HOUSTON, July 30, 2020 /PRNewswire/ -- Cabot Oil & Gas
Corporation (NYSE: COG) ("Cabot" or the "Company") today reported
financial and operating results for the second quarter of 2020.
"Cabot Oil & Gas demonstrated its continued ability to
deliver profitability during this global pandemic, which has
contributed to a historically-low natural gas price environment,
resulting in the lowest quarterly average NYMEX price on record
since the third quarter of 1995," stated Dan O. Dinges, Chairman, President and Chief
Executive Officer. "We anticipate that the improving demand outlook
for natural gas, in conjunction with accelerated structural
declines in supply resulting from significant activity cuts across
all onshore basins, will provide tailwinds for natural gas prices
this winter."
Second Quarter 2020 Financial Results
Second quarter 2020 daily production was 2,229 million cubic
feet equivalent (Mmcfe) per day (100 percent natural gas),
exceeding the high-end of the Company's guidance range. During the
second quarter of 2020, the Company drilled 14.2 net wells,
completed 31.2 net wells, and placed 25.0 net wells on
production.
Second quarter 2020 natural gas price realizations, including
the impact of derivatives, were $1.52
per thousand cubic feet (Mcf), a decrease of 33 percent compared to
the prior-year period. Excluding the impact of derivatives, second
quarter 2020 natural gas price realizations represented a
$0.30 discount to NYMEX settlement
prices compared to a $0.44 discount
in the prior-year period. Second quarter 2020 operating expenses
(including interest expense) were $1.44 per thousand cubic feet equivalent
(Mcfe).
Second quarter 2020 net income was $30.4
million, or $0.08 per share,
compared to $181.0 million, or
$0.43 per share, in the prior-year
period. Second quarter 2020 adjusted net income (non-GAAP) was
$18.0 million, or $0.05 per share, compared to $150.6 million, or $0.36 per share, in the prior-year period. Second
quarter 2020 EBITDAX (non-GAAP) was $136.9
million, compared to $311.1
million in the prior-year period.
Second quarter 2020 net cash provided by operating activities
was $136.4 million, compared to
$326.7 million in the prior-year
period. Second quarter 2020 discretionary cash flow (non-GAAP) was
$119.2 million, compared to
$301.9 million in the prior-year
period. Second quarter 2020 free cash flow (non-GAAP) was
($63.3) million, compared to
$72.7 million in the prior-year
period. "Lower realized prices during the second quarter, coupled
with our decision to sequentially decline production volumes into a
lower price environment associated with the spring shoulder season,
resulted in our first free cash flow deficit since the second
quarter of 2018," commented Dinges. "Based on the current NYMEX
futures, we anticipate a significant expansion in our free cash
flow during the second half of 2020 driven by an improvement in
realized prices, higher production volumes, and lower capital
expenditures, allowing Cabot to deliver positive free cash flow for
a fifth consecutive year."
Cabot incurred a total of $175.3
million of capital expenditures in the second quarter of
2020 including $171.8 million of
drilling and facilities capital, $0.5
million of leasehold acquisition capital, and $3.0 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 six-month period ended
June 30, 2020 was 2,296 Mmcfe per day
(100 percent natural gas). During the six-month period ended
June 30, 2020, the Company drilled
36.2 net wells, completed 44.2 net wells, and placed 34.0 net wells
on production.
Natural gas price realizations, including the impact of
derivatives, were $1.62 per Mcf for
the six-month period ended June 30,
2020, a decrease of 42 percent compared to the prior-year
period. For the six-month period ended June
30, 2020, operating expenses (including interest expense)
were $1.45 per Mcfe.
For the six-month period ended June 30,
2020, net income was $84.3
million, or $0.21 per share,
compared to $443.8 million, or
$1.05 per share, in the prior-year
period. Adjusted net income (non-GAAP) was $72.0 million, or $0.18 per share, compared to $458.4 million, or $1.08 per share, in the prior-year period.
EBITDAX (non-GAAP) for the six-month period ended June 30, 2020 was $325.8
million, compared to $824.7
million in the prior-year period.
For the six-month period ended June 30,
2020, net cash provided by operating activities was
$341.3 million, compared to
$911.9 million in the prior-year
period. Discretionary cash flow (non-GAAP) for the six-month period
ended June 30, 2020 was $317.7 million, compared to $807.7 million in the prior-year period. Free
cash flow (non-GAAP) for the six-month period ended June 30, 2020 was ($13.5)
million, compared to $381.1
million in the prior-year period. "Our modest free cash flow
deficit during the first half of the year was a result of our
capital program being heavily weighted towards the first half of
the year, while our production volumes are more heavily weighted
towards the second half of the year," noted Dinges. "We expect that
our planned sequential increase in production during the third and
fourth quarters, in addition to a declining capital spending
profile, will allow for a return to positive free cash flow
generation during the second half of the year."
Cabot incurred a total of $335.6
million of capital expenditures during the six-month period
ended June 30, 2020 including
$329.9 million of drilling and
facilities capital, $1.3 million of
leasehold acquisition capital, and $4.4
million of other capital.
Financial Position and Liquidity
As of June 30, 2020, Cabot had
total debt of $1.2 billion and cash
on hand of $117.2 million. The
Company's net debt-to-adjusted capitalization ratio (non-GAAP) and
net debt-to-trailing twelve months EBITDAX ratio (non-GAAP) were
33.7 percent and 1.2x, respectively, compared to 32.2 percent and
0.7x as of December 31, 2019.
As of June 30, 2020, the
Company had no debt outstanding under its credit facility.
Subsequent to the end of the second quarter, the Company repaid
$87.0 million of maturities
associated with its 6.51% weighted-average senior notes.
Third Quarter and Full-Year 2020 Guidance
Cabot has provided its third quarter 2020 production guidance
range of 2,400 to 2,450 Mmcfe per day, resulting in the
reaffirmation of the Company's full-year 2020 production guidance
range of 2,350 to 2,375 Mmcfe per day based on a capital program of
$575 million. "Despite our
expectation for the 2020 average NYMEX price to be the lowest on
record since 1995, we expect our capital program for the year to be
fully funded within cash flow and to generate enough free cash flow
to cover the majority of our dividend," said Dinges. "While we do
not plan to provide our official 2021 guidance until early next
year, based on a 2021 NYMEX price assumption of $2.75 per MMbtu, which is roughly in line with
the current NYMEX futures, we can deliver similar production
volumes as 2020 from a modestly lower maintenance capital program,
while generating a free cash flow yield1 of
approximately eight percent and a ROCE between 19 and 20 percent.
Our prioritization for the deployment of our free cash flow in 2021
is funding our regular quarterly dividend, repayment of our 2021
debt maturities, and additional opportunistic returns of capital to
shareholders."
For further information on Cabot's 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.
1 Based on the Company's current market
capitalization as of July 30,
2020
Conference Call Webcast
A conference call is scheduled for Friday, July 31, 2020, at 9:30 a.m. Eastern Time to discuss second 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
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
PRODUCTION
VOLUMES
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
202.9
|
|
|
213.8
|
|
|
417.8
|
|
|
418.6
|
|
Equivalent production
(Bcfe)
|
202.9
|
|
|
213.8
|
|
|
417.8
|
|
|
418.6
|
|
Daily equivalent
production (Mmcfe/day)
|
2,229
|
|
|
2,349
|
|
|
2,296
|
|
|
2,313
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES
PRICE
|
|
|
|
|
|
|
|
Natural gas,
including hedges ($/Mcf)
|
$
|
1.52
|
|
|
$
|
2.27
|
|
|
$
|
1.62
|
|
|
$
|
2.80
|
|
Natural gas,
excluding hedges ($/Mcf)
|
$
|
1.42
|
|
|
$
|
2.20
|
|
|
$
|
1.58
|
|
|
$
|
2.64
|
|
|
|
|
|
|
|
|
|
AVERAGE UNIT COSTS
($/Mcfe)(1)
|
|
|
|
|
|
|
|
Direct
operations
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
Transportation and
gathering
|
0.67
|
|
|
0.66
|
|
|
0.67
|
|
|
0.67
|
|
Taxes other than
income
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
Exploration
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|
0.03
|
|
Depreciation,
depletion and amortization
|
0.47
|
|
|
0.45
|
|
|
0.47
|
|
|
0.45
|
|
General and
administrative (excluding stock-based
compensation)
|
0.07
|
|
|
0.08
|
|
|
0.08
|
|
|
0.08
|
|
Stock-based
compensation
|
0.04
|
|
|
0.03
|
|
|
0.06
|
|
|
0.05
|
|
Interest
expense
|
0.07
|
|
|
0.07
|
|
|
0.07
|
|
|
0.06
|
|
|
$
|
1.44
|
|
|
$
|
1.41
|
|
|
$
|
1.45
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WELLS DRILLED
(2)
|
|
|
|
|
|
|
|
Gross
|
19
|
|
|
24
|
|
|
41
|
|
|
49
|
|
Net
|
14.2
|
|
|
24.0
|
|
|
36.2
|
|
|
49.0
|
|
|
|
|
|
|
|
|
|
WELLS COMPLETED
(2)
|
|
|
|
|
|
|
|
Gross
|
36
|
|
|
28
|
|
|
49
|
|
|
42
|
|
Net
|
31.2
|
|
|
28.0
|
|
|
44.2
|
|
|
42.0
|
|
_______________________________________________________________________________
|
(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
June 30,
|
|
Six Months
Ended
June 30,
|
(In thousands,
except per share amounts)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Natural
gas
|
$
|
288,286
|
|
|
$
|
470,482
|
|
|
$
|
658,626
|
|
|
$
|
1,103,656
|
|
Gain on
derivative instruments
|
43,974
|
|
|
63,649
|
|
|
60,036
|
|
|
71,906
|
|
Other
|
88
|
|
|
(14)
|
|
|
143
|
|
|
236
|
|
|
332,348
|
|
|
534,117
|
|
|
718,805
|
|
|
1,175,798
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Direct
operations
|
17,423
|
|
|
18,093
|
|
|
34,667
|
|
|
36,427
|
|
Transportation and
gathering
|
135,249
|
|
|
141,689
|
|
|
278,581
|
|
|
279,022
|
|
Taxes other than
income
|
3,352
|
|
|
3,640
|
|
|
7,090
|
|
|
9,487
|
|
Exploration
|
4,579
|
|
|
4,504
|
|
|
6,769
|
|
|
10,548
|
|
Depreciation,
depletion and amortization
|
94,622
|
|
|
96,147
|
|
|
194,757
|
|
|
188,405
|
|
General and
administrative (excluding stock-based
compensation)
|
14,885
|
|
|
16,168
|
|
|
32,011
|
|
|
32,126
|
|
Stock-based
compensation(1)
|
8,281
|
|
|
6,721
|
|
|
24,584
|
|
|
21,853
|
|
|
278,391
|
|
|
286,962
|
|
|
578,459
|
|
|
577,868
|
|
Earnings (loss) on
equity method investments
|
—
|
|
|
3,650
|
|
|
(59)
|
|
|
7,334
|
|
Loss on sale of
assets
|
(241)
|
|
|
—
|
|
|
(170)
|
|
|
(1,500)
|
|
INCOME FROM
OPERATIONS
|
53,716
|
|
|
250,805
|
|
|
140,117
|
|
|
603,764
|
|
Interest expense,
net
|
14,543
|
|
|
14,567
|
|
|
28,754
|
|
|
26,748
|
|
Other
expense
|
48
|
|
|
143
|
|
|
114
|
|
|
287
|
|
Income before income
taxes
|
39,125
|
|
|
236,095
|
|
|
111,249
|
|
|
576,729
|
|
Income tax
expense
|
8,751
|
|
|
55,086
|
|
|
26,965
|
|
|
132,957
|
|
NET
INCOME
|
$
|
30,374
|
|
|
$
|
181,009
|
|
|
$
|
84,284
|
|
|
$
|
443,772
|
|
Earnings per share -
Basic
|
$
|
0.08
|
|
|
$
|
0.43
|
|
|
$
|
0.21
|
|
|
$
|
1.05
|
|
Weighted-average
common shares outstanding
|
398,576
|
|
|
422,141
|
|
|
398,460
|
|
|
422,626
|
|
_______________________________________________________________________________
|
(1)
|
Includes the
impact of our performance share awards and restricted
stock.
|
CONDENSED
CONSOLIDATED BALANCE SHEET (Unaudited)
|
|
(In
thousands)
|
June 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
Current
assets
|
$
|
463,934
|
|
|
$
|
568,248
|
|
Properties and
equipment, net (Successful efforts method)
|
4,002,492
|
|
|
3,855,706
|
|
Other
assets
|
61,444
|
|
|
63,291
|
|
|
$
|
4,527,870
|
|
|
$
|
4,487,245
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
$
|
206,388
|
|
|
$
|
241,034
|
|
Current portion of
long-term debt
|
175,000
|
|
|
87,000
|
|
Long-term debt, net
(excluding current maturities)
|
1,045,495
|
|
|
1,133,025
|
|
Deferred income
taxes
|
754,108
|
|
|
702,104
|
|
Other
liabilities
|
180,900
|
|
|
172,595
|
|
Stockholders'
equity
|
2,165,979
|
|
|
2,151,487
|
|
|
$
|
4,527,870
|
|
|
$
|
4,487,245
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
Quarter Ended
June 30,
|
|
Six Months
Ended
June 30,
|
(In
thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net
income
|
$
|
30,374
|
|
|
$
|
181,009
|
|
|
$
|
84,284
|
|
|
$
|
443,772
|
|
Depreciation,
depletion and amortization
|
94,622
|
|
|
96,147
|
|
|
194,757
|
|
|
188,405
|
|
Deferred income tax
expense
|
8,045
|
|
|
64,645
|
|
|
52,089
|
|
|
152,647
|
|
Loss on sale of
assets
|
241
|
|
|
—
|
|
|
170
|
|
|
1,500
|
|
Exploratory dry hole
cost
|
2,068
|
|
|
3
|
|
|
2,011
|
|
|
16
|
|
Gain on derivative
instruments
|
(43,974)
|
|
|
(63,649)
|
|
|
(60,036)
|
|
|
(71,906)
|
|
Net cash received in
settlement of derivative instruments
|
19,423
|
|
|
15,397
|
|
|
19,423
|
|
|
68,377
|
|
Stock-based
compensation and other
|
7,641
|
|
|
6,584
|
|
|
23,463
|
|
|
21,058
|
|
Income charges not
requiring cash
|
751
|
|
|
1,746
|
|
|
1,560
|
|
|
3,880
|
|
Changes in assets and
liabilities
|
17,245
|
|
|
24,768
|
|
|
23,612
|
|
|
104,188
|
|
Net cash provided by
operating activities
|
136,436
|
|
|
326,650
|
|
|
341,333
|
|
|
911,937
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Capital
expenditures
|
(182,481)
|
|
|
(225,850)
|
|
|
(331,183)
|
|
|
(421,500)
|
|
Proceeds from sale of
assets
|
227
|
|
|
—
|
|
|
275
|
|
|
2,346
|
|
Investment in equity
method investments
|
—
|
|
|
(3,303)
|
|
|
(35)
|
|
|
(5,131)
|
|
Distribution of
investment from equity method investments
|
—
|
|
|
758
|
|
|
—
|
|
|
758
|
|
Proceeds from sale of
equity method investments
|
—
|
|
|
—
|
|
|
(9,424)
|
|
|
—
|
|
Net cash used in
investing activities
|
(182,254)
|
|
|
(228,395)
|
|
|
(340,367)
|
|
|
(423,527)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net borrowings
(repayments) of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,000)
|
|
Treasury stock
repurchases
|
—
|
|
|
(125,260)
|
|
|
—
|
|
|
(156,638)
|
|
Dividends
paid
|
(39,858)
|
|
|
(38,092)
|
|
|
(79,675)
|
|
|
(67,697)
|
|
Tax withholdings on
vesting of stock awards
|
(19)
|
|
|
(987)
|
|
|
(6,332)
|
|
|
(10,557)
|
|
Capitalized debt
issuance costs
|
—
|
|
|
(7,411)
|
|
|
—
|
|
|
(7,411)
|
|
Net cash used in
financing activities
|
(39,877)
|
|
|
(171,750)
|
|
|
(86,007)
|
|
|
(249,303)
|
|
Net (decrease)
increase in cash, cash equivalents and
restricted cash
|
$
|
(85,695)
|
|
|
$
|
(73,495)
|
|
|
$
|
(85,041)
|
|
|
$
|
239,107
|
|
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 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 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 and earnings per share,
as defined by GAAP.
|
Quarter Ended
June 30,
|
|
Six Months
Ended
June 30,
|
(In thousands,
except per share amounts)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
As reported - net
income
|
$
|
30,374
|
|
|
$
|
181,009
|
|
|
$
|
84,284
|
|
|
$
|
443,772
|
|
Reversal of selected
items:
|
|
|
|
|
|
|
|
Loss on sale of
assets
|
241
|
|
|
—
|
|
|
170
|
|
|
1,500
|
|
Gain on derivative
instruments(1)
|
(24,551)
|
|
|
(48,252)
|
|
|
(40,613)
|
|
|
(3,529)
|
|
Stock-based
compensation expense
|
8,281
|
|
|
6,721
|
|
|
24,584
|
|
|
21,853
|
|
Severance
expense
|
—
|
|
|
2,124
|
|
|
—
|
|
|
2,124
|
|
Interest expense
related to income tax reserves
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,052)
|
|
Tax effect on
selected items
|
3,656
|
|
|
8,998
|
|
|
3,617
|
|
|
(4,315)
|
|
Adjusted net
income
|
$
|
18,001
|
|
|
$
|
150,600
|
|
|
$
|
72,042
|
|
|
$
|
458,353
|
|
As reported -
earnings per share
|
$
|
0.08
|
|
|
$
|
0.43
|
|
|
$
|
0.21
|
|
|
$
|
1.05
|
|
Per share impact of
selected items
|
(0.03)
|
|
|
(0.07)
|
|
|
(0.03)
|
|
|
0.03
|
|
Adjusted earnings per
share
|
$
|
0.05
|
|
|
$
|
0.36
|
|
|
$
|
0.18
|
|
|
$
|
1.08
|
|
Weighted-average
common shares outstanding
|
398,576
|
|
|
422,141
|
|
|
398,460
|
|
|
422,626
|
|
_______________________________________________________________________________
|
(1)
|
This amount
represents the non-cash mark-to-market changes of our commodity
derivative instruments recorded in
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, as defined by GAAP.
|
Twelve Months
Ended June 30,
|
(In
thousands)
|
2020
|
|
2019
|
Interest expense,
net
|
$
|
56,958
|
|
|
$
|
56,563
|
|
Interest expense
related to income tax reserves (1)
|
—
|
|
|
5,453
|
|
Tax
benefit
|
(12,996)
|
|
|
(14,274)
|
|
After-tax interest
expense, net (A)
|
43,962
|
|
|
47,742
|
|
|
|
|
|
As reported - net
income
|
321,582
|
|
|
841,153
|
|
Adjustments to as
reported - net income, net of tax
|
(9,128)
|
|
|
(38,088)
|
|
Adjusted net income
(B)
|
312,454
|
|
|
803,065
|
|
|
|
|
|
Adjusted net income
before interest expense, net (A + B)
|
$
|
356,416
|
|
|
$
|
850,807
|
|
|
|
|
|
Total debt -
beginning of twelve month period
|
$
|
1,219,555
|
|
|
$
|
1,522,572
|
|
Stockholders' equity
- beginning of twelve month period
|
2,344,804
|
|
|
2,154,174
|
|
Capital employed -
beginning of twelve month period
|
3,564,359
|
|
|
3,676,746
|
|
|
|
|
|
Total debt - end of
twelve month period
|
1,220,495
|
|
|
1,219,555
|
|
Stockholders' equity
- end of twelve month period
|
2,165,979
|
|
|
2,344,804
|
|
Capital employed -
end of twelve month period
|
3,386,474
|
|
|
3,564,359
|
|
|
|
|
|
Average capital
employed (C)
|
$
|
3,475,417
|
|
|
$
|
3,620,553
|
|
|
|
|
|
Return on average
capital employed (ROCE) (A + B) / C
|
10.3
|
%
|
|
23.5
|
%
|
_______________________________________________________________________________
|
(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, 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, 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,
as defined by GAAP, or as a measure of liquidity.
|
|
Quarter Ended
June 30,
|
|
Six Months
Ended
June 30,
|
(In
thousands)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net cash provided by
operating activities
|
|
$
|
136,436
|
|
|
$
|
326,650
|
|
|
$
|
341,333
|
|
|
$
|
911,937
|
|
Changes in assets and
liabilities
|
|
(17,245)
|
|
|
(24,768)
|
|
|
(23,612)
|
|
|
(104,188)
|
|
Discretionary cash
flow
|
|
119,191
|
|
|
301,882
|
|
|
317,721
|
|
|
807,749
|
|
Capital
expenditures
|
|
(182,481)
|
|
|
(225,850)
|
|
|
(331,183)
|
|
|
(421,500)
|
|
Investment in equity
method investments
|
|
—
|
|
|
(3,303)
|
|
|
(35)
|
|
|
(5,131)
|
|
Free cash
flow
|
|
$
|
(63,290)
|
|
|
$
|
72,729
|
|
|
$
|
(13,497)
|
|
|
$
|
381,118
|
|
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)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
|
$
|
30,374
|
|
|
$
|
181,009
|
|
|
$
|
84,284
|
|
|
$
|
443,772
|
|
Plus
(less):
|
|
|
|
|
|
|
|
Interest expense,
net
|
14,543
|
|
|
14,567
|
|
|
28,754
|
|
|
26,748
|
|
Other
expense
|
48
|
|
|
143
|
|
|
114
|
|
|
287
|
|
Income tax
expense
|
8,751
|
|
|
55,086
|
|
|
26,965
|
|
|
132,957
|
|
Depreciation,
depletion and amortization
|
94,622
|
|
|
96,147
|
|
|
194,757
|
|
|
188,405
|
|
Exploration
|
4,579
|
|
|
4,504
|
|
|
6,769
|
|
|
10,548
|
|
Loss on sale of
assets
|
241
|
|
|
—
|
|
|
170
|
|
|
1,500
|
|
Non-cash gain on
derivative instruments
|
(24,551)
|
|
|
(48,252)
|
|
|
(40,613)
|
|
|
(3,529)
|
|
(Earnings) loss on
equity method investments
|
—
|
|
|
(3,650)
|
|
|
59
|
|
|
(7,334)
|
|
Equity method
investment distributions
|
—
|
|
|
4,779
|
|
|
—
|
|
|
9,508
|
|
Stock-based
compensation
|
8,281
|
|
|
6,721
|
|
|
24,584
|
|
|
21,853
|
|
EBITDAX
|
$
|
136,888
|
|
|
$
|
311,054
|
|
|
$
|
325,843
|
|
|
$
|
824,715
|
|
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,
2020
|
|
December 31,
2019
|
Current portion of
long-term debt
|
$
|
175,000
|
|
|
$
|
87,000
|
|
Long-term debt,
net
|
1,045,495
|
|
|
1,133,025
|
|
Total debt
|
$
|
1,220,495
|
|
|
$
|
1,220,025
|
|
Stockholders'
equity
|
2,165,979
|
|
|
2,151,487
|
|
Total
capitalization
|
$
|
3,386,474
|
|
|
$
|
3,371,512
|
|
|
|
|
|
Total debt
|
$
|
1,220,495
|
|
|
$
|
1,220,025
|
|
Less: Cash and cash
equivalents
|
(117,164)
|
|
|
(200,227)
|
|
Net debt
|
$
|
1,103,331
|
|
|
$
|
1,019,798
|
|
|
|
|
|
Net debt
|
$
|
1,103,331
|
|
|
$
|
1,019,798
|
|
Stockholders'
equity
|
2,165,979
|
|
|
2,151,487
|
|
Total adjusted
capitalization
|
$
|
3,269,310
|
|
|
$
|
3,171,285
|
|
|
|
|
|
Total debt to total
capitalization ratio
|
36.0
|
%
|
|
36.2
|
%
|
Less: Impact of cash
and cash equivalents
|
2.3
|
%
|
|
4.0
|
%
|
Net debt to adjusted
capitalization ratio
|
33.7
|
%
|
|
32.2
|
%
|
Capital
Expenditures
|
|
|
Quarter Ended
June 30,
|
|
Six Months
Ended
June 30,
|
(In
thousands)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash paid for capital
expenditures
|
$
|
182,481
|
|
|
$
|
225,850
|
|
|
$
|
331,183
|
|
|
$
|
421,500
|
|
Change in accrued
capital costs
|
(5,149)
|
|
|
(5,466)
|
|
|
6,397
|
|
|
3,168
|
|
Exploratory dry hole
cost
|
(2,068)
|
|
|
(3)
|
|
|
(2,011)
|
|
|
(16)
|
|
Capital
expenditures
|
$
|
175,264
|
|
|
$
|
220,381
|
|
|
$
|
335,569
|
|
|
$
|
424,652
|
|
View original
content:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-reports-second-quarter-2020-results-301103518.html
SOURCE Cabot Oil & Gas Corporation