HOUSTON, April 28, 2005 /PRNewswire-FirstCall via COMTEX/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced first quarter results, including net income of $20.8 million, or $.43 per share, cash flow from operations of $108.0 million and discretionary cash flow of $82.7 million. Each of these compares favorably to the prior year's first quarter when the Company recorded net income totaling $19.0 million, or $.39 per share, cash flow from operations of $97.6 million and discretionary cash flow of $72.3 million. The per share results reflect the three-for-two split of the Company's common stock on March 31, 2005.
"Due to the significant rise in the forward curve for oil prices at March 31, 2005, the current quarter net income figure was reduced for this future impact (that includes the expectation of continued high oil prices)," stated Dan O. Dinges, Chairman, President and Chief Executive Officer. "The mark-to-market requirement for derivatives had a $4.6 million, or approximately $.09 per share, after-tax impact on the results," (see attached table on mark-to-market matters).
Continued high commodity prices combined with production increases year-over-year drove Company realizations. For natural gas prices Cabot realized $5.71 per mcf, up 10 percent over last year's comparable period. Crude oil prices during the same time period rose 36 percent to an overall realization of $42.11 per barrel. Also contributing to the improved results were increased production levels versus last year's first quarter. Total equivalent production increased 1 percent driven by a 0.7 Bcf increase in natural gas production, primarily from advances in the East region. "In addition to the year-over-year production gains, the daily volume improved over those realized in the fourth quarter of 2004," said Dinges.
Overall operating expenses were up 5 percent between reporting periods, due primarily to increases in DD&A, exploration, operations and G&A expenses. "Employee-related cost was the main factor in the increases for operations and G&A expense as cost associated with retirement benefits continue to escalate," commented Dinges.
Dinges added, "Overall I am pleased with our progress that includes a diversified drilling program across North America and a balance sheet that affords us a high degree of flexibility. Our transition towards longer-lived, more predictable opportunities is well underway. Combine this with $59.6 million of cash on the balance sheet that results in a net debt to total capitalization of 31.2 percent, and you have a platform for further value creation."
Listen in live to Cabot Oil & Gas Corporation's 2005 first quarter financial and operating results discussion with financial analysts on Friday, April 29, at 9:30am EDT (8:30am CDT) at www.cabotog.com. A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), passcode 5486532. A replay will be available from Friday, April 29 through Friday, May 6, 2005. The latest financial guidance, including the Company's hedge positions, along with a replay of the webcast, 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 substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid-Continent; the East and an expansion effort in Canada. 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.
OPERATING DATA Quarter Ended March 31, 2005 2004 PRODUCED NATURAL GAS (Bcf) & OIL (MBbl) Natural Gas Gulf Coast 7.4 7.7 West 5.7 5.6 East 5.1 4.4 Canada 0.2 -- Total 18.4 17.7 Crude/Condensate/Ngl Gulf Coast 406 494 West 37 41 East 5 7 Canada 4 -- Total 452 542 Equivalent Production (Bcfe) 21.1 20.9 PRICES Average Produced Gas Sales Price ($/Mcf) Gulf Coast $6.03 $5.14 West $4.73 $4.83 East $6.35 $5.80 Canada $5.57 $ -- Total $5.71 $5.21 Crude/Condensate Price ($/Bbl) Gulf Coast $41.50 $30.70 West $48.57 $34.34 East $48.06 $31.86 Canada $38.64 $ -- Total $42.11 $30.99 WELLS DRILLED Gross 44 38 Net 28 29 Gross Success Rate 86% 100% CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Quarter Ended March 31, 2005 2004 Operating Revenues Natural Gas Production (1) $104,272 $90,379 Brokered Natural Gas 26,492 31,559 Crude Oil and Condensate (1) 11,978 12,767 Other 1,332 1,899 144,074 136,604 Operating Expenses Brokered Natural Gas Cost 23,298 28,721 Direct Operations - Field and Pipeline 14,618 12,078 Exploration 19,369 16,144 Depreciation, Depletion and Amortization 30,067 26,812 General and Administrative (excluding Stock-based Compensation) 7,925 6,245 Stock-based Compensation (2) 1,035 471 Taxes Other Than Income 9,718 10,102 106,030 100,573 Gain on Sale of Assets -- 59 Income from Operations 38,044 36,090 Interest Expense and Other 4,988 5,377 Income Before Income Taxes 33,056 30,713 Income Tax Expense 12,294 11,702 Net Income $20,762 $19,011 Net Earnings Per Share - Basic (3) $0.43 $0.39 Average Common Shares Outstanding (3) 48,724 48,597 (1) See the "Impact of Mark-to-Market Accounting Requirements" table for additional information. (2) Includes the impact of the Company's performance share mark-to-market requirement and restricted stock amortization. (3) Reflects the 3-for-2 split of the Company's Common Stock on March 31, 2005. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) March 31, December 31, 2005 2004 Assets Current Assets $218,040 $194,679 Property, Equipment and Other Assets 1,018,887 1,001,422 Deferred Income Taxes 15,163 14,855 Total Assets $1,252,090 $1,210,956 Liabilities and Stockholders' Equity Current Liabilities $222,313 $196,889 Long-Term Debt 250,000 250,000 Deferred Income Taxes 255,005 247,376 Other Liabilities 61,728 61,029 Stockholders' Equity 463,044 455,662 Total Liabilities and Stockholders' Equity $1,252,090 $1,210,956 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In thousands) Quarter Ended March 31, 2005 2004 Cash Flows From Operating Activities Net Income $20,762 $19,011 Change in Derivative Fair Value 7,512 5,619 Income Charges Not Requiring Cash 31,990 27,076 Gain on Sale of Assets -- (59) Deferred Income Tax Expense 3,022 4,549 Changes in Assets and Liabilities 25,362 25,230 Exploration Expense 19,369 16,144 Net Cash Provided by Operations 108,017 97,570 Cash Flows From Investing Activities Capital Expenditures (41,070) (35,711) Proceeds from Sale of Assets 588 -- Exploration Expense (19,369) (16,144) Net Cash Used by Investing (59,851) (51,855) Cash Flows From Financing Activities Sale of Common Stock Proceeds 2,731 6,656 Dividends Paid (1,339) (1,296) Net Cash Provided by Financing 1,392 5,360 Net Increase in Cash and Cash Equivalents $49,558 $51,075
Selected Item Review and Reconciliation of Net Income and Earnings Per Share
(In thousands, except per share amounts) Quarter Ended March 31, 2005 2004 As Reported - Net Income $20,762 $19,011 Reversal of Selected Items, Net of Tax: Gain on Sale of Assets -- (37) Change in Derivative Fair Value 4,647 3,478 Net Income Including Reversal of Selected Items $25,409 $22,452 As Reported - Net Earnings Per Share $0.43 $0.39 Per Share Impact of Reversing Selected Items 0.09 0.07 Net Earnings Per Share Including Reversal of Selected Items $0.52 $0.46 Average Common Shares Outstanding 48,724 48,597 Discretionary Cash Flow Calculation and Reconciliation (In thousands) Quarter Ended March 31, 2005 2004 Discretionary Cash Flow As Reported - Net Income $20,762 $19,011 Plus: Change in Derivative Fair Value 7,512 5,619 Income Charges Not Requiring Cash 31,990 27,076 Gain on Sale of Assets -- (59) Deferred Income Tax Expense 3,022 4,549 Exploration Expense 19,369 16,144 Discretionary Cash Flow 82,655 72,340 Plus: Changes in Assets and Liabilities 25,362 25,230 Net Cash Provided by Operations $108,017 $97,570 Net Debt Reconciliation (In thousands) March 31, December 31, 2005 2004 Current Portion of Long-Term Debt $20,000 $20,000 Long-Term Debt 250,000 250,000 Total Debt $270,000 $270,000 Stockholders' Equity 463,044 455,662 Total Capital $733,044 $725,662 Total Debt $270,000 $270,000 Less: Cash and Cash Equivalents (59,584) (10,026) Net Debt $210,416 $259,974 Net Debt $210,416 $259,974 Stockholders' Equity 463,044 455,662 Total Adjusted Capital $673,460 $715,636 Total Debt to Total Capital Ratio 36.8% 37.2% Less: Impact of Cash and Cash Equivalents 5.6% 0.9% Net Debt to Capitalization Ratio 31.2% 36.3% Impact of Mark-to-Market Accounting Requirements (In thousands) Quarter Ended March 31, 2005 2004 Unrealized Loss on Derivatives (1) Natural Gas $(560) $(1,724) Crude Oil (6,952) (3,895) Incentive Stock Compensation Expense (2) Performance Shares (412) -- Mark-to-Market Impact, Before Income Tax $(7,924) $(5,619) Mark-to-Market Impact, Income Tax 3,022 2,141 Mark-to-Market Impact on Net Income $(4,902) $(3,478) (1) These amounts represent the unrealized loss associated with the mark-to-market valuation of open positions which do not qualify for hedge accounting or are ineffective. These amounts are reflected in the respective line items of Operating Revenues. Therefore, the computation of our reported realized commodity prices can be obtained by adding the loss from the respective Operating Revenues line item and dividing by reported production. (2) This amount relates to the mark-to-market valuation of the Company's performance share incentive stock compensation awards that is reflected in general and administrative expense. At March 31, 2005 the Company recognized stock compensation expense based on Cabot's ranking against a predetermined peer group based on total shareholder return. Cabot must calculate its liability at the balance sheet date under the assumption that its relative ranking remains constant throughout the measurement period (January 1, 2004 - December 31, 2006), creating an assumed ultimate liability which is then amortized over the measurement period (percent payout multiplied by shares multiplied by stock price at reported balance sheet date multiplied by the pro-rata time expired in the measurement period). Expense recognition will fluctuate between reporting periods due to the valuation of the performance shares at the reported balance sheet date.
SOURCE Cabot Oil & Gas Corporation
Scott Schroeder of Cabot Oil & Gas Corporation