News Release

<< Back
Cabot Oil & Gas Reports Second Quarter Financial Results and Double-Digit Pro-Forma Production Growth
Jul 25, 2007

HOUSTON, July 25 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced second quarter net income of $41.4 million, or $0.43 per share, along with cash flow from operations of $105.9 million and discretionary cash flow of $112.5 million. "These results compare to last year's record second quarter that included higher commodity prices and flush production from several new wells related to the south Louisiana and offshore assets that were sold in the third quarter of 2006," said Dan O. Dinges, Chairman, President and Chief Executive Officer. Net income in the 2006 second quarter was $46.9 million, or $0.48 per share, while cash flow from operations totaled $114.4 million and discretionary cash flow was $111.6 million.

Equivalent production levels in the second quarter grew 13 percent from last year's second quarter with all regions making advances, excluding the benefit of the south Louisiana and offshore production in 2006. "The Company produced 21.2 Bcfe in the 2007 second quarter on the strength of a very successful (98% success rate) organic drilling program," stated Dinges. "When including the sold production for 2006, the Company produced 23.5 Bcfe in last year's second quarter."

The Company's second quarter natural gas price realization benefited from its hedges, adding $0.66 per Mcf, resulting in a $7.24 per Mcf realization for the quarter. This price realization was 7 percent above the comparable 2006 level. Realized oil prices were $61.98 per barrel, 9 percent below the comparable period last year.

Expense levels were generally in line with guidance levels with a slight increase in operating cost and an increase in DD&A, which included a $2.4 million pre-tax increase in amortization of unproved property related to the Company's leasehold. "The DD&A guidance has been adjusted to reflect this increase going forward," commented Dinges. The balance sheet remains strong with an 18.5 percent net debt to total adjusted capitalization rate at quarter's end.

Year-to-date

In the six months ended June 30, 2007, Cabot reported net income of $89.9 million, or $0.93 per share compared to $100.0 million or $1.03 per share last year. The cash flow comparisons included cash flow from operations of $241.8 million in 2007 versus $269.4 million in 2006, while discretionary cash flow was $219.3 million in 2007, compared to $229.5 million in 2006.

Lower realized commodity prices and lower production volumes were the drivers of the results. "Clearly asset sales are going to affect comparisons," commented Dinges. "However, the equivalent pro-forma (or production from the ongoing reserve portfolio) volume comparisons highlight a 19 percent year-over-year increase and solidify our guidance of 12 to 18 percent for the year." The absolute comparison for year-to-date production is 42.2 Bcfe in 2007 versus 44.8 Bcfe in 2006.

Selected Items

Both the 2007 second quarter and the year-to-date figures were positively impacted by a non-cash gain on sale of assets. The non-cash gain on sale of assets, shown in detail in an attached table, had a $0.03 per share positive impact to net income for the second quarter and, combined with a first quarter gain on sale, an $0.08 per share pickup for the six-month year-to-date period. "These all related to small asset packages, which were yet to be closed from last year's south Louisiana and offshore sale," said Dinges.

Conference Call

Listen in live to Cabot Oil & Gas Corporation's second quarter financial and operating results discussion with financial analysts on Thursday, July 26, at 9:30 a.m. EDT (8:30 a.m. CDT) at http://www.cabotog.com. A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), pass code 4159414. The replay will be available through Saturday, July 28, 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 http://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 http://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          Six Months Ended
                              June 30,                 June 30,
                           2007      2006          2007      2006
     PRODUCED NATURAL GAS
      (Bcf) & OIL (MBbl)

     Natural Gas
       East                 6.2       5.9          12.0      11.7
       Gulf Coast           6.4       8.7          12.9      15.9
       West                 6.4       5.7          12.8      11.1
       Canada               0.9       0.6           2.0       1.1
       Total               19.9      20.9          39.7      39.8
        Less:  Production
         from properties
         sold in 2006 (1)    --      (3.3)           --      (6.3)
       Adjusted Total      19.9      17.6          39.7      33.5

     Crude/Condensate/Ngl

       East                   7         6            13        13
       Gulf Coast           161       371           309       704
       West                  43        57            90       113
       Canada                 4         3            10         7
       Total                215       437           422       837
        Less:  Production
         from properties
         sold in 2006 (1)    --      (242)           --      (492)
       Adjusted Total       215       195           422       345


     Equivalent
      Production (Bcfe)    21.2      23.5          42.2      44.8
        Less:  Production
         from properties
         sold in 2006 (1)    --      (4.8)           --      (9.3)
       Adjusted Equivalent
        Production
        (Bcfe)             21.2      18.7          42.2      35.5

     PRICES
     Average Produced Gas Sales Price ($/Mcf)

       East               $7.86     $7.58         $7.97     $8.44
       Gulf Coast         $8.27     $7.00         $8.01     $7.55
       West               $6.02     $5.73         $6.26     $6.38
       Canada             $4.25     $5.63         $5.97     $6.68
       Total (2)          $7.24     $6.77         $7.33     $7.46

     Crude/Condensate Price ($/Bbl)

       East              $59.41    $66.51        $56.60    $62.68
       Gulf Coast        $62.28    $68.58        $57.85    $65.17
       West              $62.76    $65.92        $58.33    $63.31
       Canada            $48.51    $84.24        $51.77    $65.15
       Total (2)         $61.98    $68.32        $57.76    $64.88

     WELLS DRILLED
       Gross                122       120           222       191
       Net                  111        99           203       156
       Gross Success Rate    98%       97%           98%       97%


     (1) These amounts relate to production associated with offshore and
         certain south Louisiana properties sold during the third quarter of
         2006.
     (2) These realized prices include the realized impact of derivative
         instrument settlements.

                                           Quarter Ended      Six Months Ended
                                             June 30,              June 30,
                                          2007       2006      2007     2006

    Realized Impacts to Gas Pricing      $0.66      $0.34     $0.77    $0.22
    Realized Impacts to Oil Pricing        $--        $--     $0.43      $--



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

                                 Quarter Ended      Six Months Ended
                                    June 30,             June 30,
                                 2007      2006      2007      2006
     Operating Revenues
       Natural Gas Production $144,128  $141,503  $290,878  $296,670
       Brokered Natural Gas     18,001    17,495    51,178    50,314
       Crude Oil and
        Condensate              13,263    29,668    24,205    53,848
       Other                       440     2,128     1,144     4,730
                               175,832   190,794   367,405   405,562
     Operating Expenses
       Brokered Natural
        Gas Cost                16,051    15,397    44,750    44,642
       Direct Operations -
        Field and Pipeline      19,004    17,955    36,135    35,585
       Exploration               6,825    14,797    12,477    26,411
       Depreciation,
        Depletion and
        Amortization            40,585    36,675    77,966    72,190
       General and
        Administrative
        (excluding Stock-Based
        Compensation)            8,904     9,363    20,549    18,729
       Stock-Based
        Compensation (1)         4,061     4,152    10,696     9,038
       Taxes Other Than
        Income                  14,579    14,578    27,744    30,073

                               110,009   112,917   230,317   236,668
     Gain on Sale of
      Assets (2)                 4,422         4    12,342       211
     Income from Operations     70,245    77,881   149,430   169,105
     Interest Expense and
      Other                      3,619     6,023     7,543    12,173
     Income Before Income
      Taxes                     66,626    71,858   141,887   156,932
     Income Tax Expense         25,250    24,994    51,964    56,903
     Net Income                $41,376   $46,864   $89,923  $100,029
     Net Earnings Per
      Share - Basic              $0.43     $0.48     $0.93     $1.03
     Weighted Average Common
      Shares Outstanding        96,929    97,482    96,813    97,421

     (1) Includes the impact of the Company's performance share and restricted
         stock amortization as well as expense related to stock options and
         stock appreciation rights.
     (2) Gain on Sale of Assets is primarily related to the sale in the third
         quarter of 2006 of offshore and certain south Louisiana properties.



               CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                (In thousands)

                                                   June 30,      December 31,
                                                     2007            2006
     Assets
     Current Assets                                $213,662        $315,682
     Property, Equipment and Other Assets         1,721,258       1,487,897
     Deferred Income Taxes                           34,341          30,912

        Total Assets                             $1,969,261      $1,834,491

     Liabilities and Stockholders' Equity
     Current Liabilities                           $236,111        $251,027
     Long-Term Debt, excluding Current Maturities   235,000         220,000
     Deferred Income Taxes                          394,569         347,430
     Other Liabilities                               84,718          70,836

     Stockholders' Equity                         1,018,863         945,198
        Total Liabilities and Stockholders'
         Equity                                  $1,969,261      $1,834,491



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

                                 Quarter Ended     Six Months Ended
                                    June 30,            June 30,
                                2007      2006      2007      2006
     Cash Flows From
      Operating Activities

     Net Income               $41,376   $46,864    89,923   $100,029
     Income Charges Not
      Requiring Cash           45,032    40,840    89,583     81,225
     Gain on Sale of Assets    (4,422)       (4)  (12,342)      (211)
     Deferred Income Tax
      Expense                  23,738     9,139    39,612     22,032
     Changes in Assets
      and Liabilities          (4,689)    4,660    28,600     44,771
     Stock-Based Compensation
      Tax Benefit              (1,911)   (1,945)   (6,046)    (4,897)
     Exploration Expense        6,825    14,797    12,477     26,411
     Net Cash Provided by
      Operations              105,949   114,351   241,807    269,360

     Cash Flows From
      Investing Activities

     Capital Expenditures    (158,183) (121,347) (271,931)  (224,463)
     Proceeds from Sale
      of Assets                    41        34     5,825        575
     Exploration Expense       (6,825)  (14,797)  (12,477)   (26,411)
     Net Cash Used in
      Investing              (164,967) (136,110) (278,583)  (250,299)

     Cash Flows From
      Financing Activities

     Sale of Common
      Stock Proceeds            1,163     1,502     2,307      2,564
     Net Increase in Debt      25,000    55,000    15,000     10,000
     Purchase of Treasury
      Stock                        --   (27,187)       --    (27,187)
     Stock-Based Compensation
      Tax Benefit               1,911     1,945     6,046      4,897
     Dividends Paid            (2,907)   (1,956)   (4,840)    (3,902)
     Net Cash Provided by /
      (Used In) Financing      25,167    29,304    18,513    (13,628)


     Net (Decrease) /
      Increase in Cash and
      Cash Equivalents       $(33,851)   $7,545   (18,263)    $5,433


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,
                            2007     2006      2007      2006
     As Reported -
      Net Income          $41,376  $46,864   $89,923   $100,029
     Reversal of Selected
      Items, Net of Tax:
          Gain on Sale of
           Assets          (2,750)      (2)   (7,677)      (131)
     Net Income Excluding
      Selected Items      $38,626  $46,862   $82,246    $99,898
     As Reported - Net
      Earnings Per Share    $0.43    $0.48     $0.93      $1.03
     Per Share Impact of
      Reversing Selected
      Items                 (0.03)      --     (0.08)    (0.01)
     Net Earnings Per
      Share Including
      Reversal of
      Selected Items        $0.40    $0.48     $0.85     $1.02
     Weighted Average
      Common Shares
      Outstanding          96,929   97,482    96,813    97,421



            Discretionary Cash Flow Calculation and Reconciliation
                                (In thousands)

                                   Quarter Ended   Six Months Ended
                                     June 30,            June 30,
                                  2007     2006     2007      2006
     Discretionary Cash Flow
     As Reported - Net Income   $41,376  $46,864  $89,923  $100,029
     Plus / (Less):
     Income Charges Not
      Requiring Cash             45,032   40,840   89,583    81,225
     Gain on Sale of Assets      (4,422)      (4) (12,342)     (211)
     Deferred Income Tax
      Expense                    23,738    9,139   39,612    22,032
     Exploration Expense          6,825   14,797   12,477    26,411
     Discretionary Cash Flow    112,549  111,636  219,253   229,486
     Changes in Assets
      and Liabilities            (4,689)   4,660   28,600    44,771
     Stock-Based Compensation
      Tax Benefit                (1,911)  (1,945)  (6,046)   (4,897)
     Net Cash Provided by
      Operations               $105,949 $114,351 $241,807  $269,360



                           Net Debt Reconciliation
                                (In thousands)
                                             June 30, December 31,
                                               2007      2006

     Current Portion of Long-Term Debt       $20,000    $20,000
     Long-Term Debt                          235,000    220,000
             Total Debt                     $255,000   $240,000

     Stockholders' Equity                  1,018,863    945,198
             Total Capitalization         $1,273,863 $1,185,198
     Total Debt                             $255,000   $240,000
     Less:  Cash and Cash Equivalents        (23,591)   (41,854)
             Net Debt                       $231,409   $198,146

     Net Debt                               $231,409   $198,146
     Stockholders' Equity                  1,018,863    945,198
             Total Adjusted
               Capitalization             $1,250,272 $1,143,344

     Total Debt to Total
      Capitalization Ratio                      20.0%      20.2%
     Less:  Impact of Cash and
      Cash Equivalents                           1.5%       2.9%
             Net Debt to Adjusted
              Capitalization Ratio              18.5%      17.3%

SOURCE Cabot Oil & Gas Corporation

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