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Cabot Oil & Gas Announces Record First Quarter Results; Profits Increase Over Ten-Fold and Cash Flow Triples
Apr 23, 2001

HOUSTON, April 23 /PRNewswire Interactive News Release/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced that significantly higher natural gas price realizations drove first quarter profits above the record results reported for the entire year of 2000. The Company recorded net income for the quarter of $35.3 million, or $1.20 per share, before the non-cash benefit from a selected item. The first quarter selected item relates to the adoption of SFAS 133, Accounting for Derivative Instruments and Hedging Activities (see discussion below). For the comparable quarter in 2000, the Company had net income available to common shareholders of $2.8 million, or $.11 per share, before the benefit from a gas contract settlement totaling $1.7 million after- tax.

The first three months in 2001 generated discretionary cash flow totaling $75.6 million, or $2.58 per share, versus $24.5 million, or $.99 per share, in the comparable quarter in 2000. The first quarter last year includes $2.3 million, or $.09 per share, related to the gas contract settlement.

Natural gas prices in the quarter improved 157% over the comparable period last year, with Cabot Oil & Gas realizing an average of $6.57 per Mcf in 2001, compared to $2.56 per Mcf for the same period last year. Oil prices increased 29% between comparable first quarters.

Total production of 17.9 Bcfe during the first three months of 2001 was 8.5% higher than in the first quarter of 2000 and up slightly over the fourth quarter of 2000. The increase is attributed to gas and oil production in the Gulf Coast region, driven mainly by drilling success in south Louisiana on the Etouffee prospect, along with the Augen, Bon Ton and Krescent wells.

"We are extremely pleased with the quarter's financial and operational results," said Ray Seegmiller, Chairman and Chief Executive Officer. "With the forward curve still showing strong fundamentals for the domestic natural gas market, combined with our costless collar (with approximately a $5.00 floor and $9.00 ceiling per Mmbtu) covering 51% of the Company's estimated gas production through October, we believe Cabot is well positioned for strong financial performance in 2001."

As of March 31, 2001, Cabot Oil & Gas had reduced its total debt to $199 million, down from $269 million at year end, on the strength of commodity prices and the timing of the capital program. "This decrease in leverage combined with the continuing strong gas market outlook enables Cabot Oil & Gas to pursue other strategic exploration and development opportunities in the Gulf Coast and Rocky Mountains areas," stated Seegmiller.

SFAS 133

As a result of the new accounting standards for derivative instruments established by SFAS 133, the Company recognized a non-cash gain of $6.2 million pre-tax ($3.8 million after-tax) in the first quarter. Including the impact of this selected item, net income for the quarter was $39.1 million, or $1.33 per share.

The non-cash gain primarily related to the increase in the market value of the Company's costless collar arrangements. This gain will reverse by year end as the costless collar contracts settle. Other aspects of SFAS 133 related to the Company's derivatives did not have a material impact on earnings.

Seegmiller added, "The accounting profession is continuing its analysis of this pronouncement and we are expecting new interpretations to be issued by the FASB in the upcoming months. The FASB's actions may prospectively clarify the income statement and balance sheet treatment for recording the changes in market value of certain derivatives."

Listen in live to Cabot Oil & Gas Corporation's first quarter earnings discussion with financial analysts on Tuesday, April 24, 2001, at 9:30 AM EDT at A teleconference replay is also available at (800) 633-8284, reservation number 18467626. The audio webcast and teleconference replay will be available from April 24 to May 1, 2001.

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

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,
                                                      2001              2000
    NATURAL GAS (Bcf) & OIL (MBbl)
    Produced Natural Gas
      Gulf Coast                                       4.8               3.4
      West                                             6.4               7.3
      Appalachia                                       4.1               4.5
      Total                                           15.3              15.2

    Crude/Condensate                                   405               195

    Natural Gas Liquids                                 19                 7

    Equivalent Production (Bcfe)                      17.9              16.5

    Average Produced Gas Sales Price ($/Mcf)
      Gulf Coast                                     $7.34             $2.55
      West                                           $6.10             $2.26
      Appalachia                                     $6.44             $3.07
      Total                                          $6.57             $2.56

    Crude/Condensate Price ($/Bbl)                  $28.55            $22.19

      Gross                                             43                25
      Net                                             32.5              14.7
      Gross Success Rate                               91%               88%

                     (In Thousands, Except Per Share Amounts)

                                                          Quarter Ended
                                                            March 31,
                                                      2001             2000
    Operating Revenues
      Natural Gas Production                       $100,725           $39,086
      Brokered Natural Gas                           35,422            36,937
      Crude Oil and Condensate                       11,556             4,325
      Change in Derivative Fair Value                 6,198               ---
      Other                                             990             4,772
                                                    154,891            85,120
    Operating Expenses
      Brokered Natural Gas Cost                      34,155            35,486
      Production and Pipeline Operations              8,220             8,511
      Exploration                                    10,773             3,233
      Taxes Other Than Income                         9,902             4,601
      Administrative                                  5,946             4,887
      Depreciation, Depletion and Amortization       17,373            13,608
                                                     86,369            70,326
    Gain (Loss) on Sale of Assets                         4               (21)
    Income from Operations                           68,526            14,773
    Interest Expense                                  4,706             5,971
    Income Before Income Taxes                       63,820             8,802
    Income Tax Expense                               24,758             3,457
    Net Income                                       39,062             5,345
    Dividend Requirement on Preferred Stock             ---               851
    Net Income Applicable to Common                 $39,062            $4,494
    Net Income Per Common Share - Basic               $1.33             $0.18
    Average Common Shares Outstanding                29,318            24,798

    Results from Recurring Operations
       As Reported - Net Income Applicable to
        Common                                      $39,062            $4,494
       After-Tax Impact for Selected Items:
          Change in Derivative Fair Value             3,799
          Benefit from contract settlement                              1,738
       Net Income from Recurring Operations         $35,263            $2,756
       Net Income per Common Share                    $1.20             $0.11

                                   (In Thousands)
                                                       March 31,      Dec. 31,
                                                          2001          2000
    Current Assets                                      $94,921      $110,269
    Property, Equipment and Other Assets                650,170       625,365
       Total Assets                                    $745,091      $735,634
    Liabilities and Stockholders' Equity
    Current Liabilities                                $142,151      $118,108
    Long-Term Debt                                      183,000       253,000
    Deferred Income Taxes                               121,962       108,174
    Other Liabilities                                    14,867        13,847
    Stockholders' Equity                                283,111       242,505
       Total Liabilities and Stockholders' Equity      $745,091      $735,634

                                   (In Thousands)

                                                          Quarter Ended
                                                            March 31,
                                                      2001              2000
    Cash Flows From Operating Activities
    Net Income                                      $39,062            $5,345
    Income Charges Not Requiring Cash                11,952            14,125
    (Gain) Loss on Sale of Assets                        (4)               21
    Deferred Income Taxes                            13,788             2,601
    Changes in Assets and Liabilities                34,027            10,110
    Exploration Expense                              10,773             3,233
    Net Cash Provided by Operations                 109,598            35,435

    Cash Flows From Investing Activities
    Capital Expenditures                            (34,748)          (18,945)
    Proceeds from Sale of Assets                        438             1,523
    Exploration Expense                             (10,773)           (3,233)
    Net Cash Used by Investing                      (45,083)          (20,655)

    Cash Flows From Financing Activities
    Sale of Common Stock                              4,194             1,231
    Decrease in Debt                                (70,000)          (15,000)
    Preferred Dividends                                 ---              (851)
    Common Dividends and Other                       (1,172)           (1,003)
    Net Cash Used by Financing                      (66,978)          (15,623)

    Net Decrease in Cash and Cash Equivalents       $(2,463)            $(843)

    Discretionary Cash Flow (*)                     $75,571           $24,475

    (*) 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: //
Company News On-Call: http: // or fax, 800-758-5804, ext. 129660
CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, 281-589-4993