HOUSTON, Feb. 22, 2019 /PRNewswire/ -- Cabot Oil
& Gas Corporation (NYSE: COG) ("Cabot" or the "Company") today announced the
best year of its nearly three-decade public company history that
provided record financial results, the culmination and in-service
of several long-dated infrastructure initiatives, and continued
momentum on the free cash flow front.
"In early 2018 we reaffirmed our commitment to creating
long-term shareholder value through disciplined capital allocation
by announcing a strategy focused on 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," stated
Dan O. Dinges, Chairman, President
and Chief Executive Officer. "I am happy to say that our 2018
program delivered on this strategy on all fronts."
Full-Year 2018 Highlights
New Records
- Net income of $557.0 million (or
$1.25 per share); adjusted net income
(non-GAAP) of $531.2 million (or
$1.19 per share)
- Free cash flow (non-GAAP) of $296.6
million, marking the third consecutive year of positive free
cash flow
- Production of 735.0 billion cubic feet equivalent (Bcfe), an
increase of seven percent year-over-year (14 percent on a
divestiture-adjusted basis)
- Proved reserves of 11.6 trillion cubic feet equivalent (Tcfe),
an increase of 19 percent year-over-year (25 percent on a
divestiture-adjusted basis)
- Operating expenses per unit of $1.76 per thousand cubic feet equivalent (Mcfe),
a 13 percent improvement year-over-year
Other Strategic Milestones
- Return on capital employed (ROCE) (non-GAAP) of 15.9 percent,
an improvement of 860 basis points year-over-year
- Returned approximately $1.0
billion of capital to shareholders through dividends and
share repurchases, including a 40 percent increase in the quarterly
dividend per share and an eight percent reduction in shares
outstanding
- Retired $304 million of senior
notes at maturity, resulting in annualized interest expense savings
of $21.8 million
- Total company all-sources finding and development costs of
$0.30 per Mcfe and Marcellus-only
all-sources finding and development costs of $0.26 per thousand cubic feet (Mcf)
- Reduced debt-to-EBITDAX to 1.0x at year-end 2018
See the supplemental tables at the end of this press release for
a reconciliation of non-GAAP measures including adjusted net
income, 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.
Fourth-Quarter 2018 Financial Results
Fourth-quarter 2018 daily equivalent production was 2,243
million cubic feet equivalent (Mmcfe) per day (100 percent natural
gas), a 20 percent increase relative to the fourth-quarter of 2017
and an 11 percent sequential increase relative to the third-quarter
of 2018. On a divestiture-adjusted basis, fourth-quarter 2018 daily
equivalent production increased 26 percent relative to the
prior-year comparable quarter.
Fourth-quarter 2018 net income was $275.0
million, or $0.64 per share,
compared to net loss of $44.4
million, or $0.10 per share,
in the prior-year period. Fourth-quarter 2018 adjusted net income
(non-GAAP) was $235.8 million, or
$0.55 per share, compared to adjusted
net income of $59.5 million, or
$0.13 per share, in the prior-year
period. Fourth-quarter 2018 EBITDAX (non-GAAP) was $463.1 million, compared to $259.8 million in the prior-year period.
Fourth-quarter 2018 net cash provided by operating activities
was $316.1 million, compared to
$179.1 million in the prior-year
period. Fourth-quarter 2018 discretionary cash flow (non-GAAP) was
$492.8 million, compared to
$240.1 million in the prior-year
period. Fourth-quarter 2018 free cash flow (non-GAAP) was
$241.4 million, compared to
$28.7 million in the prior-year
period. "Our free cash flow for the fourth-quarter exceeded our
initial forecast of $200 million,
driven by stronger than anticipated price realizations," commented
Dinges.
Fourth-quarter 2018 natural gas price realizations, including
the impact of derivatives, were $3.11
per Mcf, an increase of 43 percent compared to the prior-year
period. Excluding the impact of derivatives, fourth-quarter 2018
natural gas price realizations were $3.22 per Mcf, representing a $0.42 discount to NYMEX settlement prices
compared to a $0.78 discount in the
prior-year comparable quarter.
Fourth-quarter 2018 operating expenses (including financing)
decreased to $1.87 per Mcfe, a seven
percent improvement compared to the prior-year period. All
operating expenses per unit were in-line with the Company's
guidance for the quarter except for depreciation, depletion and
amortization and exploration, driven by higher amortization of
undeveloped leasehold and exploratory dry hole costs associated
with unsuccessful drilling results in our exploration areas. "After
further evaluation of our remaining exploration prospect, we have
determined that this area is unlikely to yield results that
generate long-term value creation for our shareholders," noted
Dinges. "As we have said through this entire evaluation
process, we remain committed to deploying capital judiciously and
if a project fails to generate competitive full-cycle returns, then
we will not allocate additional capital to it going forward."
Cabot incurred a total of
$223.0 million of capital
expenditures in the fourth-quarter of 2018 including $207.6 million of drilling and facilities
capital; $2.4 million of leasehold
acquisition capital; and $13.0
million of other capital. Additionally, the Company
contributed $4.4 million to its
equity method pipeline investments in the fourth-quarter of 2018.
See the supplemental table at the end of this press release
reconciling the capital expenditures during the fourth-quarter of
2018.
Full-Year 2018 Financial Results
Full-year 2018 daily equivalent production was 2,014 Mmcfe per
day (99 percent natural gas), a seven percent increase relative to
the prior-year period. On a divestiture-adjusted basis, daily
equivalent production for the full-year 2018 increased 14 percent
relative to the prior-year period.
Full-year 2018 net income was $557.0
million, or $1.25 per share,
compared to net income of $100.4
million, or $0.22 per share in
the prior-year period. Adjusted net income (non-GAAP) was
$531.2 million, or $1.19 per share, compared to adjusted net income
of $244.5 million, or $0.53 per share, in the prior-year period.
Full-year 2018 EBITDAX (non-GAAP) was $1.3
billion, compared to $1.1
billion in the prior-year period.
Full-year 2018 net cash provided by operating activities was
$1,104.9 million, compared to
$898.2 million in the prior-year
period. Full-year 2018 discretionary cash flow (non-GAAP) was
$1,268.4 million, compared to
$976.1 million in the prior-year
period. Full-year 2018 free cash flow (non-GAAP) was $296.6 million, compared to $154.5 million in the prior-year period.
Full-year 2018 ROCE (non-GAAP) improved to 15.9 percent, compared
to 7.3 percent in the prior-year period.
Full-year 2018 natural gas price realizations, including the
impact of derivatives, were $2.54 per
Mcf, an increase of 10 percent compared to the prior-year
period. Excluding the impact of derivatives, full-year 2018
natural gas price realizations were $2.58 per Mcf, representing a $0.51 discount to NYMEX settlement prices.
Full-year 2018 operating expenses (including financing)
decreased to $1.76 per Mcfe, a 13
percent improvement compared to the prior-year period.
Cabot incurred a total of
$816.1 million of capital
expenditures in 2018 including $758.9
million of drilling and facilities capital; $29.9 million of leasehold acquisition capital;
and $27.3 million of other capital.
Additionally, the Company contributed $77.3
million to its equity method pipeline investments in 2018.
See the supplemental table at the end of this press release
reconciling the capital expenditures for the year.
Capital Allocation Update
During the fourth-quarter of 2018, Cabot repurchased 11.3 million shares at a
weighted-average share price of $22.92, resulting in full-year 2018 repurchases
of approximately 38.5 million shares at a weighted-average share
price of $23.48. Since reactivating
the share repurchase program in the second-quarter of 2017,
Cabot has reduced its shares
outstanding by over nine percent to 423.4 million shares. "During
the year, we returned approximately $1.0
billion of capital to shareholders via dividends and share
repurchases, representing a total shareholder yield of over nine
percent based on our current market capitalization," said Dinges.
"We expect to continue to be an industry leader in shareholder
yield as we execute on our strategy of returning at least 50
percent of free cash flow to shareholders annually."
Financial Position and Liquidity
As of December 31, 2018,
Cabot had total debt of
$1.2 billion and cash on hand of
$2.3 million. During the
fourth-quarter of 2018, Cabot paid
off its $67.0 million tranche of
9.78% senior notes that matured on December
1, 2018. For the full-year, the Company retired $304 million of senior notes that matured in
2018, resulting in annualized interest expense savings of
$21.8 million.
The Company's debt-to-total capitalization ratio and
debt-to-trailing twelve months EBITDAX ratio were 37.0 percent and
1.0x, respectively, compared to 37.6 percent and 1.4x as of
December 31, 2017. The Company
currently has $7.0 million
outstanding under the credit facility, resulting in approximately
$1.8 billion of liquidity.
Year-End 2018 Proved Reserves
Cabot reported year-end proved
reserves of 11.6 Tcfe, an increase of 19 percent over year-end
2017. Specific highlights from the Company's year-end reserve
report include:
- Total company all-sources finding and development costs of
$0.30 per Mcfe
- Marcellus-only all-sources finding and development costs of
$0.26 per Mcf
- Marcellus-only all-sources reserve replacement of 414
percent
The table below reconciles the components driving the 2018
reserve increase:
Proved Reserves
Reconciliation (in Bcfe)
|
|
|
Balance at
December 31, 2017
|
|
9,726
|
|
Revisions of prior
estimates
|
|
780
|
|
Extensions,
discoveries and other additions
|
|
2,244
|
|
Sales
|
|
(410)
|
|
Production
|
|
(735)
|
|
Balance at
December 31, 2018
|
|
11,605
|
|
As of December 31, 2018, 100
percent of Cabot's year-end proved
reserves were natural gas and 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 five percent of drilled and
uncompleted PUDs.
Total costs incurred during 2018 were $902.7 million, which included $778.6 million for development costs,
$94.3 million for exploration costs,
and $29.9 million for lease
acquisition costs.
The SEC price used for reporting Cabot's year-end 2018 proved reserves, which
has been adjusted for basis and quality differentials, was
$2.58 per Mcf for natural gas,
representing an 11 percent year-over-year increase. Assuming the
SEC prices, the pre-tax PV–10 (non-GAAP) of the year-end 2018
proved reserves was $8.1 billion.
"Our latest year-end proved reserves disclosure further
demonstrates the strong underlying economics and repeatability of
our low-cost position in Northeast
Pennsylvania," commented Dinges. "Our 25 percent
growth in Marcellus reserves at industry-leading finding costs was
accomplished with primarily only three rigs and two completion
crews, highlighting the low capital intensity of this world-class
asset."
Upper Marcellus Operations Update
The Company drilled and completed nine Generation 5 Upper
Marcellus wells in the field during 2018. Based on the production
data gathered to date, these wells on average have demonstrated an
improvement over the average estimated ultimate recovery (EUR) per
thousand lateral feet of 2.9 billion cubic feet (Bcf) from our
earlier generation completions. "Given the limited sample size and
production history, we plan to continue to allocate a small portion
of our capital program annually to testing our Generation 5
completions in the Upper Marcellus in an effort to gather more
production history from a larger sample of wells before updating
our expected EURs; however, the long-term plan of fully-developing
the Lower Marcellus before beginning full-development mode in the
Upper Marcellus remains unchanged," stated Dinges. "Most
importantly, our results from the 2018 wells reconfirmed what our
previous Upper Marcellus results have demonstrated over the years,
which is that we have two distinct, highly-economic intervals
across our acreage position in Northeast
Pennsylvania."
First-Quarter and Full-Year 2019 Guidance
Cabot has provided its
first-quarter 2019 production guidance range of 2,250 to 2,275
Mmcfe per day. The Company has also updated its 2019 production
growth guidance to 20 percent (27 percent on a debt-adjusted per
share basis). This production growth is based on an updated capital
budget of $800 million. Approximately
$160 million of the 2019 capital
budget relates to wells that are drilled and / or completed in 2019
but not placed on production until 2020. "While we continue to
emphasize our focus on improving return on capital employed,
generating significant free cash flow, and increasing our return of
capital to shareholders, we also believe our unique, low-cost asset
base in the Marcellus Shale allows us to deliver on these
objectives while also continuing to invest in the disciplined,
organic growth of our business to enhance long-term shareholder
value, assuming market conditions warrant it," commented
Dinges.
Based on a range of $2.50 and
$3.00 per Mmbtu NYMEX prices for
2019, the Company has included its estimated key financial metrics
for the year below. "Despite the current NYMEX strip for the year
implying an outcome at the higher-end of this price range, we have
highlighted that even at the low-end of the range our 2019 program
can deliver financial metrics that are not only top-tier across all
oil and gas companies but are also extremely competitive across the
broader equity markets," noted Dinges.
Estimated Key
Financial Metrics1
|
$2.50
NYMEX
|
$2.75
NYMEX
|
$3.00
NYMEX
|
Adjusted Earnings Per
Share Growth (%)
|
20% - 35%
|
40% - 55%
|
60% - 75%
|
Free Cash Flow
($mm)
|
$475 -
$525
|
$600 -
$650
|
$700 -
$750
|
Return on Capital
Employed (%)
|
19% - 21%
|
21% - 23%
|
24% - 26%
|
|
|
|
|
(1) Ranges for estimated
key financial metrics based on guidance ranges for operating
expenses
|
Conference Call Webcast
A conference call is scheduled for Friday, February 22, 2019, at 9:30 a.m. Eastern Time to discuss fourth-quarter
and full-year 2018 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, returns to shareholders, 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,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
PRODUCTION
VOLUMES
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
206.3
|
|
|
164.4
|
|
|
729.9
|
|
|
655.6
|
|
Crude oil and
condensate (Mbbl)
|
—
|
|
|
1,238.0
|
|
|
754.0
|
|
|
4,440.9
|
|
Natural gas liquids
(NGLs) (Mbbl)
|
—
|
|
|
131.5
|
|
|
75.1
|
|
|
512.1
|
|
Equivalent production
(Bcfe)
|
206.3
|
|
|
172.6
|
|
|
735.0
|
|
|
685.3
|
|
Daily equivalent
production (Mmcfe/day)
|
2,243
|
|
|
1,876
|
|
|
2,014
|
|
|
1,878
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES
PRICE
|
|
|
|
|
|
|
|
Natural gas,
including hedges ($/Mcf)
|
$
|
3.11
|
|
|
$
|
2.18
|
|
|
$
|
2.54
|
|
|
$
|
2.31
|
|
Natural gas,
excluding hedges ($/Mcf)
|
$
|
3.22
|
|
|
$
|
2.15
|
|
|
$
|
2.58
|
|
|
$
|
2.30
|
|
Crude oil and
condensate, including hedges ($/Bbl)
|
$
|
—
|
|
|
$
|
54.54
|
|
|
$
|
63.68
|
|
|
$
|
48.16
|
|
Crude oil and
condensate, excluding hedges ($/Bbl)
|
$
|
—
|
|
|
$
|
54.77
|
|
|
$
|
64.68
|
|
|
$
|
47.81
|
|
NGL
($/Bbl)
|
$
|
—
|
|
|
$
|
23.51
|
|
|
$
|
21.51
|
|
|
$
|
19.47
|
|
|
|
|
|
|
|
|
|
AVERAGE UNIT COSTS
($/Mcfe)
|
|
|
|
|
|
|
|
Direct
operations
|
$
|
0.08
|
|
|
$
|
0.14
|
|
|
$
|
0.09
|
|
|
$
|
0.15
|
|
Transportation and
gathering
|
0.68
|
|
|
0.69
|
|
|
0.68
|
|
|
0.70
|
|
Taxes other than
income
|
0.03
|
|
|
0.04
|
|
|
0.03
|
|
|
0.05
|
|
Exploration
|
0.22
|
|
|
0.03
|
|
|
0.15
|
|
|
0.03
|
|
Depreciation,
depletion and amortization
|
0.63
|
|
|
0.83
|
|
|
0.57
|
|
|
0.83
|
|
General and
administrative (excluding stock-based compensation)
|
0.07
|
|
|
0.11
|
|
|
0.09
|
|
|
0.09
|
|
Stock-based
compensation
|
0.08
|
|
|
0.05
|
|
|
0.05
|
|
|
0.05
|
|
Interest
expense
|
0.08
|
|
|
0.12
|
|
|
0.10
|
|
|
0.12
|
|
|
$
|
1.87
|
|
|
$
|
2.01
|
|
|
$
|
1.76
|
|
|
$
|
2.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WELLS
DRILLED(1)
|
|
|
|
|
|
|
|
Gross
|
37
|
|
|
20
|
|
|
97
|
|
|
91
|
|
Net
|
35.1
|
|
|
20.0
|
|
|
95.1
|
|
|
82.5
|
|
|
|
|
|
|
|
|
|
WELLS
COMPLETED(1)
|
|
|
|
|
|
|
|
Gross
|
33
|
|
|
24
|
|
|
94
|
|
|
105
|
|
Net
|
32.0
|
|
|
24.0
|
|
|
93.0
|
|
|
94.2
|
|
_______________________________________________________________________________
|
(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)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Natural
gas
|
$
|
663,547
|
|
|
$
|
353,989
|
|
|
$
|
1,881,150
|
|
|
$
|
1,506,078
|
|
Crude oil and
condensate
|
—
|
|
|
67,810
|
|
|
48,722
|
|
|
212,338
|
|
Gain (loss) on
derivative instruments
|
46,060
|
|
|
(29,427)
|
|
|
44,432
|
|
|
16,926
|
|
Brokered natural
gas
|
6,155
|
|
|
4,957
|
|
|
209,530
|
|
|
17,217
|
|
Other
|
539
|
|
|
3,174
|
|
|
4,314
|
|
|
11,660
|
|
|
716,301
|
|
|
400,503
|
|
|
2,188,148
|
|
|
1,764,219
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Direct
operations
|
16,889
|
|
|
24,125
|
|
|
69,646
|
|
|
102,310
|
|
Transportation and
gathering
|
140,883
|
|
|
119,530
|
|
|
496,731
|
|
|
481,439
|
|
Brokered natural
gas
|
5,761
|
|
|
4,990
|
|
|
184,198
|
|
|
15,252
|
|
Taxes other than
income
|
7,208
|
|
|
6,925
|
|
|
22,642
|
|
|
33,487
|
|
Exploration
|
45,654
|
|
|
4,903
|
|
|
113,820
|
|
|
21,526
|
|
Depreciation,
depletion and amortization
|
129,269
|
|
|
143,128
|
|
|
417,479
|
|
|
568,817
|
|
Impairment of oil and
gas properties(1)
|
—
|
|
|
414,256
|
|
|
—
|
|
|
482,811
|
|
General and
administrative (excluding stock-based compensation)
|
15,113
|
|
|
19,022
|
|
|
63,494
|
|
|
63,745
|
|
Stock-based
compensation(2)
|
15,516
|
|
|
7,863
|
|
|
33,147
|
|
|
34,041
|
|
|
376,293
|
|
|
744,742
|
|
|
1,401,157
|
|
|
1,803,428
|
|
Earnings (loss) on
equity method investments(3)
|
2,146
|
|
|
(96,500)
|
|
|
1,137
|
|
|
(100,486)
|
|
(Gain) loss on sale
of assets
|
(1,477)
|
|
|
1,933
|
|
|
(16,327)
|
|
|
(11,565)
|
|
INCOME (LOSS) FROM
OPERATIONS
|
340,677
|
|
|
(438,806)
|
|
|
771,801
|
|
|
(151,260)
|
|
Interest expense,
net
|
15,624
|
|
|
20,410
|
|
|
73,201
|
|
|
82,130
|
|
Other expense
(income)
|
116
|
|
|
18
|
|
|
463
|
|
|
(4,955)
|
|
Income (loss) before
income taxes
|
324,937
|
|
|
(459,234)
|
|
|
698,137
|
|
|
(228,435)
|
|
Income tax expense
(benefit)(4)
|
49,893
|
|
|
(414,793)
|
|
|
141,094
|
|
|
(328,828)
|
|
NET INCOME
(LOSS)
|
$
|
275,044
|
|
|
$
|
(44,441)
|
|
|
$
|
557,043
|
|
|
$
|
100,393
|
|
Earnings (loss) per
share - Basic
|
$
|
0.64
|
|
|
$
|
(0.10)
|
|
|
$
|
1.25
|
|
|
$
|
0.22
|
|
Weighted-average
common shares outstanding
|
430,978
|
|
|
462,371
|
|
|
445,538
|
|
|
463,735
|
|
_______________________________________________________________________________
|
(1)
|
Includes the impairment of our Eagle
Ford Shale oil and gas properties in south Texas in the fourth
quarter of 2017.
|
(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,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
Current
assets
|
$
|
544,545
|
|
|
$
|
764,957
|
|
Properties and
equipment, net (Successful efforts method)
|
3,463,606
|
|
|
3,072,204
|
|
Assets held for
sale
|
—
|
|
|
778,855
|
|
Other
assets
|
190,678
|
|
|
111,328
|
|
|
$
|
4,198,829
|
|
|
$
|
4,727,344
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
$
|
287,264
|
|
|
$
|
630,050
|
|
Long-term debt, net
(excluding current maturities)
|
1,226,104
|
|
|
1,217,891
|
|
Deferred income
taxes
|
458,597
|
|
|
227,030
|
|
Liabilities held for
sale
|
—
|
|
|
15,748
|
|
Other
liabilities
|
138,705
|
|
|
112,720
|
|
Stockholders'
equity
|
2,088,159
|
|
|
2,523,905
|
|
|
$
|
4,198,829
|
|
|
$
|
4,727,344
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(In
thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
275,044
|
|
|
$
|
(44,441)
|
|
|
$
|
557,043
|
|
|
$
|
100,393
|
|
Deferred income tax
expense (benefit)
|
97,804
|
|
|
(410,844)
|
|
|
229,603
|
|
|
(321,113)
|
|
Impairment of oil and
gas properties
|
—
|
|
|
414,256
|
|
|
—
|
|
|
482,811
|
|
(Gain) loss on sale
of assets
|
1,477
|
|
|
(1,933)
|
|
|
16,327
|
|
|
11,565
|
|
Exploratory dry hole
cost
|
41,316
|
|
|
978
|
|
|
97,741
|
|
|
3,820
|
|
(Gain) loss on
derivative instruments
|
(46,060)
|
|
|
29,427
|
|
|
(44,432)
|
|
|
(16,926)
|
|
Net cash received
(paid) in settlement of derivative instruments
|
(21,277)
|
|
|
4,469
|
|
|
(41,631)
|
|
|
8,056
|
|
Income charges not
requiring cash
|
144,500
|
|
|
248,231
|
|
|
453,712
|
|
|
707,496
|
|
Changes in assets and
liabilities
|
(176,753)
|
|
|
(61,030)
|
|
|
(163,460)
|
|
|
(77,942)
|
|
Net cash provided by
operating activities
|
316,051
|
|
|
179,113
|
|
|
1,104,903
|
|
|
898,160
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Capital
expenditures
|
(246,967)
|
|
|
(177,745)
|
|
|
(894,470)
|
|
|
(764,558)
|
|
Proceeds from sale of
assets
|
2,825
|
|
|
82,733
|
|
|
678,350
|
|
|
115,444
|
|
Investment in equity
method investments
|
(4,397)
|
|
|
(33,657)
|
|
|
(77,263)
|
|
|
(57,039)
|
|
Net cash used in
investing activities
|
(248,539)
|
|
|
(128,669)
|
|
|
(293,383)
|
|
|
(706,153)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net borrowings
(repayments) of debt
|
(60,000)
|
|
|
—
|
|
|
(297,000)
|
|
|
—
|
|
Treasury stock
repurchases
|
(291,036)
|
|
|
(55,486)
|
|
|
(872,761)
|
|
|
(123,741)
|
|
Dividends
paid
|
(30,184)
|
|
|
(23,131)
|
|
|
(111,369)
|
|
|
(78,838)
|
|
Tax withholding on
vesting of stock awards
|
(82)
|
|
|
(2,044)
|
|
|
(8,150)
|
|
|
(7,973)
|
|
Other
|
—
|
|
|
8
|
|
|
—
|
|
|
50
|
|
Net cash used in
financing activities
|
(381,302)
|
|
|
(80,653)
|
|
|
(1,289,280)
|
|
|
(210,502)
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
and cash equivalents
|
$
|
(313,790)
|
|
|
$
|
(30,209)
|
|
|
$
|
(477,760)
|
|
|
$
|
(18,495)
|
|
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)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
As reported - net
income (loss)
|
$
|
275,044
|
|
|
$
|
(44,441)
|
|
|
$
|
557,043
|
|
|
$
|
100,393
|
|
Reversal of selected
items:
|
|
|
|
|
|
|
|
Impairment of oil and
gas properties(1)
|
—
|
|
|
414,256
|
|
|
—
|
|
|
482,811
|
|
Impairment of equity
method investments(2)
|
—
|
|
|
95,945
|
|
|
—
|
|
|
95,945
|
|
(Gain) loss on sale
of assets
|
1,477
|
|
|
(1,933)
|
|
|
16,327
|
|
|
11,565
|
|
(Gain) loss on
derivative instruments(3)
|
(67,337)
|
|
|
33,896
|
|
|
(86,063)
|
|
|
(8,870)
|
|
Stock-based
compensation expense
|
15,516
|
|
|
7,863
|
|
|
33,147
|
|
|
34,041
|
|
Severance
expense
|
—
|
|
|
21
|
|
|
28
|
|
|
3,213
|
|
OPEB
curtailment
|
—
|
|
|
(67)
|
|
|
—
|
|
|
(4,917)
|
|
Interest expense
related to income tax reserves
|
(538)
|
|
|
—
|
|
|
3,116
|
|
|
—
|
|
Tax effect on
selected items
|
11,619
|
|
|
(203,211)
|
|
|
7,637
|
|
|
(226,787)
|
|
Impact of 2017 tax
reform
|
—
|
|
|
(242,875)
|
|
|
—
|
|
|
(242,875)
|
|
Adjusted net
income
|
$
|
235,781
|
|
|
$
|
59,454
|
|
|
$
|
531,235
|
|
|
$
|
244,519
|
|
As reported -
earnings (loss) per share
|
$
|
0.64
|
|
|
$
|
(0.10)
|
|
|
$
|
1.25
|
|
|
$
|
0.22
|
|
Per share impact of
selected items
|
(0.09)
|
|
|
0.23
|
|
|
(0.06)
|
|
|
0.31
|
|
Adjusted earnings per
share
|
$
|
0.55
|
|
|
$
|
0.13
|
|
|
$
|
1.19
|
|
|
$
|
0.53
|
|
Weighted-average
common shares outstanding
|
430,978
|
|
|
462,371
|
|
|
445,538
|
|
|
463,735
|
|
_______________________________________________________________________________
|
(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.
|
(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)
|
|
2018
|
|
2017
|
Interest expense,
net
|
|
$
|
73,201
|
|
|
$
|
82,130
|
|
Less: Interest
expense related to income tax reserves (1)
|
|
(3,116)
|
|
|
—
|
|
Tax benefit on
interest expense, net
|
|
(16,004)
|
|
|
(30,346)
|
|
After-tax interest
expense, net (A)
|
|
54,081
|
|
|
51,784
|
|
|
|
|
|
|
As reported - net
income (loss)
|
|
557,043
|
|
|
100,393
|
|
Adjustments to as
reported - net income (loss), net of tax
|
|
(25,808)
|
|
|
144,126
|
|
Adjusted net income
(loss) (B)
|
|
531,235
|
|
|
244,519
|
|
|
|
|
|
|
Adjusted net income
(loss) before interest expense, net (A + B)
|
|
$
|
585,316
|
|
|
$
|
296,303
|
|
|
|
|
|
|
Total debt -
beginning
|
|
$
|
1,521,891
|
|
|
$
|
1,520,530
|
|
Stockholders' equity
- beginning
|
|
2,523,905
|
|
|
2,567,667
|
|
Capital employed -
beginning
|
|
4,045,796
|
|
|
4,088,197
|
|
|
|
|
|
|
Total debt -
ending
|
|
1,226,104
|
|
|
1,521,891
|
|
Stockholders' equity
- ending
|
|
2,088,159
|
|
|
2,523,905
|
|
Capital employed -
ending
|
|
3,314,263
|
|
|
4,045,796
|
|
|
|
|
|
|
Average capital
employed (C)
|
|
$
|
3,680,030
|
|
|
$
|
4,066,997
|
|
|
|
|
|
|
Return on average
capital employed (ROCE) (A+B) / C
|
|
15.9
|
%
|
|
7.3
|
%
|
_______________________________________________________________________________
|
(1)
|
Interest expense related to income
tax reserves is included in the adjustments to as reported - net
income, net of tax.
|
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)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net cash provided by
operating activities
|
|
$
|
316,051
|
|
|
$
|
179,113
|
|
|
$
|
1,104,903
|
|
|
$
|
898,160
|
|
Changes in assets and
liabilities
|
|
176,753
|
|
|
61,030
|
|
|
163,460
|
|
|
77,942
|
|
Discretionary cash
flow
|
|
492,804
|
|
|
240,143
|
|
|
1,268,363
|
|
|
976,102
|
|
Capital
expenditures
|
|
(246,967)
|
|
|
(177,745)
|
|
|
(894,470)
|
|
|
(764,558)
|
|
Investment in equity
method investments
|
|
(4,397)
|
|
|
(33,657)
|
|
|
(77,263)
|
|
|
(57,039)
|
|
Free cash
flow
|
|
$
|
241,440
|
|
|
$
|
28,741
|
|
|
$
|
296,630
|
|
|
$
|
154,505
|
|
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, earnings and 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)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income
(loss)
|
$
|
275,044
|
|
|
$
|
(44,441)
|
|
|
$
|
557,043
|
|
|
$
|
100,393
|
|
Plus
(less):
|
|
|
|
|
|
|
|
Interest expense,
net
|
15,624
|
|
|
20,410
|
|
|
73,201
|
|
|
82,130
|
|
Other expense
(income)
|
116
|
|
|
18
|
|
|
463
|
|
|
(4,955)
|
|
Income tax expense
(benefit)
|
49,893
|
|
|
(414,793)
|
|
|
141,094
|
|
|
(328,828)
|
|
Depreciation,
depletion and amortization
|
129,269
|
|
|
143,128
|
|
|
417,479
|
|
|
568,817
|
|
Impairment of oil and
gas properties
|
—
|
|
|
414,256
|
|
|
—
|
|
|
482,811
|
|
Exploration
|
45,654
|
|
|
4,903
|
|
|
113,820
|
|
|
21,526
|
|
(Gain) loss on sale
of assets
|
1,477
|
|
|
(1,933)
|
|
|
16,327
|
|
|
11,565
|
|
Non-cash (gain) loss
on derivative instruments
|
(67,337)
|
|
|
33,896
|
|
|
(86,063)
|
|
|
(8,870)
|
|
(Earnings) loss on
equity method investments
|
(2,146)
|
|
|
96,500
|
|
|
(1,137)
|
|
|
100,486
|
|
Stock-based
compensation
|
15,516
|
|
|
7,863
|
|
|
33,147
|
|
|
34,041
|
|
EBITDAX
|
$
|
463,110
|
|
|
$
|
259,807
|
|
|
$
|
1,265,374
|
|
|
$
|
1,059,116
|
|
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 Adjusted 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 Adjusted
Capitalization ratio.
(In
thousands)
|
December 31,
2018
|
|
December 31,
2017
|
Current portion of
long-term debt
|
$
|
—
|
|
|
$
|
304,000
|
|
Long-term debt,
net
|
1,226,104
|
|
|
1,217,891
|
|
Total debt
|
$
|
1,226,104
|
|
|
$
|
1,521,891
|
|
Stockholders'
equity
|
2,088,159
|
|
|
2,523,905
|
|
Total
capitalization
|
$
|
3,314,263
|
|
|
$
|
4,045,796
|
|
|
|
|
|
Total debt
|
$
|
1,226,104
|
|
|
$
|
1,521,891
|
|
Less: Cash and cash
equivalents
|
(2,287)
|
|
|
(480,047)
|
|
Net debt
|
$
|
1,223,817
|
|
|
$
|
1,041,844
|
|
|
|
|
|
Net debt
|
$
|
1,223,817
|
|
|
$
|
1,041,844
|
|
Stockholders'
equity
|
2,088,159
|
|
|
2,523,905
|
|
Total adjusted
capitalization
|
$
|
3,311,976
|
|
|
$
|
3,565,749
|
|
|
|
|
|
Total debt to total
capitalization ratio
|
37.0
|
%
|
|
37.6
|
%
|
Less: Impact of cash
and cash equivalents
|
—
|
%
|
|
8.4
|
%
|
Net debt to adjusted
capitalization ratio
|
37.0
|
%
|
|
29.2
|
%
|
Capital Expenditures
|
|
Quarter Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
(In
thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cash paid for capital
expenditures
|
|
$
|
246,967
|
|
|
$
|
177,745
|
|
|
$
|
894,470
|
|
|
$
|
764,558
|
|
Change in accrued
capital costs
|
|
17,326
|
|
|
(2,309)
|
|
|
19,346
|
|
|
(3,516)
|
|
Exploratory dry hole
cost
|
|
(41,316)
|
|
|
(978)
|
|
|
(97,741)
|
|
|
(3,820)
|
|
Capital
expenditures
|
|
$
|
222,977
|
|
|
$
|
174,458
|
|
|
$
|
816,075
|
|
|
$
|
757,222
|
|
Pre-tax Present Value of Future Net Cash Flows
Calculation and Reconciliation
(In
thousands)
|
December 31,
2018
|
|
December 31,
2017
|
Standardized Measure
of Discounted Future Net Cash Flows
|
$
|
6,483,308
|
|
|
$
|
5,010,446
|
|
Plus: Future Income
Tax Expenses, discounted at 10% annual rate
|
1,651,488
|
|
|
955,240
|
|
Pre-tax Present Value
of Future Net Cash Flows, discounted at 10% annual rate
|
$
|
8,134,796
|
|
|
$
|
5,965,686
|
|
View original
content:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-establishes-several-new-full-year-records-returns-1-0-billion-to-shareholders-repays-304-million-of-debt-300800200.html
SOURCE Cabot Oil & Gas Corporation