HOUSTON, Feb. 23, 2018 /PRNewswire/ -- Cabot Oil
& Gas Corporation (NYSE: COG) ("Cabot" or the "Company") today
reported financial and operating results for the fourth-quarter and
full-year ended December 31, 2017.
Additionally, the Company announced an expansion of its share
repurchase program authorization to 30 million shares (or
approximately 6.5 percent of its current shares outstanding).
Full-Year 2017 Highlights
- Net income of $100.4 million (or
$0.22 per share); adjusted net income
(non-GAAP) of $244.5 million (or
$0.53 per share)
- Net cash provided by operating activities of $898.2 million; discretionary cash flow
(non-GAAP) of $976.1 million
- Free cash flow (non-GAAP) of $154.5
million, marking the second consecutive year of positive
free cash flow
- Daily equivalent production growth of 10 percent
year-over-year
- Proved reserves growth of 13 percent year-over-year
- Total company all-sources finding and development costs of
$0.35 per thousand cubic feet
equivalent (Mcfe) and Marcellus-only all-sources finding and
development costs of $0.22 per
thousand cubic feet (Mcf)
- Returned $202.6 million of cash
to shareholders through dividends and share repurchases
- Improved operating expenses per unit by seven percent
year-over-year
- Capital expenditures (including investment in equity method
investments) of $821.6 million, three
percent below the full-year guidance
- Improved return on capital employed (ROCE) (non-GAAP) by over
800 basis points
- Announced the divestiture of three non-core assets for total
proceeds of $836.3 million (subject
to customary closing conditions and purchase price
adjustments)
See the supplemental tables at the end of this press release for
a reconciliation of non-GAAP measures including adjusted net income
(loss), EBITDAX, discretionary cash flow, free cash flow, ROCE,
pre-tax present value of future net cash flows (pre-tax PV–10) and
net debt to adjusted capitalization ratio.
"2017 marked another positive year for Cabot Oil & Gas as we
continued to execute on our strategy for creating long-term
shareholder value by delivering debt-adjusted per share growth;
generating positive free cash flow; improving corporate returns on
capital employed; increasing return of capital to shareholders; and
maintaining a strong balance sheet," commented Dan O. Dinges, Chairman, President and Chief
Executive Officer. "Our strategy was rewarded in 2017 as Cabot
delivered the highest total shareholder return in our peer group
and outperformed the S&P 500 index. Given our relentless focus
on delivering returns-focused per share growth, we have increased
our share repurchase program authorization and modified the target
metrics in our 2018 compensation program to focus on corporate
returns and growth per debt-adjusted share, which are
better-aligned with our disciplined capital allocation
philosophy."
Full-Year 2017 Financial Results
Full-year 2017 equivalent production was 685.3 billion cubic
feet equivalent (Bcfe), consisting of 655.6 billion cubic feet
(Bcf) of natural gas, 4,440.9 thousand barrels (Mbbls) of crude oil
and condensate, and 512.1 Mbbls of natural gas liquids (NGLs).
Full-year 2017 net income was $100.4
million, or $0.22 per share,
compared to a net loss of $417.1
million, or $0.91 per share,
in the prior-year period. Full-year 2017 adjusted net income
(non-GAAP) was $244.5 million, or
$0.53 per share, compared to an
adjusted net loss of $97.3 million,
or $0.21 per share, in the prior-year
period. Full-year 2017 EBITDAX (non-GAAP) was $1,059.1 million, compared to $556.0 million in the prior-year period.
Full-year 2017 net cash provided by operating activities was
$898.2 million, compared to
$397.4 million in the prior-year
period. Full-year 2017 discretionary cash flow (non-GAAP) was
$976.1 million, compared to
$460.7 million in the prior-year
period. Full-year 2017 free cash flow (non-GAAP) was $154.5 million, compared to $57.1 million in in the prior-year period.
Full-year 2017 natural gas price realizations, including the
impact of derivatives, were $2.31 per
Mcf, a 36 percent improvement compared to the prior-year period.
Excluding the impact of derivatives, full-year 2017 natural gas
price realizations were $2.30 per
Mcf, representing an $0.80 discount
to NYMEX settlement prices. Full-year 2017 oil price realizations,
including the impact of derivatives, were $48.16 per barrel (Bbl), an increase of 29
percent compared to the prior-year period. NGL price realizations
were $19.47 per Bbl, an increase of
66 percent compared to the prior-year period. Full-year 2017
operating expenses (including financing) decreased to $2.02 per Mcfe, a seven percent improvement
compared to the prior-year period.
Cabot incurred a total of $757.2
million of capital expenditures in 2017 including
$637.2 million of drilling and
facilities capital associated with drilling 91 gross (82.5 net)
wells and completing 105 gross (94.2 net) wells; $102.3 million of leasehold acquisition capital
primarily associated with the Company's grassroots leasing efforts
in two new exploratory operating areas; and $17.7 million of other capital. Additionally, the
Company contributed $57.0 million to
its equity pipeline investments in 2017. See the supplemental table
at the end of this press release reconciling the capital
expenditures for the year.
Fourth-Quarter 2017 Financial Results
Fourth-quarter 2017 equivalent production was 172.6 Bcfe,
consisting of 164.4 Bcf of natural gas, 1,238.0 Mbbls of crude oil
and condensate, and 131.5 Mbbls of NGLs. On a divestiture-adjusted
basis (which reflects the impact of the West Virginia disposition that closed in the
third-quarter), Cabot's equivalent production increased four
percent sequentially compared to the third-quarter. Natural gas
production for the fourth-quarter came in on the lower end of the
Company's guidance range primarily due to delayed in-service dates
for two new third-party compressor stations, of which one was
placed in-service in January 2018 and
one that is expected to be in-service by the end of the first
quarter.
Fourth-quarter 2017 net loss was $44.4
million, or $0.10 per share,
compared to net loss of $292.8
million, or $0.63 per share,
in the prior-year period. Fourth-quarter 2017 adjusted net income
(non-GAAP) was $59.5 million, or
$0.13 per share, compared to adjusted
net income of $5.1 million, or
$0.01 per share, in the prior-year
period. Fourth-quarter 2017 EBITDAX (non-GAAP) was $259.8 million, compared to $187.8 million in the prior-year period.
Fourth-quarter 2017 net cash provided by operating activities
was $179.1 million, compared to
$139.7 million in the prior-year
period. Fourth-quarter 2017 discretionary cash flow (non-GAAP) was
$240.1 million, compared to
$163.6 million in the prior-year
period. Fourth-quarter 2017 free cash flow (non-GAAP) was
$28.7 million, compared to
$29.1 million in in the prior-year
period.
Fourth-quarter 2017 natural gas price realizations, including
the impact of derivatives, were $2.18
per Mcf, a 12 percent improvement compared to the prior-year
period. Excluding the impact of derivatives, fourth-quarter 2017
natural gas price realizations were $2.15 per Mcf, representing a $0.78 discount to NYMEX settlement prices.
Fourth-quarter 2017 oil price realizations, including the impact of
derivatives, were $54.54 per Bbl, an
increase of 27 percent compared to the prior-year period. NGL price
realizations were $23.51 per Bbl, an
increase of 70 percent compared to the prior-year period.
Fourth-quarter 2017 operating expenses (including financing)
decreased to $2.01 per Mcfe, a two
percent improvement compared to the prior-year period.
Cabot incurred a total of $174.5
million of capital expenditures in the fourth-quarter of
2017 including $162.0 million of
drilling and facilities capital associated with drilling 20 gross
(20.0 net) wells and completing 24 gross (24.0 net) wells;
$4.4 million of leasehold acquisition
capital primarily associated with the Company's grassroots leasing
efforts in two new exploratory operating areas; and $8.1 million of other capital. Additionally, the
Company contributed $33.7 million to
its equity pipeline investments in 2017. See the supplemental table
at the end of this press release reconciling the capital
expenditures during the fourth-quarter of 2017.
Year-End 2017 Financial Position and Liquidity
As of December 31, 2017, Cabot had
total debt of $1.5 billion and cash
on hand of $480.0 million. The
Company's net debt to adjusted capitalization ratio and net debt to
trailing twelve months EBITDAX ratio were 29.2 percent and 1.0x,
respectively, compared to 28.5 percent and 1.8x as of December 31, 2016.
Total commitments under the Company's credit facility remain
unchanged at $1.8 billion, with
approximately $1.7 billion currently
available to the Company. The Company currently has no debt
outstanding under the credit facility, resulting in approximately
$2.2 billion of liquidity.
Share Repurchase Program Update
During the fourth-quarter of 2017, Cabot repurchased 2.0 million
shares at a weighted-average share price of $27.72. For the full-year 2017, the Company
repurchased 5.0 million shares at a weighted-average share price of
$24.52.
The Board of Directors has authorized an increase in the
Company's share repurchase program to 30 million shares (or
approximately 6.5 percent of its current shares outstanding).
All purchases will be made in accordance with applicable securities
laws from time to time in open market or private transactions,
depending on market conditions, and may be discontinued at any
time. Based on the closing share price on February 22, 2018, the program implies
approximately $720 million of
potential share repurchases. "Subsequent to the closing of our
Eagle Ford Shale divestiture (which is expected to close on
February 28, 2018), we will have
approximately $1.2 billion of cash on
hand. This cash position, along with our anticipated free cash flow
in 2018, provides us the financial flexibility to execute on an
expanded share repurchase program while continuing to reinvest in
returns-focused, organic growth from our existing asset base,"
stated Dinges.
Year-End 2017 Proved Reserves
Cabot reported year-end proved reserves of 9.7 trillion cubic
feet equivalent (Tcfe), an increase of 13 percent over year-end
2016. Specific highlights from the Company's year-end reserve
report include:
- Total company all-sources finding and development costs of
$0.35 per Mcfe
- Marcellus-only all-sources finding and development costs of
$0.22 per Mcf
- Total company all-sources reserve replacement of 316
percent
- Marcellus-only all-sources reserve replacement of 305
percent
The table below reconciles the components driving the 2017
reserve increase:
Proved Reserves
Reconciliation (in Bcfe)
|
Balance at
December 31, 2016
|
8,576
|
Revisions of prior
estimates
|
928
|
Extensions,
discoveries and other additions
|
1,236
|
Sales
|
(329)
|
Production
|
(685)
|
Balance at
December 31, 2017
|
9,726
|
As of December 31, 2017, 96
percent of Cabot's year-end proved reserves were natural gas and 96
percent were located in the Marcellus Shale. Approximately 64
percent of the year-end proved reserves were classified as proved
developed and 36 percent were classified as proved undeveloped
(PUD), including eight percent of drilled and uncompleted PUDs.
Total costs incurred during 2017 were $761.0 million, which included $617.5 million for development costs,
$41.2 million for exploration costs,
and $102.3 million for lease
acquisition costs.
The SEC prices used for reporting Cabot's year-end 2017 proved
reserves, which have been adjusted for basis and quality
differentials, were $2.33 per Mcf for
natural gas and $49.26 per Bbl for
crude oil, representing a 34 percent and 31 percent year-over-year
increase, respectively. Assuming the SEC prices, the pre-tax PV–10
(non-GAAP) of the year-end 2017 proved reserves was $6.0 billion.
Tax Reform Impact
On December 22, 2017, the U.S.
enacted tax legislation referred to as the Tax Cuts and Jobs Act
(the "Tax Act"), which made significant changes to U.S. federal
income tax law. These changes include, among others, a permanent
reduction of the U.S. corporate income tax rate from a top marginal
rate of 35 percent to a flat rate of 21 percent; elimination of the
corporate alternative minimum tax (AMT); and immediate deductions
for certain new investments instead of deductions for depreciation
expense over time. Overall, the Company expects the provisions of
the Tax Act to favorably impact its future effective tax rate,
after-tax earnings, and cash flows.
As a result of the enactment of the Tax Act, Cabot recorded an
income tax benefit of $242.9 million
in the fourth-quarter of 2017 resulting from the remeasurement of
the Company's net deferred tax liabilities based on the new lower
corporate income tax rate. As of December
31, 2017, the Company had AMT credit carryforwards of
$208.6 million, which do not expire
and can be used to offset regular income taxes in future years.
Under the new Tax Act, the Company may claim a refund of 50 percent
of the remaining AMT credits (to the extent the credits exceed
regular tax for the year) in 2018, 2019, and 2020. Any AMT credits
remaining after 2020 will be refunded in 2021. The Company expects
a net refund of $97.1 million related
to 2018.
First-Quarter and Full-Year 2018 Guidance Update
Cabot has provided first-quarter 2018 net production guidance of
1,775 to 1,825 million cubic feet (Mmcf) per day for natural
gas; 7,500 to 8,000 Bbls per day for crude oil and condensate; and
700 to 800 Bbls per day for NGLs. This guidance range assumes a
February 28, 2018 closing date for
the Company's previously announced Eagle Ford divestiture and
reflects the impact of the previously mentioned in-service delay
for two new third-party compressor stations in the
Marcellus.
Cabot has reaffirmed its 2018 daily production growth guidance
of 10 to 15 percent (18 to 23 percent on a divestiture-adjusted
basis to reflect the impact of the previously announced Eagle Ford,
East Texas, and West Virginia dispositions). "Our 2018
production growth is weighted toward the second half of the year
driven by anticipated mid-year in-service dates for the Moxie
Freedom power plant, Lackawanna Energy Center power plant, and
Atlantic Sunrise pipeline," noted Dinges. "We anticipate sequential
quarterly growth of approximately six, eleven and thirteen percent
in the second, third, and fourth quarters, respectively, resulting
in a divestiture-adjusted exit-to-exit production growth rate of
over 35 percent."
The Company has also updated its capital budget to $950 million (consistent with the midpoint of the
previously announced 2018 budget) as follows:
• Marcellus
Shale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$800
million
|
• Exploration
Areas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$75
million
|
• Pipeline
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$60
million
|
•
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$15
million
|
The Company plans to average three rigs and two completion crews
in the Marcellus Shale during 2018, resulting in 85 net wells
drilled and 95 net wells completed. The average lateral length for
the 2018 Marcellus Shale drilling program is 8,300 feet and the
expected average well cost is $8.3
million ($1,000 per foot) for
drilling, completion and facilities. This average well cost
incorporates anticipated cost inflation resulting from new service
contracts, offset by efficiencies associated with implementing the
Generation 5 well design across the majority of the program. "Our
Generation 5 wells continue to track our 4.4 Bcf per 1,000 lateral
feet type curve, which gives us the confidence to implement this
well design across the majority of our program moving forward due
to the improved economics from this more capital-efficient design,"
said Dinges.
Additionally, the Company has updated its 2018 operating expense
guidance to the following to reflect the impact of the previously
announced divestitures:
• Direct
operations:
|
$0.09 - $0.11 per
Mcfe
|
• Transportation and
gathering:
|
$0.66 - $0.68 per
Mcfe
|
• Taxes other than
income:
|
$0.02 - $0.03 per
Mcfe
|
• Depreciation,
depletion and amortization:
|
$0.50 - $0.60 per
Mcfe
|
• Interest
expense:
|
$0.09 - $0.11 per
Mcfe
|
• Cash general and
administrative (ex. stock-based compensation):
|
$60
million
|
•
Exploration:
|
$35
million
|
|
|
"Our forecasted operating expenses for the year are now expected
to be below $1.60 per Mcfe,
representing over a 20 percent improvement relative to 2017,"
highlighted Dinges. "This industry-leading cost structure will
allow us to continue to generate profitability and deliver strong
corporate returns on capital even at the lows of the natural gas
price cycle. Our 2018 plan is expected to generate approximately
$180 million of free cash flow at an
average NYMEX price of $2.75 per
Mmbtu and can still be self-funding and generate a double-digit
ROCE at an average NYMEX price as low as $2.50 per Mmbtu."
For further disclosure on Cabot's natural gas pricing exposure
by index and corporate tax guidance, please see the current
Guidance slide in the Investor Relations section of the Company's
website.
Updated Three-Year Outlook
As a result of the previously announced divestiture of the Eagle
Ford properties and the recent change in U.S. federal income tax
law, the Company has provided an updated three-year outlook for the
total company including the impact of income taxes, corporate
overhead and interest expense. From 2018 to 2020, the Company
expects to deliver a three-year production compound annual growth
rate (CAGR) of 17 to 21 percent (or 20 to 24 percent on a
divestiture-adjusted basis). Based on a range of NYMEX prices of
$2.75 to $3.25 per Mmbtu, the Company expects to deliver
between $1.6 and $2.5 billion of after-tax cumulative free cash
flow (non-GAAP) while delivering significant growth in net income,
discretionary cash flow (non-GAAP), and ROCE (non-GAAP). "We
believe the combination of growth, free cash flow and corporate
returns expected during this three-year period are not only
best-in-class in the exploration and production sector, but are
extremely competitive when compared to the broader equity market,"
emphasized Dinges.
The Company assumed no capital was allocated to exploration in
2019 and 2020; however, this is subject to change based on the
initial results from the ongoing testing in the Company's
exploratory areas. For further disclosure on the Company's
three-year plan assumptions, please see the current investor
presentation in the Investor Relations section of the Company's
website.
Conference Call Webcast and Supplemental Earnings
Materials
A conference call is scheduled for Friday, February 23, 2018, at 9:30 a.m. Eastern Time to discuss fourth quarter
and full-year 2017 financial and operating results. To access the
live audio webcast, please visit the Investor Relations section of
the Company's website. A replay of the call will also be available
on 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 website at
www.cabotog.com.
This press release includes forward‐looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The statements regarding future financial and operating
performance and results, strategic pursuits and goals, market
prices, future hedging and risk management activities, and other
statements that are not historical facts contained in this report
are forward-looking statements. The words "expect", "project",
"estimate", "believe", "anticipate", "intend", "budget", "plan",
"forecast", "outlook", "predict", "may", "should", "could", "will"
and similar expressions are also intended to identify
forward-looking statements. Such statements involve risks and
uncertainties, including, but not limited to, market factors,
market prices (including geographic basis differentials) of natural
gas and crude oil, results of future drilling and marketing
activity, future production and costs, legislative and regulatory
initiatives, electronic, cyber or physical security breaches and
other factors detailed herein and in our other Securities and
Exchange Commission (SEC) filings. See "Risk Factors" in Item 1A of
the Form 10-K and subsequent public filings for additional
information about these risks and uncertainties. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially
from those indicated. Any forward-looking statement speaks
only as of the date on which such statement is made, and the
Company does not undertake any obligation to correct or update any
forward-looking statement, whether as the result of new
information, future events or otherwise, except as required by
applicable law.
FOR MORE INFORMATION CONTACT
Matt Kerin (281) 589-4642
OPERATING
DATA
|
|
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
PRODUCTION
VOLUMES
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
164.4
|
|
|
158.6
|
|
|
655.6
|
|
|
600.4
|
|
Crude oil and
condensate (Mbbl)
|
1,238.0
|
|
|
822.7
|
|
|
4,440.9
|
|
|
4,013.1
|
|
Natural gas liquids
(NGLs) (Mbbl)
|
131.5
|
|
|
106.5
|
|
|
512.1
|
|
|
441.2
|
|
Equivalent production
(Bcfe)
|
172.6
|
|
|
164.2
|
|
|
685.3
|
|
|
627.1
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES
PRICE
|
|
|
|
|
|
|
|
Natural gas,
including hedges ($/Mcf)
|
$
|
2.18
|
|
|
$
|
1.94
|
|
|
$
|
2.31
|
|
|
$
|
1.70
|
|
Natural gas,
excluding hedges ($/Mcf)
|
$
|
2.15
|
|
|
$
|
1.96
|
|
|
$
|
2.30
|
|
|
$
|
1.70
|
|
Crude oil and
condensate, including hedges ($/Bbl)
|
$
|
54.54
|
|
|
$
|
42.94
|
|
|
$
|
48.16
|
|
|
$
|
37.30
|
|
Crude oil and
condensate, excluding hedges ($/Bbl)
|
$
|
54.77
|
|
|
$
|
44.36
|
|
|
$
|
47.81
|
|
|
$
|
37.65
|
|
NGL
($/Bbl)
|
$
|
23.51
|
|
|
$
|
13.84
|
|
|
$
|
19.47
|
|
|
$
|
11.74
|
|
|
|
|
|
|
|
|
|
AVERAGE UNIT COSTS
($/Mcfe)
|
|
|
|
|
|
|
|
Direct
operations
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
Transportation and
gathering
|
0.69
|
|
|
0.69
|
|
|
0.70
|
|
|
0.70
|
|
Taxes other than
income
|
0.04
|
|
|
0.03
|
|
|
0.05
|
|
|
0.05
|
|
Exploration
|
0.03
|
|
|
0.09
|
|
|
0.03
|
|
|
0.04
|
|
Depreciation,
depletion and amortization
|
0.83
|
|
|
0.86
|
|
|
0.83
|
|
|
0.94
|
|
General and
administrative (excluding stock-based compensation)
|
0.11
|
|
|
0.10
|
|
|
0.09
|
|
|
0.10
|
|
Stock-based
compensation
|
0.05
|
|
|
0.02
|
|
|
0.05
|
|
|
0.04
|
|
Interest
expense
|
0.12
|
|
|
0.12
|
|
|
0.12
|
|
|
0.14
|
|
|
$
|
2.01
|
|
|
$
|
2.05
|
|
|
$
|
2.02
|
|
|
$
|
2.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WELLS
DRILLED(1)
|
|
|
|
|
|
|
|
Gross
|
20
|
|
|
12
|
|
|
91
|
|
|
40
|
|
Net
|
20.0
|
|
|
10.0
|
|
|
82.5
|
|
|
38.0
|
|
|
|
|
|
|
|
|
|
WELLS
COMPLETED(1)
|
|
|
|
|
|
|
|
Gross
|
24
|
|
|
25
|
|
|
105
|
|
|
76
|
|
Net
|
24.0
|
|
|
25.0
|
|
|
94.2
|
|
|
76.0
|
|
____________________________________________
|
(1)
|
Wells drilled
represents wells drilled to total depth during the period. Wells
completed includes wells completed during the period, regardless of
when they were drilled.
|
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
|
|
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(In thousands,
except per share amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Natural
gas
|
$
|
353,989
|
|
|
$
|
311,580
|
|
|
$
|
1,506,078
|
|
|
$
|
1,022,590
|
|
Crude oil and
condensate
|
67,810
|
|
|
36,496
|
|
|
212,338
|
|
|
151,106
|
|
Gain (loss) on
derivative instruments
|
(29,427)
|
|
|
(37,664)
|
|
|
16,926
|
|
|
(38,950)
|
|
Brokered natural
gas
|
4,957
|
|
|
4,152
|
|
|
17,217
|
|
|
13,569
|
|
Other
|
3,174
|
|
|
1,927
|
|
|
11,660
|
|
|
7,362
|
|
|
400,503
|
|
|
316,491
|
|
|
1,764,219
|
|
|
1,155,677
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Direct
operations
|
24,125
|
|
|
23,557
|
|
|
102,310
|
|
|
100,696
|
|
Transportation and
gathering
|
119,530
|
|
|
113,659
|
|
|
481,439
|
|
|
436,542
|
|
Brokered natural
gas
|
4,990
|
|
|
3,259
|
|
|
15,252
|
|
|
10,785
|
|
Taxes other than
income
|
6,925
|
|
|
5,486
|
|
|
33,487
|
|
|
29,223
|
|
Exploration
|
4,903
|
|
|
14,553
|
|
|
21,526
|
|
|
27,662
|
|
Depreciation,
depletion and amortization
|
143,128
|
|
|
141,218
|
|
|
568,817
|
|
|
590,128
|
|
Impairment of oil and
gas properties and other assets(1)
|
414,256
|
|
|
435,619
|
|
|
482,811
|
|
|
435,619
|
|
General and
administrative (excluding stock-based compensation)
|
19,022
|
|
|
15,489
|
|
|
63,745
|
|
|
59,665
|
|
Stock-based
compensation(2)
|
7,863
|
|
|
2,952
|
|
|
34,041
|
|
|
25,968
|
|
|
744,742
|
|
|
755,792
|
|
|
1,803,428
|
|
|
1,716,288
|
|
Loss on equity method
investments(3)
|
(96,500)
|
|
|
(2,685)
|
|
|
(100,486)
|
|
|
(2,477)
|
|
(Gain) loss on sale
of assets
|
1,933
|
|
|
(1,089)
|
|
|
(11,565)
|
|
|
(1,857)
|
|
LOSS FROM
OPERATIONS
|
(438,806)
|
|
|
(443,075)
|
|
|
(151,260)
|
|
|
(564,945)
|
|
Interest expense,
net
|
20,410
|
|
|
20,515
|
|
|
82,130
|
|
|
88,336
|
|
Loss on debt
extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
4,709
|
|
Other expense
(income)
|
18
|
|
|
402
|
|
|
(4,955)
|
|
|
1,609
|
|
Loss before income
taxes
|
(459,234)
|
|
|
(463,992)
|
|
|
(228,435)
|
|
|
(659,599)
|
|
Income tax
benefit(4)
|
(414,793)
|
|
|
(171,232)
|
|
|
(328,828)
|
|
|
(242,475)
|
|
NET INCOME
(LOSS)
|
$
|
(44,441)
|
|
|
$
|
(292,760)
|
|
|
$
|
100,393
|
|
|
$
|
(417,124)
|
|
Earnings (loss) per
share - Basic
|
$
|
(0.10)
|
|
|
$
|
(0.63)
|
|
|
$
|
0.22
|
|
|
$
|
(0.91)
|
|
Weighted-average
common shares outstanding
|
462,371
|
|
|
465,150
|
|
|
463,735
|
|
|
456,847
|
|
____________________________________
|
(1)
|
Includes the impairment of our
Eagle Ford Shale oil and gas properties in south Texas in the
fourth quarter of 2017. Includes the impairment of oil and gas
properties and the related pipeline assets in West Virginia and
Virginia in the fourth quarter of 2016.
|
(2)
|
Includes the impact
of our performance share awards and restricted stock.
|
(3)
|
Includes the $95.9
million other than temporary impairment of our investment in
Constitution.
|
(4)
|
Includes the impact
of the remeasurement of our net deferred income tax liabilities
based on the new corporate income tax rate associated with the Tax
Act in the fourth quarter of 2017. The remeasurement resulted in an
income tax benefit of $242.9 million.
|
CONDENSED
CONSOLIDATED BALANCE SHEET (Unaudited)
|
|
(In
thousands)
|
December 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Current
assets
|
$
|
764,957
|
|
|
$
|
715,881
|
|
Properties and
equipment, net (Successful efforts method)
|
3,072,204
|
|
|
4,250,125
|
|
Assets held for
sale
|
778,855
|
|
|
—
|
|
Other
assets
|
111,328
|
|
|
156,563
|
|
|
$
|
4,727,344
|
|
|
$
|
5,122,569
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
$
|
630,050
|
|
|
$
|
257,812
|
|
Long-term debt, net
(excluding current maturities)
|
1,217,891
|
|
|
1,520,530
|
|
Deferred income
taxes
|
227,030
|
|
|
579,447
|
|
Liabilities held for
sale
|
15,748
|
|
|
—
|
|
Other
liabilities
|
112,720
|
|
|
197,113
|
|
Stockholders'
equity
|
2,523,905
|
|
|
2,567,667
|
|
|
$
|
4,727,344
|
|
|
$
|
5,122,569
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(In
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(44,441)
|
|
|
$
|
(292,760)
|
|
|
$
|
100,393
|
|
|
$
|
(417,124)
|
|
Deferred income tax
benefit
|
(410,844)
|
|
|
(171,294)
|
|
|
(321,113)
|
|
|
(230,707)
|
|
Impairment of oil and
gas properties and other assets
|
414,256
|
|
|
435,619
|
|
|
482,811
|
|
|
435,619
|
|
(Gain) loss on sale
of assets
|
(1,933)
|
|
|
1,089
|
|
|
11,565
|
|
|
1,857
|
|
Exploratory dry hole
cost
|
978
|
|
|
10,102
|
|
|
3,820
|
|
|
10,120
|
|
(Gain) loss on
derivative instruments
|
29,427
|
|
|
37,664
|
|
|
(16,926)
|
|
|
38,950
|
|
Net cash received
(paid) in settlement of derivative instruments
|
4,469
|
|
|
(4,886)
|
|
|
8,056
|
|
|
(1,682)
|
|
Income charges not
requiring cash
|
248,231
|
|
|
148,029
|
|
|
707,496
|
|
|
623,670
|
|
Changes in assets and
liabilities
|
(61,030)
|
|
|
(23,827)
|
|
|
(77,942)
|
|
|
(63,262)
|
|
Net cash
provided by operating activities
|
179,113
|
|
|
139,736
|
|
|
898,160
|
|
|
397,441
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Capital
expenditures
|
(177,745)
|
|
|
(130,120)
|
|
|
(764,558)
|
|
|
(375,153)
|
|
Proceeds from sale of
assets
|
82,733
|
|
|
1,351
|
|
|
115,444
|
|
|
50,419
|
|
Investment in equity
method investments
|
(33,657)
|
|
|
(4,308)
|
|
|
(57,039)
|
|
|
(28,484)
|
|
Net cash
used in investing activities
|
(128,669)
|
|
|
(133,077)
|
|
|
(706,153)
|
|
|
(353,218)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net borrowings
(repayments) of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(497,000)
|
|
Treasury stock
repurchases
|
(55,486)
|
|
|
—
|
|
|
(123,741)
|
|
|
—
|
|
Sale of common stock,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
995,279
|
|
Dividends
paid
|
(23,131)
|
|
|
(9,302)
|
|
|
(78,838)
|
|
|
(36,187)
|
|
Tax withholding on
vesting of stock awards
|
(2,044)
|
|
|
(8)
|
|
|
(7,973)
|
|
|
(5,064)
|
|
Capitalized debt
issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,223)
|
|
Other
|
8
|
|
|
—
|
|
|
50
|
|
|
—
|
|
Net cash
(used in) provided by financing activities
|
(80,653)
|
|
|
(9,310)
|
|
|
(210,502)
|
|
|
453,805
|
|
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
$
|
(30,209)
|
|
|
$
|
(2,651)
|
|
|
$
|
(18,495)
|
|
|
$
|
498,028
|
|
Explanation and Reconciliation of Non-GAAP Financial
Measures
We report our financial results in accordance with accounting
principles generally accepted in the
United States (GAAP). However, we believe certain non-GAAP
performance measures may provide financial statement users with
additional meaningful comparisons between current results, the
results of our peers and of prior periods. In addition, we
believe these measures are used by analysts and others in the
valuation, rating and investment recommendations of companies
within the oil and natural gas exploration and production industry.
See the reconciliations throughout this release of GAAP financial
measures to non-GAAP financial measures for the periods
indicated.
We have also included herein certain forward-looking non-GAAP
financial measures. Due to the forward-looking nature of these
non-GAAP financial measures, we cannot reliably predict certain of
the necessary components of the most directly comparable
forward-looking GAAP measures, such as future impairments and
future changes in capital. Accordingly, we are unable to present a
quantitative reconciliation of such forward-looking non-GAAP
financial measures to their most directly comparable
forward-looking GAAP financial measures. Reconciling items in
future periods could be significant.
Reconciliation of Net Income (Loss) to Adjusted Net Income
(Loss) and Adjusted Earnings Per Share
Adjusted Net Income (Loss) and Adjusted Earnings per Share are
presented based on our belief that these non-GAAP measures enable a
user of the financial information to understand the impact of these
items on reported results. Additionally, this presentation provides
a beneficial comparison to similarly adjusted measurements of prior
periods. Adjusted Net Income (Loss) and Adjusted Earnings per
Share are not measures of financial performance under GAAP and
should not be considered as alternatives to net income and earnings
per share, as defined by GAAP.
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(In thousands,
except per share amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
As reported - net
income (loss)
|
$
|
(44,441)
|
|
|
$
|
(292,760)
|
|
|
$
|
100,393
|
|
|
$
|
(417,124)
|
|
Reversal of selected
items:
|
|
|
|
|
|
|
|
Impairment of oil and
gas properties and other assets(1)
|
414,256
|
|
|
435,619
|
|
|
482,811
|
|
|
435,619
|
|
Impairment of equity
method investments(2)
|
95,945
|
|
|
—
|
|
|
95,945
|
|
|
—
|
|
(Gain) loss on sale
of assets
|
(1,933)
|
|
|
1,089
|
|
|
11,565
|
|
|
1,857
|
|
(Gain) loss on
derivative instruments(3)
|
33,896
|
|
|
32,778
|
|
|
(8,870)
|
|
|
37,268
|
|
Loss on debt
extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
4,709
|
|
Drilling rig
termination fees
|
—
|
|
|
—
|
|
|
—
|
|
|
1,655
|
|
Stock-based
compensation expense
|
7,863
|
|
|
2,952
|
|
|
34,041
|
|
|
25,968
|
|
Severance
expense
|
21
|
|
|
—
|
|
|
3,213
|
|
|
209
|
|
OPEB
curtailment
|
(67)
|
|
|
—
|
|
|
(4,917)
|
|
|
—
|
|
Tax effect on
selected items
|
(203,211)
|
|
|
(174,567)
|
|
|
(226,787)
|
|
|
(187,443)
|
|
Impact of 2017 tax
reform
|
(242,875)
|
|
|
—
|
|
|
(242,875)
|
|
|
—
|
|
Adjusted net income
(loss)
|
$
|
59,454
|
|
|
$
|
5,111
|
|
|
$
|
244,519
|
|
|
$
|
(97,282)
|
|
As reported -
earnings (loss) per share
|
$
|
(0.10)
|
|
|
$
|
(0.63)
|
|
|
$
|
0.22
|
|
|
$
|
(0.91)
|
|
Per share impact of
selected items
|
0.23
|
|
|
0.64
|
|
|
0.31
|
|
|
0.70
|
|
Adjusted earnings
(loss) per share
|
$
|
0.13
|
|
|
$
|
0.01
|
|
|
$
|
0.53
|
|
|
$
|
(0.21)
|
|
Weighted-average
common shares outstanding
|
462,371
|
|
|
465,150
|
|
|
463,735
|
|
|
456,847
|
|
_____________________________________
|
(1)
|
This amount represents the
non-cash impairment of our Eagle Ford Shale oil and gas properties
located in south Texas in the fourth quarter of 2017 and the
non-cash impairment of our West Virginia and Virginia properties in
the fourth quarter of 2016.
|
(2)
|
This amount
represents the non-cash other than temporary impairment of our
investment in Constitution recorded in Loss on equity method
investments in the Condensed Consolidated Statement of
Operations.
|
(3)
|
This amount
represents the non-cash mark-to-market changes of our commodity
derivative instruments recorded in Gain (loss) on derivative
instruments in the Condensed Consolidated Statement of
Operations.
|
Return on Capital Employed
Return on Capital Employed (ROCE) is defined as adjusted net
income (loss) (defined above) plus after-tax net interest expense
divided by average capital employed, which is defined as total debt
plus stockholders' equity. ROCE is presented based on our belief
that this non-GAAP measure is useful information to investors when
comparing our profitability and the efficiency with which we have
employed capital over time relative to other companies. ROCE is not
a measure of financial performance under GAAP and should not be
considered an alternative to net income.
(In
thousands)
|
|
2017
|
|
2016
|
Interest expense,
net
|
|
$
|
82,130
|
|
|
$
|
88,336
|
|
Tax benefit on
interest expense, net
|
|
(30,346)
|
|
|
(32,640)
|
|
After-tax interest expense, net
(A)
|
|
51,784
|
|
|
55,696
|
|
|
|
|
|
|
As reported - net
income (loss)
|
|
100,393
|
|
|
(417,124)
|
|
Adjustments to as
reported - net income (loss), net of tax
|
|
144,126
|
|
|
319,842
|
|
Adjusted net income (loss)
(B)
|
|
244,519
|
|
|
(97,282)
|
|
|
|
|
|
|
Adjusted net income (loss)
before interest expense, net (A + B)
|
|
$
|
296,303
|
|
|
$
|
(41,586)
|
|
|
|
|
|
|
Total debt -
beginning
|
|
$
|
1,520,530
|
|
|
$
|
2,016,139
|
|
Stockholders' equity
- beginning
|
|
2,567,667
|
|
|
2,009,188
|
|
Capital employed -
beginning
|
|
4,088,197
|
|
|
4,025,327
|
|
|
|
|
|
|
Total debt -
ending
|
|
1,521,891
|
|
|
1,520,530
|
|
Stockholders' equity
- ending
|
|
2,523,905
|
|
|
2,567,667
|
|
Capital employed -
ending
|
|
4,045,796
|
|
|
4,088,197
|
|
|
|
|
|
|
Average capital employed -
(C)
|
|
$
|
4,066,997
|
|
|
$
|
4,056,762
|
|
|
|
|
|
|
Return on average capital
employed (ROCE) (A+B) / C
|
|
7.3%
|
|
|
(1.0)%
|
|
Discretionary Cash Flow and Free Cash Flow Calculation and
Reconciliation
Discretionary Cash Flow is defined as net cash provided by
operating activities excluding changes in assets and
liabilities. Discretionary Cash Flow is widely accepted as a
financial indicator of an oil and gas company's ability to generate
cash which is used to internally fund exploration and development
activities, pay dividends and service debt. Discretionary Cash
Flow is presented based on our belief that this non-GAAP measure is
useful information to investors when comparing our cash flows with
the cash flows of other companies that use the full cost method of
accounting for oil and gas producing activities or have different
financing and capital structures or tax rates. Discretionary
Cash Flow is not a measure of financial performance under GAAP and
should not be considered as an alternative to cash flows from
operating activities, as defined by GAAP, or as a measure of
liquidity, or an alternative to net income.
Free Cash Flow is defined as Discretionary Cash Flow (defined
above) less capital expenditures and investment in equity method
investments. Free Cash Flow is an indicator of a company's ability
to generate cash flow after spending the money required to maintain
or expand its asset base. Free Cash Flow is presented based on our
belief that this non-GAAP measure is useful information to
investors when comparing our cash flows with the cash flows of
other companies. Free Cash Flow is not a measure of financial
performance under GAAP and should not be considered as an
alternative to cash flows from operating activities, as defined by
GAAP, or as a measure of liquidity, or an alternative to net
income.
|
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(In
thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net cash provided by
operating activities
|
|
179,113
|
|
|
139,736
|
|
|
898,160
|
|
|
397,441
|
|
Changes in assets and
liabilities
|
|
61,030
|
|
|
23,827
|
|
|
77,942
|
|
|
63,262
|
|
Discretionary cash
flow
|
|
240,143
|
|
|
163,563
|
|
|
976,102
|
|
|
460,703
|
|
Capital
expenditures
|
|
(177,745)
|
|
|
(130,120)
|
|
|
(764,558)
|
|
|
(375,153)
|
|
Investment in equity
method investments
|
|
(33,657)
|
|
|
(4,308)
|
|
|
(57,039)
|
|
|
(28,484)
|
|
Free cash
flow
|
|
$
|
28,741
|
|
|
$
|
29,135
|
|
|
$
|
154,505
|
|
|
$
|
57,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAX Calculation and Reconciliation
EBITDAX is defined as net income plus loss on debt
extinguishment, interest expense, other expense, income tax
expense, depreciation, depletion and amortization (including
impairments), exploration expense, gain and loss on sale of assets,
non-cash gain and loss on derivative instruments, loss on equity
method investments, and stock-based compensation expense. EBITDAX
is presented based on our belief that this non-GAAP measure is
useful information to investors when evaluating our ability to
internally fund exploration and development activities and to
service or incur debt without regard to financial or capital
structure. EBITDAX is not a measure of financial performance under
GAAP and should not be considered as alternative to cash flows from
operating activities or net income, as defined by GAAP, or as a
measure of liquidity.
|
Quarter
Ended
December
31,
|
|
Twelve Months Ended
December 31,
|
(In
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net income
(loss)
|
$
|
(44,441)
|
|
|
$
|
(292,760)
|
|
|
$
|
100,393
|
|
|
$
|
(417,124)
|
|
Plus
(less):
|
|
|
|
|
|
|
|
Interest expense,
net
|
20,410
|
|
|
20,515
|
|
|
82,130
|
|
|
88,336
|
|
Loss on debt
extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
4,709
|
|
Other expense
(income)
|
18
|
|
|
402
|
|
|
(4,955)
|
|
|
1,609
|
|
Income tax
benefit
|
(414,793)
|
|
|
(171,232)
|
|
|
(328,828)
|
|
|
(242,475)
|
|
Depreciation,
depletion and amortization
|
143,128
|
|
|
141,218
|
|
|
568,817
|
|
|
590,128
|
|
Impairment of oil and
gas properties and other assets
|
414,256
|
|
|
435,619
|
|
|
482,811
|
|
|
435,619
|
|
Exploration
|
4,903
|
|
|
14,553
|
|
|
21,526
|
|
|
27,662
|
|
(Gain) loss on sale
of assets
|
(1,933)
|
|
|
1,089
|
|
|
11,565
|
|
|
1,857
|
|
Non-cash (gain) loss
on derivative instruments
|
33,896
|
|
|
32,778
|
|
|
(8,870)
|
|
|
37,268
|
|
Loss on equity method
investments
|
96,500
|
|
|
2,685
|
|
|
100,486
|
|
|
2,477
|
|
Stock-based
compensation
|
7,863
|
|
|
2,952
|
|
|
34,041
|
|
|
25,968
|
|
EBITDAX
|
$
|
259,807
|
|
|
$
|
187,819
|
|
|
$
|
1,059,116
|
|
|
$
|
556,034
|
|
Net Debt Reconciliation
The total debt to total capitalization ratio is calculated by
dividing total debt by the sum of total debt and total
stockholders' equity. This ratio is a measurement which is
presented in our annual and interim filings and we believe this
ratio is useful to investors in determining our leverage. Net Debt
is calculated by subtracting cash and cash equivalents from total
debt. Net Debt and the Net Debt to Total Capitalization ratio
are non-GAAP measures which we believe are also useful to investors
since we have the ability to and may decide to use a portion of our
cash and cash equivalents to retire debt. Additionally, as we may
incur additional expenditures without increasing debt, it is
appropriate to apply cash and cash equivalents to debt in
calculating the Net Debt to Total Capitalization ratio.
(In
thousands)
|
December 31,
2017
|
|
December 31,
2016
|
Current portion of
long-term debt
|
$
|
304,000
|
|
|
$
|
—
|
|
Long-term debt,
net
|
1,217,891
|
|
|
1,520,530
|
|
Total debt
|
$
|
1,521,891
|
|
|
$
|
1,520,530
|
|
Stockholders'
equity
|
2,523,905
|
|
|
2,567,667
|
|
Total
capitalization
|
$
|
4,045,796
|
|
|
$
|
4,088,197
|
|
|
|
|
|
Total debt
|
$
|
1,521,891
|
|
|
$
|
1,520,530
|
|
Less: Cash and cash
equivalents
|
(480,047)
|
|
|
(498,542)
|
|
Net debt
|
$
|
1,041,844
|
|
|
$
|
1,021,988
|
|
|
|
|
|
Net debt
|
$
|
1,041,844
|
|
|
$
|
1,021,988
|
|
Stockholders'
equity
|
2,523,905
|
|
|
2,567,667
|
|
Total adjusted
capitalization
|
$
|
3,565,749
|
|
|
$
|
3,589,655
|
|
|
|
|
|
Total debt to total
capitalization ratio
|
37.6
|
%
|
|
37.2
|
%
|
Less: Impact of cash
and cash equivalents
|
8.4
|
%
|
|
8.7
|
%
|
Net debt to adjusted
capitalization ratio
|
29.2
|
%
|
|
28.5
|
%
|
Capital Expenditures
|
|
Quarter Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(In
thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cash paid for capital
expenditures
|
|
$
|
177,745
|
|
|
$
|
130,120
|
|
|
$
|
764,558
|
|
|
$
|
375,153
|
|
Change in accrued
capital costs
|
|
(2,309)
|
|
|
(9,904)
|
|
|
(3,516)
|
|
|
7,168
|
|
Exploratory dry hole
cost
|
|
(978)
|
|
|
(10,102)
|
|
|
(3,820)
|
|
|
(10,120)
|
|
Capital
expenditures
|
|
$
|
174,458
|
|
|
$
|
110,114
|
|
|
$
|
757,222
|
|
|
$
|
372,201
|
|
Pre-tax Present Value of Future Net Cash Flows Calculation
and Reconciliation
(In
thousands)
|
December 31,
2017
|
|
December 31,
2016
|
Standardized Measure
of Discounted Future Net Cash Flows
|
$
|
5,010,446
|
|
|
$
|
2,234,767
|
|
Plus: Future Income
Tax Expenses, discounted at 10% annual rate
|
955,240
|
|
|
380,276
|
|
Pre-tax Present Value
of Future Net Cash Flows, discounted at 10% annual rate
|
$
|
5,965,686
|
|
|
$
|
2,615,043
|
|
View original
content:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-announces-fourth-quarter-and-full-year-2017-results-expands-share-repurchase-program-authorization-300603225.html
SOURCE Cabot Oil & Gas Corporation