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News Release

Cabot Oil & Gas Announces Record Third Quarter Results; Strong Hedge Position and Increased Production Drive Profits
 

HOUSTON, Oct. 22 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced record third quarter results including net income of $10.7 million, or $.35 per share and discretionary cash flow of $63.6 million, or $2.08 per share, before certain selected items. The selected items include a net expense of $0.6 million after tax related to an impairment of long-lived assets and a small adjustment for SFAS 133 (Accounting for Derivative Instruments and Hedging Activities), partially offset by a severance tax refund. These results compare to last year's third quarter profits of $6.1 million, or $.21 per share, and discretionary cash flow of $29.4 million, or $1.01 per share.

Contributing to the record results were increased production and strong prices realized from a hedge position in effect through the end of October 2001. Total production of 22,246 Mmcfe during the third quarter was nearly 30% higher than in the corresponding period last year (17,102 Mmcfe), and nearly 25% over the second quarter of 2001 (17,739 Mmcfe). The increase is attributable to gas and oil production in the Gulf Coast region, driven mainly by drilling success in south Louisiana, along with volumes from the Cody Company merger that were consolidated starting in August. Of the 5.1 Bcfe increase in production since the comparable quarter last year, 2.3 Bcfe came from organic growth within Cabot's drilling program giving the Company a 13.6% increase from drilling over last year's third quarter. Also, organic growth in production versus the second quarter of 2001 was 9.6%.

For the quarter, average realized natural gas prices increased 30% primarily as a result of certain hedge positions, while oil prices declined 16% over the prior year period, with Cabot realizing an average price of $3.77 per Mcf and $24.99 per barrel in the third quarter of 2001. "Approximately 45% of our third quarter natural gas production was covered by our hedge positions, which were instrumental in protecting a portion of our price realization against the dramatic fall we have seen in natural gas prices," stated Ray Seegmiller, Chairman and Chief Executive Officer. "The costless collar arrangements for the quarter had an approximate $5.00 floor and $9.00 ceiling. The benefit to Cabot was $20 million, which added $1.06 per Mcf to the realized gas price."

In terms of cost comparisons between the third quarters, unit costs associated with production and pipelines, along with administrative expenses, remained fairly constant. Depreciation, depletion and amortization was higher due to the increasing emphasis on Gulf Coast drilling and the Cody merger. The other significant increase in expenses occurred in exploration. This year's quarterly total includes four dry holes totaling $9.0 million and seismic investments of $2.9 million. "We had two dry holes in the Gulf Coast and one each in our other two regions," added Seegmiller. "However, we drilled five successful exploration wells during the quarter, the most significant of which was the southeast Lake Pelto well located in Terrebonne Parish, Louisiana."

The well was drilled to a total depth of 16,500 feet and encountered 38 feet of pay in the Miocene Sand at approximately 16,000 feet. This well is producing at a rate of 7.8 Mmcf of natural gas and 567 barrels of oil per day. Cabot has a 58% net revenue interest and is the operator of the well. "This was our third consecutive exploration success in the Lake Pelto area so far this year," said Seegmiller.

Year-to-date

For the nine months ended September 30, 2001, Cabot Oil & Gas reported a record-setting profit of $62.6 million, or $2.10 per share, and discretionary cash flow of $195.9 million, or $6.57 per share, before certain selected items. Last year's first nine months results on a comparable basis reflected net income to common shareholders of $11.5 million, or $.43 per share, and discretionary cash flow of $72.5 million, or $2.70 per share.

"Strong prices combined with production increases year-over-year were the foundation of these record-setting financial and operational results for the Company," said Seegmiller. "While prices benefited from hedge gains, the growth in production is the direct result of our exploration successes, primarily from the Gulf Coast and our Cody Company acquisition. Currently our production rate is in excess of 250 Mmcfe per day, up from 197 Mmcfe at the beginning of the year."

At September 30, 2001, Cabot had $367 million of debt, up from $187 million at June 30, 2001. The entire $180 million increment relates to the Cody acquisition. Also, Cabot issued approximately 2.0 million common shares to the Cody shareholders bringing its September 30, 2001, shareholders' equity to $366.2 million, for a 50% capitalization ratio. "Even after funding 80% of the Cody acquisition with cash, Cabot's financial position remains strong," commented Seegmiller.

Listen in live to Cabot Oil & Gas Corporation's third quarter earnings discussion with financial analysts on Tuesday, October 23, 2001, at 9:30 AM EDT at www.cabotog.com . A teleconference replay is also available at (800) 633-8284, reservation number 19805180. The audio webcast and teleconference replay will be available from October 23 to October 30, 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     Nine Months Ended
                                           September 30,       September 30,
                                          2001      2000      2001      2000
    NATURAL GAS (Bcf) & OIL (MBbl)
    Produced Natural Gas
      Appalachia                           4.6       4.6      12.9      13.5
      West                                 6.4       7.4      19.4      22.0
      Gulf Coast                           7.9       3.5      17.3       9.9
      Total                               18.9      15.5      49.6      45.4

    Crude/Condensate                       509       255     1,307       656

    Natural Gas Liquids                     46         5        74        18

    Equivalent Production (Bcfe)          22.2      17.1      57.8      49.5

    PRICES
    Average Produced Gas Sales Price
     ($/Mcf)
      Appalachia                         $4.56     $2.73     $5.45     $2.81
      West                               $3.10     $2.62     $4.43     $2.46
      Gulf Coast                         $3.91     $3.72     $5.19     $3.12
      Total                              $3.77     $2.90     $4.95     $2.71

    Crude/Condensate
     Price ($/Bbl)                      $24.99    $29.72    $26.96    $25.26

    WELLS DRILLED
      Gross                                 58        25       154        85
      Net                                 49.0      17.9     119.7      61.3
      Gross Success Rate                    90%       80%       88%       88%


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

                                          Quarter Ended    Nine Months Ended
                                          September 30,      September 30,
                                          2001     2000      2001      2000
    Net Operating Revenues
      Natural Gas Production            $71,227  $45,099  $245,363  $123,088
      Crude Oil and Condensate           12,712    7,593    35,232    16,567
      Brokered Natural Gas               18,447   32,771    81,142   106,731
      Change in Derivative Fair Value      (422)       0       789         0
      Other                               2,262      773     4,198     7,417
                                        104,226   86,236   366,724   253,803
    Operating Expenses
      Brokered Natural Gas Cost          18,472   31,541    78,951   102,949
      Production and Pipeline
       Operations                        11,745    8,718    29,615    26,292
      Exploration                        14,441    4,691    39,754    12,086
      Taxes Other Than Income             4,547    6,016    21,164    15,570
      Administrative                      6,520    5,318    18,158    15,536
      Depreciation, Depletion and
       Amortization                      24,948   14,179    60,001    41,215
      Impairment of Long-Lived Assets     1,721        0     1,721     9,143
                                         82,394   70,463   249,364   222,791
    Gain (Loss) on Sale of Assets          (231)      26      (258)      (21)
    Income from Operations               21,601   15,799   117,102    30,991
    Minority Interest in Subsidiaries        14        0        14         0
    Interest Expense                      5,126    5,709    14,535    17,044
    Income Before Income Taxes           16,461   10,090   102,553    13,947
    Income Tax Expense                    6,430    3,953    39,868     5,546
    Net Income                           10,031    6,137    62,685     8,401
    Dividend Requirement on
     Preferred Stock                          0        0         0    (3,749)
    Net Income Applicable to Common     $10,031   $6,137   $62,685   $12,150
    Net Income Per Common Share -
     Basic                                $0.33    $0.21     $2.10     $0.45
    Average Common Shares Outstanding    30,644   28,976    29,829    26,830

    Results from Recurring Operations
       As Reported - Net Income
        Applicable to Common            $10,031   $6,137   $62,685   $12,150
       After-Tax Impact for Selected
        Items:
         Change in Derivative Fair Value   (259)               484
         Impairment of Long-Lived Assets (1,055)            (1,055)   (5,606)
         Negative Dividend - Preferred
          Stock Repurchase                                             5,100
         Severence Tax Refund               695                695
         Severence Costs                                                (582)
         Benefit from Contract
          Settlement                                                   1,739
       Net Income from Recurring
        Operations                      $10,650   $6,137   $62,561   $11,499
       Net Income per Common Share        $0.35    $0.21     $2.10     $0.43
       Discretionary Cash Flow (DCF)    $63,588  $29,371  $195,912   $72,501
       DCF per Common Share               $2.08    $1.01     $6.57     $2.70


                 CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                   (In Thousands)

                                                  Sept. 30,       Dec. 31,
                                                    2001            2000
    Assets
    Current Assets                                $116,058       $110,269
    Property, Equipment and
     Other Assets                                  977,039        625,365
       Total Assets                             $1,093,097       $735,634

    Liabilities and Stockholders' Equity
    Current Liabilities                           $119,847       $118,108
    Long-Term Debt                                 367,000        253,000
    Deferred Income Taxes                          221,737        108,174
    Other Liabilities                               18,338         13,847
    Stockholders' Equity                           366,175        242,505
       Total Liabilities and Stockholders'
        Equity                                  $1,093,097       $735,634


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

                                           Quarter Ended    Nine Months Ended
                                             Sept. 30,          Sept. 30,
                                           2001      2000     2001      2000
    Cash Flows From Operating Activities
    Net Income                           $10,031   $6,137   $62,685   $8,401
    Income Charges Not Requiring Cash     32,621   15,002    59,499   51,435
    (Gain) Loss on Sale of Assets            231      (26)      258       21
    Deferred Income Taxes                  6,959    3,567    34,411    4,175
    Changes in Assets and Liabilities    (12,128)  (6,744)   22,641   (2,284)
    Exploration Expense                   14,441    4,691    39,754   12,086
    Net Cash Provided by Operations       52,155   22,627   219,248   73,834

    Cash Flows From Investing Activities
    Capital Expenditures                (213,041) (29,614) (276,795) (71,674)
    Proceeds from Sale of Assets           5,159      882     5,898    2,663
    Restricted Cash                       (4,450)       0    (4,450)       0
    Exploration Expense                  (14,441)  (4,691)  (39,754) (12,086)
    Net Cash Used by Investing          (226,773) (33,423) (315,101) (81,097)

    Cash Flows From Financing Activities
    Sale of Common Stock                     372    1,549     7,748   81,597
    Retirement of Preferred Stock              0        0         0  (51,600)
    Increase (Decrease) in Debt          180,000   11,000    98,000  (17,000)
    Preferred Dividends                        0        0         0   (2,202)
    Common Dividends                      (1,183)  (1,160)   (3,538)  (3,189)
    Net Cash Provided by Financing       179,189   11,389   102,210    7,606

    Net Increase in Cash and
     Cash Equivalents                     $4,571     $593    $6,357     $343

    Discretionary Cash Flow (*)          $64,283  $29,371  $196,607  $73,916

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