five year average to $.85 per Mcfe." Seegmiller added, "Also contributing to the higher 1998 finding costs were drilling cost overruns on four wells and certain well mechanical problems in the Gulf Coast which have since been resolved."

Outlook

"As a result of the low energy price environment, Cabot Oil & Gas has reduced its 1999 capital program to a level that will mirror discretionary cash flow, as we, like our peers, work through this natural gas price cycle," said Seegmiller. "Our 1999 efforts will focus on the recently acquired Gulf Coast properties, our existing Gulf Coast asset base, and the continuation of our exploration effort in Appalachia. Specifically, we will spend approximately half of our capital program in the Gulf Coast." Seegmiller added, "We will also sell off certain non-strategic properties during the year to reduce long-term debt."

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 Mountains, and Gulf Coast regions. For additional information about Cabot Oil & Gas Corporation, visit the Company's 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 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,
                              1998          1997         1998          1997
    NATURAL GAS (Bcf) &
     OIL (MBbl)
    Produced Natural Gas
     Appalachia                6.1           5.4         22.7          25.3
     West                      7.8           8.3         30.9          30.2
     Gulf Coast                1.7           2.4         10.6           8.4
     Total                    15.6          16.1         64.2          63.9

    Crude/Condensate           179           140          650           574

    Natural Gas Liquids         15            17           86            57

    Equivalent Production
     (Bcfe)                   16.7          17.1         68.6          67.7

    PRICES
     Average Produced Gas Sales
     Price ($/Mcf)
     Appalachia              $2.57         $3.44        $2.53         $3.00
     West                    $1.92         $2.32        $1.90         $2.14
     Gulf Coast              $1.82         $2.90        $2.15         $2.52
    Total                    $2.16         $2.85        $2.16         $2.53

    Crude/Condensate Price
     ($/Bbl)                $11.69        $19.11       $13.06        $20.13

    WELLS DRILLED
     Gross                      54            57          205           225
     Net                      35.6          30.6        143.7         151.4
     Gross Success Rate         91%           83%          89%           88%


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

                                 Quarter Ended               Year Ended
                                  December 31,              December 31,
                              1998          1997         1998          1997
    Net Operating Revenues
     Natural Gas
      Production           $33,662       $45,835     $138,903      $161,737
     Crude Oil and
      Condensate             2,092         2,617        8,486        11,443
     Brokered Natural
      Gas Margin             1,991         1,629        5,547         4,113
     Other                   2,017         2,074        6,670         7,834
                            39,762        52,155      159,606       185,127
    Operating Expenses
     Operations(A)           8,224         7,793       30,250        29,380
     Exploration(A)          5,989         4,011       19,564        13,884
     Taxes Other Than
      Income                 3,714         3,857       15,324        14,874
     Administrative(A)(B)    5,707         5,877       21,950        19,744
     Depreciation,
     Depletion and
     Amortization           11,355        10,035       45,588        43,454
                            34,989        31,573      132,676       121,336
    Gain/(Loss) on
     Sale of Assets            340         (288)          473            61
    Income from Operations   5,113        20,294       27,403        63,852
    Interest Expense         5,343         4,428       18,598        17,961
    Income/(Loss) Before
     Income Taxes             (230)       15,866        8,805        45,891
    Income Tax Expense/
     (Benefit)                (229)        5,643        3,501        17,557
    Net Income/(Loss)           (1)       10,223        5,304        28,334
    Dividend Requirement
     on Preferred Stock        850           928        3,402         5,103
    Net Income/(Loss)
     Applicable to Common    $(851)       $9,295       $1,902       $23,231
    Net Income/(Loss)
     Per Common Share-
     Basic (C)              $(0.03)        $0.38        $0.08         $1.00
    Average Common
     Shares Outstanding     24,642        24,442       24,733        23,272

    (A)  The December 1998 reorganization charge of $0.9 million is comprised
         as follows:  Operations - $0.4 million, Exploration - $0.3 million,
         Administrative - $0.2 million.
    (B)  The annual increase over 1997 Administrative expense is largely due
         to :
           (1)  staffing increases in the third and fourth quarters of 1997
                ($0.5 million),
           (2)  non-cash stock compensation from stock awards ($0.7 million),
           (3)  certain executive retirement and severance packages accrued in
                1998 ($0.5 million) and
           (4)  relocation and other travel expenses ($0.3 million).
    (C)  Basic earnings per share as defined in Statement of Financial
         Accounting Standards No. 128.

                 CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                  (In Thousands)

                                                      Dec. 31,      Dec. 31,
                                                         1998          1997
    Assets
    Current Assets                                    $71,116       $70,533
    Property, Equipment and Other Assets              633,045       471,272
      Total Assets                                   $704,161      $541,805
    Liabilities and Stockholders' Equity
    Current Liabilities                               $99,034       $85,872
    Long-Term Debt                                    327,000       183,000
    Deferred Income Taxes                              85,952        80,108
    Other Liabilities                                   9,507         8,763
    Stockholders' Equity                              182,668       184,062
      Total Liabilities and Stockholders' Equity     $704,161      $541,805


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

                                  Quarter Ended               Year Ended
                                     Dec. 31,                  Dec. 31,
                              1998          1997         1998          1997
    Cash Flows From Operating
     Activities
    Net Income/(Loss)          $(1)      $10,223       $5,304       $28,334
    Income Charges Not
     Requiring Cash         10,786        11,059       46,949        44,811
    Deferred Income Taxes      403          (502)       5,844        10,681
    Changes in Assets and
     Liabilities             6,154       (18,450)       9,575        (2,670)
    Exploration Expense      5,989         4,011       19,564        13,884
    Net Cash Provided by
     Operations             23,331         6,341       87,236        95,040

    Cash Flows From Investing
      Activities
    Capital Expenditures  (109,601)      (59,645)    (203,632)     (118,722)
    Proceeds from Sale
     of Assets                 102        92,911        1,054        94,162
    Exploration Expense     (5,989)       (4,011)     (19,564)      (13,884)
    Net Cash Provided (Used)
     by Investing         (115,488)       29,255     (222,142)      (38,444)

    Cash Flows From
     Financing Activities
    Sale of Common Stock       185           850        3,082         2,197
    Treasury Stock
     Transactions              (75)            0       (4,384)            0
    Increase (Decrease)
     in Debt                94,000       (34,000)     144,000       (49,000)
    Preferred Dividends       (851)       (1,470)      (3,402)       (5,644)
    Common Dividends
     and Other                (997)         (987)      (3,975)       (3,732)
    Net Cash Provided
     (Used) by Financing    92,262       (35,607)     135,321       (56,179)

    Net Increase (Decrease)
     in Cash and Cash
     Equivalents              $105          $(11)        $415          $417

    Discretionary Cash
     Flow(A)               $16,326       $29,676      $74,258       $98,421

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

SOURCE Cabot Oil & Gas Corporation
Web site: http: //www.cabotog.com
Company News On-Call: http: //www.prnewswire.com/comp/129660.html or fax, 800-758-5804, ext. 129660
CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, 281-589-4993