HOUSTON, Feb. 14 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced the final results of its year-end reserve audit. Total proved reserves increased 13% to 1,154.1 Bcfe at December 31, 2001, compared to 1,018.7 Bcfe in the prior year. Driving this increase was 113.5 Bcfe from drilling additions and 146.8 Bcfe from acquisitions. The drilled additions and the acquired reserves were added at a cost of $1.68 per Mcfe. Revisions, caused primarily by lower pricing ($2.65 per Mcf on the last day of 2001 versus $9.63 per Mcf on the last day of 2000), removed 42.7 Bcfe from reserves and added $.33 to the overall finding cost level. The Company replaced 268% of production during the year.
"While Cabot maintains a conservative approach to adding reserves, a 72% reduction in gas price from the previous year is obviously going to have an impact on the economic life of certain wells," said Ray Seegmiller, Chairman and Chief Executive Officer. "This is very evident in the Company's discounted future net cash flow (pre-tax PV10) that went from $3.5 billion at the end of 2000 to $951 million in 2001."
The 2001 capital program included $144.3 million (versus $75.2 million in
2000) for drilling and dry hole, along with $32.5 million (versus
$16.2 million in 2000) for lease acquisition and seismic that will benefit
future years. "With the decline in natural gas prices over the latter part of
the year, we were able to add significantly to our seismic database and
acreage position at very attractive rates," said Seegmiller. "Today we have
access to nearly 10,000 square miles of 3-D seismic data versus only about
2,000 square miles one year ago. These incremental investments added $.17 to
our drilling addition finding costs."
Listed below are reserve-related disclosures that will be part of the 2001 Form 10-K.
Supplemental Oil & Gas Information Year Ended December 31, 2001 2001 Proved Reserve Reconciliation Proved Reserves Natural Gas (Mmcf) Liquids (MBbls) Total (Mmcfe) Beginning of Year 959,222 9,914 1,018,703 Revisions (44,266) 254 (42,737) Additions 99,911 2,257 113,456 Production (69,162) (1,996) (81,139) Purchases 91,290 9,255 146,819 Sales (991) --- (993) End of Year 1,036,004 19,684 1,154,109 Developed (% of reserves) 77.7% 77.9% 77.7% Estimated Proved Reserves by Area at December 31, 2001 Natural Gas (Mmcf) Liquids (A) (MBbl) Developed Undeveloped Total Developed Undeveloped Total Gulf Coast 148,692 53,734 202,426 12,567 3,744 16,311 West 333,265 74,953 408,218 2,435 612 3,047 East 322,689 102,671 425,360 326 --- 326 Total 804,646 231,358 1,036,004 15,328 4,356 19,684 Total (B) (Mmcfe) Developed Undeveloped Total Gulf Coast 224,096 76,198 300,294 West 347,872 78,628 426,500 East 324,644 102,671 427,315 Total 896,612 257,497 1,154,109 (A) Liquids include crude oil, condensate and natural gas liquids. (B) Natural gas equivalents are determined using the ratio of 6 Mcf of natural gas to 1 Bbl of crude oil, condensate or natural gas liquids. Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities - 2001* ($000) Property Acquisitions Costs - Proved $245,079 Property Acquisition Costs - Unproved 21,116 Exploration and Extension Well Costs 91,261 Development Costs 90,246 Total Costs $447,702 * Note: These costs include administrative exploration costs of $9.8 million that the Company does not consider in its finding cost calculation. Exploration Well Results
After a thorough evaluation of the Impac well in south Louisiana and the first Trenton well in Appalachia, both were determined to be non-commercial and will be abandoned by Cabot Oil & Gas. "The Impac well did find tight sandstone that was gas charged in the objective section. Our structural expectation and timing history held up, but unfortunately we did not find a producible reservoir," commented Seegmiller. "From this and other recent information gathered in the area, we have learned that deep sands are present in this sub-basin and the additional knowledge gained will help us identify and evaluate other deep prospects in the adjacent areas." Seegmiller added, "The results of the Trenton dry hole lead to a re-evaluation of our geological model and drilling procedures. The well encountered a substantial gas flow from the Trenton-Black River while drilling, but quickly depleted. Subsequent testing showed we had limited reservoir extent." While disappointing, Cabot still considers this a viable play and plans to drill two Trenton exploration wells this year.
As discussed in the January 22, 2002, press release, accounting guidelines require that costs incurred as of year-end on any exploration well determined to be dry before filing the Company's Form 10-K must be included in the results of operations for the reported period.
Consequently, for these dry holes Cabot will record the previously announced $7.7 million (pre-tax) of exploration expense which was incurred on the wells through December 31, 2001. The following tables highlight the specific impact.
Year Ended December 31, 2001 As Reported As Revised Net Income (000) $51,847 $47,084 Per Share $1.71 $1.56 Discretionary Cash Flow (000) $230,507 $230,507 Per Share $ 7.61 $ 7.61 Debt (000) $393,000 $393,000 Equity (000) $351,315 $346,552 Debt to Total Capital 52.8% 53.1% Deferred Income Taxes (000) $203,808 $200,859 2001 Wells Drilled Gross 208 Net 153.6 Gross Success Rate 87%
In addition, the Company will record in 2002 additional pre-tax expenditures of approximately $2.5 million, which were incurred during the first quarter, associated with drilling and abandoning these wells.
"While we are disappointed with the results of these two wells, we remain committed to our exploration program," said Seegmiller. "In the last three years, exploration has added 111 Bcfe to our reserve base and currently accounts for 28% of our daily production."
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.
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CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, +1-281-589-4993