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Cabot Oil & Gas Announces Full Year and Fourth Quarter Results
Jan 24, 2002

Year

HOUSTON, Jan. 24 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced 2001 net income available to common shareholders of $56.7 million, or $1.87 per share, and discretionary cash flow of $231.2 million, or $7.64 per share, before taking into account certain selected items related to non-cash impairments of oil and gas properties, credit exposure to Enron Corp., a severance tax refund and unrealized gains on derivative instruments. (See the table below the Condensed Consolidated Statement of Operations for the after-tax amounts associated with all reported selected items.) After these selected items, reported earnings are $51.8 million, or $1.71 per share, and discretionary cash flow is $230.5 million, or $7.61 per share.

These results surpass the 2000 net income available to common shareholders of $30.2 million, or $1.10 per share, and the discretionary cash flow of $125.0 million, or $4.56 per share, excluding the impact of selected items.

Taken as a whole, Cabot experienced an unprecedented year. This is due to several factors, namely a 21% increase in production volumes year-over-year, the strength of realized natural gas prices and the Company's favorable hedge positions in effect from February through October.

"The most important of these is the production increase, in particular the 12% increase through the drillbit resulting from our exploration program," stated Ray Seegmiller, Chairman and Chief Executive Officer. "This is the first time in our history that the Company has delivered double-digit, organic production growth reinforcing the early success of our exploration efforts."

Production

For the year Cabot's equivalent production totaled 81.1 Bcfe, including 6.2 Bcfe of production related to the Cody acquisition. This compares to 66.9 Bcfe produced in 2000. The Company reported fourth quarter 2001 production of 23.3 Bcfe versus 17.4 Bcfe (a 34% increase) in the comparable quarter last year. Analyzing the fourth quarter, after removing the 3.4 Bcfe associated with the Cody acquisition, production would have increased 14% over last year's comparable period. Sequentially, third quarter to fourth quarter of 2001, production increased 5% nearly all of which reflects a full three months of Cody production versus two months in the prior quarter.

Pricing

In 2001, the Company's average realized natural gas price was $4.36 per Mcf compared to an average realization of $3.19 per Mcf in 2000. Of the $1.17 per Mcf increase in realized prices, $.49 per Mcf relates to the incremental value realized from Cabot's hedge position. Oil prices dropped nearly $2.00 per barrel from 2000 to an average of $24.91 in 2001.

Cabot realized an average natural gas price for the fourth quarter of $2.87 per Mcf, 37% lower than the prior year. Oil price comparisons for the fourth quarter reflected the same trend with the average realized price per barrel down 32% to $20.47 per barrel in 2001. "We have once again entered a downturn in the energy price cycle," stated Seegmiller. "To provide some level of protection going into 2002, we have taken a defensive posture and entered into collar agreements covering approximately 60% of our anticipated natural gas production for the first four months of the year. These hedges provide us price protection at $2.50 per Mmbtu on a NYMEX equivalent basis for the early months of our 2002 budget," commented Seegmiller.

Other Items

Exploration expense for 2001 was $63.5 million compared to $19.9 million in 2000. "This increase relates to an expanded overall level of drilling activity which included 27 exploration wells in 2001 compared to 17 wells in 2000," said Seegmiller. In 2001, Cabot incurred $30.2 million in dry hole expense and $20.6 million in seismic costs, of which $8.9 million and $11.6 million, respectively, related to the fourth quarter (this was discussed in the January 22, 2002, press release).

General and Administrative expense of $25.7 million for 2001 was $5.2 million higher year-over-year. This increase includes $1.2 million of transition costs associated with the assimilation of Cody Company, nearly all of which was completed by year-end. The remaining increase relates primarily to increases for incentive compensation programs totaling $1.4 million, along with increases in salaries and benefits of $1.0 million. These incremental expenses primarily relate to efforts early in the year to retain employees due to the intense competition for professional talent and the incremental personnel requirements resulting from the Cody acquisition. Fourth quarter expenses were up over the prior year for the same reasons.

As previously announced, Cabot has taken a $2.3 million charge to bad debt in the fourth quarter. This amount relates to the Enron bankruptcy and approximates our initial estimate.

Fourth Quarter

Because of the higher reported exploration expense and lower commodity prices, Cabot reported a fourth quarter loss of $5.9 million, or $.19 per share, and discretionary cash flow of $35.3 million, or $1.12 per share. This reported figure is after removing the impact of certain selected items including non-cash impairments of oil and gas properties, credit exposure to Enron and unrealized gains on derivative instruments. For the fourth quarter of 2000, Cabot reported net income of $18.7 million, or $.64 per share, and discretionary cash flow of $52.5 million, or $1.81 per share, excluding the impact of selected items. After the selected items in 2001, the fourth quarter reported net loss was $10.8 million, or $.34 per share, and discretionary cash flow was $33.9 million, or $1.07 per share.

Reserves

Cabot presently is in the final stages of its year-end reserve audit. The Company will release the details of this audit by mid February. At this time, total proved reserves are estimated between 1,140 and 1,165 Bcfe, up from the 1,019 Bcfe at the end of 2000. The increase is due primarily to the Cody acquisition, which combined with the drillbit is expected to replace production by in excess of 250%. Finding costs for the year will be higher than last year due to increased drilling costs, the Cody acquisition, extensive investments in seismic and leasehold expected to benefit future years, along with an increase in dry hole expense.

Outlook

"What a difference 12 months make," said Seegmiller. "The industry is once again dealing with extremes. We still feel the long-term fundamentals of the natural gas market are strong. However, with the current soft market, a recovery in commodity prices during the second half of the year is only a remote possibility; thus, Cabot has scaled back its drilling program but will still be testing 19 new exploration prospects." Seegmiller added, "It is anticipated there will be numerous acquisition opportunities at reasonable prices during this low price environment and we would consider reducing our drilling program to fund a good reserve acquisition with upside potential. However, we do not intend to over extend the Company's balance sheet. We believe the energy market will self correct as it has every time and those who have a long term view will benefit."

Listen in live to Cabot Oil & Gas Corporation's full year and fourth quarter earnings discussion with financial analysts on Friday, January 25, 2002, at 9:30 AM EST at www.cabotog.com . A teleconference replay is also available at (800) 633-8284, reservation number 20204109. The audio webcast and teleconference replay will be available from January 25 at 11:30 AM EST until February 1, 2002, at 5 PM EST.

Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading domestic independent natural gas producer and marketer with substantial interests in the onshore Texas and Louisiana Gulf Coast, Rocky Mountains, Appalachia and Mid-Continent. 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,
                                          2001      2000      2001      2000
    NATURAL GAS (Bcf) & OIL (MBbl)
    Produced Natural Gas
      Appalachia                           4.5       4.3      17.4      17.8
      West                                 6.8       7.0      26.2      29.0
      Gulf Coast                           8.3       4.2      25.6      14.1
      Total                               19.6      15.5      69.2      60.9

    Crude/Condensate                       601       297     1,908       953

    Natural Gas Liquids                     14        19        88        37

    Equivalent Production (Bcfe)          23.3      17.4      81.1      66.9

    PRICES
    Average Produced Gas Sales Price
     ($/Mcf)
      Appalachia                         $3.58     $4.62     $4.96     $3.24
      West                               $2.31     $4.08     $3.88     $2.86
      Gulf Coast                         $2.92     $5.41     $4.44     $3.79
      Total                              $2.87     $4.58     $4.36     $3.19

    Crude/Condensate Price ($/Bbl)      $20.47    $30.23    $24.91    $26.81

    WELLS DRILLED
      Gross                                 51        44       205       129
      Net                                 32.7      30.3     152.6      91.6
      Gross Success Rate                    88%       82%       88%       86%


          CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                   (In Thousands, Except Per Share Amounts)

                                          Quarter Ended        Year Ended
                                           December 31,        December 31,
                                          2001     2000      2001      2000
    Net Operating Revenues
      Natural Gas Production             $56,166  $71,097  $301,529  $194,185
      Crude Oil and Condensate            12,312    8,976    47,544    25,544
      Brokered Natural Gas                 9,568   34,354    90,710   141,085
      Change in Derivative Fair Value       (647)       0       142         0
      Other                                2,919      420     7,117     7,837
                                          80,318  114,847   447,042   368,651
    Operating Expenses
      Brokered Natural Gas Cost            8,835   32,750    87,785   135,700
      Production and Pipeline
       Operations                         11,602    9,436    41,217    35,727
      Exploration                         23,699    7,771    63,454    19,858
      Taxes Other Than Income              7,177    7,470    28,341    23,041
      Administrative                       7,492    4,886    25,650    20,421
      Bad Debt                             2,270    2,096     2,270     2,096
      Depreciation, Depletion and
       Amortization                       28,421   16,595    88,422    57,809
      Impairment of Long-Lived
       Assets                              5,131        0     6,852     9,143
                                          94,627   81,004   343,991   303,795
    Gain (Loss) on Sale of Assets            284      (17)       26       (39)
    Income (Loss) from Operations        (14,025)  33,826   103,077    64,817
    Minority Interest in
     Subsidiaries                            (10)       0         4         0
    Interest Expense                       6,278    5,834    20,813    22,878
    Income (Loss) Before Income
     Taxes                               (20,293)  27,992    82,260    41,939
    Income Tax Expense (Benefit)          (9,454)  10,920    30,413    16,467
    Net Income (Loss)                    (10,839)  17,072    51,847    25,472
    Dividend Requirement on
     Preferred Stock                           0        0         0    (3,749)
    Net Income (Loss) Applicable to
     Common                             $(10,839) $17,072   $51,847   $29,221
    Net Income (Loss) Per Common
     Share - Basic                        $(0.34)   $0.59     $1.71     $1.07

    Average Common Shares
     Outstanding                          31,602   29,032    30,276    27,384

    Results from Recurring Operations
      As Reported - Net Income
       (Loss) Applicable to Common      $(10,839) $17,072   $51,847   $29,221
      After-Tax Impact for Selected
       Items:
        Change in Derivative Fair Value     (397)                87
        Impairment of Long-Lived Assets   (3,145)            (4,200)   (5,605)
        Negative Dividend - Preferred
         Stock Repurchase                                               5,100
        Bad Debt Expense                  (1,392)  (1,285)   (1,392)   (1,285)
        Severance Tax Refund                                    695
        Severance Costs                                                  (582)
        Benefit from Contract Settlement             (306)              1,432
      Net Income (Loss) from
        Recurring Operations             $(5,905) $18,663   $56,657   $30,161
      Net Income (Loss) per Common
        Share                             $(0.19)   $0.64     $1.87     $1.10
      Discretionary Cash Flow (DCF)      $35,292  $52,488  $231,205  $124,990
      DCF per Common Share                 $1.12    $1.81     $7.64     $4.56


               CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                (In Thousands)
                                                     Dec. 31,        Dec. 31,
                                                       2001            2000
    Assets
    Current Assets                                     $88,455       $110,269
    Property, Equipment and Other Assets               988,287        625,365
      Total Assets                                  $1,076,742       $735,634

    Liabilities and Stockholders' Equity
    Current Liabilities                               $110,239       $118,108
    Long-Term Debt                                     393,000        253,000
    Deferred Income Taxes                              203,808        108,174
    Other Liabilities                                   18,380         13,847
    Stockholders' Equity                               351,315        242,505
      Total Liabilities and Stockholders' Equity    $1,076,742       $735,634


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

                                          Quarter Ended        Year Ended
                                            Dec. 31,            Dec. 31,
                                          2001      2000     2001      2000
    Cash Flows From Operating
     Activities
    Net Income (Loss)                   $(10,839) $17,072   $51,847   $25,472
    Income Charges Not Requiring Cash     34,874   16,657    98,126    68,091
    (Gain) Loss on Sale of Assets           (284)      17       (26)       39
    Deferred Income Taxes                (13,550)   8,988    17,106    13,163
    Changes in Assets and
     Liabilities                           1,737   (5,330)   19,928    (7,613)
    Exploration Expense                   23,699    7,771    63,454    19,858
    Net Cash Provided by Operations       35,637   45,175   250,435   119,010

    Cash Flows From Investing
     Activities
    Capital Expenditures (*)             (45,831) (27,685) (322,625)  (99,359)
    Proceeds from Sale of Assets             931      487     6,829     3,150
    Exploration Expense                  (23,699)  (7,771)  (63,454)  (19,858)
    Net Cash Used by Investing           (68,599) (34,969) (379,250) (116,067)

    Cash Flows From Financing
     Activities
    Sale of Common Stock                       0    3,507     7,748    85,104
    Retirement of Preferred Stock              0        0         0   (51,600)
    Increase (Decrease) in Debt           26,000   (7,000)  124,000   (24,000)
    Preferred Dividends                        0        0         0    (2,202)
    Common Dividends                      (1,264)  (1,161)   (4,801)   (4,350)
    Net Cash Provided (Used) by
     Financing                            24,736   (4,654)  126,947     2,952

    Net Increase (Decrease) in Cash and
     Cash Equivalents                    $(8,226)  $5,552   $(1,868)   $5,895

    Discretionary Cash Flow (**)         $33,900  $50,505  $230,507  $124,421

     (*)  Excludes the non-cash consideration of $49.9 million in common stock
          issued in connection with the acquisition of Cody Company in
          August 2001.
     (**) Net income plus non-cash charges and exploration less preferred
          dividends.  Excludes net proceeds on property sales.

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SOURCE Cabot Oil & Gas Corporation
Web site: http: //www.cabotog.com
Company News On-Call: http: //www.prnewswire.com/comp/129660.html
CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, +1-281-589-4993