HOUSTON, Oct. 29, 2020 /PRNewswire/ -- Cabot Oil
& Gas Corporation (NYSE: COG) ("Cabot" or the "Company") today reported
financial and operating results for the third quarter of 2020.
"2020 has proven to be the most challenging year for natural gas
prices in the last 25 years, resulting from a multi-year trend of
overcapitalization of both oil and natural gas assets across our
industry," stated Dan O. Dinges,
Chairman, President and Chief Executive Officer. "However, we are
optimistic about the path forward as our industry as a whole has
begun to adopt a similar philosophy on disciplined capital
allocation that has been paramount to Cabot's strategy for years, which is centered
on delivering strong corporate returns, generating free cash flow,
returning capital to shareholders, and maintaining a strong balance
sheet. We believe this capital discipline, along with rebounding
demand largely driven by exports, will continue to move natural gas
supply and demand toward a more sustainable balance, allowing
Cabot to deliver a significant
expansion of free cash flow in 2021 and beyond, while also
increasing our return on and of capital."
Third Quarter 2020 Financial Results
Third quarter 2020 daily production was 2,406 million cubic feet
equivalent (Mmcfe) per day (100 percent natural gas). During the
third quarter of 2020, the Company drilled 13.0 net wells,
completed 18.1 net wells, and placed 28.2 net wells on
production.
Third quarter 2020 natural gas price realizations, including the
impact of derivatives, were $1.57 per
thousand cubic feet (Mcf), a decrease of 26 percent compared to the
prior-year period. Excluding the impact of derivatives, third
quarter 2020 natural gas price realizations were $1.51 per Mcf, representing a $0.47 discount to NYMEX settlement prices
compared to a $0.34 discount in the
prior-year period. Third quarter 2020 operating expenses (including
interest expense) were $1.41 per
thousand cubic feet equivalent (Mcfe), an improvement of one
percent compared to the prior-year period.
Third quarter 2020 net loss was $15.0
million, or $0.04 per share,
compared to net income of $90.4
million, or $0.22 per share,
in the prior-year period. Third quarter 2020 adjusted net income
(non-GAAP) was $37.3 million, or
$0.09 per share, compared to
$119.7 million, or $0.29 per share, in the prior-year period. Third
quarter 2020 EBITDAX (non-GAAP) was $163.7
million, compared to $283.6
million in the prior-year period.
Third quarter 2020 net cash provided by operating activities was
$129.1 million, compared to
$270.9 million in the prior-year
period. Third quarter 2020 discretionary cash flow (non-GAAP) was
$146.9 million, compared to
$275.5 million in the prior-year
period. Third quarter 2020 free cash flow (non-GAAP) was
($0.3) million, compared to
$72.4 million in the prior-year
period. "Despite lower realized prices and the corresponding impact
of strategic price-related curtailments on our production volumes,
Cabot was able to deliver a free
cash breakeven program during the third quarter," commented Dinges.
"Based on the current NYMEX futures, we expect to generate between
$125 and $150
million of free cash flow during the fourth quarter,
resulting in our fifth consecutive year of positive free cash flow
generation, despite the expectation for the lowest average annual
NYMEX natural gas price on record since 1995."
Cabot incurred a total of
$128.4 million of capital
expenditures in the third quarter of 2020 including $119.2 million of drilling and facilities
capital, $2.0 million of leasehold
acquisition capital, and $7.2 million
of other capital.
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 return on capital employed
(ROCE).
Year-to-Date 2020 Financial Results
Daily equivalent production for the nine-month period ended
September 30, 2020 was 2,333 Mmcfe
per day (100 percent natural gas). During the nine-month period
ended September 30, 2020, the Company
drilled 49.2 net wells, completed 62.3 net wells, and placed 62.2
net wells on production.
Natural gas price realizations, including the impact of
derivatives, were $1.60 per Mcf for
the nine-month period ended September 30,
2020, a decrease of 38 percent compared to the prior-year
period. For the nine-month period ended September 30, 2020, operating expenses (including
interest expense) were $1.44 per
Mcfe.
For the nine-month period ended September
30, 2020, net income was $69.3
million, or $0.17 per share,
compared to $534.1 million, or
$1.27 per share, in the prior-year
period. Adjusted net income (non-GAAP) was $109.3 million, or $0.27 per share, compared to $578.0 million, or $1.38 per share, in the prior-year period.
EBITDAX (non-GAAP) for the nine-month period ended September 30, 2020 was $489.6 million, compared to $1,108.3 million in the prior-year period.
For the nine-month period ended September
30, 2020, net cash provided by operating activities was
$470.4 million, compared to
$1,182.8 million in the prior-year
period. Discretionary cash flow (non-GAAP) for the nine-month
period ended September 30, 2020 was
$464.6 million, compared to
$1,083.2 million in the prior-year
period. Free cash flow (non-GAAP) for the nine-month period ended
September 30, 2020 was ($13.8) million, compared to $453.5 million in the prior-year period.
Cabot incurred a total of
$463.9 million of capital
expenditures during the nine-month period ended September 30, 2020 including $449.0 million of drilling and facilities
capital, $3.3 million of leasehold
acquisition capital, and $11.6
million of other capital.
Financial Position and Liquidity
As of September 30, 2020,
Cabot had total debt of
$1.2 billion and cash on hand of
$0.2 million. The Company's
debt-to-total capitalization ratio and debt-to-trailing twelve
months EBITDAX ratio (non-GAAP) were 35.4 percent and 1.5x,
respectively, compared to 36.2 percent and 0.9x as of December 31, 2019. As of September 30, 2020, the Company had $28.0 million outstanding under its credit
facility, resulting in approximately $1.5
billion of liquidity. "While our leverage ratio has
increased moderately throughout 2020 as a result of reduced EBITDAX
due to lower price realizations, we anticipate a significant
reduction in our leverage in 2021 through a combination of higher
EBITDAX resulting from improved price realizations and lower
absolute debt levels as we plan to utilize a portion of our
expected free cash flow to retire our 2021 debt maturities," said
Dinges.
Upper Marcellus Operations Update
Cabot has placed five Upper
Marcellus wells on production during 2020, which have been
producing for an average of 140 days. These wells are located
across the eastern, western, and northern areas of the Company's
acreage position and are offset to currently producing Lower
Marcellus wells. Based on the production history to date, on
average these wells are currently exceeding the estimated ultimate
recovery (EUR) of 2.7 billion cubic feet (Bcf) per thousand lateral
feet that was reported at year-end for Cabot's 2018 and 2019 Upper Marcellus wells.
"We believe these results continue to demonstrate the productivity
of this distinct, economic interval across our 173,000 net acre
position in the core of the dry gas window in northeast
Pennsylvania," noted Dinges. "We
plan to continue to allocate a modest amount of capital to the
Upper Marcellus annually as we continue to optimize our well design
and lateral placement across this interval, with the intent of
moving to full development of our Upper Marcellus inventory at the
tail end of this decade. We expect to develop the Upper Marcellus
at an average lateral length greater than 10,000 feet, which would
provide significant well cost savings, further improving the
economics of our Upper Marcellus inventory."
Fourth Quarter / Full-Year 2020 and Preliminary 2021
Guidance
Cabot has reaffirmed its fourth
quarter 2020 production guidance range of 2,300 to 2,350 Mmcfe per
day, which includes the impact of previously announced
price-related curtailments during the quarter. The Company has also
reaffirmed its full-year 2020 production guidance range of 2,325 to
2,340 Mmcfe per day based on a capital program of $575 million.
Cabot has also provided
preliminary 2021 production guidance of 2,350 Mmcfe per day from a
capital program of $530 to
$540 million, representing a seven
percent reduction in capital spending year-over-year at the
midpoint of the range. "Despite the expectation for higher price
realizations and cash flow in 2021, our capital allocation
priorities remain focused on maintaining our current production
levels, funding our current dividend, retiring our 2021 debt
maturities, and opportunistically returning incremental free cash
flow to shareholders as we continue to target a minimum return of
capital of at least 50 percent of free cash flow annually," stated
Dinges. "While we will continue to analyze the natural gas market
outlook as we evaluate the potential for disciplined investment in
modest levels of growth capital in the future, it is our belief
that the natural gas price futures for 2022 and beyond, which are
currently in backwardation, do not warrant incremental levels of
capital investment above our current maintenance capital
requirements at this time."
Inaugural Sustainability Accounting Standards Board (SASB)
Report
Cabot today issued its
inaugural SASB report, highlighting the Company's commitment to
environmental responsibility, workforce health and safety, business
ethics, and risk management. The report is available at
www.cabotog.com/corporate-responsibility. "At Cabot, we strive not
only to be a leading independent producer of natural gas, but to
also be a leader in safe, responsible operations, to minimize our
impact on the environment, and to be a valued partner to our
employees and communities," commented Dinges. "We believe this
commitment, along with our operational success, continues to create
value for our shareholders and other stakeholders in our
communities. With the issuance of this inaugural SASB report, we
are adding transparency into our environmental, social and
governance programs, further highlighting our focus on sustainable
and responsible operations."
Conference Call Webcast
A conference call is scheduled for Friday, October 30, 2020, at 9:30 a.m. Eastern Time to discuss third quarter
2020 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, the
continuing effects of the COVID-19 pandemic and the impact thereof
on the Company's business, financial condition and results of
operations, the availability of cash on hand and other sources of
liquidity to fund our capital expenditures, the repayment of our
debt maturities and our dividends, actions by, or disputes among or
between, the Organization of Petroleum Exporting Countries and
other producer countries, 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 Company's most recent Annual Report on Form 10-K and subsequent
Quarterly Reports on Form 10-Q 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,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
PRODUCTION
VOLUMES
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
221.4
|
|
|
220.7
|
|
|
639.2
|
|
|
639.3
|
|
Equivalent production
(Bcfe)
|
221.4
|
|
|
220.7
|
|
|
639.2
|
|
|
639.3
|
|
Daily equivalent
production (Mmcfe/day)
|
2,406
|
|
|
2,399
|
|
|
2,333
|
|
|
2,342
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES
PRICE
|
|
|
|
|
|
|
|
Natural gas, including
hedges ($/Mcf)
|
$
|
1.57
|
|
|
$
|
2.11
|
|
|
$
|
1.60
|
|
|
$
|
2.56
|
|
Natural gas, excluding
hedges ($/Mcf)
|
$
|
1.51
|
|
|
$
|
1.89
|
|
|
$
|
1.55
|
|
|
$
|
2.38
|
|
|
|
|
|
|
|
|
|
AVERAGE UNIT COSTS
($/Mcfe)(1)
|
|
|
|
|
|
|
|
Direct
operations
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
Transportation and
gathering
|
0.66
|
|
|
0.66
|
|
|
0.67
|
|
|
0.66
|
|
Taxes other than
income
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
Exploration
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
Depreciation,
depletion and amortization
|
0.45
|
|
|
0.50
|
|
|
0.46
|
|
|
0.47
|
|
General and
administrative (excluding stock-based compensation)
|
0.06
|
|
|
0.07
|
|
|
0.07
|
|
|
0.08
|
|
Stock-based
compensation
|
0.05
|
|
|
0.01
|
|
|
0.06
|
|
|
0.04
|
|
Interest
expense
|
0.06
|
|
|
0.06
|
|
|
0.07
|
|
|
0.06
|
|
|
$
|
1.41
|
|
|
$
|
1.43
|
|
|
$
|
1.44
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WELLS DRILLED
(2)
|
|
|
|
|
|
|
|
Gross
|
14
|
|
|
22
|
|
|
55
|
|
|
71
|
|
Net
|
13.0
|
|
|
22.0
|
|
|
49.2
|
|
|
71.0
|
|
|
|
|
|
|
|
|
|
WELLS COMPLETED
(2)
|
|
|
|
|
|
|
|
Gross
|
22
|
|
|
29
|
|
|
71
|
|
|
71
|
|
Net
|
18.1
|
|
|
29.0
|
|
|
62.3
|
|
|
71.0
|
|
|
_______________________________________________________________________________
|
(1)
|
Total unit cost
may differ from the sum of the individual costs due to
rounding.
|
(2)
|
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)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Natural gas
|
$
|
333,256
|
|
|
$
|
418,133
|
|
|
$
|
991,882
|
|
|
$
|
1,521,789
|
|
(Loss) gain on
derivative instruments
|
(42,253)
|
|
|
11,060
|
|
|
17,783
|
|
|
82,966
|
|
Other
|
38
|
|
|
(82)
|
|
|
181
|
|
|
154
|
|
|
291,041
|
|
|
429,111
|
|
|
1,009,846
|
|
|
1,604,909
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Direct
operations
|
20,197
|
|
|
19,181
|
|
|
54,864
|
|
|
55,608
|
|
Transportation and
gathering
|
146,982
|
|
|
145,681
|
|
|
425,563
|
|
|
424,703
|
|
Taxes other than
income
|
3,615
|
|
|
4,607
|
|
|
10,705
|
|
|
14,094
|
|
Exploration
|
3,900
|
|
|
4,481
|
|
|
10,669
|
|
|
15,029
|
|
Depreciation,
depletion and amortization
|
99,649
|
|
|
110,889
|
|
|
294,406
|
|
|
299,294
|
|
General and
administrative (excluding stock-based compensation)
|
12,890
|
|
|
16,272
|
|
|
44,901
|
|
|
48,398
|
|
Stock-based
compensation(1)
|
11,372
|
|
|
2,119
|
|
|
35,956
|
|
|
23,972
|
|
|
298,605
|
|
|
303,230
|
|
|
877,064
|
|
|
881,098
|
|
Earnings (loss) on
equity method investments
|
—
|
|
|
3,860
|
|
|
(59)
|
|
|
11,194
|
|
Gain (loss) on sale
of assets
|
31
|
|
|
36
|
|
|
(139)
|
|
|
(1,464)
|
|
(LOSS) INCOME FROM
OPERATIONS
|
(7,533)
|
|
|
129,777
|
|
|
132,584
|
|
|
733,541
|
|
Interest expense,
net
|
14,389
|
|
|
13,554
|
|
|
43,143
|
|
|
40,302
|
|
Other
expense
|
57
|
|
|
143
|
|
|
171
|
|
|
430
|
|
(Loss) income before
income taxes
|
(21,979)
|
|
|
116,080
|
|
|
89,270
|
|
|
692,809
|
|
Income tax (benefit)
expense
|
(7,018)
|
|
|
25,722
|
|
|
19,947
|
|
|
158,679
|
|
NET (LOSS)
INCOME
|
$
|
(14,961)
|
|
|
$
|
90,358
|
|
|
$
|
69,323
|
|
|
$
|
534,130
|
|
(Loss) earnings per
share - Basic
|
$
|
(0.04)
|
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
1.27
|
|
Weighted-average
common shares outstanding
|
398,580
|
|
|
412,456
|
|
|
398,500
|
|
|
419,199
|
|
|
_______________________________________________________________________________
|
(1)
|
Includes the
impact of our performance share awards and restricted
stock.
|
CONDENSED
CONSOLIDATED BALANCE SHEET (Unaudited)
|
|
(In
thousands)
|
September
30,
2020
|
|
December
31,
2019
|
ASSETS
|
|
|
|
Current
assets
|
$
|
322,552
|
|
|
$
|
568,248
|
|
Properties and
equipment, net (Successful efforts method)
|
4,034,680
|
|
|
3,855,706
|
|
Other
assets
|
62,073
|
|
|
63,291
|
|
|
$
|
4,419,305
|
|
|
$
|
4,487,245
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
$
|
197,928
|
|
|
$
|
241,034
|
|
Current portion of
long-term debt
|
188,000
|
|
|
87,000
|
|
Long-term debt, net
(excluding current maturities)
|
973,712
|
|
|
1,133,025
|
|
Deferred income
taxes
|
748,489
|
|
|
702,104
|
|
Other
liabilities
|
192,688
|
|
|
172,595
|
|
Stockholders'
equity
|
2,118,488
|
|
|
2,151,487
|
|
|
$
|
4,419,305
|
|
|
$
|
4,487,245
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
Quarter
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(In
thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(14,961)
|
|
|
$
|
90,358
|
|
|
$
|
69,323
|
|
|
$
|
534,130
|
|
Depreciation,
depletion and amortization
|
99,649
|
|
|
110,889
|
|
|
294,406
|
|
|
299,294
|
|
Deferred income tax
(benefit) expense
|
(5,576)
|
|
|
36,350
|
|
|
46,513
|
|
|
188,997
|
|
(Gain) loss on sale
of assets
|
(31)
|
|
|
(36)
|
|
|
139
|
|
|
1,464
|
|
Exploratory dry hole
cost
|
—
|
|
|
—
|
|
|
2,011
|
|
|
16
|
|
Loss (gain) on
derivative instruments
|
42,253
|
|
|
(11,060)
|
|
|
(17,783)
|
|
|
(82,966)
|
|
Net cash received in
settlement of derivative instruments
|
14,106
|
|
|
46,555
|
|
|
33,529
|
|
|
114,931
|
|
Stock-based
compensation and other
|
10,741
|
|
|
1,662
|
|
|
34,204
|
|
|
22,720
|
|
Income charges not
requiring cash
|
733
|
|
|
754
|
|
|
2,293
|
|
|
4,635
|
|
Changes in assets and
liabilities
|
(17,854)
|
|
|
(4,598)
|
|
|
5,758
|
|
|
99,590
|
|
Net cash provided by
operating activities
|
129,060
|
|
|
270,874
|
|
|
470,393
|
|
|
1,182,811
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Capital
expenditures
|
(147,239)
|
|
|
(199,196)
|
|
|
(478,422)
|
|
|
(620,696)
|
|
Proceeds from sale of
assets
|
60
|
|
|
55
|
|
|
335
|
|
|
2,401
|
|
Investment in equity
method investments
|
—
|
|
|
(3,846)
|
|
|
(35)
|
|
|
(8,977)
|
|
Distribution of
investment from equity method investments
|
—
|
|
|
898
|
|
|
—
|
|
|
1,656
|
|
Proceeds from sale of
equity method investments
|
—
|
|
|
—
|
|
|
(9,424)
|
|
|
—
|
|
Net cash used in
investing activities
|
(147,179)
|
|
|
(202,089)
|
|
|
(487,546)
|
|
|
(625,616)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net borrowings
(repayments) of debt
|
(59,000)
|
|
|
—
|
|
|
(59,000)
|
|
|
(7,000)
|
|
Treasury stock
repurchases
|
—
|
|
|
(190,808)
|
|
|
—
|
|
|
(347,446)
|
|
Dividends
paid
|
(39,857)
|
|
|
(37,025)
|
|
|
(119,532)
|
|
|
(104,722)
|
|
Tax withholdings on
vesting of stock awards
|
(18)
|
|
|
(30)
|
|
|
(6,350)
|
|
|
(10,587)
|
|
Capitalized debt
issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,411)
|
|
Net cash used in
financing activities
|
(98,875)
|
|
|
(227,863)
|
|
|
(184,882)
|
|
|
(477,166)
|
|
Net (decrease)
increase in cash, cash equivalents and restricted cash
|
$
|
(116,994)
|
|
|
$
|
(159,078)
|
|
|
$
|
(202,035)
|
|
|
$
|
80,029
|
|
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 and
results 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 (Loss) 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. Adjusted Net Income is defined as net
income or loss plus gain and loss on sale of assets, gain and loss
on derivative instruments, stock-based compensation expense,
severance expense, interest expense related to income tax reserves
and tax effect on selected items. 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 or loss and
earnings or loss per share, as defined by GAAP.
|
Quarter
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(In thousands,
except per share amounts)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
As reported - net
(loss) income
|
$
|
(14,961)
|
|
|
$
|
90,358
|
|
|
$
|
69,323
|
|
|
$
|
534,130
|
|
Reversal of selected
items:
|
|
|
|
|
|
|
|
(Gain) loss on sale of
assets
|
(31)
|
|
|
(36)
|
|
|
139
|
|
|
1,464
|
|
Loss on derivative
instruments(1)
|
56,359
|
|
|
35,495
|
|
|
15,746
|
|
|
31,965
|
|
Stock-based
compensation expense
|
11,372
|
|
|
2,119
|
|
|
35,956
|
|
|
23,972
|
|
Severance
expense
|
—
|
|
|
398
|
|
|
—
|
|
|
2,521
|
|
Interest expense
related to income tax reserves
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,052)
|
|
Tax effect on selected
items
|
(15,442)
|
|
|
(8,672)
|
|
|
(11,825)
|
|
|
(12,986)
|
|
Adjusted net
income
|
$
|
37,297
|
|
|
$
|
119,662
|
|
|
$
|
109,339
|
|
|
$
|
578,014
|
|
As reported - (loss)
earnings per share
|
$
|
(0.04)
|
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
1.27
|
|
Per share impact of
selected items
|
0.13
|
|
|
0.07
|
|
|
0.10
|
|
|
0.11
|
|
Adjusted earnings per
share
|
$
|
0.09
|
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
$
|
1.38
|
|
Weighted-average
common shares outstanding
|
398,580
|
|
|
412,456
|
|
|
398,500
|
|
|
419,199
|
|
|
|
_______________________________________________________________________________
|
(1)
|
This amount
represents the non-cash mark-to-market changes of our commodity
derivative instruments recorded in (Loss) gain 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
evaluating our profitability and the efficiency with which we have
employed capital over time. ROCE is not a measure of financial
performance under GAAP and should not be considered an alternative
to net income or loss, as defined by GAAP.
|
Twelve Months
Ended September 30,
|
(In
thousands)
|
2020
|
|
2019
|
Interest expense,
net
|
$
|
57,793
|
|
|
$
|
55,926
|
|
Interest expense
related to income tax reserves (1)
|
—
|
|
|
3,590
|
|
Tax
benefit
|
(13,183)
|
|
|
(13,590)
|
|
After-tax interest
expense, net (A)
|
44,610
|
|
|
45,926
|
|
|
|
|
|
As reported - net
income
|
216,263
|
|
|
809,174
|
|
Adjustments to as
reported - net income, net of tax
|
13,826
|
|
|
4,622
|
|
Adjusted net income
(B)
|
230,089
|
|
|
813,796
|
|
|
|
|
|
Adjusted net income
before interest expense, net (A + B)
|
$
|
274,699
|
|
|
$
|
859,722
|
|
|
|
|
|
Total debt -
beginning of twelve month period
|
$
|
1,219,790
|
|
|
$
|
1,285,848
|
|
Stockholders' equity
- beginning of twelve month period
|
2,213,576
|
|
|
2,094,147
|
|
Capital employed -
beginning of twelve month period
|
3,433,366
|
|
|
3,379,995
|
|
|
|
|
|
Total debt - end of
twelve month period
|
1,161,712
|
|
|
1,219,790
|
|
Stockholders' equity
- end of twelve month period
|
2,118,488
|
|
|
2,213,576
|
|
Capital employed -
end of twelve month period
|
3,280,200
|
|
|
3,433,366
|
|
|
|
|
|
Average capital
employed (C)
|
$
|
3,356,783
|
|
|
$
|
3,406,681
|
|
|
|
|
|
Return on average
capital employed (ROCE) (A + B) / C
|
8.2
|
%
|
|
25.2
|
%
|
|
|
_______________________________________________________________________________
|
(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, return capital to shareholders through dividends and
share repurchases, 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 or net income or loss, as defined by GAAP, or
as a measure of liquidity.
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 or net income
or loss, as defined by GAAP, or as a measure of
liquidity.
|
|
Quarter
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(In
thousands)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net cash provided by
operating activities
|
|
$
|
129,060
|
|
|
$
|
270,874
|
|
|
$
|
470,393
|
|
|
$
|
1,182,811
|
|
Changes in assets and
liabilities
|
|
17,854
|
|
|
4,598
|
|
|
(5,758)
|
|
|
(99,590)
|
|
Discretionary cash
flow
|
|
146,914
|
|
|
275,472
|
|
|
464,635
|
|
|
1,083,221
|
|
Capital
expenditures
|
|
(147,239)
|
|
|
(199,196)
|
|
|
(478,422)
|
|
|
(620,696)
|
|
Investment in equity
method investments
|
|
—
|
|
|
(3,846)
|
|
|
(35)
|
|
|
(8,977)
|
|
Free cash
flow
|
|
$
|
(325)
|
|
|
$
|
72,430
|
|
|
$
|
(13,822)
|
|
|
$
|
453,548
|
|
EBITDAX Calculation and Reconciliation
EBITDAX is defined as net income or loss plus interest expense,
other expense, income tax expense and benefit, 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 or loss, as defined by GAAP, or as a
measure of liquidity.
|
Quarter
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(In
thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net (loss)
income
|
$
|
(14,961)
|
|
|
$
|
90,358
|
|
|
$
|
69,323
|
|
|
$
|
534,130
|
|
Plus
(less):
|
|
|
|
|
|
|
|
Interest expense,
net
|
14,389
|
|
|
13,554
|
|
|
43,143
|
|
|
40,302
|
|
Other
expense
|
57
|
|
|
143
|
|
|
171
|
|
|
430
|
|
Income tax (benefit)
expense
|
(7,018)
|
|
|
25,722
|
|
|
19,947
|
|
|
158,679
|
|
Depreciation,
depletion and amortization
|
99,649
|
|
|
110,889
|
|
|
294,406
|
|
|
299,294
|
|
Exploration
|
3,900
|
|
|
4,481
|
|
|
10,669
|
|
|
15,029
|
|
(Gain) loss on sale of
assets
|
(31)
|
|
|
(36)
|
|
|
139
|
|
|
1,464
|
|
Non-cash gain (loss)
on derivative instruments
|
56,359
|
|
|
35,495
|
|
|
15,746
|
|
|
31,965
|
|
(Earnings) loss on
equity method investments
|
—
|
|
|
(3,860)
|
|
|
59
|
|
|
(11,194)
|
|
Equity method
investment distributions
|
—
|
|
|
4,758
|
|
|
—
|
|
|
14,266
|
|
Stock-based
compensation
|
11,372
|
|
|
2,119
|
|
|
35,956
|
|
|
23,972
|
|
EBITDAX
|
$
|
163,716
|
|
|
$
|
283,623
|
|
|
$
|
489,559
|
|
|
$
|
1,108,337
|
|
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,
2020
|
|
December
31,
2019
|
Current portion of
long-term debt
|
$
|
188,000
|
|
|
$
|
87,000
|
|
Long-term debt,
net
|
973,712
|
|
|
1,133,025
|
|
Total debt
|
$
|
1,161,712
|
|
|
$
|
1,220,025
|
|
Stockholders'
equity
|
2,118,488
|
|
|
2,151,487
|
|
Total
capitalization
|
$
|
3,280,200
|
|
|
$
|
3,371,512
|
|
|
|
|
|
Total debt
|
$
|
1,161,712
|
|
|
$
|
1,220,025
|
|
Less: Cash and cash
equivalents
|
(170)
|
|
|
(200,227)
|
|
Net debt
|
$
|
1,161,542
|
|
|
$
|
1,019,798
|
|
|
|
|
|
Net debt
|
$
|
1,161,542
|
|
|
$
|
1,019,798
|
|
Stockholders'
equity
|
2,118,488
|
|
|
2,151,487
|
|
Total adjusted
capitalization
|
$
|
3,280,030
|
|
|
$
|
3,171,285
|
|
|
|
|
|
Total debt to total
capitalization ratio
|
35.4
|
%
|
|
36.2
|
%
|
Less: Impact of cash
and cash equivalents
|
—
|
%
|
|
4.0
|
%
|
Net debt to adjusted
capitalization ratio
|
35.4
|
%
|
|
32.2
|
%
|
Capital Expenditures
|
Quarter
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(In
thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash paid for capital
expenditures
|
$
|
147,239
|
|
|
$
|
199,196
|
|
|
$
|
478,422
|
|
|
$
|
620,696
|
|
Change in accrued
capital costs
|
(18,883)
|
|
|
(1,732)
|
|
|
(12,486)
|
|
|
1,436
|
|
Exploratory dry hole
cost
|
—
|
|
|
—
|
|
|
(2,011)
|
|
|
(16)
|
|
Capital
expenditures
|
$
|
128,356
|
|
|
$
|
197,464
|
|
|
$
|
463,925
|
|
|
$
|
622,116
|
|
View original
content:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-reports-third-quarter-2020-results-301163434.html
SOURCE Cabot Oil & Gas Corporation