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Cabot Oil & Gas Announces Record Second Quarter Results; Continued Strong Price Realizations Drive Significant Increase in Profits
 

HOUSTON, July 19 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced record second quarter profits. The Company reported second quarter net income available to common shareholders of $16.7 million, or $.56 per share, before a non-cash impact related to SFAS 133, Accounting for Derivative Instruments and Hedging Activities (see discussion below). Discretionary cash flow for the quarter was $56.8 million, or $1.92 per share.

This compares with last year's second quarter profits of $2.6 million, or $.10 per share, and discretionary cash flow of $20.9 million, or $.78 per share. Last year's comparable results are before taking into account the net expense related to certain non-recurring items which included a gain from the repurchase of preferred stock, a field impairment and costs associated with an office closing.

High realized prices for both natural gas and oil, along with increasing production, continue to drive quarterly results. For the quarter, natural gas prices improved 80% and oil prices improved 23% over the prior year period, with Cabot realizing an average price of $4.79 per Mcf and $27.86 per barrel in the second quarter of 2001.

"Our hedging program limited our exposure to falling gas prices during the quarter. If you recall, our position consists primarily of a series of costless collar arrangements that are in place through October (with approximately a $5.00 floor and $9.00 ceiling per Mmbtu) and currently cover over 50% of the Company's gas production," said Ray Seegmiller, Chairman and Chief Executive Officer. "Cabot realized $4.4 million in cash through its derivative positions in the second quarter adding $.28 to the realized gas price."

Production of 17,739 Mmcfe (194.9 Mmcfe per day) during the second quarter of 2001 was 11% above last year's corresponding level. The increase resulted primarily from gas and oil production in the Gulf Coast region that more than offset production declines in Appalachia and the West. "The primary reason for the increase in production has been our success in south Louisiana at the Etouffee prospect, as well as the Augen, Bon Ton and Krescent wells," commented Seegmiller. "Because of the timing of our drilling program, second quarter production was slightly below the production in this year's first quarter (17,862 Mmcfe). Several new wells were turned in-line during June which brought our exit rate for the quarter to 210 Mmcfe per day."

In terms of cost comparisons between second quarters the increase in production reduced the Company's unit cost for production and pipeline operating expense, along with administrative expense, while the Company experienced incrementally higher production taxes and exploration expense. The increase in production taxes resulted from the significant increase in oil and natural gas prices. The higher exploration expense in the quarter was the result of four dry holes totaling $8 million (three in the Gulf Coast and one in Appalachia), along with $2 million of incremental investment in 3-D seismic. "For 2001, we increased our overall exploration program due to the stronger natural gas price outlook by expanding the number of exploration wells in the program (which raises our exposure to dry holes) and investing in additional 3-D seismic. Through six months the exploration expenditures are consistent with our budget," added Seegmiller.

Year-to-date

For the six months ended June 30, 2001, Cabot Oil & Gas reported a record- setting profit of $51.9 million, or $1.76 per share, before the non-cash impact relating to SFAS 133, while discretionary cash flow was $132.3 million, or $4.50 per share. For comparison, last year's first half results were a profit of $5.4 million, or $.21 per share, and discretionary cash flow of $43.1 million, or $1.68 per share, before non-recurring items. A 118% increase in the price of realized natural gas, a 26% increase in oil price realizations and a 10% increase in equivalent production were the primary drivers for the year-over-year improvement, partially offset by an increase in exploration expense.

As of June 30, 2001, Cabot Oil & Gas had reduced its total debt to $187 million, a $12 million reduction since last quarter. "In May we paid off our 10.18% Notes one year early utilizing existing borrowing capacity under our revolving credit agreement. The lower debt levels enabled us to make the strategic Cody Energy acquisition, the first benefits of which are expected to be realized upon closing which is scheduled during the third quarter," stated Seegmiller.

SFAS 133

During the first quarter the Company recognized a non-cash gain relating to SFAS 133 of $6.2 million ($3.8 million after-tax). This unrealized gain resulted from changes in the market value of existing derivatives. As the derivatives expire, the unrealized gain reverses. Thus, the second quarter recognized a non-cash charge of $5.0 million ($3.1 million after-tax). For the six month year-to-date period, a $1.2 million ($.7 million after-tax) non- cash, unrealized gain remains.

Listen in live to Cabot Oil & Gas Corporation's second quarter earnings discussion with financial analysts on Friday, July 20, 2001, at 9:30 AM EDT at www.cabotog.com . A teleconference replay is also available at (800) 633-8284, reservation number 19126834. The audio webcast and teleconference replay will be available from July 20 to July 27, 2001.

Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading domestic independent natural gas producer and marketer with substantial interests in the onshore Texas and Louisiana Gulf Coast, Rocky Mountains, Appalachia and Mid-Continent. 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      Six Months Ended
                                             June 30,            June 30,
                                          2001      2000      2001      2000
    NATURAL GAS (Bcf) & OIL (MBbl)
    Produced Natural Gas
      Appalachia                           4.2       4.5       8.3       9.0
      West                                 6.4       7.2      12.8      14.5
      Gulf Coast                           4.7       3.0       9.5       6.4
      Total                               15.3      14.7      30.6      29.9

    Crude/Condensate                       394       205       798       400

    Natural Gas Liquids                      9         6        28        13

    Equivalent Production (Bcfe)          17.7      15.9      35.6      32.4

    PRICES
    Average Produced Gas Sales Price
     ($/Mcf)
      Appalachia                         $5.44     $2.63     $5.94     $2.85
      West                               $4.11     $2.51     $5.10     $2.38
      Gulf Coast                         $5.16     $3.05     $6.26     $2.78
      Total                              $4.79     $2.66     $5.68     $2.61

    Crude/Condensate
     Price ($/Bbl)                      $27.86    $22.66    $28.21    $22.42

    WELLS DRILLED
      Gross                                 53        35        96        60
      Net                                 38.2      28.8      70.7      43.5
      Gross Success Rate                    85%       94%       88%       92%


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

                                          Quarter Ended     Six Months Ended
                                            June 30,            June 30,
                                         2001     2000      2001      2000
    Net Operating Revenues
      Natural Gas Production            $73,411  $38,903  $174,136  $77,989
      Crude Oil and Condensate           10,964    4,649    22,520    8,974
      Brokered Natural Gas               27,273   37,024    62,695   73,960
      Change in Derivative Fair Value    (4,988)       0     1,211        0
      Other                                 946    1,872     1,936    6,644
                                        107,606   82,448   262,498  167,567
    Operating Expenses
      Brokered Natural Gas Cost          26,323   35,923    60,479   71,408
      Production and Pipeline Operations  9,650    9,062    17,870   17,573
      Exploration                        14,540    4,162    25,313    7,395
      Taxes Other Than Income             6,715    4,954    16,617    9,555
      Administrative                      5,691    5,331    11,638   10,218
      Depreciation, Depletion and
       Amortization                      17,680   13,427    35,053   27,035
      Impairment of Long-Lived Assets         0    9,143         0    9,143
                                         80,599   82,002   166,970  152,327
    Loss on Sale of Assets                  (31)     (26)      (27)     (47)
    Income from Operations               26,976      420    95,501   15,193
    Interest Expense                      4,704    5,365     9,409   11,336
    Income (Loss) Before Income Taxes    22,272   (4,945)   86,092    3,857
    Income Tax Expense (Benefit)          8,679   (1,863)   33,438    1,594
    Net Income (Loss)                    13,593   (3,082)   52,654    2,263
    Dividend Requirement on Preferred
     Stock                                    0   (4,600)        0   (3,749)
    Net Income Applicable to Common     $13,593   $1,518   $52,654   $6,012
    Net Income Per Common Share -
     Basic                                $0.46    $0.05     $1.79    $0.23
    Average Common Shares Outstanding    29,509   26,694    29,414   25,746

    Results from Recurring Operations
       As Reported - Net Income
        Applicable to Common            $13,593   $1,518   $52,654   $6,012
       After-Tax Impact for Selected
        Items:
         Change in Derivative Fair Value (3,057)               742
         Impairment of Long-Lived Assets          (5,605)            (5,605)
         Negative Dividend - Preferred
          Stock Repurchase                         5,100              5,100
         Severence Costs                            (582)              (582)
         Benefit from Contract Settlement                             1,739
       Net Income from Recurring
        Operations                      $16,650   $2,605   $51,912   $5,360
       Net Income per Common Share        $0.56    $0.10     $1.76    $0.21
       Discretionary Cash Flow (DCF)    $56,753  $20,926  $132,324  $43,131
       DCF per Common Share               $1.92    $0.78     $4.50    $1.68


                CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                  (In Thousands)
                                                June 30,       Dec. 31,
                                                  2001           2000
    Assets
    Current Assets                             $109,224       $110,269
    Property, Equipment and Other Assets        663,706        625,365
       Total Assets                            $772,930       $735,634

    Liabilities and Stockholders' Equity
    Current Liabilities                        $122,384       $118,108
    Long-Term Debt                              187,000        253,000
    Deferred Income Taxes                       135,626        108,174
    Other Liabilities                            13,837         13,847
    Stockholders' Equity                        314,083        242,505
       Total Liabilities
        and Stockholders' Equity               $772,930       $735,634


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

                                           Quarter Ended    Six Months Ended
                                              June 30,          June 30,
                                           2001     2000     2001      2000
    Cash Flows From Operating Activities
    Net Income (Loss)                    $13,593  $(3,082)  $52,654   $2,263
    Income Charges Not Requiring Cash     14,926   22,310    26,878   36,433
    Gain on Sale of Assets                    31       26        27       47
    Deferred Income Taxes                 13,664   (1,994)   27,452      607
    Changes in Assets and Liabilities        741   (5,650)   34,769    4,462
    Exploration Expense                   14,540    4,162    25,313    7,395
    Net Cash Provided by Operations       57,495   15,772   167,093   51,207

    Cash Flows From Investing Activities
    Capital Expenditures                 (29,008) (23,115)  (63,754) (42,060)
    Proceeds from Sale of Assets             302      258       739    1,781
    Exploration Expense                  (14,540)  (4,162)  (25,313)  (7,395)
    Net Cash Used by Investing           (43,246) (27,019)  (88,328) (47,674)

    Cash Flows From Financing Activities
    Sale of Common Stock                   3,182   78,817     7,376   80,048
    Retirement of Preferred Stock              0  (51,600)        0  (51,600)
    Decrease in Debt                     (12,000) (13,000)  (82,000) (28,000)
    Preferred Dividends                        0   (1,351)        0   (2,202)
    Common Dividends                      (1,181)  (1,026)   (2,354)  (2,029)
    Net Cash Provided (Used) by Financing (9,999)  11,840   (76,978)  (3,783)

    Net Increase (Decrease) in Cash and
     Cash Equivalents                     $4,250     $593    $1,787    $(250)

    Discretionary Cash Flow (*)          $56,753  $20,071  $132,324  $44,543

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

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SOURCE Cabot Oil & Gas Corporation
Web site: http: //www.cabotog.com
CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, +1-281-589-4993
Company News On-Call: http://www.prnewswire.com/gh/cnoc/comp/129660.html