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Cabot Oil & Gas Completes Record Year
Jan 29, 1997

HOUSTON, Jan. 29 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced its best yearly performance since going public in 1990 with net income available to common shareholders of $15.3 million, or $.67 per share, and discretionary cash flow of $83.7 million, or $3.67 per share. "This is a significant turnaround from 1995 when lower prices, together with a $69.2 million after-tax charge relating to a new accounting standard and changes to the organization and its operations resulted in the Company posting a net loss of $92.2 million applicable to common shareholders, or $4.05 per share, and discretionary cash flow of $30.6 million, or $1.35 per share. It is important to note that the momentum from the turnaround, which commenced at the beginning of 1996, is carrying through into 1997 with continuing gas price and production increases for the first two months of this year," commented Charles P. Siess, Jr., Chairman and Chief Executive Officer.

Mr. Siess added, "At the start of 1996, our plan was in place to improve the performance of the Company by increasing production, hydrocarbon reserves and the financial results, all with no increase in debt. This was accomplished. Equivalent production increased from 164 Mmcf per day in December 1995 to the present rate of over 180 Mmcf per day, a 10% increase. This increase reversed a downward trend in production brought on by a small drilling program in 1995 and further exacerbated by adverse winter conditions that slowed the start of the 1996 drilling program. For the full year, production was 62.3 Bcfe, essentially equal to 1995. The success realized in our production rates was achieved largely through the drill bit from COG's 196 gross well program. COG expects reserve replacement for the year of approximately 175% when measured against production. Finding costs, including purchases, will be below $.60 mcfe."

The Company's financial success in 1996 resulted from higher realized prices in each of its operating areas, lower DD&A and financing costs and the reversal of production declines. Adding to results for 1996 was a contribution from our marketing activity of $5.6 million versus $2.5 million in 1995, a 124% increase. Excluding non-recurring items in both years, COG realized net income of $12.4 million compared to a 1995 loss of $17.3 million and discretionary cash flow of $80.2 million versus $36.9 million in 1995.

Fourth Quarter

Buoyed by a 73% increase in western gas prices and a 21% increase in Appalachian gas prices over last year's quarter, COG's fourth quarter net income available to common shareholders totaled $6.2 million, or $.27 per share, a substantial improvement over the $1.9 million loss, or $.08 per share, in the fourth quarter of 1995, after excluding non-recurring items. Discretionary cash flow in the 1996 fourth quarter grew to $27.3 million, or $1.20 per share, compared to $12.4 million, or $.55 per share, in the comparable quarter of 1995, after excluding non-recurring items. Also contributing to the quarter's success was an increase in production to 16.3 Bcfe in this year's fourth quarter from 15.2 Bcfe recorded in 1995, a 7% increase. Each of COG's operating areas contributed to the increase by showing improvements in production.

Outlook

1997 is off to a good start with two months of equity production already sold at average price levels which have exceeded last year's realized prices by $1.25 per mcf for January and $.82 per mcf for February. These prices relate to volumes that are 15 Mmcf per day higher than last year at the same time. Because of underlying market conditions and the current outlook for the year, COG expects to spend $78.6 million in 1997 on capital and exploration expenditures, a 7% increase over 1996. This capital program translates to participation in a 256 well drilling program for the year. Should an acquisition opportunity arise, the Company has the flexibility to reallocate capital from drilling.

Mr. Siess concluded, "COG's 1996 performance helps to reestablish Cabot Oil & Gas as a company with significant growth potential in the mid-cap gas sector of the E&P industry. The latest results provide confidence and build momentum for our future. With increasing production, a 14 year reserve life, an outstanding backlog of drilling locations, and the current gas price outlook, COG is starting 1997 even better than it began 1996".

Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading domestic independent natural gas producer and marketer with substantial interests in the Appalachia, Anadarko, Rocky Mountain and Gulf Coast regions. For additional information about the Company, visit COG's internet home page at http:// 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 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,
                                              1996    1995      1996    1995
    NATURAL GAS (Bcf) & OIL (MBbl)
    Produced Natural Gas
     Appalachia                                7.0     6.5      26.8    27.5
     West                                      8.5     7.7      32.0    30.2
     Total                                    15.5    14.2      58.8    57.7

    Crude/Condensate                           117     148       520     618

    Natural Gas Liquids                         15      24        77     129

    Equivalent Production (Bcfe)              16.3    15.2      62.3    62.2

    PRICES
    Average Produced Gas Sales Price ($/Mcf)
     Appalachia                              $3.05   $2.52     $2.72   $2.22
     West                                    $2.54   $1.47     $2.02   $1.33
     Total                                   $2.77   $1.95     $2.34   $1.75

    Crude/Condensate Price ($/Bbl)          $23.99  $18.23    $21.14  $17.95

    WELLS DRILLED
     Gross                                      51      46       196      93
     Net                                      38.5    32.5     154.2    55.4
     Net Success Rate                           67%     73%       80%     75%

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

                                       Quarter Ended           Year Ended
                                        December 31,           December 31,
                                      1996      1995         1996       1995
    Net Operating Revenues
      Natural Gas Production        $42,961   $27,717     $137,482   $101,260
      Crude Oil and Condensate        2,797     2,701       10,992     11,089
      Brokered Natural Gas Margin     1,434       644        5,619      2,509
      Other, Net                      1,828    (1,807)       8,968      6,225
                                     49,020    29,255      163,061    121,083

    Operating Expenses
      Operations                      7,975     7,636       28,361     28,328
      Exploration                     3,585     3,015       12,559      8,031
      Taxes Other Than Income         3,419     2,440       12,826     11,215
      Administrative                  4,791     4,058       16,823     16,785
      Cost Reduction Program              0         0            0      6,820
      Depreciation, Depletion
       and Amortization              12,813    10,894       45,390     52,253
      Impairment of Long-Lived Assets     0         0            0    113,795
                                     32,583    28,043      115,959    237,227
    Other Income (Loss)                 229      (216)       1,685       (614)
    Income (Loss) from Operations    16,666       996       48,787   (116,758)
    Interest Expense (A)              4,540     7,767       17,409     24,885
    Income (Loss) Before
     Income Taxes                    12,126    (6,771)      31,378   (141,643)
    Income Tax Expense (Benefit)(A)   4,561    (2,791)      10,554    (55,025)
    Net Income (Loss)                 7,565    (3,980)      20,824    (86,618)
    Dividend Requirement
     on Preferred Stock               1,391     1,391        5,566      5,553
    Net Income (Loss) Applicable
     to Common                       $6,174   $(5,371)     $15,258   $(92,171)
    Net Income (Loss)
     Per Common Share                 $0.27    $(0.24)       $0.67     $(4.05)
    Average Common Shares
     Outstanding                     22,826    22,780       22,807     22,775

NOTE(A): COG received $3.5 million, including $1.7 million of interest income, in 1996 related to a tax refund for percentage depletion claimed for certain periods prior to 1990.

               CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                (In Thousands)
                                                         Dec. 31,    Dec. 31,
                                                           1996        1995
    Assets
    Current Assets                                       $79,637     $52,348
    Property, Equipment and Other Assets                 481,704     475,807
       Total Assets                                     $561,341    $528,155

    Liabilities and Stockholders' Equity
    Current Liabilities                                  $72,617     $60,881
    Long-Term Debt                                       248,000     249,000
    Deferred Income Taxes                                 69,427      62,752
    Other Liabilities                                     10,593       7,666
    Stockholders' Equity                                 160,704     147,856
       Total Liabilities and Stockholders' Equity       $561,341    $528,155


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

                                          Quarter Ended         Year Ended
                                           December 31,         December 31,
                                           1996    1995        1996      1995
    Cash Flows From Operating Activities
    Net Income (Loss)                    $7,565  $(3,980)   $20,824  $(86,618)
    Income Charges Not Requiring Cash    17,556    9,176     55,897   114,788
    Changes in Assets
     and Liabilities, Net                (5,956)   2,512    (13,795)    5,290
    Exploration Expense                   3,585    3,015     12,559     8,031
    Net Cash Provided by Operations      22,750   10,723     75,485    41,491

    Cash Flows From Investing Activities
    Capital Expenditures                (22,151) (13,862)   (60,719)  (24,672)
    Cost of Major Acquisition  (B)            0        0          0     8,402
    Proceeds from Sale of Assets            977      698      5,725    10,291
    Exploration Expense                  (3,585)  (3,015)   (12,559)   (8,031)
    Net Cash Used by Investing          (24,759) (16,179)   (67,553)  (14,010)

    Cash Flows From Financing Activities
    Sale of Common Stock                    247        9        620       348
    Increase (Decrease) in Debt           4,000    8,664     (1,000)  (19,363)
    Preferred Dividends                  (1,391)  (1,391)    (5,566)   (5,566)
    Common Dividends and Other, Net        (913)    (758)    (3,648)   (3,644)
    Net Cash Provided (Used) By Financing 1,943    6,524     (9,594)  (28,225)

    Net Increase (Decrease) in Cash and
     Cash Equivalents                      $(66)  $1,068    $(1,662)    $(744)

    Discretionary Cash Flow (C)         $27,315   $6,820    $83,714   $30,635

NOTE(B): COG received an $8.4 million net cash settlement in August 1995 recorded as a valuation adjustment to the WERCO acquisition.

(C): Net income (loss) plus non-cash charges and exploration less preferred dividends.
SOURCE Cabot Oil & Gas Corporation
CONTACT: Scott Schroeder, 281-589-4993 or Ray Seegmiller, 281-589-4696, both of Cabot Oil & Gas