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News Release

Cabot Oil & Gas Corporation Establishes New Records
 
2005 Net Income, Cash Flow Metrics and Reserves Surpass 2004 Record Levels

HOUSTON, Feb 16, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Cabot Oil & Gas Corporation (NYSE: COG) today released year-end financial results including net income of $148.4 million, or $3.04 per share, cash flow from operations of $364.6 million and discretionary cash flow of $374.4 million. All of these figures were significantly above the levels recorded for 2004, the previous benchmark for financial success in the Company. The comparison levels for 2004 include $88.4 million, or $1.81 per share, for net income (all 2004 per share data has been adjusted for the 3-for-2 stock split in March 2005), $273.0 million for cash flow from operations and discretionary cash flow of $294.3 million.

"It is no secret that commodity prices were the key drivers for Cabot and many of its peers reporting such robust results," stated Dan O. Dinges, Chairman, President and Chief Executive Officer. "Even with a portion of the upside hedged away, the cash generated provided funding for Cabot's largest ever organic capital program."

For the full year, natural gas price realizations were $6.74 per Mcf, compared to $5.20 per Mcf in 2004. The Company also experienced an increase in oil prices, recording $44.19 per barrel in 2005 versus $31.55 per barrel in 2004. "Expense inflation occurs as the industry reacts to higher prices by increasing its activity levels and its demand for services," commented Dinges. "In 2005, our expenses increased over 2004, with the largest percent increases coming from exploration expense, stock compensation, and other taxes."

For the year, Cabot reported 84.4 Bcfe of production, down less than one percent versus 2004's 84.8 Bcfe. "Deferred volumes the last four months of the year from hurricanes Katrina and Rita are estimated at 1.4 Bcfe," said Dinges. "This highlights how close we are in transitioning to and establishing a growing production profile from an organic program." Dinges added, "Reinforcing this point are two important facts: (1) we continue to grow our natural gas production, and (2) our equivalent fourth quarter 2005 production volumes increased versus the comparable quarter in 2004."

Fourth Quarter

The Company set a new quarterly high in the fourth quarter of 2005, reporting net income of $58.5 million, or $1.20 per share, compared to $32.2 million, or $.66 per share, in 2004. Quarterly cash flow comparisons were just as robust, with cash flow from operations of $117.4 million, more than doubling last year's figure of $57.1 million, and discretionary cash flow of $119.3 million, up 44 percent. Higher realized prices and production more than offset the increase in expense levels.

Selected Items

The selected items that impacted the quarter and full year earnings figures, but had no impact on cash flow related items, included a gain on sale of assets, an unrealized change in derivative fair value, and an impairment of oil and gas properties in the 2004 full year period. Taking these into account the net income comparison for 2005 versus 2004 is $144.3 million, or $2.95 per share, versus $91.8 million, or $1.88 per share. The quarter comparison for net income is $53.1 million, or $1.09 per share, and $25.3 million, or $.52 per share.

Balance Sheet

Long-term debt increased over last year as the Company used its credit facility to fund about $70 million in acquisitions. During the course of the year, but predominately in the fourth quarter, the Company repurchased 452,300 shares of its common stock at a weighted average purchase price of $42.41. "With the inherent value in Cabot's capital program, we recommenced buying shares in late November and early December with the market pull back," stated Dinges. "We still see a lot of merit and long-term value for the shareholders in looking at COG stock as an investment alternative."

Reserves

Cabot increased reserves by 10.7% in 2005, bringing year-end total proved reserves to 1,330.9 Bcfe -- the highest level ever for the Company. To accomplish this, Cabot grew reserves in each of its operating regions and replaced 252% of 2005 production. The Company's 2005 drilling program added 187.9 Bcfe, a limited acquisition program added 20.1 Bcfe, and the Company had a 4.9 Bcfe positive revision. The all-in finding cost was $1.91 per Mcfe.

"With the high demand for materials and services in our industry and the resulting inflationary pressure we have experienced during the year, I am very pleased with our overall reserve and finding cost for 2005," said Dinges. "I am particularly happy with the drilling only finding cost of $1.77 per Mcfe, while replacing 223% of production. I should add that these figures reflect a proven, undeveloped (PUD) component consistent with historical levels."

Outlook

For 2006, Cabot once again is expanding its drilling program. "We have secured the rigs necessary to complete our program, a program that focuses on more development activity and less risk," said Dinges. "The current forecasted activity level calls for 391 wells, with increased activity in each region including expanded drilling on each of the acquisition plays purchased in 2005."

Given the current outlook on prices and the hedge philosophy for 2006 of wide range collars, Cabot is well positioned to participate more fully in any up market for 2006 commodity prices. On a weighted average basis, Cabot's natural gas collars range from $8.25 to $12.74 per Mcf while its oil collar ranges from $50.00 to $76.00 per barrel. These derivatives cover 34% of anticipated 2006 equivalent production.

Conference Call

Listen in live to Cabot Oil & Gas Corporation's 2005 year-end/fourth quarter financial and operating results discussion with financial analysts on Friday, February 17, 2006 at 9:30 AM EST (8:30 AM CST) at www.cabotog.com. A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), passcode: 4293569. A replay will be available from Friday, February 17 through Friday, February 24, 2006. The latest financial guidance, including the Company's hedge positions, along with a 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 North American exploration and production independent. The Company's reserves are focused in both conventional and unconventional basins including the East, the West (Rocky Mountain and Mid-Continent), the Gulf Coast (South and East Texas to North Louisiana) and Canada. For additional information, visit the Company's Internet homepage at www.cabotog.com.

Forward-Looking Statements

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  Twleve Months Ended
                                             December 31,    December 31,
                                             2005    2004    2005    2004
        PRODUCED NATURAL GAS
         (Bcf) & OIL (MBbl)
        Natural Gas
          Gulf Coast                          7.1     7.7    28.1    31.3
          West                                5.9     5.6    23.2    21.9
          East                                5.7     5.1    21.4    19.4
          Canada                              0.4     0.2     1.2     0.2
          Total                              19.1    18.6    73.9    72.8

        Crude/Condensate/Ngl
          Gulf Coast                          339     411   1,530   1,809
          West                                 45      40     172     163
          East                                  7       7      27      27
          Canada                                4       2      18       3
          Total                               395     460   1,747   2,002

        Equivalent Production (Bcfe)         21.5    21.3    84.4    84.8

        PRICES
        Average Produced Gas Sales
         Price ($/Mcf)
          Gulf Coast                        $6.73   $5.55   $6.38   $5.27
          West                              $7.82   $4.83   $6.00   $4.75
          East                             $11.06   $6.13   $8.02   $5.60
          Canada                            $8.89   $4.69   $6.79   $4.69
          Total(1)                          $8.42   $5.49   $6.74   $5.20

        Crude/Condensate Price ($/Bbl)
          Gulf Coast                       $43.13  $30.52  $42.81  $30.67
          West                             $58.70  $47.18  $55.37  $40.29
          East                             $56.36  $44.95  $53.84  $38.28
          Canada                           $47.08  $37.93  $43.39  $37.93
          Total(1)                         $45.09  $32.18  $44.19  $31.55

        WELLS DRILLED
          Gross                                87      51     316     256
          Net                                  70      41     247     220
          Gross Success Rate                   94%     90%     95%     95%

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



             CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                      (In thousands, except per share amounts)


                                         Quarter Ended     Twelve Months Ended
                                          December 31,         December 31,
                                         2005      2004      2005      2004
       Operating Revenues
         Natural Gas Production (1)    $161,611  $103,143  $499,177  $379,661
         Brokered Natural Gas            37,837    24,005    98,605    84,416
         Crude Oil and Condensate (1)    25,098    25,189    82,348    60,022
         Other                              536     2,302     2,667     6,309
                                        225,082   154,639   682,797   530,408
       Operating Expenses
         Brokered Natural Gas Cost       33,634    21,273    87,183    75,217
         Direct Operations - Field and
          Pipeline                       18,579    15,092    61,750    53,581
         Exploration                     14,444    15,439    61,840    48,130
         Depreciation, Depletion and
          Amortization                   30,932    28,538   121,424   113,488
         Impairment of Oil & Gas
          Properties                       --        --        --       3,458
         General and Administrative
          (excluding Stock-Based
             Compensation)                7,518     8,512    28,028    28,198
         Stock-Based Compensation (2)     2,793       924     9,622     6,537
         Taxes Other Than Income         17,240    10,884    54,293    41,022
                                        125,140   100,662   424,140   369,631
       (Loss) / Gain on Sale of Assets     --        (131)       74      (124)
       Income from Operations            99,942    53,846   258,731   160,653
       Interest Expense and Other         7,036     5,630    22,497    22,029
       Income Before Income Taxes        92,906    48,216   236,234   138,624
       Income Tax Expense                34,401    15,989    87,789    50,246
       Net Income                       $58,505   $32,227  $148,445   $88,378
       Net Earnings Per Share
        - Basic (3)                       $1.20     $0.66     $3.04     $1.81
       Weighted Average Common Shares
        Outstanding (3)                  48,831    48,722    48,856    48,733

    (1) See the "Impact of Mark-to-Market Accounting Requirements" table for
        additional information.

    (2) Includes the impact of the Company's performance share mark-to-market
        requirement and restricted stock amortization.

    (3) Reflects the 3-for-2 split of the Company's Common Stock on March 31,
        2005.



                  CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                    (In thousands)

                                                December 31,      December 31,
                                                    2005              2004
       Assets
       Current Assets                             $230,312           $194,679
       Property, Equipment and Other
        Assets                                   1,245,471          1,001,422
       Deferred Income Taxes                        19,587             14,855
          Total Assets                          $1,495,370         $1,210,956

       Liabilities and Stockholders'
        Equity
       Current Liabilities                        $218,584           $196,889
       Long-Term Debt                              320,000            250,000
       Deferred Income Taxes                       289,381            247,376
       Other Liabilities                            67,194             61,029
       Stockholders' Equity                        600,211            455,662
          Total Liabilities and
           Stockholders' Equity                 $1,495,370         $1,210,956



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

                                        Quarter Ended      Twelve Months Ended
                                          December 31,         December 31,
                                         2005      2004      2005      2004
        Cash Flows From Operating
         Activities
        Net Income                      $58,505   $32,227  $148,445   $88,378
        Unrealized Change in
         Derivative Fair Value           (8,677)  (11,292)   (6,626)    2,003
        Impairment of Oil & Gas
         Properties                        --        --        --       3,458
        Income Charges Not Requiring
         Cash                            33,581    29,234   131,227   119,448
        Loss / (Gain) on Sale of
         Assets                            --         131       (74)      124
        Deferred Income Tax Expense      21,403    17,264    39,628    32,713
        Changes in Assets and
         Liabilities                     (1,807)  (25,908)   (9,880)  (21,232)
        Exploration Expense              14,444    15,439    61,840    48,130
        Net Cash Provided by
         Operations                     117,449    57,095   364,560   273,022

        Cash Flows From Investing
         Activities
        Capital Expenditures           (109,802)  (49,599) (351,306) (207,346)
        Proceeds from Sale of Assets       --         (67)      996       119
        Exploration Expense             (14,444)  (15,439)  (61,840)  (48,130)
        Net Cash Used by Investing     (124,246)  (65,105) (412,150) (255,357)

        Cash Flows From Financing
         Activities
        Sale of Common Stock Proceeds       498     1,351     4,586    12,474
        Net Increase in Debt             60,000      --      70,000      --
        Decrease in Book Overdrafts     (25,691)     --        --        --
        Purchase of Treasury Stock      (18,612)   (6,899)  (19,183)  (15,631)
        Dividends Paid                   (1,959)   (1,300)   (7,213)   (5,206)
        Net Cash Provided / (Used) by
         Financing                       14,236    (6,848)   48,190    (8,363)

        Net Increase / (Decrease) in
         Cash and
          Cash Equivalents               $7,439  $(14,858)     $600    $9,302



       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,
                                            2005     2004     2005     2004
         As Reported - Net Income         $58,505  $32,227  $148,445  $88,378
         Reversal of Selected Items, Net
          of Tax:
          Impairment of Oil & Gas
           Properties                        --       --        --      2,139
          Loss / (Gain) on Sale of Assets    --         81       (46)      77
          Unrealized Change in Derivative
           Fair Value                      (5,374)  (6,985)   (4,108)   1,239
         Net Income Including Reversal of
          Selected Items                  $53,131  $25,323  $144,291  $91,833
         As Reported - Net Earnings Per
          Share                             $1.20    $0.66     $3.04    $1.81
         Per Share Impact of Reversing
          Selected Items                    (0.11)   (0.14)    (0.09)    0.07
         Net Earnings Per Share Including
          Reversal of Selected Items        $1.09    $0.52     $2.95    $1.88
         Weighted Average Common Shares
          Outstanding                      48,831   48,722    48,856   48,733



               Discretionary Cash Flow Calculation and Reconciliation
                                   (In thousands)

                                          Quarter Ended    Twelve Months Ended
                                           December 31,       December 31,
                                          2005      2004     2005      2004
         Discretionary Cash Flow
         As Reported - Net Income        $58,505  $32,227  $148,445   $88,378
         Plus:
         Unrealized Change in
          Derivative Fair Value           (8,677) (11,292)   (6,626)    2,003
         Impairment of Oil & Gas
          Properties                        --       --        --       3,458
         Income Charges Not Requiring
          Cash                            33,581   29,234   131,227   119,448
         Loss / (Gain) on Sale of
          Assets                            --        131       (74)      124
         Deferred Income Tax Expense      21,403   17,264    39,628    32,713
         Exploration Expense              14,444   15,439    61,840    48,130
         Discretionary Cash Flow         119,256   83,003   374,440   294,254
         Plus:  Changes in Assets and
          Liabilities                     (1,807) (25,908)   (9,880)  (21,232)
         Net Cash Provided by
          Operations                    $117,449  $57,095  $364,560  $273,022



                              Net Debt Reconciliation
                                   (In thousands)

                                                 December 31,     December 31,
                                                     2005             2004

         Current Portion of Long-Term Debt          $20,000           $20,000
         Long-Term Debt                             320,000           250,000
              Total Debt                           $340,000          $270,000
         Stockholders' Equity                       600,211           455,662
              Total Capitalization                 $940,211          $725,662

         Total Debt                                $340,000          $270,000
         Less:  Cash and Cash Equivalents           (10,626)          (10,026)
              Net Debt                             $329,374          $259,974

         Net Debt                                  $329,374          $259,974
         Stockholders' Equity                       600,211           455,662
              Total Adjusted
               Capitalization                      $929,585          $715,636

        Total Debt to Total Capitalization
         Ratio                                        36.2%             37.2%
         Less:  Impact of Cash and Cash
          Equivalents                                  0.8%              0.9%
              Net Debt to Adjusted
               Capitalization Ratio                   35.4%             36.3%



                 Impact of Mark-to-Market Accounting Requirements
                                  (In thousands)

                                        Quarter Ended      Twelve Months Ended
                                         December 31,         December 31,
                                       2005       2004      2005       2004
      Unrealized Gain / (Loss) on
       Derivatives (1)
         Natural Gas                  $1,300       $983    $1,114       $914
         Crude Oil                     7,377     10,309     5,512     (2,917)

      Incentive Stock Compensation
       Expense (2)
         Performance Shares             (785)       (26)   (3,357)    (3,184)
      Mark-to-Market Impact,
       Before Income Tax              $7,892    $11,266    $3,269    $(5,187)
      Mark-to-Market Impact,
       Income Tax                     (2,999)    (4,297)   (1,242)     1,978
      Mark-to-Market Impact on Net
       Income                         $4,893     $6,969    $2,027    $(3,209)

      (1) These amounts represent the unrealized gain / (loss) associated with
          the mark-to-market valuation of open positions which do not qualify
          for hedge accounting or are ineffective.  These amounts are
          reflected in the respective line items of Operating Revenues.
          Therefore, the computation of our reported realized commodity prices
          can be obtained by adding the loss or subtracting the gain from the
          respective Operating Revenues line item and dividing by reported
          production.

      (2) This amount relates to the mark-to-market valuation of the Company's
          performance share incentive stock compensation awards that is
          reflected in general and administrative expense.  At December 31,
          2005 the Company recognized stock compensation expense based on
          Cabot's ranking against a predetermined peer group based on total
          shareholder return.  Cabot must calculate its liability at the
          balance sheet date under the assumption that its relative ranking
          remains constant throughout the measurement period, creating an
          assumed ultimate liability which is then amortized over the
          measurement period (percent payout multiplied by shares multiplied
          by stock price at reported balance sheet date multiplied by the
          pro-rata time expired in the measurement period).  Expense
          recognition will fluctuate between reporting periods due to the
          valuation of the performance shares at the reported balance sheet
          date.

SOURCE Cabot Oil & Gas Corporation

Scott Schroeder, +1-281-589-4993, for Cabot Oil & Gas Corporation

http://www.prnewswire.com