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Cabot Oil & Gas Announces Second Quarter Results

Posted on: Thursday, 23 July 2009, 17:03 CDT

HOUSTON, July 23 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today reported second quarter net income of $25.5 million, or $0.25 per share. Removing the selected items, (which are detailed in the Selected Items Table and include the loss related to the sale of the Company's Canadian operations), the quarter's net income was $39.1 million, or $0.38 per share. These figures compare to the 2008 second quarter numbers (for both the reported results and after the removal of selected items) of $54.6 million, or $0.55 per share, and $69.9 million, or $0.71 per share, for net income respectively.

Cash flow from operations for the 2009 second quarter totaled $147.9 million, while discretionary cash flow was $133.6 million. Comparatively, 2008 second quarter cash flow from operations was $143.7 million, and discretionary cash flow was $147.1 million.

"This marks our 25th consecutive quarter of profitability," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "These results include a ten percent increase in second quarter 2009 equivalent production over the second quarter of 2008 but also reflect a reduced commodity price realization." The production growth rate was driven by a 42 percent increase in the East region and a 20 percent increase in the Gulf Coast region for comparable year over year quarters. On the pricing front, even with the hedge benefit, the price realization fell short of last year. Realized natural gas prices were $7.25 per Mcf in the 2009 second quarter versus $9.30 per Mcf in the 2008 second quarter. Realized oil prices fell 15 percent to $83.76 per barrel.

In terms of cost comparisons, overall reported expenses were higher, but per unit levels were lower in this second quarter versus last year's second quarter. The higher components of DD&A, interest and exploration expense are related to the impact of the August 2008 east Texas acquisition.

Year-to-Date

In the six months ended June 30, 2009, Cabot reported net income of $73.1 million, or $0.71 per share, compared to $100.6 million, or $1.03 per share, for the same period last year. The cash flow comparisons for the six months ended June 30, 2009 and June 30, 2008, respectively, are cash flow from operations of $300.4 million versus $276.4 million and discretionary cash flow of $271.7 million versus $285.5 million. The 2009 six-month net income figure, after removal of the selected items, was $81.3 million, or $0.78 per share, versus $126.9 million, or $1.29 per share for the six-month period ended June 30, 2008.

"The same dynamic that drove the quarter results apply to the year-to-date periods - increased production and lower price realizations," stated Dinges. "Production was up approximately 13 percent while natural gas and oil prices each fell 14 percent." Expenses including financing costs were up three percent between the six-month year-to-date comparable periods.

Conference Call

Listen in live to Cabot Oil & Gas Corporation's second quarter financial and operating results discussion with financial analysts on Friday, July 24, 2009 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 18590704. The replay will be available through Sunday, July 26, 2009. 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 Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- PRODUCED NATURAL GAS (Bcf) & OIL (MBbl) Natural Gas East 8.4 5.9 15.7 11.9 Gulf Coast 9.3 7.7 19.7 15.1 West 6.2 7.1 12.4 13.5 Canada 0.4 1.4 1.0 2.6 --- --- --- --- Total 24.3 22.1 48.8 43.1 ==== ==== ==== ==== Crude/Condensate/Ngl East 5 6 9 12 Gulf Coast 147 136 300 280 West 44 43 79 79 Canada 2 5 6 11 -- -- -- -- Total 198 190 394 382 === === === === Equivalent Production (Bcfe) 25.6 23.2 51.2 45.4 PRICES Average Produced Gas Sales Price ($/Mcf) East $7.09 $9.64 $7.67 $8.96 Gulf Coast $8.79 $10.36 $8.55 $9.35 West $5.36 $8.04 $5.45 $7.67 Canada $3.22 $8.41 $3.40 $7.91 Total (1) $7.25 $9.30 $7.38 $8.63 Average Crude/Condensate Price ($/Bbl) East $54.24 $118.33 $46.90 $103.89 Gulf Coast $94.51 $91.87 $90.72 $88.11 West $52.15 $118.18 $43.37 $108.12 Canada $45.14 $96.89 $36.46 $87.26 Total (1) $83.76 $98.68 $79.55 $92.58 WELLS DRILLED Gross 33 116 82 201 Net 28 97 65 162 Gross Success Rate 100% 99% 98% 99% (1) These realized prices include the realized impact of derivative instrument settlements. Quarter Ended Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Realized Impacts to Gas Pricing $4.15 $(0.97) $3.74 $(0.48) Realized Impacts to Oil Pricing $30.78 $(21.19) $34.87 $(14.88) CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Quarter Ended Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Operating Revenues Natural Gas Production $176,213 $202,689 $360,735 $369,248 Brokered Natural Gas 11,704 27,188 45,085 62,808 Crude Oil and Condensate 16,210 18,600 30,452 35,087 Other 697 377 2,491 1,362 --- --- ----- ----- 204,824 248,854 438,763 468,505 Operating Expenses Brokered Natural Gas Cost 10,684 24,140 40,433 54,430 Direct Operations - Field and Pipeline 23,073 22,636 48,552 40,127 Exploration 10,397 7,290 16,863 12,351 Depreciation, Depletion and Amortization 61,838 48,401 126,930 94,668 General and Administrative (excluding Stock-Based Compensation) 10,946 11,782 22,882 21,779 Stock-Based Compensation (1) 6,171 21,695 11,300 39,271 Taxes Other Than Income 10,914 19,225 23,812 36,122 ------ ------ ------ ------ 134,023 155,169 290,772 298,748 Gain / (Loss) on Sale of Assets (2) (16,562) 401 (3,855) 401 ------- --- ------ --- Income from Operations 54,239 94,086 144,136 170,158 Interest Expense and Other 15,046 6,207 29,272 12,198 ------ ----- ------ ------ Income Before Income Taxes 39,193 87,879 114,864 157,960 Income Tax Expense 13,691 33,254 41,782 57,360 ------ ------ ------ ------ Net Income $25,502 $54,625 $73,082 $100,600 ======= ======= ======= ======== Net Earnings Per Share - Basic $0.25 $0.55 $0.71 $1.03 Weighted Average Common Shares Outstanding 103,640 98,467 103,581 98,092 (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 loss on sale of assets in 2009 primarily relates to a loss on our April 2009 sale of our Canadian properties, partially offset by a gain on sale of assets from the first quarter 2009 sale of the Thornwood properties in the East. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) June 30, December 31, 2009 2008 ---- ---- Assets Current Assets $370,822 $460,551 Property, Equipment and Other Assets 3,252,862 3,241,113 --------- --------- Total Assets $3,623,684 $3,701,664 ========== ========== Liabilities and Stockholders' Equity Current Liabilities $265,127 $378,913 Long-Term Debt, excluding Current Maturities 795,000 831,143 Deferred Income Taxes 628,234 599,106 Other Liabilities 98,851 101,940 Stockholders' Equity 1,836,472 1,790,562 --------- --------- Total Liabilities and Stockholders' Equity $3,623,684 $3,701,664 ========== ========== CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In thousands) Quarter Ended Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Cash Flows From Operating Activities Net Income $25,502 $54,625 $73,082 $100,600 Unrealized (Gain) / Loss on Derivatives 126 2,909 (815) 2,909 Income Charges Not Requiring Cash 69,151 50,692 140,443 114,498 (Gain) / Loss on Sale of Assets 16,562 (401) 3,855 (401) Deferred Income Tax Expense 11,903 31,955 38,252 55,515 Changes in Assets and Liabilities 14,210 (8,005) 28,705 (9,061) Stock-Based Compensation Tax Benefit - 4,642 - - Exploration Expense 10,397 7,290 16,863 12,351 ------ ----- ------ ------ Net Cash Provided by Operations 147,851 143,707 300,385 276,411 ------- ------- ------- ------- Cash Flows From Investing Activities Capital Expenditures (121,941) (244,510) (292,970) (372,611) Proceeds from Sale of Assets 64,604 1,150 79,667 1,150 Exploration Expense (10,397) (7,290) (16,863) (12,351) ------- ------ ------- ------- Net Cash Used in Investing (67,734) (250,650) (230,166) (383,812) ------- -------- -------- -------- Cash Flows From Financing Activities Sale of Common Stock Proceeds 1 313,867 150 316,107 Net Increase / (Decrease) in Debt (62,000) (105,000) (52,000) (85,000) Capitalized Debt Issuance Costs (10,409) - (10,409) - Stock-Based Compensation Tax Benefit - (4,642) - - Dividends Paid (3,110) (2,943) (6,213) (5,873) ------ ------ ------ ------ Net Cash (Used in) / Provided by Financing (75,518) 201,282 (68,472) 225,234 ------- ------- ------- ------- Net Increase in Cash and Cash Equivalents $4,599 $94,339 $1,747 $117,833 ====== ======= ====== ======== 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, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- As Reported - Net Income $25,502 $54,625 $73,082 $100,600 Reversal of Selected Items, Net of Tax: (Gain) / Loss on Sale of Assets (1) 9,596 (253) 1,629 (253) Stock-Based Compensation Expense 3,875 13,668 7,091 24,723 Unrealized (Gain) / Loss on Derivatives (2) 79 1,833 (511) 1,833 -- ----- ---- ----- Net Income Excluding Selected Items $39,052 $69,873 $81,291 $126,903 ======= ======= ======= ======== As Reported - Net Earnings Per Share $0.25 $0.55 $0.71 $1.03 Per Share Impact of Reversing Selected Items 0.13 0.16 0.07 0.26 ---- ---- ---- ---- Net Earnings Per Share Including Reversal of Selected Items $0.38 $0.71 $0.78 $1.29 ===== ===== ===== ===== Weighted Average Common Shares Outstanding 103,640 98,467 103,581 98,092 (1) The loss on sale of assets in 2009 primarily relates to a loss on our April 2009 sale of our Canadian properties, partially offset by a gain on sale of assets from the first quarter 2009 sale of the Thornwood properties in the East. The loss on sale of assets for the three and six months ended June 30, 2009 considers a tax benefit associated with foreign tax credits. (2) This unrealized (gain) / loss 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 Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Discretionary Cash Flow As Reported - Net Income $25,502 $54,625 $73,082 $100,600 Plus / (Less): Unrealized (Gain) / Loss on Derivatives 126 2,909 (815) 2,909 Income Charges Not Requiring Cash 69,151 50,692 140,443 114,498 (Gain) / Loss on Sale of Assets 16,562 (401) 3,855 (401) Deferred Income Tax Expense 11,903 31,955 38,252 55,515 Exploration Expense 10,397 7,290 16,863 12,351 ------ ----- ------ ------ Discretionary Cash Flow 133,641 147,070 271,680 285,472 Changes in Assets and Liabilities 14,210 (8,005) 28,705 (9,061) Stock-Based Compensation Tax Benefit - 4,642 - - --- ----- --- --- Net Cash Provided by Operations $147,851 $143,707 $300,385 $276,411 ======== ======== ======== ======== Net Debt Reconciliation (In thousands) June 30, December 31, 2009 2008 ---- ---- Current Portion of Long-Term Debt $20,000 $35,857 Long-Term Debt 795,000 831,143 ------- ------- Total Debt $815,000 $867,000 Stockholders' Equity 1,836,472 1,790,562 --------- --------- Total Capitalization $2,651,472 $2,657,562 Total Debt $815,000 $867,000 Less: Cash and Cash Equivalents (29,848) (28,101) ------- ------- Net Debt $785,152 $838,899 Net Debt $785,152 $838,899 Stockholders' Equity 1,836,472 1,790,562 --------- --------- Total Adjusted Capitalization $2,621,624 $2,629,461 Total Debt to Total Capitalization Ratio 30.7% 32.6% Less: Impact of Cash and Cash Equivalents 0.8% 0.7% ---- ---- Net Debt to Adjusted Capitalization Ratio 29.9% 31.9%

SOURCE Cabot Oil & Gas Corporation

Source: PR Newswire

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