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Cabot Oil & Gas Announces First Quarter Profits
Apr 28, 2010

HOUSTON, April 28 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG)- today reported that for the first quarter of 2010 the Company had net income of $28.7 million, or $0.28 per share, compared to $47.6 million, or $0.46 per share, for last year's first quarter.  The 2010 earnings figure, along with 2009 comparison, were impacted by gains on sales of properties, charges related to stock compensation and derivative-related movements, which are detailed in the attached Selected Items table.  Net income excluding these selected items for both first quarter periods is $30.6 million, or $0.30 per share, for 2010 versus $42.2 million, or $0.41 per share, in 2009.

The Company also reported cash flow from operations for the quarter of $116.1 million, versus the $152.5 million recorded in last year's first quarter.  Discretionary cash flow was down slightly between comparable periods at $131.4 million for 2010, compared to $138.0 million for 2009.  

"The key drivers for the lower quarterly results were lower natural gas price realizations, partially offset by increased production," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "For the quarter, Cabot reported 26.7 Bcfe of production, compared to last year's first quarter figure of 25.6 Bcfe, which includes 0.6 Bcfe of production from the Canadian properties sold in 2009.  Based on 25.0 Bcfe of pro forma production the growth rate for the comparable first quarter periods is 6.8 percent." Dinges added, "We had a significant up-tick in production half-way through the first quarter, generating a production exit rate of 325 Mmcfe per day."

Natural gas price realizations were $6.56 per Mcf in 2010 versus $7.51 per Mcf in 2009 for the quarter comparison.  This year's quarter experienced a $1.12 per Mcf pick-up from the Company's hedge position, where last year's impact was $3.34 per Mcf.  While oil comprises a small portion of Cabot's production, the hedge per unit impact was very positive, moving realized oil prices up $22.36 per barrel for the first quarter 2010 versus $39.07 per barrel in the first quarter 2009.  Even with the smaller hedge benefit in 2010, the realized price of $97.40 per barrel was 29 percent above last year's first quarter.

"Expenses between comparable quarters fell slightly and were within expectations," added Dinges.  "DD&A increased due to higher production and costs related to leasehold amortizations.

"During the quarter, Cabot used its balance sheet to continue its leasing efforts in the Marcellus and in establishing a new oil position in the Eagle Ford," said Dinges. "So far during 2010 we have accumulated 28,400 net acres in these two areas.  This, combined with carryover investments from 2009, moved our overall debt level by $110 million but still well within our comfort level at 33 percent debt to total capital."

Conference Call

Listen in live to Cabot Oil & Gas Corporation's first quarter financial and operating results discussion with financial analysts on Thursday, April 29, 2010 at 9:30 a.m. EDT (8:30 a.m. CDT) at www.cabotog.com.   A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), pass code 64482901.  The replay will be available through Saturday, May 1, 2010.  The latest financial guidance, including the Company's hedge positions, along with a replay of the web cast, 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 its entire resource base located in the continental United States.  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





March 31,





2010


2009


PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)






Natural Gas






 North


14.4


10.7


 South


11.0


13.2


 Canada


-


0.6


 Total


25.4


24.5









Crude/Condensate/Ngl






 North


23.0


26.0


 South


194.0


166.0


 Canada


-


4.0


 Total


217.0


196.0























Equivalent Production (Bcfe)


26.7


25.6









PRICES







Average Produced Gas Sales Price ($/Mcf)






 North

$

5.59

$

7.19


 South

$

7.84

$

7.95


 Canada

$

-

$

3.51


 Total (1)

$

6.56

$

7.51









Average Crude/Condensate Price ($/Bbl)






 North

$

68.04

$

30.63


 South

$

100.86

$

83.24


 Canada

$

-

$

32.01


 Total (1)

$

97.40

$

75.25









WELLS DRILLED






 Gross


24


49


 Net


20


37


 Gross Success Rate


96%


96%









(1)  These realized prices include the realized impact of derivative instrument settlements.  






Quarter Ended




March 31,




2010


2009


    Realized Impacts to Gas Pricing

$   1.12


$   3.34


    Realized Impacts to Oil Pricing

$ 22.36


$ 39.07




CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)


(In thousands, except per share amounts)
















Quarter Ended




March 31,




2010


2009


Operating Revenues






 Natural Gas Production


$ 166,081


$ 184,522


 Brokered Natural Gas


24,873


33,381


 Crude Oil and Condensate


19,982


14,242


 Other


1,620


1,794




212,556


233,939


Operating Expenses






 Brokered Natural Gas Cost


21,268


29,749


 Direct Operations - Field and Pipeline


22,983


25,479


 Exploration


8,426


6,466


 Depreciation, Depletion and Amortization


73,498


65,092


 General and Administrative (excluding Stock-Based Compensation)


12,522


11,936


 Stock-Based Compensation (1)


3,224


5,129


 Taxes Other Than Income


10,805


12,898




152,726


156,749


Gain on Sale of Assets (2)


759


12,707


Income from Operations


60,589


89,897


Interest Expense and Other  


14,912


14,226


Income Before Income Taxes


45,677


75,671


Income Tax Expense


16,981


28,091


Net Income


$   28,696


$   47,580


Net Earnings Per Share - Basic


$       0.28


$       0.46


Weighted Average Common Shares Outstanding


103,794


103,521







(1) Includes the impact of the Company's performance share awards and restricted stock amortization as well as expense related to stock options and stock appreciation rights.  Also includes expense for the Supplemental Employee Incentive Plans which commenced in 2008.

(2) The gain on sale of assets for the period ending March 31, 2009 primarily relates to the sale of the Thornwood properties in the East.



CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

 (In thousands)






March 31,


December 31,


2010


2009

Assets




Current Assets

$          293,897


$           281,502

Property, Equipment and Other Assets

3,518,020


3,401,899

  Total Assets

$       3,811,917


$        3,683,401





Liabilities and Stockholders' Equity




Current Liabilities

$          265,302


$           308,741

Long-Term Debt, excluding Current Maturities

915,000


805,000

Deferred Income Taxes

663,579


644,801

Other Liabilities

113,906


112,345

Stockholders' Equity

1,854,130


1,812,514

  Total Liabilities and Stockholders' Equity

$       3,811,917


$        3,683,401



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

 (In thousands)










Quarter Ended


March 31,


2010


2009

Cash Flows From Operating Activities




Net Income

$            28,696


$             47,580

Unrealized (Gain) Loss on Derivatives

587


(941)

Income Charges Not Requiring Cash

78,776


71,292

Gain on Sale of Assets

(759)


(12,707)

Deferred Income Tax Expense

15,716


26,349

Changes in Assets and Liabilities

(15,345)


14,495

Exploration Expense

8,426


6,466

Net Cash Provided by Operations

116,097


152,534





Cash Flows From Investing Activities




Capital Expenditures

(226,977)


(171,029)

Proceeds from Sale of Assets

803


15,063

Exploration Expense

(8,426)


(6,466)

Net Cash Used in Investing

(234,600)


(162,432)





Cash Flows From Financing Activities




Net Increase in Debt

110,000


10,000

Dividends Paid

(3,112)


(3,103)

Other

(38)


149

Net Cash Provided by Financing

106,850


7,046





Net Increase / (Decrease) in Cash and Cash Equivalents

$          (11,653)


$              (2,852)



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

(In thousands, except per share amounts)






Quarter Ended


March 31,


2010


2009

  As Reported - Net Income

$             28,696


$         47,580

  Reversal of Selected Items, Net of Tax:




     Gain on Sale of Assets (1)

(474)


(7,967)

     Stock-Based Compensation Expense

2,015


3,216

     Unrealized Loss (Gain) on Derivatives (2)

367


(590)

  Net Income Excluding Selected Items

$             30,604


$         42,239

  As Reported - Net Earnings Per Share

$                 0.28


$             0.46

  Per Share Impact of Reversing Selected Items

0.02


(0.05)

 Net Earnings Per Share Including Reversal of

   Selected Items

$                 0.30


$             0.41

  Weighted Average Common Shares Outstanding

103,794


103,521





(1)  The gain on sale of assets in 2009 primarily relates to the sale of the Thornwood properties in the East.  

(2)  This unrealized loss (gain) is included in Natural Gas Production Revenues in the Condensed Consolidated Statement of Operations and represents the mark to market change related to the Company's natural gas basis swaps.  



Discretionary Cash Flow Calculation and Reconciliation 

(In thousands)


Quarter Ended


March 31,


2010


2009

  Discretionary Cash Flow




  As Reported - Net Income

$             28,696


$         47,580

  Plus / (Less):




  Unrealized Loss (Gain) on Derivatives

587


(941)

  Income Charges Not Requiring Cash

78,776


71,292

  Gain on Sale of Assets

(759)


(12,707)

  Deferred Income Tax Expense

15,716


26,349

  Exploration Expense

8,426


6,466

  Discretionary Cash Flow

131,442


138,039

  Changes in Assets and Liabilities

(15,345)


14,495

  Stock-Based Compensation Tax Benefit

-


-

  Net Cash Provided by Operations

$           116,097


$       152,534



Net Debt Reconciliation 

(In thousands)







March 31,


December 31,


2010


2009





  Long-Term Debt

$           915,000


$       805,000

  Stockholders' Equity

1,854,130


1,812,514

       Total Capitalization

$        2,769,130


$    2,617,514





  Total Debt

$           915,000


$       805,000

  Less:  Cash and Cash Equivalents

(28,505)


(40,158)

       Net Debt

$           886,495


$       764,842





  Net Debt

$           886,495


$       764,842

  Stockholders' Equity

1,854,130


1,812,514

       Total Adjusted Capitalization

$        2,740,625


$    2,577,356





 Total Debt to Total Capitalization Ratio

33.0%


30.8%

  Less:  Impact of Cash and Cash Equivalents

0.7%


1.1%

       Net Debt to Adjusted Capitalization Ratio

32.3%


29.7%