Cabot Oil & Gas Corporation Announces Second Quarter 2014 Financial and Operating Results
HOUSTON, July 24, 2014 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today reported its financial and operating results for the second quarter of 2014. Highlights for the quarter include:
- Production of 127.6 billion cubic feet equivalent (Bcfe), an increase of 34 percent over last year's comparable quarter
- Liquids production (crude oil/condensate/natural gas liquids) of 961,000 barrels, an increase of 26 percent over last year's comparable quarter as reported and an increase of 64 percent pro forma for last year's Mid-Continent and West Texas asset sales
- Crude oil and condensate production of 869,000 barrels, an increase of 25 percent over last year's comparable quarter as reported and an increase of 65 percent pro forma for last year's Mid-Continent and West Texas asset sales
- Net income excluding selected items of $115.3 million, an increase of 21 percent over last year's comparable quarter
- Discretionary cash flow of $332.3 million, an increase of 12 percent over last year's comparable quarter
- Total unit costs (including financing) of $2.59 per thousand cubic feet equivalent (Mcfe), a 16 percent improvement over last year's comparable quarter
Second Quarter 2014 Financial Results
Equivalent production in the second quarter of 2014 was 127.6 Bcfe, consisting of 121.8 billion cubic feet (Bcf) of natural gas and 961,000 barrels of liquids. These figures represent increases of 34 percent, 34 percent, and 26 percent, respectively. "Our total liquids volumes increased 40 percent sequentially—with crude oil and condensate volumes increasing 44 percent—due to strong well performance from new Eagle Ford wells that were placed on production during the quarter," commented Dan O. Dinges, Chairman, President, and Chief Executive Officer.
Cash flow from operations in the second quarter of 2014 was $329.6 million, compared to $277.3 million in the second quarter of 2013. Discretionary cash flow in the second quarter of 2014 was $332.3 million, compared to $297.1 million in the second quarter of 2013. Net income in the second quarter of 2014 was $118.4 million, or $0.28 per share, compared to $89.1 million, or $0.21 per share, in the second quarter of 2013. Excluding the effect of selected items (detailed in the table below), net income was $115.3 million, or $0.28 per share, in the second quarter of 2014, compared to $95.0 million, or $0.22 per share, in the second quarter of 2013.
Natural gas price realizations, including the effect of hedges, were $3.47 per thousand cubic feet (Mcf) in the second quarter of 2014, down 15 percent compared to the second quarter of 2013. Excluding the impact of hedges, natural gas price realizations for the quarter were $3.78 per Mcf, representing an $0.89 discount to NYMEX settlement prices. Oil price realizations, including the effect of hedges, were $98.84 per barrel (Bbl), down 3 percent compared to the second quarter of 2013. "Despite lower realized commodity prices, Cabot generated free cash flow during the quarter while growing equivalent production by 34 percent year-over-year," stated Dinges.
Total per unit costs (including financing) decreased to $2.59 per Mcfe in the second quarter of 2014, down 16 percent from $3.10 per Mcfe in the second quarter of 2013. All operating expense categories decreased on a per unit basis relative to last year's comparable quarter except for transportation and gathering expense, which increased as a result of slightly higher transportation rates and the commencement of new transportation agreements.
Year-To-Date 2014 Financial Results
Production during the six-month period ended June 30, 2014 was 247.5 Bcfe, consisting of 237.6 Bcf of natural gas and 1.6 million barrels of liquids. These figures represent increases of 34 percent, 35 percent, and 13 percent, respectively, compared to the six-month period ended June 30, 2013.
For the six-month period ended June 30, 2014, cash flow from operations was $584.9 million, compared to $490.0 million for the six-month period ended June 30, 2013. Discretionary cash flow was $651.8 million for the six-month period ended June 30, 2014, compared to $531.5 million for the six-month period ended June 30, 2013.
For the six-month period ended June 30, 2014, net income was $225.5 million, or $0.54 per share, compared to $131.9 million, or $0.32 per share, for the six-month period ended June 30, 2013. Excluding the effect of selected items (detailed in the table below), net income was $225.0 million, or $0.54 per share, compared to $149.1 million, or $0.36 per share, for the six-month period ended June 30, 2013.
Hedging Update
Effective April 1, 2014, the Company elected to discontinue hedge accounting for its commodity derivatives on a prospective basis. Subsequent to April 1, 2014, the Company's derivative instruments are accounted for on a mark-to-market basis with changes in fair value recognized in earnings; however, these mark-to-market adjustments will have no cash flow impact. The Company recognized an unrealized mark-to-market gain of $12.9 million in the second quarter of 2014.
Operational Highlights
Marcellus Shale
During the second quarter of 2014, the Company averaged 1,258 million cubic feet (Mmcf) per day of net Marcellus production, an increase of 41 percent over the prior year's comparable quarter.
"Our operations in the Marcellus continue to meet expectations across our acreage position," said Dinges. "We recently placed on production three pads that encompass the northern and eastern most reaches of our acreage with great success." Specifically, in aggregate these wells were completed with 191 frac stages and had an initial production (IP) rate of 238 Mmcf per day. Dinges added, "While all of these wells are early in the production cycle, we expect estimated ultimate recoveries (EURs) per foot to be comparable to the results we disclosed at year-end."
Eagle Ford Shale
Cabot's net production in the Eagle Ford during the second quarter of 2014 was 10,308 barrels of oil equivalent (Boe) per day, an increase of 76 percent over the prior year's comparable quarter. This included 9,784 barrels of liquids per day, an increase of 83 percent over the prior year's comparable quarter.
During the second quarter of 2014, Cabot placed 10 wells on production that have produced for at least 30 days. These wells achieved an average 30-day production rate of 840 Boe per day per well with a 92 percent oil cut from an average lateral length of 6,729 feet. "We continue to be pleased with the performance improvements in our Eagle Ford Program, with this most recent group of wells tracking above our 500,000 Boe type curve", explained Dinges.
Financial Position and Liquidity
As of June 30, 2014, the Company's net debt to adjusted capitalization ratio was 32.3 percent, compared to 33.8 percent at December 31, 2013 (detailed in the table below). The Company's total debt was $1,193 million, of which $506 million is outstanding under the Company's revolving credit facility. Total lender commitments under the revolving credit facility are $1.4 billion, with $893 million of available credit under the facility at June 30, 2014.
Conference Call
A conference call is scheduled for Thursday, July 24, 2014, at 9:30 a.m. Eastern Time to discuss second quarter 2014 financial and operating results. To access the live audio webcast, please visit the Investor Relations section of the Company's website at www.cabotog.com. A replay of the call will also be available on the Company's website. The latest financial guidance, including the Company's hedge positions, is also available in the Investor Relations section of the Company's website.
Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading independent natural gas producer with its entire resource base located in the continental United States. For additional information, visit the Company's homepage at www.cabotog.com.
The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs, and other factors detailed in the Company's Securities and Exchange Commission filings.
FOR MORE INFORMATION CONTACT
Matt Kerin (281) 589-4642
| OPERATING DATA |
|||||||||
| Quarter Ended |
Six Months Ended |
||||||||
| June 30, |
June 30, |
||||||||
| 2014 |
2013 |
2014 |
2013 |
||||||
| PRODUCED NATURAL GAS (Bcf) & LIQUIDS (Mbbl) |
|||||||||
| Natural Gas |
|||||||||
| Appalachia |
118.4 |
85.4 |
231.2 |
165.2 |
|||||
| Other |
3.4 |
5.3 |
6.4 |
10.6 |
|||||
| Total |
121.8 |
90.7 |
237.6 |
175.8 |
|||||
| Crude/Condensate/NGL |
961 |
763 |
1,647 |
1,454 |
|||||
| Equivalent Production (Bcfe) |
127.6 |
95.2 |
247.5 |
184.5 |
|||||
| PRICES(1) |
|||||||||
| Average Produced Gas Sales Price ($/Mcf) |
|||||||||
| Appalachia |
$ |
3.44 |
$ |
4.09 |
$ |
3.57 |
$ |
3.81 |
|
| Other |
$ |
4.65 |
$ |
3.63 |
$ |
4.80 |
$ |
3.05 |
|
| Total |
$ |
3.47 |
$ |
4.06 |
$ |
3.60 |
$ |
3.77 |
|
| Average Crude/Condensate Price ($/Bbl) |
$ |
98.84 |
$ |
101.39 |
$ |
98.39 |
$ |
102.65 |
|
| WELLS DRILLED |
|||||||||
| Gross |
49 |
51 |
76 |
83 |
|||||
| Net |
35 |
44 |
62 |
70 |
|||||
| Gross success rate |
100% |
96% |
100% |
96% |
|||||
| (1) These realized prices include the realized impact of derivative instrument settlements. |
|||||||||
| Quarter Ended |
Six Months Ended |
||||||||
| June 30, |
June 30, |
||||||||
| 2014 |
2013 |
2014 |
2013 |
||||||
| Realized Impacts to Gas Pricing |
$ (0.30) |
$ - |
$ (0.45) |
$ 0.07 |
|||||
| Realized Impacts to Oil Pricing |
$ (1.25) |
$ 3.02 |
$ (0.89) |
$ 3.12 |
|||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) |
||||||||
| (In thousands, except per share amounts) |
||||||||
| Quarter Ended |
Six Months Ended |
|||||||
| June 30, |
June 30, |
|||||||
| 2014 |
2013 |
2014 |
2013 |
|||||
| Operating Revenues |
||||||||
| Natural gas |
$ 437,761 |
$ 368,391 |
$ 870,571 |
$ 662,184 |
||||
| Crude oil and condensate |
86,341 |
70,226 |
145,485 |
135,881 |
||||
| Gain (loss) on derivative instruments |
(2,329) |
- |
(2,329) |
- |
||||
| Brokered natural gas |
8,140 |
8,244 |
21,293 |
19,137 |
||||
| Other |
3,274 |
2,819 |
7,970 |
5,763 |
||||
| 533,187 |
449,680 |
1,042,990 |
822,965 |
|||||
| Operating Expenses |
||||||||
| Direct operations |
35,605 |
36,978 |
71,439 |
68,475 |
||||
| Transportation and gathering |
83,976 |
52,648 |
161,741 |
98,869 |
||||
| Brokered natural gas |
7,031 |
6,704 |
18,891 |
15,093 |
||||
| Taxes other than income |
12,816 |
11,364 |
25,860 |
23,051 |
||||
| Exploration |
4,676 |
4,529 |
11,150 |
8,553 |
||||
| Depreciation, depletion and amortization |
157,563 |
151,389 |
304,981 |
300,042 |
||||
| General and administrative (excluding stock-based compensation) |
13,853 |
11,565 |
32,318 |
28,600 |
||||
| Stock-based compensation(1) |
6,274 |
10,043 |
9,445 |
28,712 |
||||
| 321,794 |
285,220 |
635,825 |
571,395 |
|||||
| Earnings (loss) on equity method investments |
756 |
290 |
756 |
336 |
||||
| Gain (loss) on sale of assets |
(1,496) |
276 |
(2,781) |
180 |
||||
| Income from Operations |
210,653 |
165,026 |
405,140 |
252,086 |
||||
| Interest expense |
16,334 |
16,991 |
32,891 |
33,292 |
||||
| Income before income taxes |
194,319 |
148,035 |
372,249 |
218,794 |
||||
| Income tax expense |
75,899 |
58,921 |
146,798 |
86,856 |
||||
| Net Income |
$ 118,420 |
$ 89,114 |
$ 225,451 |
$ 131,938 |
||||
| Earnings per share - Basic |
$ 0.28 |
$ 0.21 |
$ 0.54 |
$ 0.32 |
||||
| Weighted average common shares outstanding |
417,291 |
420,698 |
417,097 |
420,500 |
||||
| (1) |
Includes the impact of the Company's performance share awards, restricted stock, stock appreciation rights and expense associated with the Supplemental Employee Incentive Plan. |
|||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) |
|||
| (In thousands) |
|||
| June 30, |
December 31, |
||
| 2014 |
2013 |
||
| Assets |
|||
| Current assets |
$ 306,096 |
$ 378,899 |
|
| Properties and equipment, net |
4,825,524 |
4,546,227 |
|
| Other assets |
77,302 |
55,954 |
|
| Total assets |
$ 5,208,922 |
$ 4,981,080 |
|
| Liabilities and Stockholders' Equity |
|||
| Current liabilities |
$ 362,147 |
$ 407,905 |
|
| Long-term debt |
1,193,000 |
1,147,000 |
|
| Deferred income taxes |
1,101,326 |
1,067,912 |
|
| Other liabilities |
150,510 |
153,661 |
|
| Stockholders' equity |
2,401,939 |
2,204,602 |
|
| Total liabilities and stockholders' equity |
$ 5,208,922 |
$ 4,981,080 |
|
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) |
|||||||
| (In thousands) |
|||||||
| Quarter Ended |
Six Months Ended |
||||||
| June 30, |
June 30, |
||||||
| 2014 |
2013 |
2014 |
2013 |
||||
| Cash Flows From Operating Activities |
|||||||
| Net income |
$ 118,420 |
$ 89,114 |
$ 225,451 |
$ 131,938 |
|||
| Deferred income tax expense |
60,850 |
46,088 |
118,453 |
69,662 |
|||
| (Gain) loss on sale of assets |
1,496 |
(276) |
2,781 |
(180) |
|||
| Exploration expense |
114 |
140 |
2,154 |
806 |
|||
| Unrealized (gain) loss on derivative instruments |
(12,933) |
- |
(12,933) |
- |
|||
| Income charges not requiring cash |
164,349 |
162,034 |
315,922 |
329,239 |
|||
| Changes in assets and liabilities |
(2,726) |
(19,818) |
(66,880) |
(41,498) |
|||
| Net cash provided by operations |
329,570 |
277,282 |
584,948 |
489,967 |
|||
| Cash Flows From Investing Activities |
|||||||
| Capital expenditures |
(278,912) |
(263,887) |
(617,613) |
(524,056) |
|||
| Proceeds from sale of assets |
(863) |
420 |
(755) |
906 |
|||
| Restricted cash |
19,712 |
- |
28,094 |
- |
|||
| Investment in equity method investments |
(16,293) |
(3,000) |
(22,230) |
(4,250) |
|||
| Net cash used in investing |
(276,356) |
(266,467) |
(612,504) |
(527,400) |
|||
| Cash Flows From Financing Activities |
|||||||
| Net increase (decrease) in debt |
(29,000) |
15,000 |
46,000 |
55,000 |
|||
| Dividends paid |
(8,347) |
(4,206) |
(16,679) |
(8,407) |
|||
| Stock-based compensation tax benefit |
4,311 |
5,210 |
20,354 |
7,348 |
|||
| Other |
1 |
1 |
91 |
33 |
|||
| Net cash provided by (used in) financing |
(33,035) |
16,005 |
49,766 |
53,974 |
|||
| Net increase (decrease) in cash and cash equivalents |
$ 20,179 |
$ 26,820 |
$ 22,210 |
$ 16,541 |
|||
| Selected Item Review and Reconciliation of Net Income and Earnings Per Share |
||||||||
| (In thousands, except per share amounts) |
||||||||
| Quarter Ended |
Six Months Ended |
|||||||
| June 30, |
June 30, |
|||||||
| 2014 |
2013 |
2014 |
2013 |
|||||
| As reported - net income |
$ 118,420 |
$ 89,114 |
$ 225,451 |
$ 131,938 |
||||
| Reversal of selected items, net of tax: |
||||||||
| (Gain) loss on sale of assets |
901 |
(166) |
1,674 |
(109) |
||||
| Unrealized (gain) loss on derivative instruments (1) |
(7,786) |
- |
(7,786) |
- |
||||
| Stock-based compensation expense |
3,777 |
6,046 |
5,686 |
17,314 |
||||
| Net income excluding selected items |
$ 115,312 |
$ 94,994 |
$ 225,025 |
$ 149,143 |
||||
| As reported - earnings per share |
$ 0.28 |
$ 0.21 |
$ 0.54 |
$ 0.32 |
||||
| Per share impact of reversing selected items |
- |
0.01 |
- |
0.04 |
||||
| Earnings per share including reversal of selected items |
$ 0.28 |
$ 0.22 |
$ 0.54 |
$ 0.36 |
||||
| Weighted average common shares outstanding |
417,291 |
420,698 |
417,097 |
420,500 |
||||
| (1) |
Effective April 1, 2014, the Company elected to discontinue hedge accounting for its commodity derivatives on a prospective basis. The unrealized mark-to-market changes of our commodity derivative instruments are recorded in gain (loss) on derivative instruments in the Condensed Consolidated Statement of Operations |
|||||||||||||||
| Discretionary Cash Flow Calculation and Reconciliation |
||||||||
| (In thousands) |
||||||||
| Quarter Ended |
Six Months Ended |
|||||||
| June 30, |
June 30, |
|||||||
| 2014 |
2013 |
2014 |
2013 |
|||||
| Discretionary Cash Flow |
||||||||
| As reported - net income |
$ 118,420 |
$ 89,114 |
$ 225,451 |
$ 131,938 |
||||
| Plus (less): |
||||||||
| Deferred income tax expense |
60,850 |
46,088 |
118,453 |
69,662 |
||||
| (Gain) loss on sale of assets |
1,496 |
(276) |
2,781 |
(180) |
||||
| Exploration expense |
114 |
140 |
2,154 |
806 |
||||
| Unrealized (gain) loss on derivative instruments |
(12,933) |
- |
(12,933) |
- |
||||
| Income charges not requiring cash |
164,349 |
162,034 |
315,922 |
329,239 |
||||
| Discretionary Cash Flow |
332,296 |
297,100 |
651,828 |
531,465 |
||||
| Changes in assets and liabilities |
(2,726) |
(19,818) |
(66,880) |
(41,498) |
||||
| Net cash provided by operations |
$ 329,570 |
$ 277,282 |
$ 584,948 |
$ 489,967 |
||||
| Net Debt Reconciliation |
||||
| (In thousands) |
||||
| June 30, |
December 31, |
|||
| 2014 |
2013 |
|||
| Long-term debt |
$ 1,193,000 |
$ 1,147,000 |
||
| Stockholders' equity |
2,401,939 |
2,204,602 |
||
| Total Capitalization |
$ 3,594,939 |
$ 3,351,602 |
||
| Total debt |
$ 1,193,000 |
$ 1,147,000 |
||
| Less: Cash and cash equivalents |
(45,610) |
(23,400) |
||
| Net Debt |
$ 1,147,390 |
$ 1,123,600 |
||
| Net debt |
$ 1,147,390 |
$ 1,123,600 |
||
| Stockholders' equity |
2,401,939 |
2,204,602 |
||
| Total Adjusted Capitalization |
$ 3,549,329 |
$ 3,328,202 |
||
| Total debt to total capitalization ratio |
33.2% |
34.2% |
||
| Less: Impact of cash and cash equivalents |
0.9% |
0.4% |
||
| Net Debt to Adjusted Capitalization Ratio |
32.3% |
33.8% |
||
SOURCE Cabot Oil & Gas Corporation
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