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News Release

Cabot Oil & Gas Announces Record Second Quarter Financial Results
 

HOUSTON, July 29 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced second quarter net income of $17.9 million, or $.56 per share, and discretionary cash flow of $62.5 million. These results compare favorably to net income of $2.1 million, or $.07 per share, and discretionary cash flow of $40.8 million for the 2002 second quarter. Also for the second quarter of 2003, cash flow from operations was $80.3 million, up 50 percent, versus $53.5 million in the comparable period for last year.

Higher realized commodity prices drove the significant increases in net income and cash flow over last year's comparable quarter. Realized natural gas prices averaged $4.50 per Mcf in the second quarter of 2003, up 51 percent, versus the $2.99 per Mcf reported during the same period last year. Oil prices exhibited strong gains with a $29.27 per barrel realization for the 2003 second quarter versus $24.19 per barrel during last year's comparable period.

Consistent with the Company's public guidance, daily production was down slightly in the second quarter of 2003 versus the level reported in the second quarter of 2002, with the Company recording production of 245.3 Mmcfe per day versus 250.8 Mmcfe per day, respectively. Production was up 1 percent sequentially compared to the 242.9 Mmcfe per day produced during the first three months of 2003.

"This was our best second quarter ever in terms of both earnings and cash flow," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "The strong prices, consistent production volumes and lower debt levels made this a standout quarter."

In terms of expenses, the strength of commodity prices was more than enough to offset a 28 percent increase in benefit costs that impacted the Direct Operations and General and Administrative expense categories, a 45 percent increase in exploration expense and a 16 percent rise in production taxes due to these high prices. "The increase in exploration expense was a direct result of the significantly larger exploration program the Company has planned for this year, including more seismic investment and dry hole exposure," commented Dinges. Last year's second quarter General and Administrative expense included a $3.6 million impact of a chief executive officer retirement.

Year-to-Date

For the first six months of the year, the Company recorded a net loss of $21.3 million, or $.67 per share, and discretionary cash flow of $130.1 million. For comparison, last year's first half results were a profit of $1.3 million, or $.04 per share, and discretionary cash flow of $75.2 million. Cash flow from operations was $139.8 million in the first half of 2003 versus $83 million in the comparable period for last year.

The period January through June 2003 encompasses the first quarter effects of the Kurten field impairment, a $54.4 million after-tax charge, and the adoption of SFAS No. 143 "Accounting for Asset Retirement Obligations," a $6.8 million after-tax item. Excluding the impact of these non-cash selected items, Cabot's net income was $39.9 million, or $1.25 per share, for the first six months.

"We expect, based on our existing hedge positions and the continuing strength of commodity prices, Cabot will realize a profit for the year, overcoming the $61.2 million in (after-tax) non-cash selected items incurred in the first quarter," added Dinges.

As of June 30, 2003, the Company's long-term debt was $304 million, down from $397 million at June 30, 2002. "The $93 million reduction in debt year- over-year and a $61 million reduction in the first six months have been made possible by higher realized prices and our ongoing commitment to prudent spending," said Dinges. "Our debt to total capitalization ratio now stands at 49 percent. We have focused on strengthening our financial position and pursuing opportunities that expose Cabot to further growth potential, including adding to our capital program."

Listen in live to Cabot Oil & Gas Corporation's second quarter earnings discussion with financial analysts on Wednesday, July 30 at 9:30 AM EDT (8:30 AM CDT) at www.cabotog.com . A teleconference replay will also be available at (888) 203-1112 (international (719) 457-0820), reservation number 472122. The audio webcast and teleconference replay will be available beginning July 30 at 12:30 PM EDT.

The latest financial guidance and 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    Six Months Ended
                                              June 30,          June 30,
                                           2003     2002     2003     2002
    PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)
      Natural Gas
        Gulf Coast                           7.4      7.7     14.1     15.2
        West                                 6.0      6.4     12.1     12.8
        East                                 4.6      4.4      9.0      8.9
        Total                               18.0     18.5     35.2     36.9

      Crude/Condensate
        Gulf Coast                           648      656    1,344    1,266
        West                                  51       53      100      103
        East                                   7        8       13       16
        Total                                706      717    1,457    1,385

      Natural Gas Liquids                      6        5       35       20

      Equivalent Production (Bcfe)          22.3     22.8     44.2     45.3

    PRICES
    Average Produced Gas Sales Price ($/Mcf)
      Gulf Coast                           $4.96    $3.35    $4.92    $2.99
      West                                 $3.60    $2.40    $3.61    $2.27
      East                                 $4.92    $3.31    $5.13    $3.08
      Total                                $4.50    $2.99    $4.52    $2.76

    Crude/Condensate Price ($/Bbl)
      Gulf Coast                          $29.30   $24.16   $30.10   $22.41
      West                                $28.47   $25.23   $30.22   $23.17
      East                                $31.83   $21.87   $29.05   $19.18
      Total                               $29.27   $24.19   $30.10   $22.43

    WELLS DRILLED
      Gross                                   43       33       68       54
      Net                                   37.1     24.2     55.6     36.5
      Gross Success Rate                     95%      94%      93%      94%


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

                                         Quarter Ended     Six Months Ended
                                            June 30,           June 30,
                                         2003     2002      2003      2002
    Operating Revenues
      Natural Gas Production            $81,113  $55,300  $159,286  $101,806
      Brokered Natural Gas               23,370   15,687    55,220    29,385
      Crude Oil and Condensate           20,663   17,348    43,837    31,066
      Change in Derivative Fair Value      (650)    (564)   (1,194)   (1,180)
      Other                               2,260    1,813     5,523     3,580
                                        126,756   89,584   262,672   164,657
    Operating Expenses
      Brokered Natural Gas Cost          21,539   14,581    49,800    26,848
      Direct Operations - Field and
       Pipeline                          13,825   11,921    24,751    24,156
      Exploration                        15,663   10,824    29,054    17,880
      Depreciation, Depletion and
       Amortization                      26,101   25,790    51,945    51,337
      Impairment of Long-Lived Assets       ---      ---    87,926     1,063
      General and Administrative          6,172    9,572    12,767    15,311
      Taxes Other Than Income             8,651    7,475    18,875    13,627
                                         91,951   80,163   275,118   150,222
    Gain on Sale of Assets                   45      429       605       411
    Income (Loss) from Operations        34,850    9,850   (11,841)   14,846
    Interest Expense and Other            5,952    6,331    11,577    12,557
    Income (Loss) Before Income Taxes    28,898    3,519   (23,418)    2,289
    Income Tax Expense (Benefit)         10,994    1,398    (8,946)      966
    Net Income (Loss) Before
     Cumulative Effect of
     Accounting Change                   17,904    2,121   (14,472)    1,323
    Cumulative Effect of Accounting
     Change (A)                             ---      ---    (6,847)      ---
    Net Income (Loss)                   $17,904   $2,121  $(21,319)   $1,323
    Net Earnings (Loss) Per Share -
     Basic                                $0.56    $0.07    $(0.67)    $0.04
    Average Common Shares
     Outstanding                         31,980   31,737    31,909    31,671

    (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)

                                                 June 30,       Dec. 31,
                                                   2003           2002
    Assets
    Current Assets                               $109,997        $93,121
    Property, Equipment and Other Assets          897,334        978,767
      Total Assets                             $1,007,331     $1,071,888

    Liabilities and Stockholders' Equity
    Current Liabilities                          $169,173       $121,890
    Long-Term Debt                                304,000        365,000
    Deferred Income Taxes                         160,549        200,207
    Other Liabilities                              57,855         34,134
    Stockholders' Equity                          315,754        350,657
      Total Liabilities and Stockholders'
       Equity                                  $1,007,331     $1,071,888


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

                                        Quarter Ended    Six Months Ended
                                           June 30,          June 30,
                                        2003     2002     2003      2002
    Cash Flows From Operating
     Activities
    Net Income (Loss)                  $17,904   $2,121  $(21,319)  $1,323
    Cumulative Effect of Accounting
     Change                                ---      ---     6,847      ---
    Change in Derivative Fair Value        650      564     1,194    1,180
    Impairment of Long-Lived Assets        ---      ---    87,926    1,063
    Income Charges Not Requiring Cash   26,572   27,333    52,278   54,244
    Gain on Sale of Assets                 (45)    (429)     (605)    (411)
    Deferred Income Taxes                1,762      422   (25,248)     (49)
    Changes in Assets and Liabilities   17,751   12,644     9,677    7,799
    Exploration Expense                 15,663   10,824    29,054   17,880
    Net Cash Provided by Operations     80,257   53,479   139,804   83,029

    Cash Flows From Investing
     Activities
    Capital Expenditures               (30,078) (30,126)  (51,399) (71,188)
    Proceeds from Sale of Assets           758    3,445     2,360    3,443
    Exploration Expense                (15,663) (10,824)  (29,054) (17,880)
    Net Cash Used by Investing         (44,983) (37,505)  (78,093) (85,625)

    Cash Flows From Financing
     Activities
    Sale of Common Stock                 1,960    3,031     2,458    3,136
    Increase (Decrease) in Debt        (34,000) (15,000)  (61,000)   4,000
    Dividends Paid                      (1,195)  (1,271)   (2,468)  (2,536)
    Net Cash Provided (Used) by
     Financing                         (33,235) (13,240)  (61,010)   4,600

    Net Increase in Cash and
     Cash Equivalents                   $2,039   $2,734      $701   $2,004


Selected Item Review and Reconciliation of Net Income (Loss) and Earnings

                               (Loss) Per Share
                   (In Thousands, Except Per Share Amounts)

                                           Quarter Ended    Six Months Ended
                                              June 30,          June 30,
                                           2003     2002      2003     2002
    As Reported - Net Income (Loss)       $17,904   $2,121  $(21,319)  $1,323
    Reversal of Selected Items, Net
     of Tax:
      Retirement of Executive Officer         ---    2,204       ---    2,204
      Impairment of Long-Lived Assets         ---      ---    54,338      652
      Cumulative Effect of Accounting
       Change                                 ---      ---     6,847      ---
    Net Income Including Reversal of
     Selected Items                       $17,904   $4,325   $39,866   $4,179
    As Reported - Net Earnings (Loss)
     Per Share                              $0.56    $0.07    $(0.67)   $0.04
    Per Share Impact of Reversing
     Selected Items                          0.00     0.07      1.92     0.09
    Net Earnings Per Share Including
     Reversal of Selected Items             $0.56    $0.14     $1.25    $0.13
    Average Common Shares Outstanding      31,980   31,737    31,909   31,671


            Discretionary Cash Flow Calculation and Reconciliation
                                (In Thousands)

                                           Quarter Ended    Six Months Ended
                                              June 30,          June 30,
                                           2003     2002      2003     2002
    Discretionary Cash Flow
    As Reported - Net Income (Loss)       $17,904   $2,121  $(21,319)  $1,323
    Plus:
    Cumulative Effect of Accounting
     Change                                   ---      ---     6,847      ---
    Change in Derivative Fair Value           650      564     1,194    1,180
    Impairment of Long-Lived Assets           ---      ---    87,926    1,063
    Income Charges Not Requiring Cash      26,572   27,333    52,278   54,244
    Gain on Sale of Assets                    (45)    (429)     (605)    (411)
    Deferred Income Taxes                   1,762      422   (25,248)     (49)
    Exploration Expense                    15,663   10,824    29,054   17,880
    Discretionary Cash Flow                62,506   40,835   130,127   75,230
    Plus: Changes in Assets and
     Liabilities                           17,751   12,644     9,677    7,799
    Net Cash Provided by Operations       $80,257  $53,479  $139,804  $83,029

SOURCE Cabot Oil & Gas Corporation