Cabot Posts Second Quarter 2014 Operating & Financial Results

It’s that time of year again – the posting of Cabot’s second quarter 2014 operating and financial results. The press release reports on the impressive numbers coming from Cabot’s operations around the country. We’ve posted the full release here to give our readers an idea of what is going in other areas besides just northeastern Pennsylvania in the Marcellus.

For example, Cabot’s Chairman, President and Chief Executive Officer Dan O. Dinges spoke on the impressive results coming from the Eagle Ford:

“We continue to be pleased with the performance improvements in our Eagle Ford Program, with this most recent group of wells tracking above our 500,000 Boe type curve”, explained Dinges.

Read the full press release below for more information on our operations, or click here to read it on the corporate website.

HOUSTON, July 24, 2014 /PRNewswire/ — Cabot Oil & Gas Corporation (NYSE: COG) today reported its financial and operating results for the second quarter of 2014. Highlights for the quarter include:

  • Production of 127.6 billion cubic feet equivalent (Bcfe), an increase of 34 percent over last year’s comparable quarter
  • Liquids production (crude oil/condensate/natural gas liquids) of 961,000 barrels, an increase of 26 percent over last year’s comparable quarter as reported and an increase of 64 percent pro forma for last year’s Mid-Continent and West Texas asset sales
  • Crude oil and condensate production of 869,000 barrels, an increase of 25 percent over last year’s comparable quarter as reported and an increase of 65 percent pro forma for last year’s Mid-Continent and West Texas asset sales
  • Net income excluding selected items of $115.3 million, an increase of 21 percent over last year’s comparable quarter
  • Discretionary cash flow of $332.3 million, an increase of 12 percent over last year’s comparable quarter
  • Total unit costs (including financing) of $2.59 per thousand cubic feet equivalent (Mcfe), a 16 percent improvement over last year’s comparable quarter

Second Quarter 2014 Financial Results

Equivalent production in the second quarter of 2014 was 127.6 Bcfe, consisting of 121.8 billion cubic feet (Bcf) of natural gas and 961,000 barrels of liquids. These figures represent increases of 34 percent, 34 percent, and 26 percent, respectively. “Our total liquids volumes increased 40 percent sequentially—with crude oil and condensate volumes increasing 44 percent—due to strong well performance from new Eagle Ford wells that were placed on production during the quarter,” commented Dan O. Dinges, Chairman, President, and Chief Executive Officer.

Cash flow from operations in the second quarter of 2014 was $329.6 million, compared to $277.3 million in the second quarter of 2013. Discretionary cash flow in the second quarter of 2014 was $332.3 million, compared to $297.1 million in the second quarter of 2013. Net income in the second quarter of 2014 was $118.4 million, or $0.28 per share, compared to $89.1 million, or $0.21 per share, in the second quarter of 2013. Excluding the effect of selected items (detailed in the table below), net income was $115.3 million, or $0.28 per share, in the second quarter of 2014, compared to $95.0 million, or $0.22 per share, in the second quarter of 2013.

Natural gas price realizations, including the effect of hedges, were $3.47 per thousand cubic feet (Mcf) in the second quarter of 2014, down 15 percent compared to the second quarter of 2013. Excluding the impact of hedges, natural gas price realizations for the quarter were $3.78 per Mcf, representing an $0.89 discount to NYMEX settlement prices. Oil price realizations, including the effect of hedges, were $98.84 per barrel (Bbl), down 3 percent compared to the second quarter of 2013. “Despite lower realized commodity prices, Cabot generated free cash flow during the quarter while growing equivalent production by 34 percent year-over-year,” stated Dinges.

Total per unit costs (including financing) decreased to $2.59 per Mcfe in the second quarter of 2014, down 16 percent from $3.10 per Mcfe in the second quarter of 2013. All operating expense categories decreased on a per unit basis relative to last year’s comparable quarter except for transportation and gathering expense, which increased as a result of slightly higher transportation rates and the commencement of new transportation agreements.

Year-To-Date 2014 Financial Results

Production during the six-month period ended June 30, 2014 was 247.5 Bcfe, consisting of 237.6 Bcf of natural gas and 1.6 million barrels of liquids. These figures represent increases of 34 percent, 35 percent, and 13 percent, respectively, compared to the six-month period ended June 30, 2013.

For the six-month period ended June 30, 2014, cash flow from operations was $584.9 million, compared to $490.0 million for the six-month period ended June 30, 2013. Discretionary cash flow was $651.8 million for the six-month period ended June 30, 2014, compared to $531.5 million for the six-month period ended June 30, 2013.

For the six-month period ended June 30, 2014, net income was $225.5 million, or $0.54 per share, compared to $131.9 million, or $0.32 per share, for the six-month period ended June 30, 2013.  Excluding the effect of selected items (detailed in the table below), net income was $225.0 million, or $0.54 per share, compared to $149.1 million, or $0.36 per share, for the six-month period ended June 30, 2013.

Hedging Update

Effective April 1, 2014, the Company elected to discontinue hedge accounting for its commodity derivatives on a prospective basis. Subsequent to April 1, 2014, the Company’s derivative instruments are accounted for on a mark-to-market basis with changes in fair value recognized in earnings; however, these mark-to-market adjustments will have no cash flow impact.  The Company recognized an unrealized mark-to-market gain of $12.9 million in the second quarter of 2014.

Operational HighlightsMarcellus Shale

During the second quarter of 2014, the Company averaged 1,258 million cubic feet (Mmcf) per day of net Marcellus production, an increase of 41 percent over the prior year’s comparable quarter.

“Our operations in the Marcellus continue to meet expectations across our acreage position,” said Dinges.  “We recently placed on production three pads that encompass the northern and eastern most reaches of our acreage with great success.”  Specifically, in aggregate these wells were completed with 191 frac stages and had an initial production (IP) rate of 238 Mmcf per day.  Dinges added, “While all of these wells are early in the production cycle, we expect estimated ultimate recoveries (EURs) per foot to be comparable to the results we disclosed at year-end.”

Eagle Ford Shale

Cabot’s net production in the Eagle Ford during the second quarter of 2014 was 10,308 barrels of oil equivalent (Boe) per day, an increase of 76 percent over the prior year’s comparable quarter. This included 9,784 barrels of liquids per day, an increase of 83 percent over the prior year’s comparable quarter.

During the second quarter of 2014, Cabot placed 10 wells on production that have produced for at least 30 days.  These wells achieved an average 30-day production rate of 840 Boe per day per well with a 92 percent oil cut from an average lateral length of 6,729 feet. “We continue to be pleased with the performance improvements in our Eagle Ford Program, with this most recent group of wells tracking above our 500,000 Boe type curve”, explained Dinges.

Financial Position and Liquidity

As of June 30, 2014, the Company’s net debt to adjusted capitalization ratio was 32.3 percent, compared to 33.8 percent at December 31, 2013 (detailed in the table below). The Company’s total debt was $1,193 million, of which $506 million is outstanding under the Company’s revolving credit facility. Total lender commitments under the revolving credit facility are $1.4 billion, with $893 million of available credit under the facility at June 30, 2014.

Conference Call

A conference call is scheduled for Thursday, July 24, 2014, at 9:30 a.m. Eastern Time to discuss second quarter 2014 financial and operating results. To access the live audio webcast, please visit the Investor Relations section of the Company’s website at www.cabotog.com. A replay of the call will also be available on the Company’s website. The latest financial guidance, including the Company’s hedge positions, is also available in the Investor Relations section of the Company’s website.

Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading independent natural gas producer with its entire resource base located in the continental United States. For additional information, visit the Company’s 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.

FOR MORE INFORMATION CONTACTMatt Kerin (281) 589-4642

 

            OPERATING DATA               
Quarter Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
PRODUCED NATURAL GAS (Bcf) & LIQUIDS (Mbbl)
Natural Gas
  Appalachia 118.4 85.4 231.2 165.2
  Other 3.4 5.3 6.4 10.6
   Total 121.8 90.7 237.6 175.8
Crude/Condensate/NGL 961 763 1,647 1,454
Equivalent Production (Bcfe) 127.6 95.2 247.5 184.5
PRICES(1)
Average Produced Gas Sales Price ($/Mcf)
  Appalachia $ 3.44 $ 4.09 $ 3.57 $ 3.81
  Other $ 4.65 $ 3.63 $ 4.80 $ 3.05
   Total $ 3.47 $ 4.06 $ 3.60 $ 3.77
Average Crude/Condensate Price ($/Bbl) $ 98.84 $ 101.39 $ 98.39 $ 102.65
WELLS DRILLED 
  Gross 49 51 76 83
  Net 35 44 62 70
  Gross success rate 100% 96% 100% 96%
(1)  These realized prices include the realized impact of derivative instrument settlements.
Quarter Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
     Realized Impacts to Gas Pricing $ (0.30) $       – $ (0.45) $  0.07
     Realized Impacts to Oil Pricing $ (1.25) $  3.02 $ (0.89) $  3.12

 

 

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Operating Revenues
  Natural gas $ 437,761 $ 368,391 $ 870,571 $ 662,184
  Crude oil and condensate 86,341 70,226 145,485 135,881
  Gain (loss) on derivative instruments (2,329) (2,329)
  Brokered natural gas 8,140 8,244 21,293 19,137
  Other 3,274 2,819 7,970 5,763
533,187 449,680 1,042,990 822,965
Operating Expenses
  Direct operations 35,605 36,978 71,439 68,475
  Transportation and gathering 83,976 52,648 161,741 98,869
  Brokered natural gas 7,031 6,704 18,891 15,093
  Taxes other than income 12,816 11,364 25,860 23,051
  Exploration 4,676 4,529 11,150 8,553
  Depreciation, depletion and amortization 157,563 151,389 304,981 300,042
  General and administrative (excluding stock-based compensation) 13,853 11,565 32,318 28,600
  Stock-based compensation(1) 6,274 10,043 9,445 28,712
321,794 285,220 635,825 571,395
Earnings (loss) on equity method investments 756 290 756 336
Gain (loss) on sale of assets (1,496) 276 (2,781) 180
Income from Operations 210,653 165,026 405,140 252,086
Interest expense 16,334 16,991 32,891 33,292
Income before income taxes 194,319 148,035 372,249 218,794
Income tax expense 75,899 58,921 146,798 86,856
Net Income $  118,420 $    89,114 $  225,451 $  131,938
Earnings per share – Basic $       0.28 $       0.21 $       0.54 $       0.32
Weighted average common shares outstanding 417,291 420,698 417,097 420,500

 

 

(1) Includes the impact of the Company’s performance share awards, restricted stock, stock appreciation rights and expense associated with the Supplemental Employee Incentive Plan.

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
  (In thousands)
June 30, December 31,
2014 2013
Assets
Current assets $    306,096 $       378,899
Properties and equipment, net 4,825,524 4,546,227
Other assets 77,302 55,954
   Total assets $ 5,208,922 $    4,981,080
Liabilities and Stockholders’ Equity
Current liabilities $    362,147 $       407,905
Long-term debt 1,193,000 1,147,000
Deferred income taxes 1,101,326 1,067,912
Other liabilities 150,510 153,661
Stockholders’ equity 2,401,939 2,204,602
   Total liabilities and stockholders’ equity $ 5,208,922 $    4,981,080

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
  (In thousands)
Quarter Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Cash Flows From Operating Activities
Net income $    118,420 $         89,114 $ 225,451 $ 131,938
Deferred income tax expense 60,850 46,088 118,453 69,662
(Gain) loss on sale of assets 1,496 (276) 2,781 (180)
Exploration expense 114 140 2,154 806
Unrealized (gain) loss on derivative instruments (12,933) (12,933)
Income charges not requiring cash 164,349 162,034 315,922 329,239
Changes in assets and liabilities (2,726) (19,818) (66,880) (41,498)
Net cash provided by operations 329,570 277,282 584,948 489,967
Cash Flows From Investing Activities
Capital expenditures (278,912) (263,887) (617,613) (524,056)
Proceeds from sale of assets (863) 420 (755) 906
Restricted cash 19,712 28,094
Investment in equity method investments (16,293) (3,000) (22,230) (4,250)
Net cash used in investing (276,356) (266,467) (612,504) (527,400)
Cash Flows From Financing Activities
Net increase (decrease) in debt (29,000) 15,000 46,000 55,000
Dividends paid (8,347) (4,206) (16,679) (8,407)
Stock-based compensation tax benefit 4,311 5,210 20,354 7,348
Other 1 1 91 33
Net cash provided by (used in) financing (33,035) 16,005 49,766 53,974
Net increase (decrease) in cash and cash equivalents $      20,179 $         26,820 $   22,210 $   16,541

 

 

 

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,
2014 2013 2014 2013
As reported – net income $        118,420 $          89,114 $  225,451 $  131,938
Reversal of selected items, net of tax:
(Gain) loss on sale of assets 901 (166) 1,674 (109)
Unrealized (gain) loss on derivative instruments (1) (7,786) (7,786)
Stock-based compensation expense 3,777 6,046 5,686 17,314
Net income excluding selected items $         115,312 $           94,994 $   225,025 $   149,143
As reported – earnings per share $              0.28 $              0.21 $        0.54 $        0.32
  Per share impact of reversing selected items 0.01 0.04
Earnings per share including reversal of selected items $              0.28 $              0.22 $        0.54 $        0.36
Weighted average common shares outstanding 417,291 420,698 417,097 420,500
(1) Effective April 1, 2014, the Company elected to discontinue hedge accounting for its commodity derivatives on a prospective basis. The unrealized mark-to-market changes of our commodity derivative instruments are recorded in gain (loss) on derivative instruments in the Condensed Consolidated Statement of Operations

 

 

Discretionary Cash Flow Calculation and Reconciliation
(In thousands)
Quarter Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
   Discretionary Cash Flow
   As reported – net income $        118,420 $          89,114 $  225,451 $  131,938
   Plus (less):
   Deferred income tax expense 60,850 46,088 118,453 69,662
   (Gain) loss on sale of assets 1,496 (276) 2,781 (180)
   Exploration expense 114 140 2,154 806
   Unrealized (gain) loss on derivative instruments (12,933) (12,933)
   Income charges not requiring cash 164,349 162,034 315,922 329,239
   Discretionary Cash Flow 332,296 297,100 651,828 531,465
   Changes in assets and liabilities (2,726) (19,818) (66,880) (41,498)
   Net cash provided by operations $        329,570 $        277,282 $  584,948 $  489,967

 

Net Debt Reconciliation
(In thousands)
June 30, December 31,
2014 2013
   Long-term debt $     1,193,000 $     1,147,000
   Stockholders’ equity 2,401,939 2,204,602
        Total Capitalization $     3,594,939 $     3,351,602
   Total debt $     1,193,000 $     1,147,000
   Less:  Cash and cash equivalents (45,610) (23,400)
        Net Debt $     1,147,390 $     1,123,600
   Net debt $     1,147,390 $     1,123,600
   Stockholders’ equity 2,401,939 2,204,602
        Total Adjusted Capitalization $     3,549,329 $     3,328,202
  Total debt to total capitalization ratio 33.2% 34.2%
   Less:  Impact of cash and cash equivalents 0.9% 0.4%
        Net Debt to Adjusted Capitalization Ratio 32.3% 33.8%

 

SOURCE Cabot Oil & Gas Corporation

– See more at: http://phx.corporate-ir.net/phoenix.zhtml?c=116492&p=irol-newsArticle&ID=1950815&highlight=#sthash.LsRomxSh.dpuf

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Brittany Ramos

Brittany was born and raised in Pittsburgh, Pennsylvania and attended Pennsylvania State University where she earned degrees in Public Relations and Psychology. She recently earned her Masters in Sociology from Sam Houston State University. Brittany works in the External Affairs for Cabot where she manages communications and outreach projects to community members, elected officials, media and online supporters.

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