News Release

<< Back
Cabot Oil & Gas Reports Record Year-End Results
Feb 15, 2007

HOUSTON, Feb 15, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced the results for an excellent 2006 on nearly all of the reported metrics.

    *  The Company reported net income of $321.2 million, including a gain
       from the sale of assets totaling $145.1 million, after-tax.

    *  Year-end reserves totaled 1,416 Bcfe, the highest ever reported, on the
       strength of an all-in reserve replacement ratio of 273 percent.

    *  Absolute production growth was 4.6 percent with total production being
       88.2 Bcfe.

    *  Total drilling finding cost was $1.97 per Mcfe.

    *  Year-end total debt to capitalization ratio reached an all-time low of
       20 percent (with net debt to capitalization being 17.3 percent).

"When I reflect on the year, we made progress in many different areas that culminated with a very successful year," commented Dan O. Dinges, Chairman, President and Chief Executive Officer. "And now with the lower risk portfolio we have, I believe we are positioned for multiple years of successful drilling with growth off of the new base in production and reserves at a very competitive finding cost."

Full year results

Cabot Oil & Gas Corporation reported record net income of $321.2 million, or $6.64 per share, which exceeded the prior year's net income of $148.4 million or $3.04 per share. In addition to the $145.1 million earnings contribution from the sale of certain south Louisiana, offshore and other properties, the year-over-year increase in net income is the result of increased production, along with higher realized prices for both natural gas and crude oil.

Cash flow from operations and discretionary cash flow for the year were $357.1 million and $356.9 million, respectively, both slightly below the figures reported in the prior year. The comparable cash flow figures in 2005 were $364.6 million for cash flow from operations and $374.4 million for discretionary cash flow.

"Our strategy to migrate our portfolio toward a more predictable, lower risk model culminated with the asset sale," said Dinges. "The early success of the transition is evident in Cabot's growing production profile and the high drilling success rate," said Dinges. "We grew total company production (4.6 percent) for the first time since 2002, even after removing a full quarter of production due to the sale. The retained properties in the portfolio experienced production growth of about 17 percent on a comparable basis year-over-year."

For the full year, natural gas price realizations were $7.13 per Mcf, compared to $6.74 per Mcf in 2005, although there was a significant decline in price indexes between 2006 and 2005. A hedge position covering a portion of production with an $8.25 per Mcf floor, led to the better realizations in 2006, versus a reduction from index prices that occurred in 2005. Oil realizations improved due to the expiration of lower price hedges in 2005. The Company realized $65.03 per barrel versus $44.19 per barrel.

"Expenses overall trended higher due to the inflationary pressures in the sector and competition for personnel," stated Dinges. "Operating expenses were up about 10 percent year-over-year with increases occurring in DD&A, G&A, direct operations and stock compensation, offset by lower exploration expense due to the strategic drilling change."

Fourth Quarter

The Company reported net income of $32.1 million, or $0.67 per share, for the fourth quarter compared to last year's record of $58.5 million, or $1.20 per share. The lower results were due to a 19 percent decline in realized natural gas prices, partially offset by increased oil prices, and a decline in the Gulf Coast region production due to the asset sale that removed over 36 Mmcfe per day (3.3 Bcfe), beginning October 1, 2006.

Selected Items (see attached reconciliation for selected items)

The selected items that impacted the quarter and full year earnings figures, included a gain on sale of assets and an impairment of an oil and gas property in the 2006 full year period. Removing the effect of these items, the net income comparison for 2006 versus 2005 would have been $178.5 million, or $3.69 per share, versus $144.3 million, or $2.95 per share. The quarter comparison for net income would have been $33.3 million, or $0.69 per share, and $53.1 million, or $1.09 per share.

Balance Sheet

Cabot used the proceeds from the sale of the properties to repay outstanding debt on its revolver, repurchase shares, fund its capital program and pay the related tax liability. At year-end, debt totaled $240 million, down from last year's $340 million. Additionally, Cabot repurchased nearly 1.1 million shares at a weighted average price of $42.71 per share during 2006. "When we have seen opportunity in our stock, we have made it a practice to repurchase it in the open market," said Dinges. "The share repurchase in 2006 had the effect of buying reserves in the ground at about $1.80 per Mcfe, which is very competitive with our reported finding cost."

Reserves

Once again, the Company has organically replaced reserves. Cabot's reserves increased six percent to 1,416.1 Bcfe in 2006, up 12 percent, after removing the divestiture of 68 Bcfe in the Gulf Coast from the beginning balance. Finding costs were $1.97 for drilling, $2.09 for drilling and revisions and $2.10 for drilling, revisions and purchases. "Embedded in these numbers are 18.4 Bcfe of negative revisions due to a short-term price drop at year-end, which added $0.15 to the finding cost amount," commented Dinges.

The Company's 273 percent all-in reserve replacement comes primarily from drilling additions of 253 Bcfe that came from a 96 percent successful drilling program. "These favorable results are evidence of a successfully balanced portfolio achieved by divesting non-strategic properties and replacing them with lower cost, repeatable drilling opportunities," stated Dinges. "The PUD percentage rose two percent due to our expanding drilling program."

Conference Call

Listen in live to Cabot Oil & Gas Corporation's 2006 year-end and fourth quarter financial and operating results discussion with financial analysts on Friday, February 16, at 9:30 a.m. EST (8:30 a.m. CST) 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 6650466. A replay will be available through Monday, February 19, 2007. 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 substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid-Continent; the East and 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  Twelve Months Ended
                                             December 31,     December 31,
                                             2006    2005    2006      2005
        PRODUCED NATURAL GAS (Bcf) &
         OIL (MBbl)
        Natural Gas
          East                                 6.0     5.7    23.5    21.4
          Gulf Coast (excluding sold
           properties)                         6.1     4.2    21.0    15.1
          West                                 6.3     5.9    23.6    23.2
          Canada                               0.8     0.4     2.6     1.2
          Subtotal                            19.2    16.2    70.7    60.9
          Attributable to Asset Sale            --     2.9     9.0    13.0
          Total                               19.2    19.1    79.7    73.9

        Crude/Condensate/Ngl
          East                                   5       7      24      27
          Gulf Coast (excluding sold
           properties)                         139      69     457     309
          West                                  47      45     214     172
          Canada                                 5       4      13      18
          Subtotal                             196     125     708     526
          Attributable to Asset Sale            --     270     707   1,221
          Total                                196     395   1,415   1,747


        Equivalent Production (Bcfe)          20.4    21.5    88.2    84.4

        PRICES
        Average Produced Gas Sales
         Price($/Mcf)
          East                               $7.69  $11.06   $7.99   $8.02
          Gulf Coast                         $7.24   $6.73   $7.37   $6.38
          West                               $5.68   $7.82   $6.05   $6.00
          Canada                             $6.37   $8.89   $6.18   $6.79
          Total(1)                           $6.83   $8.42   $7.13   $6.74

        Crude/Condensate Price ($/Bbl)
          East                              $56.61  $56.36  $62.03  $53.84
          Gulf Coast                        $56.25  $43.13  $65.44  $42.81
          West                              $57.73  $58.70  $63.36  $55.37
          Canada                            $49.82  $47.08  $60.55  $43.39
          Total(1)                          $56.48  $45.09  $65.03  $44.19

        WELLS DRILLED
          Gross                                 86      87     387     316
          Net                                   59      70     307     247
          Gross Success Rate                    92%     94%     96%     95%

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



             CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                      (In thousands, except per share amounts)

                                         Quarter Ended    Twelve Months Ended
                                          December 31,        December 31,
                                         2006      2005      2006      2005
       Operating Revenues
         Natural Gas Production        $131,166  $161,611  $568,097  $499,177
         Brokered Natural Gas            26,262    37,837    93,651    98,605
         Crude Oil and Condensate        11,097    25,098    91,380    82,348
         Other                            3,157       536     8,860     2,667
                                        171,682   225,082   761,988   682,797
       Operating Expenses
         Brokered Natural Gas Cost       23,451    33,634    83,375    87,183
         Direct Operations - Field and
          Pipeline                       19,312    18,579    74,790    61,750
         Exploration                      9,425    14,444    49,397    61,840
         Depreciation, Depletion and
          Amortization                   31,988    30,932   140,092   121,424
         Impairment of Oil & Gas
          Properties                      3,886        --     3,886        --
         General and Administrative
          (excluding Stock-Based
          Compensation)                  10,715     7,518    37,010    28,028
         Stock-Based Compensation (1)     8,971     2,793    21,158     9,622
         Taxes Other Than Income         10,912    17,240    55,351    54,293
                                        118,660   125,140   465,059   424,140
       Gain on Sale of Assets (2)         2,073        --   232,017        74
       Income from Operations            55,095    99,942   528,946   258,731
       Interest (Income) / Expense and
        Other                              (710)    7,036    18,441    22,497
       Income Before Income Taxes        55,805    92,906   510,505   236,234
       Income Tax Expense                23,679    34,401   189,330    87,789
       Net Income                       $32,126   $58,505  $321,175  $148,445
       Net Earnings Per Share - Basic     $0.67     $1.20     $6.64     $3.04
       Weighted Average Common Shares
        Outstanding                      47,966    48,831    48,402    48,856

    (1)  Includes the impact of the Company's performance share and restricted
         stock amortization.  In addition, the 2006 figures
         include expense related to stock options and stock appreciation
         rights following the adoption of SFAS 123R.
    (2)  Gain on Sale of Assets is primarily due to the sale of offshore and
         certain south Louisiana properties.



                  CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                    (In thousands)

                                               December 31,       December 31,
                                                   2006               2005
       Assets
       Current Assets                             $315,682           $230,312
       Property, Equipment and Other Assets      1,487,897          1,245,471
       Deferred Income Taxes                        30,912             19,587
          Total Assets                          $1,834,491         $1,495,370

       Liabilities and Stockholders' Equity
       Current Liabilities                        $251,027           $218,584
       Long-Term Debt, excluding Current
        Maturities                                 220,000            320,000
       Deferred Income Taxes                       347,430            289,381
       Other Liabilities                            70,836             67,194
       Stockholders' Equity                        945,198            600,211
          Total Liabilities and
           Stockholders' Equity                 $1,834,491         $1,495,370



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

                                         Quarter Ended     Twelve Months Ended
                                          December 31,         December 31,
                                         2006      2005      2006      2005
        Cash Flows From Operating
         Activities
        Net Income                      $32,126   $58,505  $321,175  $148,445
        Unrealized Gain on
         Derivatives                         --    (8,677)       --    (6,626)
        Impairment of Oil & Gas
         Properties                       3,886        --     3,886        --
        Income Charges Not Requiring
         Cash                            40,997    33,581   161,363   131,227
        Gain on Sale of Assets           (2,073)       --  (232,017)      (74)
        Deferred Income Tax Expense      21,568    21,403    53,082    39,628
        Changes in Assets and
         Liabilities                   (101,146)   (1,807)    9,703    (9,880)
        Stock-Based Compensation Tax
         Benefit                         (3,729)       --    (9,485)       --
        Exploration Expense               9,425    14,444    49,397    61,840
        Net Cash Provided by
         Operations                       1,054   117,449   357,104   364,560

        Cash Flows From Investing
         Activities
        Capital Expenditures           (122,810) (109,802) (467,430) (351,306)
        Proceeds from Sale of Assets      6,487        --   329,474       996
        Exploration Expense              (9,425)  (14,444)  (49,397)  (61,840)
        Net Cash Used in Investing     (125,748) (124,246) (187,353) (412,150)

        Cash Flows From Financing
         Activities
        Sale of Common Stock Proceeds     2,615       498     6,235     4,586
        Net (Decrease) / Increase in
         Debt                          (160,000)   60,000  (100,000)   70,000
        Decrease in Book Overdrafts          --   (25,691)       --        --
        Purchase of Treasury Stock           --   (18,612)  (46,492)  (19,183)
        Stock-Based Compensation Tax
         Benefit                          3,729        --     9,485        --
        Dividends Paid                   (1,919)   (1,959)   (7,751)   (7,213)
        Net Cash (Used In) / Provided
         by Financing                  (155,575)   14,236  (138,523)   48,190

        Net (Decrease) / Increase in
         Cash and
          Cash Equivalents            $(280,269)   $7,439   $31,228      $600



       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,
                                          2006     2005      2006      2005
         As Reported - Net Income        $32,126  $58,505  $321,175  $148,445
         Reversal of Selected Items, Net
          of Tax:
          Impairment of Oil & Gas
           Properties                      2,429       --     2,429        --
              Gain on Sale of Assets      (1,296)      --  (145,102)      (46)
          Unrealized Gain on Derivatives      --   (5,374)       --    (4,108)
         Net Income Excluding Selected
          Items                          $33,259  $53,131  $178,502  $144,291
         As Reported - Net Earnings Per
          Share                            $0.67    $1.20     $6.64     $3.04
         Per Share Impact of Reversing
          Selected Items                    0.02    (0.11)    (2.95)    (0.09)
         Net Earnings Per Share
          Including Reversal
           of Selected Items               $0.69    $1.09     $3.69     $2.95
         Weighted Average Common Shares
          Outstanding                     47,966   48,831    48,402    48,856



               Discretionary Cash Flow Calculation and Reconciliation
                                   (In thousands)

                                         Quarter Ended    Twelve Months Ended
                                          December 31,        December 31,
                                        2006      2005       2006      2005
         Discretionary Cash Flow
         As Reported - Net Income       $32,126   $58,505  $321,175  $148,445
         Plus / (Less):
         Unrealized Gain on Derivatives      --    (8,677)       --    (6,626)
         Impairment of Oil & Gas
          Properties                      3,886        --     3,886        --
         Income Charges Not Requiring
          Cash                           40,997    33,581   161,363   131,227
         Gain on Sale of Assets          (2,073)       --  (232,017)      (74)
         Deferred Income Tax Expense     21,568    21,403    53,082    39,628
         Exploration Expense              9,425    14,444    49,397    61,840
         Discretionary Cash Flow        105,929   119,256   356,886   374,440
         Changes in Assets and
          Liabilities                  (101,146)   (1,807)    9,703    (9,880)
         Stock-Based Compensation Tax
          Benefit                        (3,729)       --    (9,485)       --
         Net Cash Provided by
          Operations                     $1,054  $117,449  $357,104  $364,560



                              Net Debt Reconciliation
                                   (In thousands)

                                                December 31,      December 31,
                                                      2006              2005

         Current Portion of Long-Term Debt           $20,000          $20,000
         Long-Term Debt                              220,000          320,000
              Total Debt                            $240,000         $340,000
         Stockholders' Equity                        945,198          600,211
              Total Capitalization                $1,185,198         $940,211

         Total Debt                                 $240,000         $340,000
         Less:  Cash and Cash Equivalents            (41,854)         (10,626)
              Net Debt                              $198,146         $329,374

         Net Debt                                   $198,146         $329,374
         Stockholders' Equity                        945,198          600,211
              Total Adjusted
               Capitalization                     $1,143,344         $929,585

        Total Debt to Total Capitalization Ratio        20.2%            36.2%
        Less:  Impact of Cash and Cash
          Equivalents                                    2.9%             0.8%
              Net Debt to Adjusted
               Capitalization Ratio                     17.3%            35.4%

SOURCE Cabot Oil & Gas Corporation

Scott Schroeder, +1-281-589-4993, for Cabot Oil & Gas Corporation

http://www.cabotog.com