HOUSTON, July 26, 2019 /PRNewswire/ -- Cabot Oil
& Gas Corporation (NYSE: COG) ("Cabot" or the "Company") today
reported financial and operating results for the second quarter of
2019.
"During the quarter, Cabot successfully executed on its
strategic plan of delivering a combination of positive free cash
flow generation, improved return on capital employed, and
disciplined growth in per share metrics, while continuing to return
capital to shareholders through a combination of dividends and
opportunistic share repurchases," stated Dan O. Dinges, Chairman, President and Chief
Executive Officer. "Our success for the quarter was achieved
despite NYMEX natural gas prices retreating to the lowest levels
the industry has experienced since the second quarter of 2016,
further highlighting Cabot's ability to deliver strong financial
results throughout the natural gas price cycle."
Second Quarter 2019 Highlights
- Net income of $181.0 million (or
$0.43 per share); adjusted net income
(non-GAAP) of $150.6 million (or
$0.36 per share)
- Net cash provided by operating activities of $326.7 million; discretionary cash flow
(non-GAAP) of $301.9 million
- Free cash flow (non-GAAP) of $72.7
million
- Return on capital employed (ROCE) (non-GAAP) for the trailing
twelve months of 23.5 percent
- Returned $163.4 million of
capital to shareholders through dividends and share
repurchases
- Daily equivalent production of 2,349 million cubic feet
equivalent (Mmcfe) per day, an increase of 24 percent relative to
the prior-year period
- Improved operating expenses per unit to $1.41 per thousand cubic feet equivalent (Mcfe),
a 24 percent reduction relative to the prior-year period
See the supplemental tables at the end of this press release for
a reconciliation of non-GAAP measures including adjusted net
income, discretionary cash flow, EBITDAX, free cash flow, net debt
to adjusted capitalization ratio, and ROCE.
Second Quarter 2019 Financial Results
Second quarter 2019 daily equivalent production was 2,349 Mmcfe
per day (100 percent natural gas), meeting the high-end of the
Company's guidance range and representing a 24 percent increase
relative to the second quarter of 2018.
Second quarter 2019 net income was $181.0
million, or $0.43 per share,
compared to net income of $42.4
million, or $0.09 per share,
in the prior-year period. Second quarter 2019 adjusted net income
(non-GAAP) was $150.6 million, or
$0.36 per share, compared to adjusted
net income of $57.9 million, or
$0.13 per share, in the prior-year
period. Second quarter 2019 EBITDAX (non-GAAP) was $311.1 million, compared to $232.1 million in the prior-year period.
Second quarter 2019 net cash provided by operating activities
was $326.7 million, compared to
$273.9 million in the prior-year
period. Second quarter 2019 discretionary cash flow (non-GAAP) was
$301.9 million, compared to
$196.5 million in the prior-year
period. Second quarter 2019 free cash flow (non-GAAP) was
$72.7 million, compared to a free
cash flow deficit of $62.0 million in
the prior-year period.
Second quarter 2019 natural gas price realizations, including
the impact of derivatives, were $2.27
per thousand cubic feet (Mcf), an increase of six percent compared
to the prior-year period. Excluding the impact of derivatives,
second quarter 2019 natural gas price realizations were
$2.20 per Mcf, representing a
$0.44 discount to NYMEX settlement
prices compared to a $0.68 discount
in the prior-year period.
Second quarter 2019 operating expenses (including financing)
decreased to $1.41 per Mcfe, a 24
percent improvement compared to the prior-year period. The decrease
in operating expenses per unit was primarily driven by a reduction
in exploration expenses, in addition to improvements in direct
operations; taxes other than income; depreciation, depletion, and
amortization; general and administrative; and interest expense.
Cabot incurred a total of $220.4
million of capital expenditures in the second quarter of
2019 including $213.1 million of
drilling and facilities capital, $2.6
million of leasehold acquisition capital, and $4.7 million of other capital. Additionally, the
Company contributed $3.3 million to
its equity method pipeline investments. See the supplemental table
at the end of this press release reconciling the capital
expenditures during the second quarter of 2019.
Year-To-Date 2019 Financial Results
Daily equivalent production for the six-month period ended
June 30, 2019 was 2,313 Mmcfe per day
(100 percent natural gas), representing a 22 percent increase
relative to the prior-year period.
For the six-month period ended June 30,
2019, net income was $443.8
million, or $1.05 per share,
compared to net income of $159.7
million, or $0.35 per share,
for the prior-year period. Adjusted net income (non-GAAP) was
$458.4 million, or $1.08 per share, compared to adjusted net income
of $186.4 million, or $0.41 per share, for the prior-year period.
EBITDAX (non-GAAP) for the six-month period ended June 30, 2019 was $824.7
million, compared to $510.7
million for the prior-year period.
For the six-month period ended June 30,
2019, net cash provided by operating activities was
$911.9 million, compared to
$546.7 million for the prior-year
period. Discretionary cash flow (non-GAAP) for the six-month
period ended June 30, 2019 was
$807.7 million, compared to
$476.8 million for the prior-year
period. Free cash flow (non-GAAP) was $381.1
million for the six-month period ended June 30, 2019, compared to $26.6 million for the prior-year period. ROCE
(non-GAAP) improved to 23.5 percent for the trailing twelve months
ended June 30, 2019, compared to 8.5
percent for the trailing twelve months ended June 30, 2018.
Natural gas price realizations, including the impact of
derivatives, were $2.80 per Mcf for
the six-month period ended June 30,
2019, an increase of 22 percent compared to the prior-year
period.
For the six-month period ended June 30,
2019, operating expenses (including financing) decreased to
$1.45 per Mcfe, a 16 percent
improvement compared to the prior-year period. The decrease in
operating expenses per unit was primarily driven by a reduction in
exploration expenses, in addition to improvements in direct
operations; taxes other than income; depreciation, depletion, and
amortization; general and administrative; and interest expense.
Cabot incurred a total of $424.7
million of capital expenditures during the six-month period
ended June 30, 2019 including
$415.4 million of drilling and
facilities capital; $3.3 million of
leasehold acquisition capital; and $6.0
million of other capital. Additionally, the Company
contributed $5.1 million to its
equity method pipeline investments during the six-month period
ended June 30, 2019. See the
supplemental table at the end of this press release reconciling the
capital expenditures during the six-month period ended June 30, 2019.
Share Repurchase Program Update
During the second quarter of 2019, Cabot repurchased 5.1 million
shares at a weighted-average share price of $24.63. Since reactivating the share repurchase
program in the second quarter of 2017, Cabot has reduced its shares
outstanding by over 10 percent to 418.4 million shares.
Additionally, the Board of Directors has authorized an increase
in the Company's share repurchase program by 25.0 million shares,
bringing the current remaining authorization to 31.5 million shares
(or approximately eight 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. "Cabot remains committed to returning a minimum of 50 percent
of its annual free cash flow to shareholders in any given year,
while also preserving cash on the balance sheet to support
continued opportunistic returns of capital, even in the lows of the
natural gas price cycle," noted Dinges. "Our outlook for continued
positive free cash flow generation provides us confidence that we
will remain an industry leader in returning capital to
shareholders."
Financial Position and Liquidity
As of June 30, 2019, Cabot had
total debt of $1.2 billion and cash
on hand of $241.4 million. The
Company's net debt-to-adjusted capitalization ratio and net
debt-to-trailing twelve months EBITDAX ratio were 29.4 percent and
0.6x, respectively, compared to 37.0 percent and 1.0x as of
December 31, 2018. The Company
currently has no debt outstanding under its credit facility,
resulting in over $1.7 billion of
liquidity.
Third Quarter and Full-Year 2019 Guidance Update
Cabot has provided its third quarter 2019 production guidance
range of 2,360 to 2,410 Mmcfe per day. The Company has also
adjusted its 2019 production growth guidance to a range of 16 to 18
percent (24 to 26 percent on a debt-adjusted per share basis) due
in large part to a change in the operating plan resulting from a
unique opportunity to acquire acreage adjacent to an eight-well
pad, allowing the Company to increase the total lateral footage on
the pad by approximately 28,000 feet (increasing the average
lateral length per well from 8,950 feet to 12,450 feet). "This
increase in lateral lengths will improve the capital efficiency and
economics of the pad; however, the longer cycle time will result in
a delay in the wells being placed on production, pushing out the
production contribution from this pad to late December or early
January," said Dinges.
Cabot has updated its 2019 capital budget to a range of
$800 million to $820 million to reflect the incremental drilling
and completion activity on the previously referenced eight-well pad
and an increase in drilling activity for the year by four net wells
resulting from continued efficiency gains on the Company's three
fully-contracted drilling rigs.
Additionally, the Company has updated its NYMEX price assumption
range for 2019 to reflect a tighter band of expected outcomes
resulting from seven months of actual NYMEX settlements
year-to-date. The Company has provided updated guidance on its
estimated key financial metrics based on this NYMEX price
assumption range in the table below.
Estimated 2019 Key
Financial Metrics (1)
|
|
$2.60
NYMEX
|
|
$2.70
NYMEX
|
|
$2.80
NYMEX
|
Adjusted Earnings Per
Share Growth (%)
|
|
38% - 42%
|
|
45% - 49%
|
|
52% - 56%
|
Free Cash Flow
($mm)
|
|
$500 -
$525
|
|
$550 -
$575
|
|
$600 -
$625
|
Return on Capital
Employed (%)
|
|
20% - 22%
|
|
21% - 23%
|
|
22% - 24%
|
|
(1) Includes the
impact of derivative instruments
|
For further disclosure on Cabot's expected third quarter 2019
natural gas pricing exposure by index and cost guidance, please see
the current Guidance slide in the Investor Relations section of the
Company's website.
Preliminary Full-Year 2020 Guidance
Cabot has provided its preliminary 2020 production growth
guidance of five percent (seven to eight percent on a debt-adjusted
per share basis). This production growth is based on a preliminary
capital budget range of $700 million
to $725 million. The Company's 2020
program is expected to deliver $375
million to $400 million of
free cash flow at a $2.50 NYMEX price
and $525 million to $550 million of free cash flow at a $2.75 NYMEX price. "Based on our current outlook
for the natural gas market, we believe a strategy that focuses on
maximizing free cash flow generation through a reduction in capital
spending and production growth will create the most value for our
shareholders," explained Dinges. "This strategy, which is
underpinned by disciplined capital allocation, will allow the
Company to sustainably deliver a combination of free cash flow
generation, high return on capital employed, consistent return of
capital to shareholders, low leverage, and growth in production and
reserves per share."
Conference Call Webcast
A conference call is scheduled for Friday, July 26, 2019, at 9:30 a.m. Eastern Time to discuss second quarter
2019 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
June 30,
|
|
Six Months
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
PRODUCTION
VOLUMES
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
213.8
|
|
|
172.4
|
|
|
418.6
|
|
|
337.0
|
|
Crude oil and
condensate (Mbbl)
|
—
|
|
|
—
|
|
|
—
|
|
|
754.0
|
|
Natural gas liquids
(NGLs) (Mbbl)
|
—
|
|
|
—
|
|
|
—
|
|
|
75.1
|
|
Equivalent production
(Bcfe)
|
213.8
|
|
|
172.4
|
|
|
418.6
|
|
|
342.0
|
|
Daily equivalent
production (Mmcfe/day)
|
2,349
|
|
|
1,895
|
|
|
2,313
|
|
|
1,890
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES
PRICE
|
|
|
|
|
|
|
|
Natural gas,
including hedges ($/Mcf)
|
$
|
2.27
|
|
|
$
|
2.15
|
|
|
$
|
2.80
|
|
|
$
|
2.29
|
|
Natural gas,
excluding hedges ($/Mcf)
|
$
|
2.20
|
|
|
$
|
2.11
|
|
|
$
|
2.64
|
|
|
$
|
2.30
|
|
Crude oil and
condensate, including hedges ($/Bbl)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
63.68
|
|
Crude oil and
condensate, excluding hedges ($/Bbl)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
64.68
|
|
NGL
($/Bbl)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21.49
|
|
|
|
|
|
|
|
|
|
AVERAGE UNIT COSTS
($/Mcfe)
|
|
|
|
|
|
|
|
Direct
operations
|
$
|
0.08
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.10
|
|
Transportation and
gathering
|
0.66
|
|
|
0.66
|
|
|
0.67
|
|
|
0.66
|
|
Taxes other than
income
|
0.02
|
|
|
0.03
|
|
|
0.02
|
|
|
0.04
|
|
Exploration
|
0.02
|
|
|
0.32
|
|
|
0.03
|
|
|
0.17
|
|
Depreciation,
depletion and amortization
|
0.45
|
|
|
0.49
|
|
|
0.45
|
|
|
0.49
|
|
General and
administrative (excluding stock-based compensation)
|
0.08
|
|
|
0.09
|
|
|
0.08
|
|
|
0.10
|
|
Stock-based
compensation
|
0.03
|
|
|
0.03
|
|
|
0.05
|
|
|
0.03
|
|
Interest
expense
|
0.07
|
|
|
0.14
|
|
|
0.06
|
|
|
0.13
|
|
|
$
|
1.41
|
|
|
$
|
1.85
|
|
|
$
|
1.45
|
|
|
$
|
1.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WELLS DRILLED
(1)
|
|
|
|
|
|
|
|
Gross
|
24
|
|
|
24
|
|
|
49
|
|
|
39
|
|
Net
|
24.0
|
|
|
24.0
|
|
|
49.0
|
|
|
39.0
|
|
|
|
|
|
|
|
|
|
WELLS COMPLETED
(1)
|
|
|
|
|
|
|
|
Gross
|
28
|
|
|
23
|
|
|
42
|
|
|
34
|
|
Net
|
28.0
|
|
|
23.0
|
|
|
42.0
|
|
|
34.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 June 30,
|
|
Six Months
Ended June 30,
|
(In thousands,
except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Natural
gas
|
$
|
470,482
|
|
|
$
|
364,660
|
|
|
$
|
1,103,656
|
|
|
$
|
776,768
|
|
Crude
oil and condensate
|
—
|
|
|
—
|
|
|
—
|
|
|
48,722
|
|
Gain
(loss) on derivative instruments
|
63,649
|
|
|
(3,668)
|
|
|
71,906
|
|
|
1,909
|
|
Brokered
natural gas
|
—
|
|
|
92,576
|
|
|
—
|
|
|
97,526
|
|
Other
|
(14)
|
|
|
(121)
|
|
|
236
|
|
|
1,749
|
|
|
534,117
|
|
|
453,447
|
|
|
1,175,798
|
|
|
926,674
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Direct
operations
|
18,093
|
|
|
15,657
|
|
|
36,427
|
|
|
35,727
|
|
Transportation and
gathering
|
141,689
|
|
|
114,189
|
|
|
279,022
|
|
|
226,314
|
|
Brokered natural
gas
|
—
|
|
|
80,082
|
|
|
—
|
|
|
85,032
|
|
Taxes other than
income
|
3,640
|
|
|
5,392
|
|
|
9,487
|
|
|
12,582
|
|
Exploration
|
4,504
|
|
|
54,500
|
|
|
10,548
|
|
|
58,117
|
|
Depreciation,
depletion and amortization
|
96,147
|
|
|
84,910
|
|
|
188,405
|
|
|
167,038
|
|
General and
administrative (excluding stock-based compensation)
|
16,168
|
|
|
15,533
|
|
|
32,126
|
|
|
34,146
|
|
Stock-based
compensation(1)
|
6,721
|
|
|
5,695
|
|
|
21,853
|
|
|
11,142
|
|
|
286,962
|
|
|
375,958
|
|
|
577,868
|
|
|
630,098
|
|
Earnings (loss) on
equity method investments
|
3,650
|
|
|
(4)
|
|
|
7,334
|
|
|
(998)
|
|
Gain (loss) on sale
of assets
|
—
|
|
|
544
|
|
|
(1,500)
|
|
|
(40,505)
|
|
INCOME FROM
OPERATIONS
|
250,805
|
|
|
78,029
|
|
|
603,764
|
|
|
255,073
|
|
Interest expense,
net
|
14,567
|
|
|
23,328
|
|
|
26,748
|
|
|
43,386
|
|
Other
expense
|
143
|
|
|
118
|
|
|
287
|
|
|
232
|
|
Income before income
taxes
|
236,095
|
|
|
54,583
|
|
|
576,729
|
|
|
211,455
|
|
Income tax
expense
|
55,086
|
|
|
12,152
|
|
|
132,957
|
|
|
51,793
|
|
NET
INCOME
|
$
|
181,009
|
|
|
$
|
42,431
|
|
|
$
|
443,772
|
|
|
$
|
159,662
|
|
Earnings per share -
Basic
|
$
|
0.43
|
|
|
$
|
0.09
|
|
|
$
|
1.05
|
|
|
$
|
0.35
|
|
Weighted-average
common shares outstanding
|
422,141
|
|
|
451,055
|
|
|
422,626
|
|
|
455,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes the
impact of our performance share awards and restricted
stock.
|
CONDENSED
CONSOLIDATED BALANCE SHEET (Unaudited)
|
|
(In
thousands)
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets
|
$
|
631,330
|
|
|
$
|
544,545
|
|
Properties and
equipment, net (Successful efforts method)
|
3,699,575
|
|
|
3,463,606
|
|
Other
assets
|
232,824
|
|
|
190,678
|
|
|
$
|
4,563,729
|
|
|
$
|
4,198,829
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
$
|
234,026
|
|
|
$
|
287,264
|
|
Long-term debt,
net
|
1,219,555
|
|
|
1,226,104
|
|
Deferred income
taxes
|
611,163
|
|
|
458,597
|
|
Other
liabilities
|
154,181
|
|
|
138,705
|
|
Stockholders'
equity
|
2,344,804
|
|
|
2,088,159
|
|
|
$
|
4,563,729
|
|
|
$
|
4,198,829
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
Quarter Ended
June 30,
|
|
Six Months
Ended
June 30,
|
(In
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net
income
|
$
|
181,009
|
|
|
$
|
42,431
|
|
|
$
|
443,772
|
|
|
$
|
159,662
|
|
Deferred income tax
expense
|
64,645
|
|
|
2,689
|
|
|
152,647
|
|
|
66,976
|
|
(Gain) loss on sale
of assets
|
—
|
|
|
(544)
|
|
|
1,500
|
|
|
40,505
|
|
Exploratory dry hole
cost
|
3
|
|
|
51,145
|
|
|
16
|
|
|
51,085
|
|
Gain on derivative
instruments
|
(63,649)
|
|
|
3,668
|
|
|
(71,906)
|
|
|
(1,909)
|
|
Net cash received
(paid) in settlement of derivative instruments
|
15,397
|
|
|
5,819
|
|
|
68,377
|
|
|
(20,312)
|
|
Income charges not
requiring cash
|
104,477
|
|
|
91,289
|
|
|
213,343
|
|
|
180,790
|
|
Changes in assets and
liabilities
|
24,768
|
|
|
77,403
|
|
|
104,188
|
|
|
69,863
|
|
Net cash provided by
operating activities
|
326,650
|
|
|
273,900
|
|
|
911,937
|
|
|
546,660
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Capital
expenditures
|
(225,850)
|
|
|
(231,014)
|
|
|
(421,500)
|
|
|
(387,271)
|
|
Proceeds from sale of
assets
|
—
|
|
|
323
|
|
|
2,346
|
|
|
646,868
|
|
Investment in equity
method investments
|
(3,303)
|
|
|
(27,487)
|
|
|
(5,131)
|
|
|
(62,905)
|
|
Distribution of
investment from equity method investments
|
758
|
|
|
—
|
|
|
758
|
|
|
—
|
|
Net cash (used in)
provided by investing activities
|
(228,395)
|
|
|
(258,178)
|
|
|
(423,527)
|
|
|
196,692
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net borrowings
(repayments) of debt
|
—
|
|
|
—
|
|
|
(7,000)
|
|
|
—
|
|
Treasury stock
repurchases
|
(125,260)
|
|
|
(212,520)
|
|
|
(156,638)
|
|
|
(419,654)
|
|
Dividends
paid
|
(38,092)
|
|
|
(27,071)
|
|
|
(67,697)
|
|
|
(54,718)
|
|
Tax withholdings on
vesting of stock awards
|
(987)
|
|
|
(65)
|
|
|
(10,557)
|
|
|
(8,033)
|
|
Capitalized debt
issuance costs
|
(7,411)
|
|
|
—
|
|
|
(7,411)
|
|
|
—
|
|
Net cash used in
financing activities
|
(171,750)
|
|
|
(239,656)
|
|
|
(249,303)
|
|
|
(482,405)
|
|
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
$
|
(73,495)
|
|
|
$
|
(223,934)
|
|
|
$
|
239,107
|
|
|
$
|
260,947
|
|
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 to Adjusted Net
Income and Adjusted Earnings Per Share
Adjusted Net Income 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 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
June 30,
|
|
Six Months
Ended
June 30,
|
(In thousands,
except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
As reported - net
income
|
$
|
181,009
|
|
|
$
|
42,431
|
|
|
$
|
443,772
|
|
|
$
|
159,662
|
|
Reversal of selected
items:
|
|
|
|
|
|
|
|
(Gain) loss on sale
of assets
|
—
|
|
|
(544)
|
|
|
1,500
|
|
|
40,505
|
|
(Gain) loss on
derivative instruments(1)
|
(48,252)
|
|
|
9,487
|
|
|
(3,529)
|
|
|
(22,221)
|
|
Stock-based
compensation expense
|
6,721
|
|
|
5,695
|
|
|
21,853
|
|
|
11,142
|
|
Severance
expense
|
2,124
|
|
|
28
|
|
|
2,124
|
|
|
28
|
|
Interest expense
related to income tax reserves
|
—
|
|
|
5,517
|
|
|
(3,052)
|
|
|
5,517
|
|
Tax effect on
selected items
|
8,998
|
|
|
(4,751)
|
|
|
(4,315)
|
|
|
(8,232)
|
|
Adjusted net
income
|
$
|
150,600
|
|
|
$
|
57,863
|
|
|
$
|
458,353
|
|
|
$
|
186,401
|
|
As reported -
earnings per share
|
$
|
0.43
|
|
|
$
|
0.09
|
|
|
$
|
1.05
|
|
|
$
|
0.35
|
|
Per share impact of
selected items
|
(0.07)
|
|
|
0.04
|
|
|
0.03
|
|
|
0.06
|
|
Adjusted earnings per
share
|
$
|
0.36
|
|
|
$
|
0.13
|
|
|
$
|
1.08
|
|
|
$
|
0.41
|
|
Weighted-average
common shares outstanding
|
422,141
|
|
|
451,055
|
|
|
422,626
|
|
|
455,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
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 (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.
|
|
Twelve Months
Ended June 30,
|
(In
thousands)
|
|
2019
|
|
2018
|
Interest expense,
net
|
|
$
|
56,563
|
|
|
$
|
84,127
|
|
Interest expense
related to income tax reserves (1)
|
|
5,453
|
|
|
(5,517)
|
|
Tax
benefit
|
|
(14,274)
|
|
|
(23,966)
|
|
After-tax interest
expense, net (A)
|
|
47,742
|
|
|
54,644
|
|
|
|
|
|
|
As reported - net
income
|
|
841,153
|
|
|
132,808
|
|
Adjustments to as
reported - net income, net of tax
|
|
(38,088)
|
|
|
145,012
|
|
Adjusted net income
(B)
|
|
803,065
|
|
|
277,820
|
|
|
|
|
|
|
Adjusted net income
before interest expense, net (A + B)
|
|
$
|
850,807
|
|
|
$
|
332,464
|
|
|
|
|
|
|
Total debt -
beginning of twelve month period
|
|
$
|
1,522,572
|
|
|
$
|
1,521,211
|
|
Stockholders' equity
- beginning of twelve month period
|
|
2,154,174
|
|
|
2,642,031
|
|
Capital employed -
beginning of twelve month period
|
|
3,676,746
|
|
|
4,163,242
|
|
|
|
|
|
|
Total debt - end of
twelve month period
|
|
1,219,555
|
|
|
1,522,572
|
|
Stockholders' equity
- end of twelve month period
|
|
2,344,804
|
|
|
2,154,174
|
|
Capital employed -
end of twelve month period
|
|
3,564,359
|
|
|
3,676,746
|
|
|
|
|
|
|
Average capital
employed (C)
|
|
$
|
3,620,553
|
|
|
$
|
3,919,994
|
|
|
|
|
|
|
Return on average
capital employed (ROCE) (A+B) / C
|
|
23.5
|
%
|
|
8.5
|
%
|
|
|
|
|
|
|
|
|
(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 June 30,
|
|
Six Months
Ended June 30,
|
(In
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net cash provided by
operating activities
|
|
$
|
326,650
|
|
|
$
|
273,900
|
|
|
$
|
911,937
|
|
|
$
|
546,660
|
|
Changes in assets and
liabilities
|
|
(24,768)
|
|
|
(77,403)
|
|
|
(104,188)
|
|
|
(69,863)
|
|
Discretionary cash
flow
|
|
301,882
|
|
|
196,497
|
|
|
807,749
|
|
|
476,797
|
|
Capital
expenditures
|
|
(225,850)
|
|
|
(231,014)
|
|
|
(421,500)
|
|
|
(387,271)
|
|
Investment in equity
method investments
|
|
(3,303)
|
|
|
(27,487)
|
|
|
(5,131)
|
|
|
(62,905)
|
|
Free cash
flow
|
|
$
|
72,729
|
|
|
$
|
(62,004)
|
|
|
$
|
381,118
|
|
|
$
|
26,621
|
|
EBITDAX Calculation and Reconciliation
EBITDAX is defined as net income plus 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, cash
distributions received from 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 an alternative to cash flows from operating
activities or net income, as defined by GAAP, or as a measure of
liquidity.
|
Quarter
Ended June 30,
|
|
Six Months
Ended June 30,
|
(In
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
|
$
|
181,009
|
|
|
$
|
42,431
|
|
|
$
|
443,772
|
|
|
$
|
159,662
|
|
Plus
(less):
|
|
|
|
|
|
|
|
Interest expense,
net
|
14,567
|
|
|
23,328
|
|
|
26,748
|
|
|
43,386
|
|
Other
expense
|
143
|
|
|
118
|
|
|
287
|
|
|
232
|
|
Income tax
expense
|
55,086
|
|
|
12,152
|
|
|
132,957
|
|
|
51,793
|
|
Depreciation,
depletion and amortization
|
96,147
|
|
|
84,910
|
|
|
188,405
|
|
|
167,038
|
|
Exploration
|
4,504
|
|
|
54,500
|
|
|
10,548
|
|
|
58,117
|
|
(Gain) loss on sale
of assets
|
—
|
|
|
(544)
|
|
|
1,500
|
|
|
40,505
|
|
Non-cash (gain) loss
on derivative instruments
|
(48,252)
|
|
|
9,487
|
|
|
(3,529)
|
|
|
(22,221)
|
|
(Earnings) loss on
equity method investments
|
(3,650)
|
|
|
4
|
|
|
(7,334)
|
|
|
998
|
|
Equity method
investment distributions
|
4,779
|
|
|
—
|
|
|
9,508
|
|
|
—
|
|
Stock-based
compensation
|
6,721
|
|
|
5,695
|
|
|
21,853
|
|
|
11,142
|
|
EBITDAX
|
$
|
311,054
|
|
|
$
|
232,081
|
|
|
$
|
824,715
|
|
|
$
|
510,652
|
|
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)
|
June 30,
2019
|
|
December 31,
2018
|
Total debt
|
$
|
1,219,555
|
|
|
$
|
1,226,104
|
|
Stockholders'
equity
|
2,344,804
|
|
|
2,088,159
|
|
Total
capitalization
|
$
|
3,564,359
|
|
|
$
|
3,314,263
|
|
|
|
|
|
Total debt
|
$
|
1,219,555
|
|
|
$
|
1,226,104
|
|
Less: Cash and cash
equivalents
|
(241,394)
|
|
|
(2,287)
|
|
Net debt
|
$
|
978,161
|
|
|
$
|
1,223,817
|
|
|
|
|
|
Net debt
|
$
|
978,161
|
|
|
$
|
1,223,817
|
|
Stockholders'
equity
|
2,344,804
|
|
|
2,088,159
|
|
Total adjusted
capitalization
|
$
|
3,322,965
|
|
|
$
|
3,311,976
|
|
|
|
|
|
Total debt to total
capitalization ratio
|
34.2
|
%
|
|
37.0
|
%
|
Less: Impact of cash
and cash equivalents
|
4.8
|
%
|
|
—
|
%
|
Net debt to adjusted
capitalization ratio
|
29.4
|
%
|
|
37.0
|
%
|
Capital
Expenditures
|
|
|
|
Quarter
Ended June 30,
|
|
Six Months
Ended June 30,
|
(In
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash paid for capital
expenditures
|
|
$
|
225,850
|
|
|
$
|
231,014
|
|
|
$
|
421,500
|
|
|
$
|
387,271
|
|
Change in accrued
capital costs
|
|
(5,466)
|
|
|
(17,308)
|
|
|
3,168
|
|
|
(6,275)
|
|
Exploratory dry hole
cost
|
|
(3)
|
|
|
(51,145)
|
|
|
(16)
|
|
|
(51,085)
|
|
Capital
expenditures
|
|
$
|
220,381
|
|
|
$
|
162,561
|
|
|
$
|
424,652
|
|
|
$
|
329,911
|
|
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content:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-reports-second-quarter-2019-results-expands-share-repurchase-program-authorization-300891520.html
SOURCE Cabot Oil & Gas Corporation