Cabot Oil & Gas Announces Third Quarter Results
HOUSTON, Oct. 25 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced third quarter net income of $32.3 million, or $0.31 per share, as compared to net income of $42.6 million, or $0.41 per share, in the third quarter of 2009, excluding the selected items in both periods, (which are detailed in the Selected Items Table and include the impact related to the sale of assets, stock compensation, impairments and pension termination related expenses, along with derivatives). The 2010 quarter's reported net income was $3.9 million, or $0.04 per share, as compared to $38.9 million, or $0.38 per share, for the third quarter of 2009.
Cash flow from operations for the 2010 third quarter totaled $124.2 million, while discretionary cash flow was $133.1 million. Comparatively, 2009 third quarter cash flow from operations was $116.7 million, and discretionary cash flow was $158.9 million.
Driving the results were lower natural gas realized prices offset by higher realized oil prices and higher equivalent production levels creating increased revenue for the quarter. "Our third quarter production level of 36.0 Bcfe established a new high for quarterly reported production and was approximately 41 percent higher than the volumes reported in last year's third quarter. Pennsylvania remains the focus of our capital program and is the key contributor to this production growth, as we wait for a backlog of Haynesville and Eagle Ford completions for both natural gas and oil," said Dan O. Dinges, Chairman, President and Chief Executive Officer. In terms of pricing, realized natural gas prices were $5.37 per Mcf in the 2010 third quarter versus $7.40 per Mcf in the 2009 third quarter. The 2009 quarter benefited from a significantly large hedge gain. Realized oil prices for the period increased 12 percent to $98.26 per barrel over last year's third quarter.
During the third quarter, Cabot finalized its decision to terminate its pension plan and replace this plan with an enhancement to its 401(k) Plan. The effective date of this termination was September 30, 2010; however, the regulatory process to liquidate the plan will take 12-18 months to complete. "We have been evaluating this decision for many years and in light of the regulatory environment, we found a more cost effective way to deliver a similar benefit," stated Dinges.
In terms of cost comparisons, the absolute levels rose with the largest increases occurring for an impairment and for DD&A; however, per unit levels for the recurring expenses improved significantly in this third quarter compared to last year. The impairment relates to two south Texas legacy fields that have seen limited activity.
Year-to-Date
The 2010 nine-month net income figure, after removal of the selected items, was $82.7 million, or $0.80 per share, versus $123.9 million, or $1.20 per share, for the nine-month period ended September 30, 2009. In the nine months ended September 30, 2010, Cabot reported net income of $54.3 million, or $0.52 per share, compared to $112.0 million, or $1.08 per share, for the same period last year. The cash flow comparisons for the nine months ended September 30, 2010 and September 30, 2009, respectively, are cash flow from operations of $367.5 million versus $417.1 million and discretionary cash flow of $374.2 million versus $430.6 million.
"The same dynamic that drove the quarter results apply to the year-to-date periods – increased production and lower natural gas price realizations," stated Dinges. "Production was up approximately 21.5 percent for the nine-month comparable periods while natural gas prices fell 22 percent and oil prices increased 18 percent." Per unit expenses, other than DD&A, were down between the year-to-date nine-month comparable periods with overall unit costs declining as well.
As previously announced during the quarter, Cabot increased its credit facility and extended the maturity date, creating additional flexibility and capacity to handle its debt maturity schedule. "We remain committed to our plans for a cash flow neutral program in 2011 while at the same time meeting our 2010 obligations, particularly in east Texas," added Dinges. "As I have stated before, we do not want to lose the long-term benefit of this large resource potential." Also of note, in the third quarter is $75 million of private placement notes are now treated as current liabilities with a required payment in July 2011.
Conference Call
Listen in live to Cabot Oil & Gas Corporation's third quarter financial and operating results discussion with financial analysts on Tuesday, October 26, 2010 at 9:30 a.m. EDT (8:30 a.m. CDT) at www.cabotog.com. A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), pass code 15541524. The replay will be available through Thursday, October 28, 2010. The latest financial guidance, including the Company's hedge positions, along with a replay of the web cast, 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 its entire resource base located in the continental United States. 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, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
PRODUCED NATURAL GAS (Bcf) & OIL (MBbl) |
|||||||||
Natural Gas |
|||||||||
North |
23.7 |
12.2 |
55.2 |
34.8 |
|||||
South |
11.1 |
12.0 |
34.0 |
37.2 |
|||||
Canada |
- |
- |
- |
1.0 |
|||||
Total |
34.8 |
24.2 |
89.2 |
73.0 |
|||||
Crude/Condensate/Ngl |
|||||||||
North |
25.0 |
33.0 |
75.0 |
92.0 |
|||||
South |
170.0 |
198.0 |
585.0 |
526.0 |
|||||
Canada |
- |
- |
- |
6.7 |
|||||
Total |
195.0 |
231.0 |
660.0 |
624.7 |
|||||
Equivalent Production (Bcfe) |
36.0 |
25.5 |
93.2 |
76.7 |
|||||
PRICES |
|||||||||
Average Produced Gas Sales Price ($/Mcf) |
|||||||||
North |
$ |
4.56 |
$ |
6.28 |
$ |
4.80 |
$ |
6.56 |
|
South |
$ |
7.10 |
$ |
8.53 |
$ |
7.29 |
$ |
8.25 |
|
Canada |
$ |
- |
$ |
- |
$ |
- |
$ |
3.56 |
|
Total (1) |
$ |
5.37 |
$ |
7.40 |
$ |
5.75 |
$ |
7.39 |
|
Average Crude/Condensate Price ($/Bbl) |
|||||||||
North |
$ |
67.15 |
$ |
58.49 |
$ |
67.47 |
$ |
48.22 |
|
South |
$ |
102.43 |
$ |
92.12 |
$ |
101.28 |
$ |
88.75 |
|
Canada |
$ |
- |
$ |
- |
$ |
- |
$ |
33.97 |
|
Total (1) |
$ |
98.26 |
$ |
87.49 |
$ |
97.43 |
$ |
82.48 |
|
WELLS DRILLED |
|||||||||
Gross |
38 |
37 |
83 |
119 |
|||||
Net |
26 |
32 |
67 |
97 |
|||||
Gross Success Rate |
97% |
97% |
98% |
98% |
|||||
(1) These realized prices include the realized impact of derivative instrument settlements. |
|||||||||
Quarter Ended |
Nine Months Ended |
||||||||
September 30, |
September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
Realized Impacts to Gas Pricing |
$ 1.13 |
$ 4.25 |
$ 1.23 |
$ 3.91 |
|||||
Realized Impacts to Oil Pricing |
$ 26.33 |
$ 23.40 |
$ 23.42 |
$ 30.64 |
|||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) |
|||||||||
(In thousands, except per share amounts) |
|||||||||
Quarter Ended |
Nine Months Ended |
||||||||
September 30, |
September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
Operating Revenues |
|||||||||
Natural Gas Production |
$ 187,094 |
$ 177,807 |
$ 512,936 |
$ 538,542 |
|||||
Brokered Natural Gas |
11,675 |
9,032 |
49,896 |
54,117 |
|||||
Crude Oil and Condensate |
19,234 |
19,574 |
60,427 |
50,026 |
|||||
Other |
1,127 |
608 |
3,901 |
3,099 |
|||||
219,130 |
207,021 |
627,160 |
645,784 |
||||||
Operating Expenses |
|||||||||
Brokered Natural Gas Cost |
10,281 |
7,786 |
43,342 |
48,219 |
|||||
Direct Operations - Field and Pipeline |
26,466 |
23,012 |
73,796 |
71,564 |
|||||
Exploration |
9,665 |
14,395 |
28,324 |
31,258 |
|||||
Depreciation, Depletion and Amortization |
85,355 |
62,037 |
235,579 |
188,967 |
|||||
Impairment of Oil & Gas Properties |
35,789 |
- |
35,789 |
- |
|||||
General and Administrative (excluding Stock-Based Compensation) |
17,254 |
9,629 |
40,244 |
32,511 |
|||||
Stock-Based Compensation (1) |
3,823 |
5,292 |
9,431 |
16,592 |
|||||
Taxes Other Than Income |
8,489 |
10,719 |
31,135 |
34,531 |
|||||
197,122 |
132,870 |
497,640 |
423,642 |
||||||
Gain (Loss) on Sale of Assets (2) |
265 |
572 |
5,411 |
(3,283) |
|||||
Income from Operations |
22,273 |
74,723 |
134,931 |
218,859 |
|||||
Interest Expense and Other |
16,758 |
14,857 |
47,439 |
44,129 |
|||||
Income Before Income Taxes |
5,515 |
59,866 |
87,492 |
174,730 |
|||||
Income Tax Expense |
1,617 |
20,969 |
33,215 |
62,751 |
|||||
Net Income |
$ 3,898 |
$ 38,897 |
$ 54,277 |
$ 111,979 |
|||||
Net Earnings Per Share - Basic |
$ 0.04 |
$ 0.38 |
$ 0.52 |
$ 1.08 |
|||||
Weighted Average Common Shares Outstanding |
103,955 |
103,647 |
103,889 |
103,603 |
|||||
(1) Includes the impact of the Company's performance share awards and restricted stock amortization as well as expense related to stock options and stock appreciation rights. Also includes expense for the Supplemental Employee Incentive Plans which commenced in 2008. |
|||||||||
(2) The gain on sale of assets in 2010 primarily relates to the sale of the Woodford Shale Prospect offset by a charge related to properties sold in the third quarter. The loss on sale in 2009 primarily relates to the sale of our Canadian properties in April 2009, partially offset by a gain on sale of assets from the first quarter 2009 sale of Thornwood properties in the North region. The gain (loss) on sale of assets for the three and nine months ended September 30, 2009 includes a tax benefit associated with foreign tax credits. |
|||||||||
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) |
||||
(In thousands) |
||||
September 30, |
December 31, |
|||
2010 |
2009 |
|||
Assets |
||||
Current Assets |
$ 220,985 |
$ 281,502 |
||
Property, Equipment and Other Assets |
3,725,725 |
3,401,899 |
||
Total Assets |
$ 3,946,710 |
$ 3,683,401 |
||
Liabilities and Stockholders' Equity |
||||
Current Liabilities |
$ 304,539 |
$ 308,741 |
||
Long-Term Debt |
1,020,000 |
805,000 |
||
Deferred Income Taxes |
676,106 |
644,801 |
||
Other Liabilities |
102,727 |
112,345 |
||
Stockholders' Equity |
1,843,338 |
1,812,514 |
||
Total Liabilities and Stockholders' Equity |
$ 3,946,710 |
$ 3,683,401 |
||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) |
||||||||
(In thousands) |
||||||||
Quarter Ended |
Nine Months Ended |
|||||||
September 30, |
September 30, |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
Cash Flows From Operating Activities |
||||||||
Net Income |
$ 3,898 |
$ 38,897 |
$ 54,277 |
$ 111,979 |
||||
Unrealized (Gain) Loss on Derivatives |
193 |
1,233 |
(162) |
418 |
||||
Impairment of Oil and Gas Properties |
35,789 |
- |
35,789 |
- |
||||
Income Charges Not Requiring Cash |
90,182 |
68,418 |
248,761 |
208,861 |
||||
(Gain) Loss on Sale of Assets |
(265) |
(572) |
(5,411) |
3,283 |
||||
Deferred Income Tax Expense |
1,374 |
36,521 |
30,465 |
74,773 |
||||
Changes in Assets and Liabilities |
(8,797) |
(29,062) |
(6,592) |
(357) |
||||
Stock-Based Compensation Tax Benefit |
(108) |
(13,085) |
(108) |
(13,085) |
||||
Exploration Expense |
1,969 |
14,395 |
10,473 |
31,258 |
||||
Net Cash Provided by Operations |
124,235 |
116,745 |
367,492 |
417,130 |
||||
Cash Flows From Investing Activities |
||||||||
Capital Expenditures |
(203,901) |
(116,344) |
(658,123) |
(426,177) |
||||
Proceeds from Sale of Assets |
4,291 |
513 |
21,033 |
80,180 |
||||
Net Cash Used in Investing |
(199,610) |
(115,831) |
(637,090) |
(345,997) |
||||
Cash Flows From Financing Activities |
||||||||
Net Increase (Decrease) in Debt |
80,000 |
(5,000) |
290,000 |
(57,000) |
||||
Capitalized Debt Issuance Costs |
(11,710) |
- |
(13,696) |
(10,409) |
||||
Stock-Based Compensation Tax Benefit |
108 |
13,085 |
108 |
13,085 |
||||
Dividends Paid |
(3,119) |
(3,110) |
(9,348) |
(9,323) |
||||
Other |
(1) |
(67) |
(36) |
83 |
||||
Net Cash Provided by (Used in) Financing |
65,278 |
4,908 |
267,028 |
(63,564) |
||||
Net (Decrease) / Increase in Cash and Cash Equivalents |
$ (10,097) |
$ 5,822 |
$ (2,570) |
$ 7,569 |
||||
Selected Item Review and Reconciliation of Net Income and Earnings Per Share |
|||||||||
(In thousands, except per share amounts) |
|||||||||
Quarter Ended |
Nine Months Ended |
||||||||
September 30, |
September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
As Reported - Net Income |
$ 3,898 |
$ 38,897 |
$ 54,277 |
$ 111,979 |
|||||
Reversal of Selected Items, Net of Tax: |
|||||||||
Impairment of Oil & Gas Properties |
22,189 |
- |
22,189 |
- |
|||||
(Gain) Loss on Sale of Assets (1) |
(164) |
(359) |
(3,355) |
1,270 |
|||||
Stock-Based Compensation Expense |
2,370 |
3,323 |
5,847 |
10,414 |
|||||
Pension Expense (2) |
3,838 |
- |
3,838 |
- |
|||||
Unrealized Loss (Gain) on Derivatives (3) |
120 |
774 |
(100) |
263 |
|||||
Net Income Excluding Selected Items |
$ 32,251 |
$ 42,635 |
$ 82,696 |
$ 123,926 |
|||||
As Reported - Net Earnings Per Share |
$ 0.04 |
$ 0.38 |
$ 0.52 |
$ 1.08 |
|||||
Per Share Impact of Reversing Selected Items |
0.27 |
0.03 |
0.28 |
0.12 |
|||||
Net Earnings Per Share Including Reversal of Selected Items |
$ 0.31 |
$ 0.41 |
$ 0.80 |
$ 1.20 |
|||||
Weighted Average Common Shares Outstanding |
103,955 |
103,647 |
103,889 |
103,603 |
|||||
(1) The gain on sale of assets in 2010 primarily relates to the sale of the Woodford Shale Prospect offset by a charge related to properties sold in the third quarter. The loss on sale in 2009 primarily relates to the sale of our Canadian properties in April 2009, partially offset by a gain on sale of assets from the first quarter 2009 sale of Thornwood properties in the North region. The loss on sale of assets for the three and nine months ended September 30, 2009 considers a tax benefit associated with foreign tax credits. |
|||||||||
(2) On July 28, 2010, the Company notified its employees of its plan to terminate its qualified and non-qualified pension plans, effective September 30, 2010. This amount represents curtailment losses related to the plan terminations and expenses related to the acceleration of amortization of prior service costs and actuarial losses over the expected amortization period until final distribution of assets from each plan. Pension expense is included in General and Administrative Expense in the Condensed Consolidated Statement of Operations. |
|||||||||
(3) This unrealized loss (gain) on derivatives is included in Natural Gas Production Revenues in the Condensed Consolidated Statement of Operations and represents the mark to market change related to the Company's natural gas basis swaps. |
|||||||||
Discretionary Cash Flow Calculation and Reconciliation |
|||||||||
(In thousands) |
|||||||||
Quarter Ended |
Nine Months Ended |
||||||||
September 30, |
September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
Discretionary Cash Flow |
|||||||||
As Reported - Net Income |
$ 3,898 |
$ 38,897 |
$ 54,277 |
$ 111,979 |
|||||
Plus / (Less): |
|||||||||
Unrealized Loss (Gain) on Derivatives |
193 |
1,233 |
(162) |
418 |
|||||
Impairment of Oil & Gas Properties |
35,789 |
- |
35,789 |
- |
|||||
Income Charges Not Requiring Cash |
90,182 |
68,418 |
248,761 |
208,861 |
|||||
(Gain) Loss on Sale of Assets |
(265) |
(572) |
(5,411) |
3,283 |
|||||
Deferred Income Tax Expense |
1,374 |
36,521 |
30,465 |
74,773 |
|||||
Exploration Expense |
1,969 |
14,395 |
10,473 |
31,258 |
|||||
Discretionary Cash Flow |
133,140 |
158,892 |
374,192 |
430,572 |
|||||
Changes in Assets and Liabilities |
(8,797) |
(29,062) |
(6,592) |
(357) |
|||||
Stock-Based Compensation Tax Benefit |
(108) |
(13,085) |
(108) |
(13,085) |
|||||
Net Cash Provided by Operations |
$ 124,235 |
$ 116,745 |
$ 367,492 |
$ 417,130 |
|||||
Net Debt Reconciliation |
|||||
(In thousands) |
|||||
September 30, |
December 31, |
||||
2010 |
2009 |
||||
Current Portion of Long-Term Debt |
$ 75,000 |
$ - |
|||
Long-Term Debt |
$ 1,020,000 |
$ 805,000 |
|||
Total Debt |
$ 1,095,000 |
$ 805,000 |
|||
Stockholders' Equity |
1,843,338 |
1,812,514 |
|||
Total Capitalization |
$ 2,938,338 |
$ 2,617,514 |
|||
Total Debt |
$ 1,095,000 |
$ 805,000 |
|||
Less: Cash and Cash Equivalents |
(37,588) |
(40,158) |
|||
Net Debt |
$ 1,057,412 |
$ 764,842 |
|||
Net Debt |
$ 1,057,412 |
$ 764,842 |
|||
Stockholders' Equity |
1,843,338 |
1,812,514 |
|||
Total Adjusted Capitalization |
$ 2,900,750 |
$ 2,577,356 |
|||
Total Debt to Total Capitalization Ratio |
37.3% |
30.8% |
|||
Less: Impact of Cash and Cash Equivalents |
0.8% |
1.1% |
|||
Net Debt to Adjusted Capitalization Ratio |
36.5% |
29.7% |
|||
SOURCE Cabot Oil & Gas Corporation
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