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Cabot Oil & Gas Announces 2003 Financial Results;
Record Fourth Quarter Profits
Feb 17, 2004

HOUSTON, Feb. 17 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced 2003 net income of $21.1 million, or $0.66 per share and discretionary cash flow of $266.4 million. These results compare favorably to 2002 net income of $16.1 million, or $0.51 per share, and discretionary cash flow of $178.8 million. Cash flow from operations reflected the same upward trend totaling $241.6 million in 2003 versus $164.2 million in 2002.

"Significant increases in realized commodity prices allowed Cabot to achieve record levels of cash flow for the year," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "These cash flow levels provided Cabot with the ability to reinvest significantly in the business ($188.2 million total investment) while still repaying our Revolving Credit Agreement in its entirety ($95 million), bringing debt down to $270 million."

During 2003 Cabot's realized price for natural gas rose 49 percent to $4.51 per Mcf while the realized price for oil gained 24 percent, to $29.55 per barrel. The higher realized prices drove the year-over-year increases in brokered natural gas activity and taxes other than income while the large capital program was instrumental in the increased exploration expense.

The Company experienced a slight decline in equivalent production between 2002 and 2003, producing 89 Bcfe for the year versus 91.1 Bcfe the year before. "From a total Company perspective, the decrease was driven primarily by the acceleration of declines in our south Louisiana CL&F related production," commented Dinges. "After three years of very prolific production from four discoveries, the wells began declining and now account for only 25 percent of Gulf Coast production, down from 50 percent at the start of 2003." Dinges added, "While these declines hindered growth this year in the Gulf Coast, our 2003 drilling program was able to recapture a portion of these daily volumes by year-end as evidenced by the Gulf Coast's increase in natural gas volumes between comparable fourth quarters. Separately, the West production declined between years due primarily to the level of reinvestment in 2002 and 2003; while the East experienced a 3.3 percent production growth year-over-year on the strength of a very solid development drilling program that was expanded and will be expanded again in 2004."

Fourth Quarter

For the December quarter, Cabot reported its best ever fourth quarter results, posting net income of $19.2 million, or $0.60 per share. This is more than double last year's net income of $8.7 million, or $0.27 per share. Discretionary cash flow also improved between comparable quarters with $71.7 million in 2003 versus $58.1 million in 2002. However, cash flow from operations declined between comparable quarters to $35.4 million versus $55.9 million due to changes in working capital primarily driven by a decrease in accounts payable and an increase in accounts receivable. Although not as dramatic, the fourth quarter also saw higher realized prices (16 percent for natural gas and 18 percent for oil), increasing exploration expenses, more brokered activity and higher taxes other than income when compared to the fourth quarter of 2002.

Selected Items

For the year, the Company's results reflect three types of transactions that historically were categorized as selected items: SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", the adoption of SFAS No. 143 "Accounting for Asset Retirement Obligations" and gains or losses on the sale of properties.

Specifically, the first quarter of 2003 was impacted by the Kurten field impairment ($54.4 million after-tax) and the adoption of SFAS No. 143 ($6.8 million after-tax), both of which had the effect of reducing net income. The third quarter experienced a benefit to net income of $0.7 million after-tax related to the sale of non-strategic properties in the East. This benefit was net of a $4.4 million gain offset by a $3.7 million impairment. The fourth quarter also experienced a benefit from additional sales of non-strategic properties totaling $2.8 million after-tax. Excluding the impact of these selected items, Cabot's net income would have been $78.5 million, or $2.45 per share, for the 2003 full-year and $16.4 million, or $0.51 per share, for the fourth quarter.

Hedging Update

The Company continued to layer in hedges covering its natural gas and oil production at increasing prices for 2004 and began to establish a position for 2005. "Five dollars an Mcf became a magic number for us," said Dinges. "The market continued to move up and we continued our strategy of layering in attractive pricing." Cabot has hedged an average of 152,500 Mmbtu per day of its 2004 natural gas production at a NYMEX equivalent price of $4.69 per Mmbtu (which equates to $5.06 per Mcf). Additionally, during December when the first quarter pricing spiked for 2004, the Company collared 50,000 Mmbtu per day of its natural gas production for the first quarter of 2004 based off a NYMEX equivalent price of $6.50 per Mmbtu (or $7.20 per Mcf). "These collars covered each of our regions and provided floors of $6.25 per Mmbtu in the East, $6.00 per Mmbtu in the Gulf Coast and $5.50 per Mmbtu in the Rocky Mountains," commented Dinges. On the strength of these prices, Cabot also has swapped 70,000 Mmbtu per day of 2005 gas at a NYMEX equivalent price of $4.89 per Mmbtu (or $5.28 per Mcf).

In terms of oil, Cabot added two range swaps both for 1,000 barrels per day that phases out the price protection at $22.00 per barrel in return for an above market swap price. One trade covers 2004 and receives a swap price of $29.80 per barrel while the other covers 2005 and receives $30.05 per barrel. The natural gas hedges are basin-specific and are all listed in the Company's guidance on its website at www.cabotog.com .

Outlook

"For 2004, we plan to invest $207 million," said Dinges. "The regional breakdown consists of 42 percent for the Gulf Coast, 28 percent for the East, 23 percent in the West and 7 percent in Canada. The focus of this effort is to explore in the Gulf Coast and Canada, exploit our two exploration successes in the Rocky Mountains and continue the momentum in the East that gave us production and reserve growth in 2003 by planning to drill 179 wells in 2004."

Listen in live to Cabot Oil & Gas Corporation's full year and fourth quarter earnings discussion with financial analysts on February 18 at 9:30 AM EST (8:30 AM CST) at www.cabotog.com . A teleconference replay will also be available at (800) 642-1687 (international (706) 645-9291), passcode 5071554. A replay will be available from Wednesday, February 18 through Wednesday, February 25, 2004.

The latest financial guidance, including the Company's hedge positions, along with a replay of the webcast, which will be archived for one year, are available in the investor relations section of the Company's website at www.cabotog.com .

Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading independent natural gas producer with substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid- Continent; the East and an expansion effort in Canada. For additional information, visit the Company's Internet homepage at www.cabotog.com .

The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs, and other factors detailed in the Company's Securities and Exchange Commission filings.

                                 OPERATING DATA

                                            Quarter Ended      Year Ended
                                             December 31,      December 31,
                                            2003     2002     2003     2002
        PRODUCED NATURAL GAS (Bcf)
         & OIL (MBbl)
        Natural Gas
          Gulf Coast                         7.7      7.2     29.5     30.4
          West                               5.8      6.3     23.8     25.3
          East                               4.7      4.5     18.6     18.0
          Total                             18.2     18.0     71.9     73.7

        Crude/Condensate
          Gulf Coast                         564      657    2,591    2,620
          West                                42       52      188      216
          East                                 7        9       27       33
          Total                              613      718    2,806    2,869

        Natural Gas Liquids                  1.0     10.0       39       40

        Equivalent Production (Bcfe)        21.9     22.4     89.0     91.1

        PRICES
        Average Produced Gas Sales Price
         ($/Mcf)
          Gulf Coast                       $4.61    $4.28    $4.78    $3.34
          West                             $3.72    $3.02    $3.67    $2.39
          East                             $5.09    $4.32    $5.15    $3.38
          Total                            $4.45    $3.82    $4.51    $3.02

        Crude/Condensate Price ($/Bbl)
          Gulf Coast                      $29.43   $25.02   $29.48   $23.69
          West                            $30.23   $26.89   $30.11   $25.24
          East                            $44.90   $24.06   $32.65   $22.09
          Total                           $29.65   $25.15   $29.55   $23.79

        WELLS DRILLED
          Gross                               50       23      173      108
          Net                                 33       16      132       72
          Gross Success Rate                  86%      91%      89%      93%


          CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                   (In thousands, except per share amounts)

                                      Quarter Ended       Year Ended
                                       December 31,       December 31,
                                      2003     2002     2003      2002
       Net Operating Revenues
         Natural Gas Production     $79,715  $68,417  $322,556  $221,101
         Brokered Natural Gas        21,887   18,506    95,816    58,729
         Crude Oil and Condensate    15,942   15,756    81,040    67,548
         Other                        3,704      871     9,979     6,378
                                    121,248  103,550   509,391   353,756
       Operating Expenses
         Brokered Natural Gas Cost   19,760   16,388    86,162    53,007
         Direct Operations -
          Field and Pipeline         14,377   14,239    50,399    50,047
         Exploration                 15,066   12,484    58,119    40,167
         Depreciation, Depletion
          and Amortization (B)       26,322   26,766   104,251   105,860
         Impairment of Long-
          Lived Assets                    0    1,657    93,796     2,720
         General and Administrative   6,543    7,100    25,112    28,377
         Taxes Other Than Income      8,962    5,834    37,138    24,734
                                     91,030   84,468   454,977   304,912
       Gain on Sale of Assets         4,580       49    12,173       244
       Income from Operations        34,798   19,131    66,587    49,088
       Interest Expense and Other     5,887    6,440    23,545    25,311
       Income Before Income Taxes    28,911   12,691    43,042    23,777
       Income Tax Expense             9,680    4,036    15,063     7,674
       Net Income Before Cumulative
        Effect of Accounting Change  19,231    8,655    27,979    16,103
       Cumulative Effect of
        Accounting Change (A)           ---      ---    (6,847)      ---
       Net Income                   $19,231   $8,655   $21,132   $16,103
       Net Earnings Per Share -
        Basic                         $0.60    $0.27     $0.66     $0.51
       Average Common Shares
        Outstanding                  32,197   31,811    32,050    31,737

       (A)  Cumulative effect of accounting change relates to the adoption
            of SFAS 143, "Accounting for Asset Retirement Obligations."
       (B)  Includes impairment of unproved properties.


                  CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                    (In thousands)
                                                          December 31,
                                                    2003               2002
       Assets
       Current Assets                             $121,396            $92,162
       Property, Equipment and Other Assets        902,805            978,767
          Total Assets                          $1,024,201         $1,070,929

       Liabilities and Stockholders' Equity
       Current Liabilities                        $154,701           $120,931
       Long-Term Debt                              270,000            365,000
       Deferred Income Taxes                       179,926            200,207
       Other Liabilities                            54,377             34,134
       Stockholders' Equity                        365,197            350,657
          Total Liabilities and
           Stockholders' Equity                 $1,024,201         $1,070,929


             CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
                                    (In thousands)

                                         Quarter Ended       Year Ended
                                          December 31,       December 31,
                                         2003     2002     2003      2002
        Cash Flows From Operating
         Activities
        Net Income                     $19,231   $8,655   $21,132   $16,103
        Cumulative Effect of
         Accounting Change                 ---      ---     6,847       ---
        Impairment of Long-Lived Assets    ---    1,657    93,796     2,720
        Income Charges Not Requiring
         Cash                           29,686   29,869   108,483   112,124
        Gain on Sale of Assets          (4,580)     (49)  (12,173)     (244)
        Deferred Income Taxes           12,339    5,439    (9,837)    7,882
        Changes in Assets and
         Liabilities                   (36,362)  (2,154)  (24,729)  (14,570)
        Exploration Expense             15,066   12,484    58,119    40,167
        Net Cash Provided by Operations 35,380   55,901   241,638   164,182

        Cash Flows From Investing
         Activities
        Capital Expenditures           (36,633) (16,540) (122,018) (103,189)
        Proceeds from Sale of Assets    10,100    1,017    28,281     4,688
        Restriced Cash                  15,761        0         0         0
        Exploration Expense            (15,066) (12,484)  (58,119)  (40,167)
        Net Cash Used by Investing     (25,838) (28,007) (151,856) (138,668)

        Cash Flows From Financing
         Activities
        Sale of Common Stock Proceeds      877      311     6,728     3,461
        Decrease in Short-Term
         Borrowings                    (12,345) (27,746)  (92,345)  (25,746)
        Dividends Paid                  (1,288)  (1,271)   (5,043)   (5,079)
        Net Cash Used by Financing     (12,756) (28,706)  (90,660)  (27,364)

        Net Decrease in Cash and
          Cash Equivalents             $(3,214)   $(812)    $(878)  $(1,850)


Selected Item Review and Reconciliation of Net Income and Earnings Per Share

                   (In thousands, except per share amounts)

                                             Quarter Ended      Year Ended
                                              December 31,      December 31,
                                              2003    2002     2003     2002
     As Reported - Net Income               $19,231  $8,655  $21,132  $16,103
     Reversal of Selected Items, Net of Tax:
       Retirement of Executive Officer          ---     ---      ---    2,205
       Revision of Tax Basis on Acquisition     ---     ---      ---     (790)
       Impairment of Long-Lived Assets          ---   1,026   58,060    1,684
       Gain on Sale of Assets                (2,835)    (30)  (7,535)    (151)
       Cumulative Effect of Accounting Change   ---     ---    6,847      ---
     Net Income Including Reversal of
      Selected Items                        $16,396  $9,651  $78,504  $19,051
     As Reported - Net Earnings Per Share     $0.60   $0.27    $0.66    $0.51
     Per Share Impact of Reversing Selected
      Items                                   (0.09)   0.03     1.79    0.09
     Net Earnings Per Share Including
       Reversal of Selected Items             $0.51   $0.30    $2.45    $0.60
     Average Common Shares Outstanding       32,197  31,811   32,050   31,737


               Discretionary Cash Flow Calculation and Reconciliation
                                   (In thousands)
                                           Quarter Ended       Year Ended
                                            December 31,       December 31,
                                           2003     2002      2003      2002
     Discretionary Cash Flow
     As Reported - Net Income            $19,231   $8,655   $21,132   $16,103
     Plus:
     Cumulative Effect of Accounting
      Change                                 ---      ---     6,847       ---
     Impairment of Long-Lived Assets         ---    1,657    93,796     2,720
     Income Charges Not Requiring Cash    29,686   29,869   108,483   112,124
     Gain on Sale of Assets               (4,580)     (49)  (12,173)     (244)
     Deferred Income Taxes                12,339    5,439    (9,837)    7,882
     Exploration Expense                  15,066   12,484    58,119    40,167
     Discretionary Cash Flow             $71,742  $58,055  $266,367  $178,752
     Plus:  Changes in Assets and
      Liabilities                        (36,362)  (2,154)  (24,729)  (14,570)
     Net Cash Provided by Operations     $35,380  $55,901  $241,638  $164,182

SOURCE Cabot Oil & Gas Corporation