HOUSTON, Oct. 24, 2019 /PRNewswire/ -- Cabot Oil & Gas
Corporation (NYSE: COG) ("Cabot" or the "Company") today reported
financial and operating results for the third quarter of 2019.
"In the third quarter of 2019, Cabot increased free cash flow by
over 150 percent compared to the prior-year period, driven by
higher production volumes, lower per unit operating expenses,
improved basis differentials, and reduced capital spending, despite
a 23 percent reduction in NYMEX benchmark prices," stated
Dan O. Dinges, Chairman, President
and Chief Executive Officer. "Our results highlight the resiliency
of Cabot's business model and our ability to deliver strong
financial results even in the lows of the natural gas price cycle,
while continuing to return capital to our shareholders."
Third Quarter 2019 Highlights
- Net income of $90.4 million (or
$0.22 per share); adjusted net income
(non-GAAP) of $119.7 million (or
$0.29 per share)
- Net cash provided by operating activities of $270.9 million; discretionary cash flow
(non-GAAP) of $275.5 million
- Free cash flow (non-GAAP) of $72.4
million
- Return on capital employed (ROCE) (non-GAAP) for the trailing
twelve months of 25.2 percent
- Returned $227.8 million of
capital to shareholders through dividends and share
repurchases
- Daily production of 2,399 million cubic feet equivalent (Mmcfe)
per day, an increase of 18 percent relative to the prior-year
period
- Improved operating expenses per unit to $1.43 per thousand cubic feet equivalent (Mcfe),
a 15 percent reduction relative to the prior-year period
- Previously announced an agreement to sell Cabot's 20 percent
ownership interest in Meade Pipeline Co LLC for $256.0 million, or over 13 times expected 2019
EBITDAX (non-GAAP), which is expected to close during the fourth
quarter of 2019
- Announced an 11 percent increase in the Company's quarterly
cash dividend to $0.10 per share
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.
Third Quarter 2019 Financial Results
Third quarter 2019 daily production was 2,399 Mmcfe per day (100
percent natural gas), exceeding the midpoint of the Company's
guidance range and representing an 18 percent increase relative to
the third quarter of 2018.
Third quarter 2019 net income was $90.4
million, or $0.22 per share,
compared to $122.3 million, or
$0.28 per share, in the prior-year
period. Third quarter 2019 adjusted net income (non-GAAP) was
$119.7 million, or $0.29 per share, compared to $108.9 million, or $0.25 per share, in the prior-year period. Third
quarter 2019 EBITDAX (non-GAAP) was $283.6
million, compared to $291.6
million in the prior-year period.
Third quarter 2019 net cash provided by operating activities was
$270.9 million, compared to
$242.2 million in the prior-year
period. Third quarter 2019 discretionary cash flow (non-GAAP) was
$275.5 million, compared to
$298.8 million in the prior-year
period. Third quarter 2019 free cash flow (non-GAAP) was
$72.4 million, compared to
$28.6 million in the prior-year
period.
Third quarter 2019 natural gas price realizations, including the
impact of derivatives, were $2.11 per
thousand cubic feet (Mcf), a decrease of 11 percent compared to the
prior-year period. Excluding the impact of derivatives, third
quarter 2019 natural gas price realizations were $1.89 per Mcf, representing a $0.34 discount to NYMEX settlement prices
compared to a $0.54 discount in the
prior-year period.
Third quarter 2019 operating expenses (including interest
expense) decreased to $1.43 per Mcfe,
a 15 percent improvement compared to the prior-year period. All
operating expenses per unit decreased relative to the prior-year
period except for direct operations and taxes other than income,
which were both flat to the third quarter of 2018.
Cabot incurred a total of $197.5
million of capital expenditures in the third quarter of 2019
including $190.5 million of drilling
and facilities capital, $2.0 million
of leasehold acquisition capital, and $5.0
million of other capital. Additionally, the Company
contributed $3.8 million to its
equity method pipeline investments. See the supplemental table at
the end of this press release reconciling the capital expenditures
during the third quarter of 2019.
Year-To-Date 2019 Financial Results
Daily production for the nine-month period ended September 30, 2019 was 2,342 Mmcfe per day (100
percent natural gas), representing a 21 percent increase relative
to the prior-year period.
For the nine-month period ended September
30, 2019, net income was $534.1
million, or $1.27 per share,
compared to $282.0 million, or
$0.63 per share, for the prior-year
period. Adjusted net income (non-GAAP) for the nine-month period
ended September 30, 2019 was
$578.0 million, or $1.38 per share, compared to $295.3 million, or $0.66 per share, for the prior-year period.
EBITDAX (non-GAAP) for the nine-month period ended September 30, 2019 was $1,108.3 million, compared to $802.3 million for the prior-year period.
For the nine-month period ended September
30, 2019, net cash provided by operating activities was
$1,182.8 million, compared to
$788.9 million for the prior-year
period. Discretionary cash flow (non-GAAP) for the nine-month
period ended September 30, 2019 was
$1,083.2 million, compared to
$775.6 million for the prior-year
period. Free cash flow (non-GAAP) was $453.5
million for the nine-month period ended September 30, 2019, compared to $55.2 million for the prior-year period. ROCE
(non-GAAP) improved to 25.2 percent for the trailing twelve months
ended September 30, 2019, compared to
10.8 percent for the trailing twelve months ended September 30, 2018.
Natural gas price realizations, including the impact of
derivatives, were $2.56 per Mcf for
the nine-month period ended September 30,
2019, an increase of 10 percent compared to the prior-year
period.
For the nine-month period ended September
30, 2019, operating expenses (including interest expense)
decreased to $1.44 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 and depreciation, depletion, and amortization, in
addition to improvements in direct operations, transportation and
gathering, taxes other than income, general and administrative, and
interest expense.
Cabot incurred a total of $622.1
million of capital expenditures during the nine-month period
ended September 30, 2019 including
$605.9 million of drilling and
facilities capital, $5.3 million of
leasehold acquisition capital, and $10.9
million of other capital. Additionally, the Company
contributed $9.0 million to its
equity method pipeline investments during the nine-month period
ended September 30, 2019. See
the supplemental table at the end of this press release reconciling
the capital expenditures during the nine-month period ended
September 30, 2019.
Dividend Increase
Cabot's Board of Directors has approved an 11 percent increase
in its quarterly cash dividend to $0.10 per share on the Company's common stock,
resulting in the fifth dividend increase since May 2017. The dividend will be paid on
November 15, 2019 to all shareholders
of record as of the close of business on November 6, 2019. "We remain committed to
increasing our return of capital to shareholders through the
combination of a growing dividend and opportunistic share
repurchases," highlighted Dinges. "Our outlook for the continued
generation of significant free cash flow over the coming years,
even at natural gas prices that are materially below the current
forward curve, will allow Cabot to remain a sector leader in
returning capital to shareholders."
Share Repurchase Program Update
As previously announced in its September
30, 2019 press release, Cabot repurchased 10.5 million
shares at a weighted-average share price of $18.21 during the third quarter of 2019. Since
reactivating the share repurchase program in the second quarter of
2017, Cabot has reduced its shares outstanding by over 12 percent
to 407.9 million shares. The Company currently has 21.0 million
remaining shares authorized under its share repurchase program (or
approximately five percent of its current shares outstanding).
Financial Position and Liquidity
As of September 30, 2019, Cabot
had total debt of $1.2 billion and
cash on hand of $82.3 million. The
Company's net debt-to-adjusted capitalization ratio and net
debt-to-trailing twelve months EBITDAX ratio were 33.9 percent and
0.7x, 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 approximately $1.6
billion of liquidity.
Fourth Quarter and Full-Year 2019 Guidance Update
Cabot has provided its fourth quarter 2019 production guidance
range of 2,375 to 2,425 Mmcfe per day. The Company has also updated
its full-year 2019 production growth guidance to 17 percent, which
is the midpoint of the prior guidance range of 16 to 18 percent.
This represents 25 percent growth in production per debt-adjusted
share for the year. Cabot has also reaffirmed its 2019 capital
budget range of $800 million to
$820 million.
Additionally, the Company has updated its full-year 2019 NYMEX
price assumption to $2.60 per Mmbtu,
which reflects the ten months of actual NYMEX settlements to date
and the current forward prices for the remaining two months of the
year. The Company has also reaffirmed its estimated key financial
metrics for the year based on this NYMEX price assumption in the
table below.
Estimated 2019 Key
Financial Metrics (1)
|
|
|
|
|
|
$2.60
NYMEX
|
Adjusted Earnings Per
Share Growth (%)
|
|
|
|
|
|
38% - 42%
|
Free Cash Flow
($mm)
|
|
|
|
|
|
$500 -
$525
|
Return on Capital
Employed (%)
|
|
|
|
|
|
20% - 22%
|
|
|
|
|
|
|
|
(1) Includes the
impact of derivative instruments
|
For further disclosure on Cabot's expected fourth 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
In the Company's second quarter 2019 earnings release, Cabot
provided a preliminary 2020 plan ("growth scenario") that is
expected to generate full-year production growth of five percent
(seven to eight percent growth in full-year production per
debt-adjusted share) based on a preliminary capital budget range of
$700 million to $725 million, including non-drilling and
completion capital. This plan was predicated on a 2020 NYMEX price
assumption of $2.50 per Mmbtu.
Subsequent to the second quarter earnings release, the 2020 NYMEX
forward curve continued to decline to levels below the Company's
original budget price assumption. As a result, in addition to its
initial preliminary 2020 guidance, Cabot is also evaluating a
maintenance capital plan ("maintenance scenario") that holds fourth
quarter 2020 production levels flat to the midpoint of the fourth
quarter 2019 production guidance range (two to three percent growth
in full-year production per debt-adjusted share) based on a
$575 million capital program,
including non-drilling and completion capital. The growth scenario
delivers a fourth quarter 2020 exit growth rate of five percent and
is designed to position Cabot for continued growth in 2021, while
the maintenance scenario is designed to position the Company for a
continued flat production profile in 2021. Both scenarios assume a
moderate amount of curtailments during the shoulder seasons based
on an expectation of normal pipeline maintenance, higher line
pressures, and weaker spot market prices. Cabot will continue to
evaluate both scenarios and assess the impact of the winter
withdrawal season on the Company's 2020 natural gas price outlook
before issuing formal 2020 guidance in the year-end earnings
release in February. "We continue to maintain a cautiously
optimistic outlook for the natural gas markets in 2020, driven in
large part by our expectation for a pronounced decrease in
operating activity across North American natural gas basins due to
continued price weakness," said Dinges. "However, we are prepared
to modify our 2020 plan early next year in response to lower
anticipated natural gas prices, if necessary, with a continued
focus on delivering a combination of strong free cash flow
generation, high return on capital employed, consistent return of
capital to shareholders including our recent dividend increase, low
financial leverage, and growth in production and reserves per
share—all of which are provided by both of the 2020 scenarios we
are currently evaluating."
Conference Call Webcast
A conference call is scheduled for Friday, October 25, 2019, at 9:30 a.m. Eastern Time to discuss third 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,
pipeline projects, 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
PRODUCTION
VOLUMES
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
220.7
|
|
|
186.5
|
|
|
639.3
|
|
|
523.6
|
|
Crude oil and
condensate (Mbbl)
|
—
|
|
|
—
|
|
|
—
|
|
|
754.0
|
|
Natural gas liquids
(NGLs) (Mbbl)
|
—
|
|
|
—
|
|
|
—
|
|
|
75.1
|
|
Equivalent production
(Bcfe)
|
220.7
|
|
|
186.5
|
|
|
639.3
|
|
|
528.6
|
|
Daily equivalent
production (Mmcfe/day)
|
2,399
|
|
|
2,029
|
|
|
2,342
|
|
|
1,936
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES
PRICE
|
|
|
|
|
|
|
|
Natural gas,
including hedges ($/Mcf)
|
$
|
2.11
|
|
|
$
|
2.36
|
|
|
$
|
2.56
|
|
|
$
|
2.32
|
|
Natural gas,
excluding hedges ($/Mcf)
|
$
|
1.89
|
|
|
$
|
2.36
|
|
|
$
|
2.38
|
|
|
$
|
2.33
|
|
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
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.10
|
|
Transportation and
gathering
|
0.66
|
|
|
0.69
|
|
|
0.66
|
|
|
0.67
|
|
Taxes other than
income
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|
0.03
|
|
Exploration
|
0.02
|
|
|
0.05
|
|
|
0.02
|
|
|
0.13
|
|
Depreciation,
depletion and amortization
|
0.50
|
|
|
0.65
|
|
|
0.47
|
|
|
0.55
|
|
General and
administrative (excluding stock-based compensation)
|
0.07
|
|
|
0.08
|
|
|
0.08
|
|
|
0.09
|
|
Stock-based
compensation
|
0.01
|
|
|
0.03
|
|
|
0.04
|
|
|
0.03
|
|
Interest
expense
|
0.06
|
|
|
0.08
|
|
|
0.06
|
|
|
0.11
|
|
|
$
|
1.43
|
|
|
$
|
1.69
|
|
|
$
|
1.44
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WELLS DRILLED
(1)
|
|
|
|
|
|
|
|
Gross
|
22
|
|
|
21
|
|
|
71
|
|
|
60
|
|
Net
|
22.0
|
|
|
21.0
|
|
|
71.0
|
|
|
60.0
|
|
|
|
|
|
|
|
|
|
WELLS COMPLETED
(1)
|
|
|
|
|
|
|
|
Gross
|
29
|
|
|
27
|
|
|
71
|
|
|
61
|
|
Net
|
29.0
|
|
|
27.0
|
|
|
71.0
|
|
|
61.0
|
|
____________________________________________________________
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
(In thousands,
except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Natural
gas
|
$
|
418,133
|
|
|
$
|
440,835
|
|
|
$
|
1,521,789
|
|
|
$
|
1,217,603
|
|
Crude
oil and condensate
|
—
|
|
|
—
|
|
|
—
|
|
|
48,722
|
|
Gain
(loss) on derivative instruments
|
11,060
|
|
|
(3,537)
|
|
|
82,966
|
|
|
(1,628)
|
|
Brokered
natural gas
|
—
|
|
|
105,849
|
|
|
—
|
|
|
203,375
|
|
Other
|
(82)
|
|
|
2,026
|
|
|
154
|
|
|
3,775
|
|
|
429,111
|
|
|
545,173
|
|
|
1,604,909
|
|
|
1,471,847
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Direct
operations
|
19,181
|
|
|
17,030
|
|
|
55,608
|
|
|
52,757
|
|
Transportation and
gathering
|
145,681
|
|
|
129,534
|
|
|
424,703
|
|
|
355,848
|
|
Brokered natural
gas
|
—
|
|
|
93,405
|
|
|
—
|
|
|
178,437
|
|
Taxes other than
income
|
4,607
|
|
|
2,852
|
|
|
14,094
|
|
|
15,434
|
|
Exploration
|
4,481
|
|
|
10,049
|
|
|
15,029
|
|
|
68,166
|
|
Depreciation,
depletion and amortization
|
110,889
|
|
|
121,172
|
|
|
299,294
|
|
|
288,210
|
|
General and
administrative (excluding stock-based compensation)
|
16,272
|
|
|
14,235
|
|
|
48,398
|
|
|
48,382
|
|
Stock-based
compensation(1)
|
2,119
|
|
|
6,489
|
|
|
23,972
|
|
|
17,631
|
|
|
303,230
|
|
|
394,766
|
|
|
881,098
|
|
|
1,024,865
|
|
Earnings (loss) on
equity method investments
|
3,860
|
|
|
(11)
|
|
|
11,194
|
|
|
(1,009)
|
|
Gain (loss) on sale
of assets
|
36
|
|
|
25,655
|
|
|
(1,464)
|
|
|
(14,850)
|
|
INCOME FROM
OPERATIONS
|
129,777
|
|
|
176,051
|
|
|
733,541
|
|
|
431,123
|
|
Interest expense,
net
|
13,554
|
|
|
14,191
|
|
|
40,302
|
|
|
57,577
|
|
Other
expense
|
143
|
|
|
115
|
|
|
430
|
|
|
347
|
|
Income before income
taxes
|
116,080
|
|
|
161,745
|
|
|
692,809
|
|
|
373,199
|
|
Income tax
expense
|
25,722
|
|
|
39,408
|
|
|
158,679
|
|
|
91,201
|
|
NET
INCOME
|
$
|
90,358
|
|
|
$
|
122,337
|
|
|
$
|
534,130
|
|
|
$
|
281,998
|
|
Earnings per share -
Basic
|
$
|
0.22
|
|
|
$
|
0.28
|
|
|
$
|
1.27
|
|
|
$
|
0.63
|
|
Weighted-average
common shares outstanding
|
412,456
|
|
|
440,772
|
|
|
419,199
|
|
|
450,445
|
|
______________________________________________________________
|
(1)
|
Includes the
impact of our performance share awards and restricted
stock.
|
CONDENSED
CONSOLIDATED BALANCE SHEET (Unaudited)
|
|
(In
thousands)
|
September 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets
|
$
|
421,679
|
|
|
$
|
544,545
|
|
Properties and
equipment, net (Successful efforts method)
|
3,787,581
|
|
|
3,463,606
|
|
Other
assets
|
233,405
|
|
|
190,678
|
|
|
$
|
4,442,665
|
|
|
$
|
4,198,829
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
$
|
294,785
|
|
|
$
|
287,264
|
|
Long-term debt, net
(excluding current maturities)
|
1,132,790
|
|
|
1,226,104
|
|
Deferred income
taxes
|
647,473
|
|
|
458,597
|
|
Other
liabilities
|
154,041
|
|
|
138,705
|
|
Stockholders'
equity
|
2,213,576
|
|
|
2,088,159
|
|
|
$
|
4,442,665
|
|
|
$
|
4,198,829
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(In
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net
income
|
$
|
90,358
|
|
|
$
|
122,337
|
|
|
$
|
534,130
|
|
|
$
|
281,998
|
|
Deferred income tax
expense
|
36,350
|
|
|
64,823
|
|
|
188,997
|
|
|
131,799
|
|
(Gain) loss on sale
of assets
|
(36)
|
|
|
(25,655)
|
|
|
1,464
|
|
|
14,850
|
|
Exploratory dry hole
cost
|
—
|
|
|
5,340
|
|
|
16
|
|
|
56,425
|
|
(Gain) loss on
derivative instruments
|
(11,060)
|
|
|
3,537
|
|
|
(82,966)
|
|
|
1,628
|
|
Net cash received
(paid) in settlement of derivative instruments
|
46,555
|
|
|
(41)
|
|
|
114,931
|
|
|
(20,354)
|
|
Income charges not
requiring cash
|
113,305
|
|
|
128,422
|
|
|
326,649
|
|
|
309,212
|
|
Changes in assets and
liabilities
|
(4,598)
|
|
|
(56,569)
|
|
|
99,590
|
|
|
13,294
|
|
Net cash provided by
operating activities
|
270,874
|
|
|
242,194
|
|
|
1,182,811
|
|
|
788,852
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Capital
expenditures
|
(199,196)
|
|
|
(260,232)
|
|
|
(620,696)
|
|
|
(647,503)
|
|
Proceeds from sale of
assets
|
55
|
|
|
28,657
|
|
|
2,401
|
|
|
675,525
|
|
Investment in equity
method investments
|
(3,846)
|
|
|
(9,961)
|
|
|
(8,977)
|
|
|
(72,866)
|
|
Distribution of
investment from equity method investments
|
898
|
|
|
—
|
|
|
1,656
|
|
|
—
|
|
Net cash used in
investing activities
|
(202,089)
|
|
|
(241,536)
|
|
|
(625,616)
|
|
|
(44,844)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net borrowings
(repayments) of debt
|
—
|
|
|
(237,000)
|
|
|
(7,000)
|
|
|
(237,000)
|
|
Treasury stock
repurchases
|
(190,808)
|
|
|
(162,071)
|
|
|
(347,446)
|
|
|
(581,725)
|
|
Dividends
paid
|
(37,025)
|
|
|
(26,467)
|
|
|
(104,722)
|
|
|
(81,185)
|
|
Tax withholdings on
vesting of stock awards
|
(30)
|
|
|
(37)
|
|
|
(10,587)
|
|
|
(8,068)
|
|
Capitalized debt
issuance costs
|
—
|
|
|
—
|
|
|
(7,411)
|
|
|
—
|
|
Net cash used in
financing activities
|
(227,863)
|
|
|
(425,575)
|
|
|
(477,166)
|
|
|
(907,978)
|
|
Net (decrease)
increase in cash and cash equivalents
|
$
|
(159,078)
|
|
|
$
|
(424,917)
|
|
|
$
|
80,029
|
|
|
$
|
(163,970)
|
|
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
September 30,
|
|
Nine Months
Ended
September 30,
|
(In thousands,
except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
As reported - net
income
|
$
|
90,358
|
|
|
$
|
122,337
|
|
|
$
|
534,130
|
|
|
$
|
281,998
|
|
Reversal of selected
items:
|
|
|
|
|
|
|
|
(Gain) loss on sale
of assets
|
(36)
|
|
|
(25,655)
|
|
|
1,464
|
|
|
14,850
|
|
(Gain) loss on
derivative instruments(1)
|
35,495
|
|
|
3,496
|
|
|
31,965
|
|
|
(18,726)
|
|
Stock-based
compensation expense
|
2,119
|
|
|
6,489
|
|
|
23,972
|
|
|
17,631
|
|
Severance
expense
|
398
|
|
|
—
|
|
|
2,521
|
|
|
28
|
|
Interest expense
related to income tax reserves
|
—
|
|
|
(1,863)
|
|
|
(3,052)
|
|
|
3,654
|
|
Tax effect on
selected items
|
(8,672)
|
|
|
4,127
|
|
|
(12,986)
|
|
|
(4,104)
|
|
Adjusted net
income
|
$
|
119,662
|
|
|
$
|
108,931
|
|
|
$
|
578,014
|
|
|
$
|
295,331
|
|
As reported -
earnings per share
|
$
|
0.22
|
|
|
$
|
0.28
|
|
|
$
|
1.27
|
|
|
$
|
0.63
|
|
Per share impact of
selected items
|
0.07
|
|
|
(0.03)
|
|
|
0.11
|
|
|
0.03
|
|
Adjusted earnings per
share
|
$
|
0.29
|
|
|
$
|
0.25
|
|
|
$
|
1.38
|
|
|
$
|
0.66
|
|
Weighted-average
common shares outstanding
|
412,456
|
|
|
440,772
|
|
|
419,199
|
|
|
450,445
|
|
___________________________________________________________________
|
(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 September 30,
|
(In
thousands)
|
|
2019
|
|
2018
|
Interest expense,
net
|
|
$
|
55,926
|
|
|
$
|
77,987
|
|
Interest expense
related to income tax reserves (1)
|
|
3,590
|
|
|
(3,654)
|
|
Tax
benefit
|
|
(13,590)
|
|
|
(20,233)
|
|
After-tax interest
expense, net (A)
|
|
45,926
|
|
|
54,100
|
|
|
|
|
|
|
As reported - net
income
|
|
809,174
|
|
|
237,558
|
|
Adjustments to as
reported - net income, net of tax
|
|
4,622
|
|
|
117,228
|
|
Adjusted net income
(B)
|
|
813,796
|
|
|
354,786
|
|
|
|
|
|
|
Adjusted net income
before interest expense, net (A + B)
|
|
$
|
859,722
|
|
|
$
|
408,886
|
|
|
|
|
|
|
Total debt -
beginning of twelve month period
|
|
$
|
1,285,848
|
|
|
$
|
1,521,551
|
|
Stockholders' equity
- beginning of twelve month period
|
|
2,094,147
|
|
|
2,644,594
|
|
Capital employed -
beginning of twelve month period
|
|
3,379,995
|
|
|
4,166,145
|
|
|
|
|
|
|
Total debt - end of
twelve month period
|
|
1,219,790
|
|
|
1,285,848
|
|
Stockholders' equity
- end of twelve month period
|
|
2,213,576
|
|
|
2,094,147
|
|
Capital employed -
end of twelve month period
|
|
3,433,366
|
|
|
3,379,995
|
|
|
|
|
|
|
Average capital
employed (C)
|
|
$
|
3,406,681
|
|
|
$
|
3,773,070
|
|
|
|
|
|
|
Return on average
capital employed (ROCE) (A+B) / C
|
|
25.2
|
%
|
|
10.8
|
%
|
_______________________________________________________________
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
(In
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net cash provided by
operating activities
|
$
|
270,874
|
|
|
$
|
242,194
|
|
|
$
|
1,182,811
|
|
|
$
|
788,852
|
|
Changes in assets and
liabilities
|
4,598
|
|
|
56,569
|
|
|
(99,590)
|
|
|
(13,294)
|
|
Discretionary cash
flow
|
275,472
|
|
|
298,763
|
|
|
1,083,221
|
|
|
775,558
|
|
Capital
expenditures
|
(199,196)
|
|
|
(260,232)
|
|
|
(620,696)
|
|
|
(647,503)
|
|
Investment in equity
method investments
|
(3,846)
|
|
|
(9,961)
|
|
|
(8,977)
|
|
|
(72,866)
|
|
Free cash
flow
|
$
|
72,430
|
|
|
$
|
28,570
|
|
|
$
|
453,548
|
|
|
$
|
55,189
|
|
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
September
30,
|
|
Nine Months
Ended
September
30,
|
(In
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
|
$
|
90,358
|
|
|
$
|
122,337
|
|
|
$
|
534,130
|
|
|
$
|
281,998
|
|
Plus
(less):
|
|
|
|
|
|
|
|
Interest expense,
net
|
13,554
|
|
|
14,191
|
|
|
40,302
|
|
|
57,577
|
|
Other
expense
|
143
|
|
|
115
|
|
|
430
|
|
|
347
|
|
Income tax
expense
|
25,722
|
|
|
39,408
|
|
|
158,679
|
|
|
91,201
|
|
Depreciation,
depletion and amortization
|
110,889
|
|
|
121,172
|
|
|
299,294
|
|
|
288,210
|
|
Exploration
|
4,481
|
|
|
10,049
|
|
|
15,029
|
|
|
68,166
|
|
(Gain) loss on sale
of assets
|
(36)
|
|
|
(25,655)
|
|
|
1,464
|
|
|
14,850
|
|
Non-cash (gain) loss
on derivative instruments
|
35,495
|
|
|
3,496
|
|
|
31,965
|
|
|
(18,726)
|
|
(Earnings) loss on
equity method investments
|
(3,860)
|
|
|
11
|
|
|
(11,194)
|
|
|
1,009
|
|
Equity method
investment distributions
|
4,758
|
|
|
—
|
|
|
14,266
|
|
|
—
|
|
Stock-based
compensation
|
2,119
|
|
|
6,489
|
|
|
23,972
|
|
|
17,631
|
|
EBITDAX
|
$
|
283,623
|
|
|
$
|
291,613
|
|
|
$
|
1,108,337
|
|
|
$
|
802,263
|
|
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)
|
September 30,
2019
|
|
December 31,
2018
|
Current portion of
long-term debt
|
$
|
87,000
|
|
|
$
|
—
|
|
Long-term debt,
net
|
1,132,790
|
|
|
1,226,104
|
|
Total debt
|
$
|
1,219,790
|
|
|
$
|
1,226,104
|
|
Stockholders'
equity
|
2,213,576
|
|
|
2,088,159
|
|
Total
capitalization
|
$
|
3,433,366
|
|
|
$
|
3,314,263
|
|
|
|
|
|
Total debt
|
$
|
1,219,790
|
|
|
$
|
1,226,104
|
|
Less: Cash and cash
equivalents
|
(82,316)
|
|
|
(2,287)
|
|
Net debt
|
$
|
1,137,474
|
|
|
$
|
1,223,817
|
|
|
|
|
|
Net debt
|
$
|
1,137,474
|
|
|
$
|
1,223,817
|
|
Stockholders'
equity
|
2,213,576
|
|
|
2,088,159
|
|
Total adjusted
capitalization
|
$
|
3,351,050
|
|
|
$
|
3,311,976
|
|
|
|
|
|
Total debt to total
capitalization ratio
|
35.5
|
%
|
|
37.0
|
%
|
Less: Impact of cash
and cash equivalents
|
1.6
|
%
|
|
—
|
%
|
Net debt to adjusted
capitalization ratio
|
33.9
|
%
|
|
37.0
|
%
|
Capital
Expenditures
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(In
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash paid for capital
expenditures
|
$
|
199,196
|
|
|
$
|
260,232
|
|
|
$
|
620,696
|
|
|
$
|
647,503
|
|
Change in accrued
capital costs
|
(1,732)
|
|
|
8,296
|
|
|
1,436
|
|
|
2,020
|
|
Exploratory dry hole
cost
|
—
|
|
|
(5,340)
|
|
|
(16)
|
|
|
(56,425)
|
|
Capital
expenditures
|
$
|
197,464
|
|
|
$
|
263,188
|
|
|
$
|
622,116
|
|
|
$
|
593,098
|
|
View original
content:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-reports-third-quarter-2019-results-increases-dividend-by-11-percent-300945188.html
SOURCE Cabot Oil & Gas Corporation