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Cabot Oil & Gas Reports Records: Quarterly Production and Second Quarter Financials
Jul 24, 2006

HOUSTON, July 24 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) announced today record second quarter financial results and record quarterly equivalent production. "The 23.5 Bcfe of quarterly production is ten percent higher than last year's comparable period and the highest ever recorded by Cabot during a quarter, highlighting the tangible results of our strategic direction," stated Dan O. Dinges, Chairman, President and Chief Executive Officer. "The majority of the increment came from our low-risk resource plays throughout the Company."

This strong level for both production and high commodity prices resulted in net income of $46.9 million, or $0.96 per share, compared to $35.4 million, or $0.72 per share, for the same period last year. Cash flow from operations totaled $114.4 million versus $80.1 million in the same period of 2005, while discretionary cash flow reached $111.6 million versus $79.6 million for the comparable quarter last year.

Cabot's 2006 natural gas price realizations outperformed 2005 due to an advantageous hedge position. The Company's 2006 second quarter realized gas price of $6.77 includes a $0.34 per Mcf pick-up associated with the hedges versus $6.02 for the same period in 2005, which included a $0.61 loss associated with hedging activities. The realized oil price for the second quarter was $68.32, compared to $43.76 in last year's comparable period. Hedges have not had an impact on 2006 realized oil prices since index prices have been within the range of our collars, while in 2005 the quarterly oil price was reduced by $6.98 per barrel. Cabot has entered into additional 2007 hedges and is approximately one-third hedged for 2007, with a weighted average natural gas floor of $8.83 per Mcf and ceiling of $12.16 per Mcf (including basis differentials), and an oil hedge collar of $60.00 to $80.00 per Bbl. (See Investor Relations tab on the website for hedge details.)

"We are extremely pleased with the operational progress in all regions, with each showing production growth, and with the improved financial results," said Dinges. "The goal we set for 2006, to continue to position the Company toward emphasizing large scale development of reserves through drilling and a focused exploration opportunity, has proven to be a successful strategy for Cabot."

Expenses trended higher in all categories between comparable second quarter periods. This increase was due to the continued inflation in the general industry operations and new accounting rules for stock compensation. This was partially offset by a lower corporate tax rate due to the recognition of a change in Texas state income taxes.

Year-to-Date

On a year-to-date basis, Cabot reported net income of $100.0 million, or $2.05 per share, cash flow from operations of $269.4 million and discretionary cash flow of $229.5 million. All of these compare favorably with last year's reported levels of $56.2 million, or $1.15 per share, for net income, $188.1 million for cash flow from operations and $162.3 million in discretionary cash flow.

The six-month reporting period benefited from higher realized commodity prices along with a six percent increase in production over the first six months of 2005.

Debt increased in the second quarter primarily due to the stock buyback program which netted 666,200 shares for approximately $27.2 million, or a weighted average price of $40.81 per share during the quarter. This leaves a remaining authorization of 819,950 shares. "With the stock market valuation significantly disconnected from recent M&A activity metrics, we felt our stock was a bargain," commented Dinges. "Additionally, we were able to purchase reserves at a level competitive with our all-in finding cost for the last two years."

Conference Call

Listen in live to Cabot Oil & Gas Corporation's 2006 second quarter financial and operating results discussion with financial analysts on Monday, July 24, at 4:00pm EDT (3:00pm CDT) 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 2397294. A replay will be available through Monday, July 31, 2006. 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 an expansion effort in Canada. For additional information, visit the Company's Internet homepage at www.cabotog.com.

Forward-Looking Statements

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    Six Months Ended
                                                June 30,          June 30,
                                             2006    2005      2006    2005
        PRODUCED NATURAL GAS
         (Bcf) & OIL (MBbl)
        Natural Gas
          Gulf Coast                          8.7     7.3       15.9    14.7
          West                                5.7     5.7       11.1    11.4
          East                                5.9     5.1       11.7    10.2
          Canada                              0.6     0.3        1.1     0.5
          Total                              20.9    18.4       39.8    36.8

        Crude/Condensate/Ngl
          Gulf Coast                          371     421        704     827
          West                                 57      45        113      82
          East                                  6       8         13      13
          Canada                                3       5          7       9
          Total                               437     479        837     931

        Equivalent Production (Bcfe)         23.5    21.3       44.8    42.4

        PRICES
        Average Produced Gas Sales
        Price ($/Mcf)
          Gulf Coast                        $7.00   $6.14      $7.55   $6.09
          West                              $5.73   $5.47      $6.38   $5.10
          East                              $7.58   $6.54      $8.44   $6.44
          Canada                            $5.63   $4.53      $6.68   $4.95
          Total (1)                         $6.77   $6.02      $7.46   $5.86

        Crude/Condensate Price ($/Bbl)
          Gulf Coast                       $68.58  $42.86     $65.17  $42.19
          West                             $65.92  $52.27     $63.31  $50.61
          East                             $66.51  $50.32     $62.68  $49.37
          Canada                           $84.24  $35.43     $65.15  $36.83
          Total(1)                         $68.32  $43.76     $64.88  $42.96

        WELLS DRILLED
          Gross                               120      97        191     141
          Net                                  99      77        156     105
          Gross Success Rate                   97%     98%        97%     94%

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



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

                                         Quarter Ended      Six Months Ended
                                            June 30,            June 30,
                                         2006      2005      2006      2005
       Operating Revenues
         Natural Gas Production (1)    $141,503  $111,817  $296,670  $216,089
         Brokered Natural Gas            17,495    15,520    50,314    42,012
         Crude Oil and Condensate (1)    29,668    23,936    53,848    35,914
         Other                            2,128       611     4,730     1,943
                                        190,794   151,884   405,562   295,958
       Operating Expenses
         Brokered Natural Gas Cost       15,397    13,701    44,642    36,999
         Direct Operations - Field and
          Pipeline                       17,955    14,307    35,585    28,925
         Exploration                     14,797    11,362    26,411    30,731
         Depreciation, Depletion and
          Amortization                   36,675    29,755    72,190    59,822
         General and Administrative
          (excluding Stock-Based
             Compensation)                9,363     7,168    18,729    15,093
         Stock-Based Compensation (2)     4,152     1,532     8,635     2,567
         Taxes Other Than Income         14,578    12,396    30,073    22,114
                                        112,917    90,221   236,265   196,251
       Gain on Sale of Assets                 4        59       211        59
       Income from Operations            77,881    61,722   169,508    99,766
       Interest Expense and Other         6,023     5,134    12,173    10,122
       Income Before Income Taxes and
        Cumulative Effect of
        Accounting Change                71,858    56,588   157,335    89,644
       Income Tax Expense                24,994    21,166    56,903    33,460
       Income Before Cumulative Effect
        of Accounting Change             46,864    35,422   100,432    56,184
       Cumulative Effect of Accounting
        Change, Net of Tax (3)               --        --      (403)       --
       Net Income                       $46,864   $35,422  $100,029   $56,184
       Net Earnings Per Share - Basic     $0.96     $0.72     $2.05     $1.15
       Weighted Average Common Shares
        Outstanding                      48,741    48,917    48,711    48,821

    (1)  See the "Impact of Mark-to-Market Accounting Requirements" table for
         additional information.
    (2)  Includes the impact of the Company's performance share and restricted
         stock amortization.  In addition, the 2006 figure includes expense
         related to stock options and stock appreciation rights following the
         adoption of SFAS 123(R).
    (3)  Cumulative effect of accounting change relates to the adoption of
         SFAS No. 123(R), "Share Based Payment (revised 2004)."



                 CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                   (In thousands)

                                             June 30,        December 31,
                                               2006             2005
       Assets
       Current Assets                        $187,591         $230,312
       Property, Equipment and
        Other Assets                        1,413,841        1,245,471
       Deferred Income Taxes                   26,573           19,587
          Total Assets                     $1,628,005       $1,495,370

       Liabilities and
        Stockholders' Equity
       Current Liabilities                   $189,943         $218,584
       Long-Term Debt                         330,000          320,000
       Deferred Income Taxes                  320,245          289,381
       Other Liabilities                       75,733           67,194
       Stockholders' Equity                   712,084          600,211
          Total Liabilities and
           Stockholders' Equity            $1,628,005       $1,495,370



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

                                     Quarter Ended        Six Months Ended
                                        June 30,              June 30,
                                    2006       2005       2006       2005
       Cash Flows From Operating
        Activities
       Net Income                 $46,864     $35,422    $100,029   $56,184
       Cumulative Effect of
        Accounting Change              --          --         403        --
       Unrealized (Gain)/Loss
        on Derivatives                 --      (3,831)         --     3,681
       Income Charges Not
        Requiring Cash             40,840      30,679      80,822    62,669
       Gain on Sale of Assets          (4)        (59)       (211)      (59)
       Deferred Income Tax
        Expense                     9,139       6,056      22,032     9,078
       Changes in Assets and
        Liabilities                 4,660         430      44,771    25,792
       Stock-Based Compensation
        Tax Benefit                (1,945)         --      (4,897)       --
       Exploration Expense         14,797      11,362      26,411    30,731
       Net Cash Provided by
        Operations                114,351      80,059     269,360   188,076

       Cash Flows From Investing
        Activities
       Capital Expenditures      (121,347)    (74,778)   (224,463) (115,848)
       Proceeds from Sale of
        Assets                         34         122         575       710
       Exploration Expense        (14,797)    (11,362)    (26,411)  (30,731)
       Net Cash Used in
        Investing                (136,110)    (86,018)   (250,299) (145,869)

       Cash Flows From Financing
        Activities
       Sale of Common Stock
        Proceeds                    1,502         849       2,564     3,580
       Net Increase in Debt        55,000          --      10,000        --
       Purchase of Treasury
        Stock                     (27,187)         --     (27,187)     (571)
       Stock-Based Compensation
        Tax Benefit                 1,945          --       4,897        --
       Dividends Paid              (1,956)     (1,957)     (3,902)   (3,296)
       Net Cash Provided by/
        (Used in) Financing        29,304      (1,108)    (13,628)     (287)

       Net Increase/(Decrease)
        in Cash and Cash
        Equivalents                $7,545     $(7,067)     $5,433   $41,920



            Selected Item Review and Reconciliation of Net Income
                            and Earnings Per Share
                      (In thousands, except per share amounts)

                                          Quarter Ended     Six Months Ended
                                             June 30,           June 30,
                                         2006      2005      2006      2005

         As Reported - Net Income       $46,864   $35,422  $100,029   $56,184
         Reversal of Selected Items,
          Net of Tax:
           Gain on Sale of Assets            (2)      (36)     (131)      (36)
           Unrealized (Gain) / Loss
            on Derivatives                   --    (2,370)       --     2,277
           Cumulative Effect of
            Accounting Change                --        --       403        --
         Net Income Including
          Reversal of Selected Items    $46,862   $33,016  $100,301   $58,425
         As Reported - Net Earnings
          Per Share                       $0.96     $0.72     $2.05     $1.15
         Per Share Impact of
          Reversing Selected Items           --     (0.05)     0.01      0.05
         Net Earnings Per Share
          Including Reversal
          of Selected Items               $0.96     $0.67     $2.06     $1.20
         Weighted Average Common
          Shares Outstanding             48,741    48,917    48,711    48,821



            Discretionary Cash Flow Calculation and Reconciliation
                                (In thousands)
                                          Quarter Ended     Six Months Ended
                                             June 30,           June 30,
                                         2006      2005      2006      2005
         Discretionary Cash Flow
         As Reported - Net Income       $46,864   $35,422  $100,029   $56,184
         Plus:
         Cumulative Effect of
          Accounting Change                  --        --       403        --
         Unrealized (Gain)/Loss on
          Derivatives                        --    (3,831)       --     3,681
         Income Charges Not
          Requiring Cash                 40,840    30,679    80,822    62,669
         Gain on Sale of Assets              (4)      (59)     (211)      (59)
         Deferred Income Tax Expense      9,139     6,056    22,032     9,078
         Exploration Expense             14,797    11,362    26,411    30,731
         Discretionary Cash Flow        111,636    79,629   229,486   162,284
         Plus:  Changes in Assets
          and Liabilities                 4,660       430    44,771    25,792
         Less:  Stock-Based
          Compensation Tax Benefit       (1,945)       --    (4,897)       --
         Net Cash Provided by
          Operations                   $114,351   $80,059  $269,360  $188,076


                           Net Debt Reconciliation
                                (In thousands)

                                             June 30,       December 31,
                                              2006             2005

         Current Portion of
          Long-Term Debt                     $20,000          $20,000
         Long-Term Debt                      330,000          320,000
              Total Debt                    $350,000         $340,000
         Stockholders' Equity                712,084          600,211
              Total Capitalization        $1,062,084         $940,211

         Total Debt                         $350,000         $340,000
         Less:  Cash and Cash
          Equivalents                        (16,059)         (10,626)
              Net Debt                      $333,941         $329,374

         Net Debt                           $333,941         $329,374
         Stockholders' Equity                712,084          600,211
              Total Adjusted
               Capitalization             $1,046,025         $929,585

        Total Debt to Total
         Capitalization Ratio                   33.0%            36.2%
         Less:  Impact of Cash and
          Cash Equivalents                       1.1%             0.8%
              Net Debt to Adjusted
               Capitalization Ratio             31.9%            35.4%



               Impact of Mark-to-Market Accounting Requirements
                                (In thousands)

                                     Quarter Ended          Six Months Ended
                                       June 30,                 June 30,
                                    2006     2005           2006      2005
      Unrealized Gain/(Loss) on
       Derivatives (1)
         Natural Gas                 $--       $782          $--        $222
         Crude Oil                    --      3,049           --      (3,903)

      Incentive Stock
       Compensation Expense (2)   (4,152)    (1,532)      (9,284)     (2,567)
      Mark-to-Market Impact,
       Before Income Tax         $(4,152)    $2,299      $(9,284)    $(6,248)
      Mark-to-Market Impact,
       Income Tax                  1,578       (877)       3,528       2,383
      Mark-to-Market Impact on
       Net Income                $(2,574)    $1,422      $(5,756)    $(3,865)

    (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 or subtracting the gain from the respective
         Operating Revenues line item and dividing by reported production.

    (2)  See Company's Form 10-Q and Form 10-K for descriptions of incentive
         stock compensation awards.

SOURCE Cabot Oil & Gas Corporation
07/24/2006

CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, +1-281-589-4993

9213 07/24/2006 14:32 EDT http://www.prnewswire.com