HOUSTON, Oct. 24, 2014 /PRNewswire/ -- Cabot Oil
& Gas Corporation (NYSE: COG) today reported continued strong
financial and operating results for the third quarter of 2014
including establishing new record highs for several key metrics.
Highlights for the quarter include:
- Production of 132.4 billion cubic feet equivalent (Bcfe), an
increase of 24 percent over last year's comparable quarter
- Liquids production (crude oil/condensate/natural gas liquids)
of 961,000 barrels (Bbls), an increase of 7 percent over last
year's comparable quarter as reported and an increase of 32 percent
pro forma for last year's Mid-Continent and West Texas asset sales
- Net income excluding selected items of $85.0 million, an increase of 14 percent over
last year's comparable quarter
- Cash flow from operations of $358.3
million, an increase of 29 percent over last year's
comparable quarter
- Total unit costs (including financing) of $2.53 per thousand cubic feet equivalent (Mcfe),
a 15 percent improvement over last year's comparable quarter
Third Quarter 2014 Financial Results
"The results posted in the most recently completed quarter once
again highlight the quality of our operations and assets," said
Dan O. Dinges, Chairman, President
and Chief Executive Officer. "We made improvements in every key
category, even in the face of strong headwinds."
Equivalent production in the third quarter of 2014 was 132.4
Bcfe, consisting of 126.7 billion cubic feet (Bcf) of natural gas
and 961,000 Bbls of liquids. These figures represent increases of
24 percent, 25 percent, and 7 percent, respectively.
Net income in the third quarter of 2014 was $100.8 million, or $0.24 per share, compared to $69.9 million, or $0.17 per share, in the third quarter of 2013.
Excluding the effect of selected items (detailed in the table
below), net income was $85.0 million,
or $0.20 per share, in the third
quarter of 2014, compared to $74.6
million, or $0.18 per share,
in the third quarter of 2013.
Cash flow from operations in the third quarter of 2014 was
$358.3 million, compared to
$276.7 million in the third quarter
of 2013. Discretionary cash flow in the third quarter of 2014 was
$296.0 million, compared to
$282.3 million in the third quarter
of 2013.
Natural gas price realizations, including the effect of hedges,
were $3.06 per thousand cubic feet
(Mcf) in the third quarter of 2014, down 9 percent compared to the
third quarter of 2013. Excluding the impact of hedges, natural gas
price realizations for the quarter were $2.92 per Mcf, representing a $1.14 discount to NYMEX settlement prices. Oil
price realizations, including the effect of hedges, were
$94.79 per Bbl, down 9 percent
compared to the third quarter of 2013.
Total per unit costs (including financing) decreased to
$2.53 per Mcfe in the third quarter
of 2014, a 15 percent improvement compared to $2.98 per Mcfe in the third 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, which increased as a result of slightly higher
transportation rates and the commencement of new transportation
agreements, and exploration expense.
Year-To-Date 2014 Financial Results
"The year-to-date results set many records for a nine-month
period including production, net income and cash flow from
operations," remarked Dinges. "We continue to post our best results
even in the face of a challenged commodity price environment."
Production during the nine-month period ended September 30, 2014 was 379.9 Bcfe, consisting of
364.3 Bcf of natural gas and 2.6 million Bbls of liquids. These
figures represent increases of 30 percent, 31 percent, and 11
percent, respectively, compared to the nine-month period ended
September 30, 2013.
For the nine-month period ended September
30, 2014, net income was $326.2
million, or $0.78 per share,
compared to $201.8 million, or
$0.48 per share, for the nine-month
period ended September 30,
2013. Excluding the effect of selected items (detailed in the
table below), net income was $310.0
million, or $0.74 per share,
compared to $223.8 million, or
$0.53 per share, for the nine-month
period ended September 30, 2013.
For the nine-month period ended September
30, 2014, cash flow from operations was $943.3 million, compared to $766.7 million for the nine-month period ended
September 30, 2013. Discretionary
cash flow was $947.8 million for the
nine-month period ended September 30,
2014, compared to $813.7
million for the nine-month period ended September 30, 2013.
Operational Highlights
Marcellus Shale
During the third quarter of 2014, the Company averaged 1,298
million cubic feet (Mmcf) per day of net Marcellus production, an
increase of 30 percent over the prior year's comparable quarter.
"Our Marcellus volumes increased three percent sequentially
relative to the second quarter and were slightly ahead of the
guidance we provided a month ago," commented Dinges. "We continue
to remain confident in our production outlook for the fourth
quarter based on a robust schedule of wells to be placed on
production between now and the end of the year."
Eagle Ford Shale
Cabot's net production in the Eagle Ford during the third
quarter of 2014 was 10,347 barrels of oil equivalent (Boe) per day,
an increase of 37 percent over the prior year's comparable quarter.
This included 9,788 Bbls of liquids per day, an increase of 45
percent over the prior year's comparable quarter.
During the third quarter of 2014, Cabot placed 10 wells on
production that have produced for at least 30 days, all of which
were placed on production during the second half of the quarter.
These wells achieved an average 30-day production rate of 751 Boe
per day per well with a 91 percent oil cut. "Our oil production for
the third quarter was relatively flat compared to the second
quarter due to the timing of when our pads were placed on
production during the quarter and downtime associated with well
shut-ins for offset completions," stated Dinges. "We anticipate a
meaningful ramp-up in oil production in the fourth quarter as we
plan to place approximately 15 wells on production before year-end,
with the majority of those wells coming online in December
providing a strong exit rate for the year."
Earlier this year, Cabot initiated a 300-foot downspacing pilot
program in the Eagle Ford, which has yielded encouraging results to
date. The initial two wells in the pilot program have combined to
produce approximately 230,000 Bbls of oil during the first 180 days
of production. "We are pleased with the early results of our
downspacing program and plan to test more 300-foot downspaced wells
this year," noted Dinges. "Our Eagle Ford drilling inventory would
increase to approximately 1,000 gross locations assuming the
success of this program."
Financial Position and Liquidity
As of September 30, 2014, the
Company's net debt to adjusted capitalization ratio was 35.5
percent, compared to 33.8 percent at December 31, 2013 (detailed in the table below).
As of September 30, 2014, the Company
had $1.4 billion available for future
borrowings under its revolving credit facility and no borrowings
outstanding.
Share Repurchase Program Update
Since the Company's last update, Cabot has repurchased an
additional 1.6 million shares, for a total of 4.3 million shares
repurchased year-to-date and 9.1 million shares repurchased since
the fourth quarter of 2013. The Company has approximately 10.1
million shares remaining under its share repurchase program.
2015 Hedging Update
During the third quarter of 2014, Cabot added 20 natural gas
derivative contracts for 2015. The Company now has approximately
194 Mmcf per day of natural gas volumes hedged for 2015 at a
weighted average floor of $3.99 per
Mcf.
2015 Guidance
The Company has reaffirmed its 2015 production growth guidance
range of 20 to 30 percent. This production growth range is based on
an average gross Marcellus production rate range of 1.8 to 2.0 Bcf
per day and an average net liquids production range of 18,000 to
20,000 Bbls per day, of which approximately 88 percent is crude
oil. The Company's capital budget for 2015 is $1.53 to $1.60 billion. Drilling and completion
capital will account for $1.25 to $1.32
billion of the capital budget, with approximately 52 percent
allocated to the Marcellus Shale, 46 percent allocated to the Eagle
Ford Shale, and 2 percent allocated to other drilling areas. The
capital budget assumes five operated rigs in the Marcellus Shale
(down from the current level of six) and four operated rigs in the
Eagle Ford Shale. The Company expects to drill 180 to 190 net wells
in 2015, including 95 to 100 net wells in the Marcellus Shale and
80 to 85 net wells in the Eagle Ford Shale. The Company's budget
for 2015 assumes commodity price realizations of $2.80 per Mcf for natural gas, which is slightly
below Cabot's unhedged price realizations for the most recently
completed quarter, and $88.00 per Bbl
for oil. Cabot's typical Marcellus Shale and Eagle Ford Shale
wells generate rates of return greater than 80 percent and 60
percent, respectively, at the 2015 budget price realizations.
"This program demonstrates the quality of our assets with the
ability to generate impressive production growth, cash flow growth
and top-tier finding and development costs, all while maintaining
an investment grade balance sheet despite the lower commodity price
assumptions," said Dinges.
Conference Call
A conference call is scheduled for Friday, October 24, 2014, at 9:30 a.m. Eastern Time to discuss third 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
PRODUCED NATURAL
GAS (Bcf) & LIQUIDS (Mbbl)
|
|
|
|
|
|
|
|
Natural
Gas
|
|
|
|
|
|
|
|
Appalachia
|
123.4
|
|
95.9
|
|
354.6
|
|
261.1
|
Other
|
3.3
|
|
5.8
|
|
9.7
|
|
16.4
|
Total
|
126.7
|
|
101.7
|
|
364.3
|
|
277.5
|
|
|
|
|
|
|
|
|
Crude/Condensate/NGL
|
961
|
|
898
|
|
2,608
|
|
2,352
|
|
|
|
|
|
|
|
|
Equivalent Production
(Bcfe)
|
132.4
|
|
107.1
|
|
379.9
|
|
291.7
|
|
|
|
|
|
|
|
|
PRICES(1)
|
|
|
|
|
|
|
|
Average Produced Gas
Sales Price ($/Mcf)
|
|
|
|
|
|
|
|
Appalachia
|
$
|
3.04
|
|
$
|
3.38
|
|
$
|
3.39
|
|
$
|
3.65
|
Other
|
$
|
3.86
|
|
$
|
3.09
|
|
$
|
4.48
|
|
$
|
3.06
|
Total
|
$
|
3.06
|
|
$
|
3.36
|
|
$
|
3.41
|
|
$
|
3.62
|
|
|
|
|
|
|
|
|
Average
Crude/Condensate Price ($/Bbl)
|
$
|
94.79
|
|
$
|
103.76
|
|
$
|
97.05
|
|
$
|
103.07
|
|
|
|
|
|
|
|
|
WELLS
DRILLED
|
|
|
|
|
|
|
|
Gross
|
49
|
|
51
|
|
125
|
|
134
|
Net
|
46
|
|
41
|
|
108
|
|
111
|
Gross success
rate
|
98%
|
|
100%
|
|
99%
|
|
98%
|
|
(1) These
realized prices include the realized impact of derivative
instrument settlements.
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Realized Impacts to
Gas Pricing
|
$
|
0.15
|
|
$
|
0.20
|
|
$
|
(0.24)
|
|
$
|
0.12
|
Realized Impacts to
Oil Pricing
|
$
|
(0.04)
|
|
$
|
(1.33)
|
|
$
|
(0.57)
|
|
$
|
1.43
|
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In thousands, except
per share amounts)
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Natural
gas
|
$
|
347,970
|
|
$
|
341,901
|
|
$
|
1,218,540
|
|
$
|
1,004,085
|
Crude
oil and condensate
|
82,563
|
|
84,209
|
|
228,047
|
|
220,090
|
Gain
(loss) on derivative instruments
|
71,906
|
|
—
|
|
69,577
|
|
—
|
Brokered
natural gas
|
6,501
|
|
7,165
|
|
27,794
|
|
26,302
|
Other
|
3,077
|
|
2,575
|
|
11,049
|
|
8,338
|
|
512,017
|
|
435,850
|
|
1,555,007
|
|
1,258,815
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Direct
operations
|
37,802
|
|
32,923
|
|
109,241
|
|
101,398
|
Transportation and gathering
|
85,966
|
|
60,803
|
|
247,707
|
|
159,672
|
Brokered
natural gas
|
5,680
|
|
5,913
|
|
24,570
|
|
21,006
|
Taxes
other than income
|
10,933
|
|
11,532
|
|
36,794
|
|
34,583
|
Exploration
|
8,812
|
|
3,891
|
|
19,963
|
|
12,444
|
Depreciation, depletion and amortization
|
154,013
|
|
168,980
|
|
458,995
|
|
469,022
|
General and
administrative (excluding stock-based compensation)
|
13,901
|
|
12,448
|
|
46,219
|
|
41,048
|
Stock-based
compensation(1)
|
5,678
|
|
12,249
|
|
15,123
|
|
40,961
|
|
322,785
|
|
308,739
|
|
958,612
|
|
880,134
|
Earnings (loss) on
equity method investments
|
1,063
|
|
278
|
|
1,819
|
|
614
|
Gain (loss) on sale
of assets
|
46
|
|
4,421
|
|
(2,735)
|
|
4,601
|
INCOME FROM
OPERATIONS
|
190,341
|
|
131,810
|
|
595,479
|
|
383,896
|
Interest
expense
|
17,422
|
|
16,074
|
|
50,312
|
|
49,366
|
Income before income
taxes
|
172,919
|
|
115,736
|
|
545,167
|
|
334,530
|
Income tax
expense
|
72,131
|
|
45,847
|
|
218,928
|
|
132,703
|
NET
INCOME
|
$
|
100,788
|
|
$
|
69,889
|
|
$
|
326,239
|
|
$
|
201,827
|
Earnings per share
- Basic
|
$
|
0.24
|
|
$
|
0.17
|
|
$
|
0.78
|
|
$
|
0.48
|
Weighted average
common shares outstanding
|
416,173
|
|
420,986
|
|
416,785
|
|
420,664
|
|
____________________________________
|
(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)
|
|
|
September 30,
2014
|
|
December 31,
2013
|
Assets
|
|
|
|
Current
assets
|
$
|
587,946
|
|
$
|
378,899
|
Properties and
equipment, net (Successful efforts method)
|
5,130,213
|
|
4,546,227
|
Other
assets
|
89,105
|
|
55,954
|
Total
assets
|
$
|
5,807,264
|
|
$
|
4,981,080
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities
|
$
|
432,791
|
|
$
|
407,905
|
Long-term
debt
|
1,612,000
|
|
1,147,000
|
Deferred income
taxes
|
1,208,036
|
|
1,067,912
|
Other
liabilities
|
187,966
|
|
153,661
|
Stockholders'
equity
|
2,366,471
|
|
2,204,602
|
Total liabilities and
stockholders' equity
|
$
|
5,807,264
|
|
$
|
4,981,080
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In
thousands)
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Cash Flows From
Operating Activities
|
|
|
|
|
|
|
|
Net income
|
$
|
100,788
|
|
$
|
69,889
|
|
$
|
326,239
|
|
$
|
201,827
|
Deferred income tax
expense
|
62,986
|
|
37,573
|
|
181,439
|
|
107,235
|
(Gain) loss on sale
of assets
|
(46)
|
|
(4,421)
|
|
2,735
|
|
(4,601)
|
Exploration
expense
|
4,300
|
|
1
|
|
6,454
|
|
807
|
Unrealized (gain)
loss on derivative instruments
|
(31,833)
|
|
—
|
|
(44,766)
|
|
—
|
Income charges not
requiring cash
|
159,755
|
|
179,234
|
|
475,677
|
|
508,473
|
Changes in assets and
liabilities
|
62,352
|
|
(5,567)
|
|
(4,528)
|
|
(47,065)
|
Net cash provided by
operations
|
358,302
|
|
276,709
|
|
943,250
|
|
766,676
|
|
|
|
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
(347,128)
|
|
(319,344)
|
|
(964,741)
|
|
(843,400)
|
Acquisitions
|
(15,826)
|
|
(128)
|
|
(15,826)
|
|
(128)
|
Proceeds from sale of
assets
|
4,668
|
|
14,268
|
|
3,913
|
|
15,174
|
Restricted
cash
|
—
|
|
—
|
|
28,094
|
|
—
|
Investment in equity
method investments
|
(6,554)
|
|
(4,374)
|
|
(28,784)
|
|
(8,624)
|
Net cash used in
investing
|
(364,840)
|
|
(309,578)
|
|
(977,344)
|
|
(836,978)
|
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
|
|
|
|
Net increase
(decrease) in debt
|
419,000
|
|
20,000
|
|
465,000
|
|
75,000
|
Treasury stock
repurchases
|
(119,767)
|
|
—
|
|
(119,767)
|
|
—
|
Dividends
paid
|
(8,339)
|
|
(8,423)
|
|
(25,018)
|
|
(16,830)
|
Stock-based
compensation tax benefit
|
(14,353)
|
|
1,936
|
|
6,001
|
|
9,284
|
Capitalized debt
issuance costs
|
(5,626)
|
|
—
|
|
(5,626)
|
|
—
|
Other
|
—
|
|
11
|
|
91
|
|
44
|
Net cash provided by
(used in) financing
|
270,915
|
|
13,524
|
|
320,681
|
|
67,498
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
$
|
264,377
|
|
$
|
(19,345)
|
|
$
|
286,587
|
|
$
|
(2,804)
|
Selected Item
Review and Reconciliation of Net Income and Earnings Per
Share
(In thousands, except
per share amounts)
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
As reported - net
income
|
$
|
100,788
|
|
$
|
69,889
|
|
$
|
326,239
|
|
$
|
201,827
|
Reversal of selected
items, net of tax:
|
|
|
|
|
|
|
|
(Gain) loss on sale
of assets
|
(28)
|
|
(2,670)
|
|
1,646
|
|
(2,776)
|
Unrealized (gain)
loss on derivative instruments (1)
|
(19,154)
|
|
—
|
|
(26,936)
|
|
—
|
Stock-based
compensation expense
|
3,416
|
|
7,397
|
|
9,100
|
|
24,712
|
Net income excluding
selected items
|
$
|
85,022
|
|
$
|
74,616
|
|
$
|
310,049
|
|
$
|
223,763
|
As reported -
earnings per share
|
$
|
0.24
|
|
$
|
0.17
|
|
$
|
0.78
|
|
$
|
0.48
|
Per share impact of
reversing selected items
|
(0.04)
|
|
0.01
|
|
(0.04)
|
|
0.05
|
Earnings per share
including reversal of selected items
|
$
|
0.20
|
|
$
|
0.18
|
|
$
|
0.74
|
|
$
|
0.53
|
Weighted average
common shares outstanding
|
416,173
|
|
420,986
|
|
416,785
|
|
420,664
|
|
_____________________________
|
(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 September
30,
|
|
Nine Months
Ended
September 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Discretionary Cash
Flow
|
|
|
|
|
|
|
|
As reported - net
income
|
$
|
100,788
|
|
$
|
69,889
|
|
$
|
326,239
|
|
$
|
201,827
|
Plus
(less):
|
|
|
|
|
|
|
|
Deferred income tax
expense
|
62,986
|
|
37,573
|
|
181,439
|
|
107,235
|
(Gain) loss on sale
of assets
|
(46)
|
|
(4,421)
|
|
2,735
|
|
(4,601)
|
Exploration
expense
|
4,300
|
|
1
|
|
6,454
|
|
807
|
Unrealized (gain)
loss on derivative instruments
|
(31,833)
|
|
—
|
|
(44,766)
|
|
—
|
Income charges not
requiring cash
|
159,755
|
|
179,234
|
|
475,677
|
|
508,473
|
Discretionary Cash
Flow
|
295,950
|
|
282,276
|
|
947,778
|
|
813,741
|
Changes in assets and
liabilities
|
62,352
|
|
(5,567)
|
|
(4,528)
|
|
(47,065)
|
Net cash provided by
operations
|
$
|
358,302
|
|
$
|
276,709
|
|
$
|
943,250
|
|
$
|
766,676
|
Net Debt
Reconciliation
(In
thousands)
|
|
|
September 30,
2014
|
|
December 31,
2013
|
Long-term
debt
|
$
|
1,612,000
|
|
$
|
1,147,000
|
Stockholders'
equity
|
2,366,471
|
|
2,204,602
|
Total
Capitalization
|
$
|
3,978,471
|
|
$
|
3,351,602
|
|
|
|
|
Total debt
|
$
|
1,612,000
|
|
$
|
1,147,000
|
Less: Cash and cash
equivalents
|
(309,987)
|
|
(23,400)
|
Net
Debt
|
$
|
1,302,013
|
|
$
|
1,123,600
|
|
|
|
|
Net debt
|
$
|
1,302,013
|
|
$
|
1,123,600
|
Stockholders'
equity
|
2,366,471
|
|
2,204,602
|
Total Adjusted
Capitalization
|
$
|
3,668,484
|
|
$
|
3,328,202
|
|
|
|
|
Total debt to total
capitalization ratio
|
40.5%
|
|
34.2%
|
Less: Impact of cash
and cash equivalents
|
5.0%
|
|
0.4%
|
Net Debt to
Adjusted Capitalization Ratio
|
35.5%
|
|
33.8%
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-announces-third-quarter-2014-financial-and-operating-results-provides-update-on-2015-guidance-and-share-repurchase-program-371083952.html
SOURCE Cabot Oil & Gas Corporation