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Cabot Oil & Gas Announces First Quarter Results; Production Increases 26% Year-Over-Year
Apr 25, 2002

HOUSTON, April 25 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced first quarter net income of $239,000, or $.01 per share, before taking into account certain non-cash selected items, and discretionary cash flow of $34.4 million, or $1.09 per share. First quarter selected items include the impact of SFAS 133, Accounting for Derivative Instruments and Hedging Activities ($380,000 after tax), and the impairment of two small producing fields ($657,000 after tax). For the comparable quarter in 2001, the Company reported net income of $35.3 million, or $1.20 per share, before the non-cash benefit relating to the adoption of SFAS 133. The first three months of 2001 generated discretionary cash flow totaling $75.6 million, or $2.58 per share. Reported results for the comparable periods include a net loss of $798,000, or $.03 per share, in 2002 versus a reported profit of $39.1 million, or $1.33 per share, in 2001.

A 26% increase in production did not offset a 61% decline in realized gas prices and a 28% decline in realized oil prices between comparable first quarters. For the first quarter of 2002, Cabot's equivalent production totaled 22.5 Bcfe on the strength of production improvements from the Gulf Coast and East. The Cody acquisition, in August 2001, provided 3.4 Bcfe of the incremental production while the drill bit generated 1.2 Bcfe of the increase, giving Cabot a 7% organic production growth rate between comparable first quarters. Sequentially, production was down 3% from the fourth quarter of 2001 due to down time associated with recompletions at the Etouffee field, the timing of the 2002 drilling program and dry holes encountered late in the 2001 drilling program.

Cabot Oil & Gas realized an average natural gas price of $2.53 per Mcf in the first three months of 2002, compared to $6.57 per Mcf for the same period last year. The 2002 natural gas price realization includes a net benefit from the Company's hedge position totaling $2.4 million, or $.13 per Mcf. Cabot's realized oil prices, between comparable first quarters, were down $8.00 per barrel to $20.55, due to general economic conditions and a loss from the Company's hedge position totaling $179,000, or $.27 per barrel.

On the cost side, Cabot experienced lower levels of exploration, taxes other than income and administrative expenses between comparable quarters. However, these declines were more than offset by increases in DD&A and operations expense primarily due to the impact of the Cody acquisition. On a per unit of production basis these five expense categories decreased between the comparable first quarter periods from $2.83 per Mcfe in 2001 to $2.41 per Mcfe for 2002.

"While the comparisons to last year are disappointing in terms of bottom line results, I am pleased with our increasing production profile and the success from our first quarter drilling program that experienced a 95% success rate, including four exploration successes in four attempts," said Dan Dinges, President and Chief Operating Officer. "The outlook for the remainder of the year is encouraging as commodity prices continue to improve. However, because of the uncertainty related to natural gas prices, we have decided to stay with our original capital plans and will evaluate acquisition opportunities to enhance our growth profile."

Second Quarter 2002

In connection with the previously announced retirement of Chairman and Chief Executive Officer Ray Seegmiller in May 2002, the Company will incur an estimated pre-tax charge to earnings in the second quarter of approximately $3.2 million. This estimate relates to a lump sum cash payment totaling $910,000 in recognition of Mr. Seegmiller's current employment agreement, his contributions to the Company and in lieu of a 2002 long-term incentive award. Also included is a charge of approximately $1.3 million (final value to be determined based on the Company's stock price on May 2, 2002) associated with the acceleration of previously awarded stock grants and options. The final component is a charge of $1.0 million to fully accrue for Mr. Seegmiller's supplemental executive retirement plan benefit.

"We truly appreciate Ray's contributions over the last few years that have helped transform Cabot into an exploration oriented company balanced by an extensive inventory of development opportunities," said Dinges. "He has successfully positioned the Company for the future and we will continue to build on his efforts to further enhance shareholder value."

Listen in live to Cabot Oil & Gas Corporation's first quarter earnings discussion with financial analysts on Friday, April 26 at 9:30 AM EDT (8:30 AM CDT) at . A teleconference replay is also available at (800) 633-8284, reservation number 20503376. The audio webcast and teleconference replay will be available from April 26 at 11:30 AM EDT until May 3 at 5 PM EDT.

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

The statements regarding future financial performance and results, outlook for prices, capital budgets 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,
                                                     2002              2001
    NATURAL GAS (Bcf) & OIL (MBbl)
    Produced Natural Gas
      Gulf Coast                                       7.5               4.8
      West                                             6.4               6.4
      East                                             4.5               4.1
      Total                                           18.4              15.3

      Gulf Coast                                       610               328
      West                                              50                68
      East                                               8                 9
      Total                                            668               405

    Natural Gas Liquids                                 15                19

    Equivalent Production (Bcfe)                      22.5              17.9

    Average Produced Gas Sales Price ($/Mcf)
      Gulf Coast                                     $2.67             $7.34
      West                                           $2.14             $6.10
      East                                           $2.85             $6.44
      Total                                          $2.53             $6.57

    Crude/Condensate Price ($/Bbl)
      Gulf Coast                                    $20.57            $28.83
      West                                          $20.97            $27.36
      East                                          $16.41            $27.21
      Total                                         $20.55            $28.55

      Gross                                             21                43
      Net                                             12.2              32.5
      Gross Success Rate                               95%               91%

                   (In Thousands, Except Per Share Amounts)

                                                        Quarter Ended
                                                           March 31,
                                                    2002              2001
    Operating Revenues
      Natural Gas Production                       $46,506           $100,725
      Brokered Natural Gas                          13,698             35,422
      Crude Oil and Condensate                      13,718             11,556
      Change in Derivative Fair Value                 (616)             6,198
      Other                                          1,767                990
                                                    75,073            154,891

    Operating Expenses
      Brokered Natural Gas Cost                     12,267             34,155
      Production and Pipeline Operations            12,235              8,220
      Exploration                                    7,056             10,773
      Taxes Other Than Income                        6,152              9,902
      Administrative                                 5,739              5,946
      Depreciation, Depletion and Amortization      25,547             17,373
      Impairment of Long-Lived Assets                1,063                  0
                                                    70,059             86,369

    Gain (Loss) on Sale of Assets                      (18)                 4
    Income from Operations                           4,996             68,526
    Interest Expense and Other                       6,226              4,706
    Income (Loss) Before Income Taxes               (1,230)            63,820
    Income Tax Expense (Benefit)                      (432)            24,758
    Net Income (Loss)                                $(798)           $39,062
    Net Income (Loss) Per Share                     $(0.03)             $1.33
    Average Common Shares Outstanding               31,604             29,318

    Results Considering Selected Items
       As Reported - Net Income (Loss)               $(798)           $39,062
       After-Tax Impact for Selected Items:
          Change in Derivative Fair Value             (380)             3,799
          Impairment of Long-Lived Assets             (657)
       Net Income Before Selected Items               $239            $35,263
       Net Income per Share                          $0.01              $1.20

                                (In Thousands)

                                                   March 31,        Dec. 31,
                                                      2002            2001
    Current Assets                                   $81,416         $84,987
    Property, Equipment and Other Assets             984,759         984,044
       Total Assets                               $1,066,175      $1,069,031

    Liabilities and Stockholders' Equity
    Current Liabilities                             $105,142        $110,240
    Long-Term Debt                                   412,000         393,000
    Deferred Income Taxes                            194,543         200,859
    Other Liabilities                                 18,798          18,380
    Stockholders' Equity                             335,692         346,552
       Total Liabilities and Stockholders'
        Equity                                    $1,066,175      $1,069,031

                                (In Thousands)

                                                        Quarter Ended
                                                           March 31,
                                                      2002            2001
    Cash Flows From Operating Activities
    Net Income (Loss)                                  $(798)        $39,062
    Income Charges Not Requiring Cash                 28,590          11,952
    (Gain) Loss on Sale of Assets                         18              (4)
    Deferred Income Taxes                               (471)         13,788
    Changes in Assets and Liabilities                 (4,846)         34,027
    Exploration Expense                                7,056          10,773
    Net Cash Provided by Operations                   29,549         109,598

    Cash Flows From Investing Activities
    Capital Expenditures                             (41,062)        (34,748)
    Proceeds from Sale of Assets                          (2)            438
    Exploration Expense                               (7,056)        (10,773)
    Net Cash Used by Investing                       (48,120)        (45,083)

    Cash Flows From Financing Activities
    Sale of Common Stock                                 105           4,194
    Increase (Decrease) in Debt                       19,000         (70,000)
    Common Dividends and Other                        (1,264)         (1,172)
    Net Cash Provided (Used) by Financing             17,841         (66,978)

    Net Decrease in Cash and Cash Equivalents          $(730)        $(2,463)

    Discretionary Cash Flow (*)                      $34,395         $75,571

    (*)  Net income plus non-cash charges and exploration.  Excludes net
         proceeds on property sales.

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CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, +1-281-589-4993