Current COG Stock Info

Cabot Oil & Gas (ticker: COG), a large-cap E&P with operations in the Marcellus and Eagle Ford shales, reported company records for production and net income excluding selected items in its year-end 2014 earnings release. Full-year production in 2014 was 531.8 Bcfe – an increase of 29% compared to 2013, including liquids production of 3,961 MBO – 23% higher than 2013.

2014 operating revenues climbed to $2,173 million and net cash from operations reached $1,236 million, representing year-over-year increases of 24% and 21%, respectivel...

Analyst Commentary

Capital One Securities (2.20.15)

Neutral. 4Q results in line and we think 2015 guidance is neutral as CAPEX is ~35% below the Street expectation with production only ~6% below the Street forecast. We think the resulting combo of lower cash flow estimates will be largely offset by lower projected net debt (and thus EV) levels, which should leave COG’s 2015 - 2016 EV/EBITDA multiples directionally unchanged at ~9.5x and ~8.5x, respectively. We do think, however, that the Street’s expectations for COG’s gas price realizations this year are too high, so we expect that could continue to pressure estimates. In October, COG provided 2015 CAPEX/production guidance of $1.53B - $1.60B with 20% - 30% growth. Today COG reduced the 2015 capital budget to $900MM (-40% y/y) and is now calling for 10% - 18% production growth. The new budget is 36% below the Street’s $1.41B expectation and 35% below our $1.39B expectation. The new implied production guidance range is 1,603 – 1,719 MMcfe/d. The 1,660 MMcfe/d midpoint of the range is 6% below the Street’s 1,774 MMcfe/d estimate and 6% below our 1,759 MMcfe/d estimate. Even though COG expects 10% - 18% growth in average volumes in FY15, guidance implies that COG’s volumes will be flat throughout the year vs the 4Q14 rate of ~1,650 MMcfe/d. The updated budget assumes $2.45/Mcf gas realizations in 2015 vs mgmt’s original expectation $2.80/Mcf. 4Q EPS was 23c vs 22c both Street/COS. 4Q CFPS was 78c vs 80c/76c Street/COS. While production vols beat our model, the impact was offset by lower-than-expected oil and gas realizations. The slight CFPS beat vs our model was driven by cash costs that came in 3% below our est. Production was +15% q/q at 1.65 Bcfe/d, which matched the Street’s estimate and was 2% above our 1.62 Bcfe/d est. COG’s avg 4Q pre-hedge gas differential was ~$1.16/Mcf, which slightly widened from ~$1.15/Mcfe in 3Q and was above our $1.11/Mcfe est. COG announced YE14 proved reserves of ~7.4 Tcfe (+36% y/y), reserve replacement ratio of 466%, and total company F&D cost (excluding purchases of reserves in place) of 65c/Mcfe. YE14 pre-tax proved PV-10 was $8.6B, a 38% y/y increase. On the call, we will be looking for progress on NY State approval of Constitution. The end of the public comment period was recently extended from Jan 30 to Feb 27.  


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