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Cabot Oil & Gas Corporation Announces 2011 Results, Record Production of 187.5 Bcfe
Feb 20, 2012

HOUSTON, Feb. 20, 2012 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced its 2011 financial results, including net income of $122.4 million, or $0.59 per share, taking into account the recent 2-for-1 stock split.  Cash flow from operations for the full year 2011 was $501.8 million and discretionary cash flow was $549.2 million.  These results compare to 2010 net income of $103.4 million, or $0.50 per share, cash flow from operations of $484.9 million and discretionary cash flow of $471.9 million.  The full year selected items, detailed in an attached table, increase net income to $139.2 million, or $0.67 per share, compared to $102.4 million, or $0.49 per share, as adjusted for 2010.

"In 2011, we continued our focused effort primarily in two basins with outstanding results that were not only recognized in our operating performance, but also in our total shareholder return," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "We exceeded 3.0 Tcfe of total proved reserves, grew production 44 percent and reduced overall leverage at the same time."

For 2011, equivalent production reached a record 187.5 Bcfe, establishing a new benchmark for both absolute production and for year-over-year growth of 43.5 percent.  The price received for natural gas was $4.46 per Mcf in 2011 versus $5.69 per Mcf in 2010, while oil was $90.49 per barrel in 2011 versus $97.91 per barrel in 2010.  Gains associated with the hedge portfolio once again added to price realizations and improved overall revenues in 2011 by $86.3 million.  "In spite of our hedge book, we still experienced just over a 20 percent decline in gas prices and about an eight percent decline in realized oil prices year-over-year.  Fortunately, our significant production growth more than offset the softness in commodity pricing to generate increased net income," commented Dinges.  "Also contributing, our total operating expense per unit fell 27 percent year-over-year.  We also reduced leverage year-over-year, even with a significant investment program, lowering our net adjusted capitalization ratio to 30.4 percent."

Fourth Quarter

The reported 2011 fourth quarter figures include net income of $26.4 million, or $0.13 per share, $126.5 million for cash flow from operations and $121.0 million for discretionary cash flow.  These compare to 2010 fourth quarter net income of $49.1 million, or $0.24 per share, cash flow from operations of $117.4 million and discretionary cash flow of $89.8 million. Removing the selected items, which are highlighted in the following table, net income would be $40.3 million, or $0.20 per share, for the 2011 fourth quarter versus $20.0 million, or $0.10 per share in the comparable 2010 period.  Higher production, partially offset by lower realized commodity prices, and flat expenses drove the doubling of net income, excluding selected items.

Conference Call

Listen in live to Cabot Oil & Gas Corporation's 2011 year-end and fourth quarter financial and operating results discussion with financial analysts on Tuesday, February 21, 2012 at 9:30 a.m. EST (8:30 a.m. CST) at www.cabotog.com.  A teleconference replay will also be available at (877) 344-7529, (U.S.) or (412) 317-0088 (International), pass code 10009373.  The replay will be available through Thursday, February 23, 2012.  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


Twelve Months Ended


December 31,


December 31,


2011


2010


2011


2010

PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)








Natural Gas











Appalachia


44.3


23.1


138.0


69.8

Other


7.3


13.2


40.8


55.7

 Total


51.6


36.3


178.8


125.5












Crude/Condensate/NGL


523


198


1,443


859












Equivalent Production (Bcfe)


54.8


37.5


187.5


130.6












PRICES (1)











Average Produced Gas Sales Price ($/Mcf)









Appalachia

$

3.89

$

4.39

$

4.32

$

4.87

Other

$

4.79

$

6.54

$

4.93

$

6.72

 Total


$

4.02

$

5.17

$

4.46

$

5.69












Average Crude/Condensate Price ($/Bbl)

$

91.90

$

99.53

$

90.49

$

97.91












WELLS DRILLED










 Gross


76


30


161


113

 Net


29


20


96


87

 Gross Success Rate


100%


100%


99%


98%












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











Quarter Ended


Twelve Months Ended





December 31,


December 31,





2011


2010


2011


2010

    Realized Impacts to Gas Pricing


$ 0.71


$   1.25


$ 0.47


$   1.23

    Realized Impacts to Oil Pricing


$ 1.67


$ 18.66


$ 1.01


$ 22.31



CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)







Quarter Ended


Twelve Months Ended





December 31,


December 31,





2011


2010


2011


2010

Operating Revenues










 Natural Gas


$ 207,541


$ 187,222


$ 796,517


$ 713,646

 Brokered Natural Gas


12,243


15,385


51,190


65,281

 Crude Oil and Condensate


46,180


18,664


125,972


79,091

 Other


2,061


1,185


6,185


5,086





268,025


222,456


979,864


863,104

Operating Expenses










 Brokered Natural Gas Cost


10,472


13,124


43,834


56,466

 Direct Operations


30,531


25,846


107,409


99,642

 Transportation and Gathering


24,612


5,581


73,322


19,069

 Taxes Other Than Income


6,506


6,759


27,576


37,894

 Exploration


5,357


14,401


36,447


42,725

 Depreciation, Depletion and Amortization


92,499


91,504


343,141


327,083

 Impairment of Oil & Gas Properties


-


5,114


-


40,903

 General and Administrative (excluding Stock-Based Compensation)


16,232


24,018


65,138


64,767

 Stock-Based Compensation (1)


10,181


5,484


39,529


14,410





196,390


191,831


736,396


702,959

Gain (Loss) on Sale of Assets (2)


26,974


100,883


63,382


106,294

Income from Operations


98,609


131,508


306,850


266,439

Interest Expense and Other


17,735


20,502


71,663


67,941

Income Before Income Taxes


80,874


111,006


235,187


198,498

Income Tax Expense (3)


54,511


61,897


112,779


95,112

Net Income


$   26,363


$   49,109


$ 122,408


$ 103,386

Earnings Per Share - Basic (4)


$       0.13


$       0.24


$       0.59


$       0.50

Weighted Average Common Shares Outstanding (4)


208,601


207,958


208,498


207,823



(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 Plan.

(2)

Gain on Sale of Assets in 2011 includes $34.2 million gain from the sale of certain Haynesville and Bossier Shale oil and gas properties and an aggregate gain of $29.2 million from the sale of various other properties during the year. Gain on Sale of Assets in 2010 includes $40.7 million from the sale of the Company's investment in Tourmaline, $49.3 million from the sale of the Company's Pennsylvania gathering infrastructure and an aggregate gain of $16.3 million from the sale of various other properties during the year.

(3)

Income tax expense for the quarter and year ended December 31, 2011 and 2010 includes an unfavorable charge to income tax expense to reflect an increase in state tax rates used in establishing deferred income taxes mainly due to a shift in the Company's state apportionment factors to higher rate states, primarily in Pennsylvania, as a result of the Company's continued focus on development of the Marcellus shale properties.

(4)

All Earnings Per Share and Weighted Average Common Share figures have been retroactively adjusted for the 2-for-1 split of the Company's common stock effective January 25, 2012.




CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)





 (In thousands)

































December 31,


December 31,
















2011


2010






Assets


















Current Assets

$      345,800


$      203,008






Properties and Equipment, Net

3,934,584


3,762,760






Other Assets

51,109


39,263






  Total Assets

$   4,331,493


$   4,005,031
























Liabilities and Stockholders' Equity












Current Liabilities

$      343,344


$      303,835






Long-Term Debt, excluding Current Maturities

950,000


975,000






Deferred Income Taxes

802,592


714,953






Other Liabilities

130,789


138,543






Stockholders' Equity

2,104,768


1,872,700






  Total Liabilities and Stockholders' Equity

$   4,331,493


$   4,005,031










































CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)





(In thousands)



















































Quarter Ended


Twelve Months Ended












December 31,


December 31,












2011


2010


2011


2010


Cash Flows From Operating Activities












Net Income

$        26,363


$        49,109


$ 122,408


$ 103,386


Impairment of Oil & Gas Properties

-


5,114


-


40,903


Deferred Income Tax Expense

17,363


31,344


74,744


61,809


Loss (Gain) on Sale of Assets

(26,974)


(100,883)


(63,382)


(106,294)


Exploration Expense

126


1,184


13,977


11,657


Unrealized (Gain) Loss on Derivatives

15


388


965


226


Income Charges Not Requiring Cash

104,071


103,495


400,462


360,258


Changes in Assets and Liabilities

5,509


27,668


(47,335)


12,966


Net Cash Provided by Operations

126,473


117,419


501,839


484,911




















Cash Flows From Investing Activities












Capital Expenditures

(222,290)


(199,128)


(891,277)


(857,251)


Proceeds from Sale of Assets

321,548


222,477


403,657


243,510


Net Cash Used in Investing

99,258


23,349


(487,620)


(613,741)




















Cash Flows From Financing Activities












Net Increase (Decrease) in Debt

(255,000)


(120,000)


(25,000)


170,000


Capitalized Debt Issuance Costs

-


(125)


(1,025)


(13,821)


Dividends Paid

(3,129)


(3,119)


(12,508)


(12,467)


Other

(619)


837


(1,724)


909


Net Cash Provided by Financing

(258,748)


(122,407)


(40,257)


144,621




















Net Increase / (Decrease) in Cash and Cash Equivalents

$      (33,017)


$        18,361


$ (26,038)


$   15,791



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

(In thousands, except per share amounts)



Quarter Ended


Twelve Months Ended


December 31,


December 31,


2011


2010


2011


2010


  As Reported - Net Income

$        26,363


$        49,109


$ 122,408


$ 103,386


  Reversal of Selected Items, Net of Tax:










Impairment of Oil & Gas Properties

-


3,171


-


25,360



(Gain) Loss on Sale of Assets (1)

(16,217)


(62,547)


(38,790)


(65,902)



Stock-Based Compensation Expense

5,996


3,400


24,192


8,934



Pension Expense(2)

2,161


4,245


8,869


8,083



PaDEP Settlement and Related Legal Fees (3)

-


3,409


-


3,409



Unrealized Loss (Gain) on Derivatives (4)

2


241


591


140



Income Tax Expense (5)

21,961


18,973


21,961


18,973


  Net Income Excluding Selected Items .

$        40,266


$        20,001


$ 139,231


$ 102,383


  As Reported - Earnings Per Share (6) 

$            0.13


$            0.24


$       0.59


$       0.50


  Per Share Impact of Reversing Selected Items(6)

0.07


(0.14)


0.08


(0.01)


  Earnings Per Share Including Reversal










of Selected Items (6)

$            0.20


$            0.10


$       0.67


$       0.49


  Weighted Average Common Shares Outstanding (6)

208,601


207,958


208,498


207,823



(1)

Gain on Sale of Assets in 2011 includes $34.2 million gain from the sale of certain Haynesville and Bossier Shale oil and gas properties and an aggregate gain of $29.2 million from the sale of various other properties during the year. Gain on Sale of Assets in 2010 includes $40.7 million from the sale of the Company's investment in Tourmaline, $49.3 million from the sale of the Company's Pennsylvania gathering infrastructure and an aggregate gain of $16.3 million from the sale of various other properties during the year.

(2)

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. The quarter and twelve months ended December 31, 2011 and 2010 amounts represent 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 Consolidated Statement of Operations

(3)

Represents costs associated with the December 2010 Consent Order and Settlement Agreement and with the PaDEP and associated legal fees.

(4)

This unrealized loss (gain) is included in Natural Gas revenues in the Consolidated Statement of Operations and represents the mark to market change related to derivatives not designated as hedging instruments.

(5)

Represents an unfavorable charge to income tax expense to reflect an increase in state tax rates used in establishing deferred income taxes mainly due to a shift in the Company's state apportionment factors to higher rate states, primarily in Pennsylvania, as a result of the Company's continued focus on development of its Marcellus shale properties.

(6)

All Earnings Per Share and Weighted Average Common Share figures have been retroactively adjusted for the 2-for-1 split of the Company's common stock effective January 25, 2012.



Discretionary Cash Flow Calculation and Reconciliation

(In thousands)


Quarter Ended


Twelve Months Ended


December 31,


December 31,


2011


2010


2011


2010

  Discretionary Cash Flow















  As Reported - Net Income

$        26,363


$        49,109


$ 122,408


$ 103,386

  Plus / (Less):
















  Impairment of Oil & Gas Properties

-


5,114


-


40,903

  Deferred Income Tax Expense

17,363


31,344


74,744


61,809

  Loss (Gain) on Sale of Assets

(26,974)


(100,883)


(63,382)


(106,294)

  Exploration Expense

126


1,184


13,977


11,657

  Unrealized Loss (Gain) on Derivatives

15


388


965


226

  Income Charges Not Requiring Cash

104,071


103,495


400,462


360,258

  Discretionary Cash Flow

120,964


89,751


549,174


471,945

  Changes in Assets and Liabilities

5,509


27,668


(47,335)


12,966

  Net Cash Provided by Operations

$      126,473


$      117,419


$ 501,839


$ 484,911



































Net Debt Reconciliation





(In thousands)














December 31,


December 31,






2011


2010






















  Long-Term Debt

$      950,000


$      975,000





  Stockholders' Equity

2,104,768


1,872,700





       Total Capitalization

$   3,054,768


$   2,847,700






















  Total Debt

$      950,000


$      975,000





  Less:  Cash and Cash Equivalents

(29,911)


(55,949)





       Net Debt

$      920,089


$      919,051






















  Net Debt

$      920,089


$      919,051





  Stockholders' Equity

2,104,768


1,872,700





       Total Adjusted Capitalization

$   3,024,857


$   2,791,751






















 Total Debt to Total Capitalization Ratio

31.1%


34.2%





  Less:  Impact of Cash and Cash Equivalents

0.7%


1.3%





       Net Debt to Adjusted Capitalization Ratio

30.4%


32.9%







SOURCE Cabot Oil & Gas Corporation