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Cabot Oil & Gas Announces Second Quarter Results, 47.5 Percent Production Growth Leads Operational Gains
Jul 27, 2011

HOUSTON, July 27, 2011 /PRNewswire via COMTEX/ --

Cabot Oil & Gas Corporation (NYSE: COG) today reported its second quarter results that included an overall growth in production of 47.5 percent between comparable second quarter periods. "This production growth clearly was the leading driver of our financial results and operational gains," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "An indicator of our significant momentum on this front was not only the 49.1 percent increase in natural gas but also the 21.7 percent increase in crude/condensate/NGL volumes, which resulted in Cabot's highest quarterly production."

Second quarter net income was $54.7 million, or $0.53 per share, as compared to net income of $21.7 million, or $0.21 per share, in the second quarter of 2010. Removing selected items in both periods (which are detailed in the Selected Items Table and include the impact of the sale of assets, stock compensation, pension and derivatives), the 2011 quarter's net income was $42.9 million, or $0.41 per share, as compared to $19.9 million, or $0.19 per share, for the second quarter of 2010.

Cash flow from operations for the 2011 second quarter totaled $129.5 million, while discretionary cash flow was $146.9 million. Comparatively, 2010 second quarter cash flow from operations was $127.1 million, and discretionary cash flow was $109.5 million.

For the quarter, realized prices for both natural gas and oil were below last year's second quarter postings. Natural gas was $4.67 per Mcf, down 17.3 percent from last year's $5.65 per Mcf, while oil was off slightly at $95.17 per barrel versus $96.70 per barrel. Operating expenses and financing cost, in absolute terms, together increased 11 percent between comparable second quarters.

"However, on the strength of Cabot's record quarterly production volumes, we have realized a 25 percent reduction in these costs per unit between second quarters," commented Dinges.

Year-to-Date

In the six months ended June 30, 2011, Cabot reported net income of $67.6 million, or $0.65 per share, compared to $50.4 million, or $0.49 per share, for the same period last year. The cash flow comparisons for the six months ended June 30, 2011 and June 30, 2010, respectively, are cash flow from operations of $220.7 million versus $243.2 million and discretionary cash flow of $255.5 million versus $241.0 million. The 2011 six-month net income figure, after removal of the selected items, was $63.7 million, or $0.61 per share, versus $50.4 million, or $0.49 per share, for the six-month period ended June 30, 2010.

"The same dynamic that drove the second quarter results applies to the year-to-date periods - increased production and lower natural gas price realizations," stated Dinges. "Production was up approximately 45 percent for the six-month comparable periods while natural gas prices fell 24.1 percent and oil prices dropped 5 percent."

From a balance sheet perspective, the Company's net debt to adjusted capital stands at 34.9% as of June 30, 2011. So far this year, Cabot has added $120 million to its outstanding borrowings to fund its investment efforts. "With our assets sales helping to fund our 2011 program, we have spent a net $350 million through six months," commented Dinges. "And with our ongoing asset rationalization efforts, our full year net 2011 program will remain at, or below, original expectations."

Conference Call

Listen in live to Cabot Oil & Gas Corporation's second quarter financial and operational results discussion with financial analysts on Thursday, July 28, 2011 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 75438015. The replay will be available for 48 hours. 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.

FOR MORE INFORMATION CONTACT


Scott Schroeder (281) 589-4993












OPERATING DATA


















Quarter Ended


Six Months Ended





June 30,


June 30,





2011


2010


2011


2010

PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)










Natural Gas










North


34.6


17.1


61.7


31.5

South


8.5


11.8


17.8


22.8

Total


43.1


28.9


79.5


54.3












Crude/Condensate/Ngl










North


22.0


28.0


43.0


51.0

South


281.0


221.0


486.0


416.0

Total


303.0


249.0


529.0


467.0


































Equivalent Production (Bcfe)


45.0


30.5


82.7


57.1












PRICES (1)










Average Produced Gas Sales Price ($/Mcf)










North

$

4.56

$

4.68


4.58

$

5.19

South

$

5.12

$

7.05


4.98

$

7.47

Total


$

4.67

$

5.65


4.67

$

6.15












Average Crude/Condensate Price ($/Bbl)










North

$

97.00

$

67.27


94.08

$

67.63

South

$

95.03

$

100.65


91.62

$

100.75

Total


$

95.17

$

96.70


91.80

$

97.04












WELLS DRILLED










Gross


28


21


52


45

Net


22


21


40


41

Gross Success Rate


100%


100%


100%


98%












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





Quarter Ended


Six Months Ended





June 30,


June 30,





2011


2010


2011


2010

Realized Impacts to Gas Pricing



$ 0.32


$ 1.44


$ 0.34


$ 1.29

Realized Impacts to Oil Pricing



$ (1.74)


$ 21.82


$ (1.61)


$ 22.09












CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)





(In thousands, except per share amounts)































Quarter Ended


Six Months Ended





June 30,


June 30,





2011


2010


2011


2010

Operating Revenues










Natural Gas.


$ 200,357


$ 164,528


$ 370,455


$ 334,399

Brokered Natural Gas


11,072


13,348


29,480


38,221

Crude Oil and Condensate


28,042


21,211


46,634


41,193

Other.


1,225


1,154


3,153


2,774





240,696


200,241


449,722


416,587

Operating Expenses










Brokered Natural Gas Cost


9,796


11,793


25,158


33,061

Direct Operations


22,579


24,347


49,586


47,330

Transportation and Gathering


16,074


4,767


28,942


8,557

Taxes Other Than Income


5,877


11,841


14,028


22,646

Exploration


4,592


10,233


10,900


18,659

Depreciation, Depletion and Amortization


83,225


76,726


160,349


150,224

General and Administrative (excluding Stock-Based Compensation)


14,828


10,469


30,989


22,991

Stock-Based Compensation (1)


11,178


2,384


19,316


5,608





168,149


152,560


339,268


309,076

Gain (Loss) on Sale of Assets


34,071


4,387


32,554


5,146

Income from Operations


106,618


52,068


143,008


112,657

Interest Expense and Other


18,044


15,769


35,411


30,681

Income Before Income Taxes


88,574


36,299


107,597


81,976

Income Tax Expense


33,897


14,617


40,034


31,598

Net Income


$ 54,677


$ 21,682


$ 67,563


$ 50,378

Earnings Per Share - Basic


$ 0.53


$ 0.21


$ 0.65


$ 0.49

Weighted Average Common Shares Outstanding


104,264


103,915


104,204


103,855












(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.










CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)




(In thousands)















June 30,


December 31,







2011


2010





Assets









Current Assets .

$ 235,838


$ 203,008





Properties and Equipment, Net

3,967,716


3,762,760





Other Assets

46,606


39,263





Total Assets

$ 4,250,160


$ 4,005,031














Liabilities and Stockholders' Equity









Current Liabilities

$ 286,724


$ 303,835





Long-Term Debt, excluding Current Maturities

1,095,000


975,000





Deferred Income Taxes

757,612


714,953





Other Liabilities

144,625


138,543





Stockholders' Equity

1,966,199


1,872,700





Total Liabilities and Stockholders' Equity

$ 4,250,160


$ 4,005,031























CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)




(In thousands)
























Quarter Ended


Six Months Ended



June 30,


June 30,



2011


2010


2011


2010

Cash Flows From Operating Activities









Net Income

$ 54,677


$ 21,682


$ 67,563


$ 50,378

Unrealized (Gain) Loss on Derivatives .

903


(942)


886


(355)

Income Charges Not Requiring Cash

94,998


79,802


182,178


158,579

Loss (Gain) on Sale of Assets

(34,071)


(4,387)


(32,554)


(5,146)

Deferred Income Tax Expense

30,343


13,375


36,886


29,091

Changes in Assets and Liabilities

(17,373)


17,551


(34,762)


2,205

Exploration Expense

11


-


504


8,426

Net Cash Provided by Operations

129,488


127,081


220,701


243,178










Cash Flows From Investing Activities









Capital Expenditures

(201,045)


(218,741)


(404,214)


(454,143)

Proceeds from Sale of Assets

49,293


15,940


54,336


16,742

Net Cash Used in Investing

(151,752)


(202,801)


(349,878)


(437,401)










Cash Flows From Financing Activities









Net Increase in Debt

40,000


100,000


120,000


210,000

Dividends Paid

(3,128)


(3,117)


(6,250)


(6,228)

Other

(190)


(1,983)


(1,208)


(2,022)

Net Cash Provided by Financing

36,682


94,900


112,542


201,750










Net Increase / (Decrease) in Cash and Cash Equivalents

$ 14,418


$ 19,180


$ (16,635)


$ 7,527











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





(In thousands, except per share amounts)


















Quarter Ended


Six Months Ended




June 30,


June 30,




2011


2010


2011


2010

As Reported - Net Income

$ 54,677


$ 21,682


$ 67,563


$ 50,378

Reversal of Selected Items, Net of Tax:










(Gain) Loss on Sale of Assets

(21,124)


(2,720)


(20,183)


(3,191)


Stock-Based Compensation Expense

6,930


1,478


11,976


3,477


Pension Expense (1)


1,879


-


3,751


-


Unrealized Loss (Gain) on Derivatives (2)


560


(584)


549


(220)

Net Income Excluding Selected Items

$ 42,922


$ 19,856


$ 63,656


$ 50,444

As Reported - Earnings Per Share

$ 0.53


$ 0.21


$ 0.65


$ 0.49

Per Share Impact of Reversing Selected Items

(0.12)


(0.02)


(0.04)


-

Earnings Per Share Including Reversal










of Selected Items

$ 0.41


$ 0.19


$ 0.61


$ 0.49

Weighted Average Common Shares Outstanding

104,264


103,915


104,204


103,855











(1)

On July 28, 2010, the Company notified its employees of its plan to terminate its qualified and non-qualified pension plans, effective September 30, 2010. This amount represents pension expenses related to the plan terminations and expenses related to the acceleration of amortization of prior service costs and actuarial losses over the expected amortization period until final distribution of assets from each plan. Pension expense is included in General and Administrative Expense in the Condensed Consolidated Statement of Operations.

(2)

This unrealized loss (gain) is included in Natural Gas 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


Six Months Ended




June 30,


June 30,




2011


2010


2011


2010

Discretionary Cash Flow









As Reported - Net Income

$ 54,677


$ 21,682


$ 67,563


$ 50,378

Plus / (Less):









Unrealized Loss (Gain) on Derivatives

903


(942)


886


(355)

Income Charges Not Requiring Cash

94,998


79,802


182,178


158,579

Loss (Gain) on Sale of Assets

(34,071)


(4,387)


(32,554)


(5,146)

Deferred Income Tax Expense

30,343


13,375


36,886


29,091

Exploration Expense

11


-


504


8,426

Discretionary Cash Flow

146,861


109,530


255,463


240,973

Changes in Assets and Liabilities

(17,373)


17,551


(34,762)


2,205

Net Cash Provided by Operations

$ 129,488


$ 127,081


$ 220,701


$ 243,178





















Net Debt Reconciliation





(In thousands)


















June 30,


December 31,








2011


2010















Long-Term Debt

$ 1,095,000


$ 975,000





Stockholders' Equity

1,966,199


1,872,700





Total Capitalization

$ 3,061,199


$ 2,847,700















Total Debt

$ 1,095,000


$ 975,000





Less: Cash and Cash Equivalents

(39,314)


(55,949)





Net Debt

$ 1,055,686


$ 919,051















Net Debt

$ 1,055,686


$ 919,051





Stockholders' Equity

1,966,199


1,872,700





Total Adjusted Capitalization

$ 3,021,885


$ 2,791,751















Total Debt to Total Capitalization Ratio

35.8%


34.2%





Less: Impact of Cash and Cash Equivalents

0.9%


1.3%





Net Debt to Adjusted Capitalization Ratio

34.9%


32.9%





SOURCE Cabot Oil & Gas