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 October 23, 2015 - 6:30 AM EDT
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Cabot Oil & Gas Corporation Announces Third Quarter 2015 Financial and Operating Results

HOUSTON, Oct. 23, 2015 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today reported its financial and operating results for the third quarter of 2015. "Even in the face of persistent headwinds resulting from lower commodity prices, Cabot continues to deliver positive operating results while lowering our cost structure through an improvement in operating efficiencies and a strict focus on capital discipline," said Dan O. Dinges, Chairman, President and Chief Executive Officer.

Third Quarter 2015 Financial Results

Equivalent production in the third quarter of 2015 was 142.1 billion cubic feet equivalent (Bcfe), consisting of 133.0 billion cubic feet (Bcf) of natural gas and 1.5 million barrels (Mmbbls) of liquids (crude oil/condensate/natural gas liquids). These figures represent increases of 7 percent, 5 percent, and 57 percent, respectively, compared to the third quarter of 2014.

Cash flow from operations in the third quarter of 2015 was $146.4 million, compared to $358.3 million in the third quarter of 2014. Discretionary cash flow in the third quarter of 2015 was $150.4 million, compared to $296.0 million in the third quarter of 2014. Net loss in the third quarter of 2015 was $15.5 million, or $0.04 per share, compared to net income of $100.8 million, or $0.24 per share, in the third quarter of 2014. Excluding the effect of selected items including a $17.6 million after-tax non-cash mark-to-market loss on natural gas derivatives, net loss was $2.2 million, or $0.01 per share, in the third quarter of 2015, compared to net income of $85.0 million, or $0.20 per share, in the third quarter of 2014. EBITDAX in the third quarter of 2015 was $167.6 million, compared to $325.9 million in the third quarter of 2014. Significant reductions in realized prices for both natural gas and oil were the primary drivers for the lower results in the quarter, partially offset by higher equivalent production and lower overall operating expenses. See the supplemental tables at the end of this press release for a reconciliation of non-GAAP measures including discretionary cash flow, net income excluding selected items, EBITDAX and net debt to adjusted capitalization ratio.

Natural gas price realizations, including the effect of hedges, were $2.02 per thousand cubic feet (Mcf) in the third quarter of 2015, down 34 percent compared to the third quarter of 2014. Excluding the impact of hedges, natural gas price realizations for the quarter were $1.68 per Mcf, representing a $1.09 discount to NYMEX settlement prices. Oil price realizations were $43.71 per barrel (Bbl), down 54 percent compared to the third quarter of 2014.

Total per unit costs (including financing) decreased to $2.35 per thousand cubic feet equivalent (Mcfe) in the third quarter of 2015, an improvement of 7 percent from $2.53 per Mcfe in the third quarter of 2014.

Cabot drilled or participated in a total of 27 net wells during the third quarter of 2015 and incurred a total of $150.5 million in capital expenditures associated with activity during the third quarter.

Year-To-Date 2015 Financial Results

Production during the nine-month period ended September 30, 2015 was 451.5 Bcfe, consisting of 423.2 Bcf of natural gas and 4.7 Mmbbls of liquids. These figures represent increases of 19 percent, 16 percent, and 81 percent, respectively, compared to the nine-month period ended September 30, 2014.

For the nine-month period ended September 30, 2015, cash flow from operations was $585.0 million, compared to $943.3 million for the nine-month period ended September 30, 2014. Discretionary cash flow was $573.8 million for the nine-month period ended September 30, 2015, compared to $947.8 million for the nine-month period ended September 30, 2014. For the nine-month period ended September 30, 2015, net loss was $2.8 million, or $0.01 per share, compared to net income of $326.2 million, or $0.78 per share, for the nine-month period ended September 30, 2014. Excluding the effect of selected items including a $57.0 million after-tax non-cash mark-to-market loss on natural gas derivatives, net income was $62.5 million, or $0.15 per share, compared to $310.0 million, or $0.74 per share, for the nine-month period ended September 30, 2014. EBITDAX for the nine-month period ended September 30, 2015 was $651.0 million, compared to $1,045.7 million for the nine-month period ended September 30, 2014.

Natural gas price realizations, including the effect of hedges, were $2.23 per Mcf for the nine-month period ended September 30, 2015, down 35 percent compared to the nine-month period ended September 30, 2014. Oil price realizations were $48.00 per Bbl, down 51 percent compared to the nine-month period ended September 30, 2014.

Total per unit costs (including financing) decreased to $2.39 per Mcfe for the nine-month period ended September 30, 2015, an improvement of 8 percent from $2.59 per Mcfe for the nine-month period ended September 30, 2014.

Cabot drilled or participated in a total of 105 net wells during the nine-month period ended September 30, 2015 and incurred a total of $676.9 million in capital expenditures associated with activity during this period.

Financial Position and Liquidity

As of September 30, 2015, the Company's net debt to adjusted capitalization ratio was 48.9 percent, compared to 44.7 percent at December 31, 2014 (detailed in the table below). The Company's total debt was $2,037 million, of which $425 million was outstanding under the Company's $1.8 billion revolving credit facility.

Fourth Quarter and Full-Year 2015 Guidance

The Company has provided fourth quarter net production guidance of 1,475 to 1,600 million cubic feet (Mmcf) per day for natural gas, as it continues to curtail a portion of its Marcellus production, and 14,000 to 15,500 Bbls per day for liquids. The Company expects its natural gas price realizations before the impact of hedges to average between $0.90 and $1.00 below NYMEX settlement prices for the fourth quarter.

Based on the fourth quarter production guidance, the Company has adjusted its full-year 2015 equivalent production growth guidance range to 12 to 14 percent. Additionally, Cabot is reducing its 2015 capital program guidance to $850 million. "The reduction in investment dollars for 2015 is a result of continued improvements in operating efficiencies, further reductions in service costs, and our decision to defer the completion of a portion of our stages in both the Marcellus and Eagle Ford," highlighted Dinges. "In addition, we plan to release a rig in the Marcellus in early December, bringing the Marcellus rig count down to two rigs by year-end." For further disclosure on Cabot's natural gas pricing exposure by index and updated unit cost guidance for the fourth quarter, please see the current Guidance slide in the Investor Relations section of the Company's website.

Preliminary 2016 Guidance

The Company has initiated its preliminary 2016 production growth guidance range at 2 to 10 percent, for which the low-end takes into account potential price-related production curtailments throughout the year based on current market price expectations and the high-end reflects an uncurtailed program predicated on an improvement in price realizations. This production growth range is based on a capital budget of $615 million. In addition, Cabot anticipates approximately $150 million of contributions to its equity method investments in the Constitution and Atlantic Sunrise pipelines, the exact timing of which will be dependent on the regulatory approval process and the corresponding impact on the timing of construction activities. Drilling, completion and facilities capital will account for approximately 93 percent of the capital budget, with approximately 74 percent allocated to the Marcellus Shale and 26 percent allocated to the Eagle Ford Shale. The Company expects to drill approximately 60 net wells in 2016, including 50 net wells in the Marcellus Shale and 10 net wells in the Eagle Ford Shale. The Company anticipates completing approximately 90 wells in 2016, including 65 net wells in the Marcellus Shale and 25 net wells in the Eagle Ford Shale.

"As has been our primary focus for years, this market-responsive plan is focused on improving our capital efficiency while generating measured growth from a cash flow positive operating program," stated Dinges. "Based on our budgeted price assumptions, the only anticipated borrowing will relate to the funding of our equity investments in the Constitution and Atlantic Sunrise pipelines." Dinges added, "Additionally, our 2016 capital program includes a sufficient amount of growth capital, which will allow for an acceleration of production growth in 2017 assuming our new takeaway projects are placed in-service in a timely manner."

Conference Call

A conference call is scheduled for Friday, October 23, 2015, at 9:30 a.m. Eastern Time to discuss third quarter 2015 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 CONTACT
Matt Kerin (281) 589-4642

 

OPERATING DATA



Quarter Ended
 September 30,


Nine Months Ended
 September 30,


2015


2014


2015


2014

PRODUCED NATURAL GAS (Bcf) & LIQUIDS (Mbbl)








Natural Gas








Appalachia

130.6



123.4



415.6



354.6


Other

2.4



3.3



7.6



9.7


Total

133.0



126.7



423.2



364.3










Crude/Condensate/NGL

1,513



961



4,719



2,608










Equivalent Production (Bcfe)

142.1



132.4



451.5



379.9










PRICES(1)








Average Produced Gas Sales Price ($/Mcf)








Appalachia

$

2.00



$

3.04



$

2.22



$

3.39


Other

$

2.71



$

3.86



$

2.74



$

4.48


Total

$

2.02



$

3.06



$

2.23



$

3.41










Average Crude/Condensate Price ($/Bbl)

$

43.71



$

94.79



$

48.00



$

97.05










WELLS DRILLED








Gross

27



49



114



125


Net

27



46



105



108


Gross success rate

100

%


98

%


100

%


99

%


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

 



Quarter Ended
 September 30,


Nine Months Ended
 September 30,


2015


2014


2015


2014

Realized Impacts to Gas Pricing

$

0.34



$

0.15



$

0.32



$

(0.24)


Realized Impacts to Oil Pricing

$



$

(0.04)



$



$

(0.57)


 

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)



Quarter Ended
 September 30,


Nine Months Ended
 September 30,


2015


2014


2015


2014

OPERATING REVENUES








   Natural gas

$

222,963



$

347,970



$

807,960



$

1,218,540


   Crude oil and condensate

59,014



82,563



202,804



228,047


   Gain (loss) on derivative instruments

17,364



71,906



44,668



69,577


   Brokered natural gas

4,010



6,501



12,650



27,794


   Other

1,945



3,077



8,277



11,049



305,296



512,017



1,076,359



1,555,007


OPERATING EXPENSES








   Direct operations

34,818



37,802



106,947



109,241


   Transportation and gathering

102,121



85,966



321,652



247,707


   Brokered natural gas

3,020



5,680



9,643



24,570


   Taxes other than income

11,407



10,933



34,298



36,794


   Exploration

4,930



8,812



18,960



19,963


   Depreciation, depletion and amortization

144,326



154,013



472,335



458,995


   General and administrative (excluding stock-based compensation)

14,015



13,901



41,989



46,219


   Stock-based compensation(1)

(2,913)



5,678



11,622



15,123



311,724



322,785



1,017,446



958,612


Earnings (loss) on equity method investments

1,648



1,063



4,581



1,819


Gain (loss) on sale of assets

3,756



46



3,814



(2,735)


INCOME (LOSS) FROM OPERATIONS

(1,024)



190,341



67,308



595,479


Interest expense

24,510



17,422



72,244



50,312


Income (loss) before income taxes

(25,534)



172,919



(4,936)



545,167


Income tax (benefit) expense

(10,020)



72,131



(2,169)



218,928


NET INCOME (LOSS)

$

(15,514)



$

100,788



$

(2,767)



$

326,239


Earnings (loss) per share - Basic

$

(0.04)



$

0.24



$

(0.01)



$

0.78


Weighted-average common shares outstanding

413,846



416,173



413,636



416,785



(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)



September 30,
 2015


December 31,
 2014

ASSETS




Current assets

$

215,421



$

413,447


Properties and equipment, net (Successful efforts method)

5,141,404



4,925,711


Other assets

127,847



98,558


  Total assets

$

5,484,672



$

5,437,716






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities

$

265,585



$

499,018


Long-term debt, excluding current maturities

2,017,000



1,752,000


Deferred income taxes

874,702



843,876


Other liabilities

205,648



200,089


Stockholders' equity

2,121,737



2,142,733


  Total liabilities and stockholders' equity

$

5,484,672



$

5,437,716


 


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(In thousands)



Quarter Ended
 September 30,


Nine Months Ended
 September 30,


2015


2014


2015


2014

CASH FLOWS FROM OPERATING ACTIVITIES








Net income (loss)

$

(15,514)



$

100,788



$

(2,767)



$

326,239


Deferred income tax expense

1,066



62,986



8,226



181,439


(Gain) loss on sale of assets

(3,756)



(46)



(3,814)



2,735


Exploratory dry hole cost

6



4,300



184



6,454


(Gain) loss on derivative instruments

(17,364)



(71,906)



(44,668)



(69,577)


Net cash received (paid) in settlement of derivative instruments

45,097



40,073



133,827



24,811


Income charges not requiring cash

140,823



159,755



482,771



475,677


Changes in assets and liabilities

(3,996)



62,352



11,195



(4,528)


  Net cash provided by operating activities

146,362



358,302



584,954



943,250










CASH FLOWS FROM INVESTING ACTIVITIES








Capital expenditures

(174,747)



(347,128)



(819,839)



(964,741)


Acquisitions

(12)



(15,826)



(16,312)



(15,826)


Proceeds from sale of assets

4,378



4,668



7,380



3,913


Restricted cash







28,094


Investment in equity method investments

(10,684)



(6,554)



(20,798)



(28,784)


  Net cash used in investing activities

(181,065)



(364,840)



(849,569)



(977,344)










CASH FLOWS FROM FINANCING ACTIVITIES








Net increase (decrease) in debt

42,000



419,000



285,000



465,000


Treasury stock repurchases



(119,767)





(119,767)


Dividends paid

(8,275)



(8,339)



(24,812)



(25,018)


Stock-based compensation tax benefit

(5,486)



(14,353)





6,001


Capitalized debt issuance costs



(5,626)



(7,838)



(5,626)


Other

5





84



91


  Net cash provided by financing activities

28,244



270,915



252,434



320,681










Net (decrease) increase in cash and cash equivalents

$

(6,459)



$

264,377



$

(12,181)



$

286,587


 


Selected Item Review and Reconciliation of Net Income and Earnings Per Share

(In thousands, except per share amounts)



Quarter Ended
 September 30,


Nine Months Ended
 September 30,


2015


2014


2015


2014

As reported - net income (loss)

$

(15,514)



$

100,788



$

(2,767)



$

326,239


Reversal of selected items, net of tax:








(Gain) loss on sale of assets

(2,379)



(28)



(2,437)



1,646


(Gain) loss on derivative instruments (1)

17,563



(19,154)



56,975



(26,936)


Drilling rig termination fees





3,256




Stock-based compensation expense

(1,845)



3,416



7,427



9,100


Net income (loss) excluding selected items

$

(2,175)



$

85,022



$

62,454



$

310,049


As reported - earnings (loss) per share

$

(0.04)



$

0.24



$

(0.01)



$

0.78


Per share impact of reversing selected items

0.03



(0.04)



0.16



(0.04)


Earnings per share including reversal of selected items

$

(0.01)



$

0.20



$

0.15



$

0.74


Weighted average common shares outstanding

413,846



416,173



413,636



416,785



(1) Effective April 1, 2014, the Company elected to discontinue hedge accounting for its commodity derivatives on a prospective basis. This amount represents the non-cash mark-to-market changes of our commodity derivative instruments recorded in gain (loss) on derivative instruments in the Condensed Consolidated Statement of Operations.

 


Discretionary Cash Flow Calculation and Reconciliation

(In thousands)



Quarter Ended
 September 30,


Nine Months Ended
 September 30,


2015


2014


2015


2014

Discretionary Cash Flow








As reported - net income (loss)

$

(15,514)



$

100,788



$

(2,767)



$

326,239


Plus (less):








    Deferred income tax expense

1,066



62,986



8,226



181,439


    (Gain) loss on sale of assets

(3,756)



(46)



(3,814)



2,735


    Exploratory dry hole cost

6



4,300



184



6,454


    (Gain) loss on derivative instruments

(17,364)



(71,906)



(44,668)



(69,577)


    Net cash received (paid) in settlement of derivative instruments

45,097



40,073



133,827



24,811


    Income charges not requiring cash

140,823



159,755



482,771



475,677


Discretionary Cash Flow

150,358



295,950



573,759



947,778


Changes in assets and liabilities

(3,996)



62,352



11,195



(4,528)


Net cash provided by operating activities

$

146,362



$

358,302



$

584,954



$

943,250






EBITDAX Calculation and Reconciliation

(in thousands)



Quarter Ended
 September 30,


Nine Months Ended
 September 30,


2015


2014


2015


2014

As reported - net income (loss)

$

(15,514)



$

100,788



$

(2,767)



$

326,239


Plus (less):
















 Interest expense

24,510



17,422



72,244



50,312


 Income tax (benefit) expense

(10,020)



72,131



(2,169)



218,928


 Depreciation, depletion and amortization

144,326



154,013



472,335



458,995


 Exploration

4,930



8,812



18,960



19,963


 (Gain) loss on sale of assets

(3,756)



(46)



(3,814)



2,735


 Non-cash (gain) loss on derivative instruments

27,733



(31,833)



89,159



(44,766)


 Stock-based compensation and other

(4,561)



4,615



7,041



13,304


EBITDAX

$

167,648



$

325,902



$

650,989



$

1,045,710


 

 

Net Debt Reconciliation

(In thousands)



September 30,
 2015


December 31,
 2014

Current portion of long-term debt

$

20,000



$


Long-term debt

2,017,000



1,752,000


Total debt

$

2,037,000



$

1,752,000


Stockholders' equity

2,121,737



2,142,733


Total Capitalization

$

4,158,737



$

3,894,733






Total debt

$

2,037,000



$

1,752,000


Less: Cash and cash equivalents

(8,773)



(20,954)


Net Debt

$

2,028,227



$

1,731,046






Net debt

$

2,028,227



$

1,731,046


Stockholders' equity

2,121,737



2,142,733


Total Adjusted Capitalization

$

4,149,964



$

3,873,779






Total debt to total capitalization ratio

49.0

%


45.0

%

Less: Impact of cash and cash equivalents

0.1

%


0.3

%

Net Debt to Adjusted Capitalization Ratio

48.9

%


44.7

%

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-announces-third-quarter-2015-financial-and-operating-results-300165217.html

SOURCE Cabot Oil & Gas Corporation


Source: PR Newswire (October 23, 2015 - 6:30 AM EDT)

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