Cabot Oil & Gas Corporation Announces First Quarter 2014 Financial and Operating Results PR Newswire HOUSTON, April 24, 2014 HOUSTON, April 24, 2014 /PRNewswire/ --Cabot Oil & Gas Corporation (NYSE: COG) today reported its financial and operating results for the first quarter of 2014. Highlights for the quarter include: oProduction of 119.9 billion cubic feet equivalent (Bcfe), an increase of 34 percent over last year's comparable quarter oDiscretionary cash flow of $319.5 million, an increase of 36 percent over last year's comparable quarter oNet income excluding selected items of $109.7 million, an increase of 102 percent over last year's comparable quarter oTotal unit costs (including financing) of $2.66 per thousand cubic feet equivalent (Mcfe), a 19 percent improvement over last year's comparable quarter First Quarter 2014 Financial Results Equivalent production in the first quarter of 2014 was 119.9 Bcfe, consisting of 115.8 billion cubic feet (Bcf) of natural gas and 686,000 barrels of liquids (crude oil/condensate/natural gas liquids). Equivalent production for the quarter represents a 34 percent increase over the first quarter of 2013 on an absolute basis and a 39 percent increase when adjusting for the Mid-Continent and West Texas asset sales in 2013. "Our daily production levels for the quarter posted a slight increase sequentially, in line with our guidance, despite unscheduled downtime on compressor stations in our Marcellus operating area resulting from severe winter weather," commented Dan O. Dinges, Chairman, President, and Chief Executive Officer. Cash flow from operations in the first quarter of 2014 was $255.4 million, compared to $212.7 million in the first quarter of 2013. Discretionary cash flow in the first quarter of 2014 was $319.5 million, compared to $234.4 million in the first quarter of 2013. Net income in the first quarter of 2014 was $107.0 million, or $0.26 per share, compared to $42.8 million, or $0.10 per share, in the first quarter of 2013. Excluding the effect of selected items (detailed in the table below), net income was $109.7 million, or $0.26 per share, in the first quarter of 2014, compared to $54.2 million, or $0.13 per share, in the first quarter of 2013. Higher equivalent production and realized natural gas prices drove the quarter's overall improvement, partially offset by lower realized oil prices and increased operating expenses associated with higher production. Natural gas price realizations, including the effect of hedges, were $3.74 per thousand cubic feet (Mcf) in the first quarter of 2014, up 8 percent compared to the first quarter of 2013. "Cabot's Marcellus natural gas price realizations for the first quarter, before the effect of hedges, were in line with our expectations of $0.60 to $0.65 below NYMEX settlement prices," stated Dinges. Oil price realizations, including the effect of hedges, were $97.76 per barrel (Bbl), down 6 percent compared to the first quarter of 2013. Total per unit costs (including financing) decreased to $2.66 per Mcfe in the first quarter of 2014, down 19 percent from $3.29 per Mcfe in the first quarter of 2013. All operating expense categories decreased on a per unit basis relative to last year's comparable quarter except for exploration expense, which was flat relative to the first quarter of 2013, and transportation and gathering expense, which increased as a result of slightly higher transportation rates and new transportation agreements in the Marcellus. Operational Highlights Marcellus Shale During the first quarter of 2014, the Company averaged 1,209 million cubic feet (Mmcf) per day of net Marcellus production, an increase of 44 percent over the prior year's comparable quarter. Subsequent to the end of the first quarter, Cabot reached a milestone of one trillion cubic feet (Tcf) of cumulative production from its Marcellus Shale asset in less than six years. "This is a tremendous accomplishment, especially considering the Company's maximum rig count in the Marcellus during this period was six rigs, with no more than 290 horizontal wells producing, highlighting the productivity of this asset," said Dinges. Cabot has averaged approximately 1,480 Mmcf per day of gross Marcellus production during the month of April, which includes a new gross Marcellus production record of 1,538 Mmcf per day. These levels compare to an average of approximately 1,410 Mmcf per day during the first quarter of 2014. "Second quarter production in the Marcellus has started out strong thanks to the continued efforts by our team in the field in tandem with our midstream provider to maximize our deliverability into the interstate pipelines," commented Dinges. "As a result, we expectsequential growth in the second quarter versus our prior expectation of flat production." Eagle Ford Shale Cabot's net production in the Eagle Ford during the first quarter of 2014 was 7,271 barrels of oil equivalent (Boe) per day, an increase of 42 percent over the prior year's comparable quarter. This included 6,839 barrels of liquids per day, an increase of 49 percent over the prior year's comparable quarter. Subsequent to the quarter end, Cabot placed its first six-well pad in the Eagle Ford on production. The six wells had an average completed lateral length of 6,658' and were completed with an average of 25 stages. The wells achieved an average peak 24-hour initial production (IP) rate of 1,045 Boe per day per well (89% oil) during the first ten days on production and the rates continue to improve. As a result of pad-drilling efficiencies, including a new record of ten stages completed in a 24-hour period, the Company realized approximately $600,000 of cost savings per well on this six-well pad. "We have been very pleased with the strides our Eagle Ford team has made over the last six months. Based on the continued improvement in production rates and realized cost savings, which have resulted in higher rates of return, we are adding a third rig to our Eagle Ford program beginning in the third quarter," explained Dinges. "This additional rig will be focused on multi-well pads and is expected to have minimal impact on 2014 production but will materially impact our estimated 2015 oil production volumes." During the first quarter, Cabot added approximately 4,000 net acres to its Eagle Ford position through organic leasing efforts and is actively pursuing additional acreage. Financial Position and Liquidity As of March 31, 2014, the Company's net debt to adjusted capitalization ratio was 34.5 percent, compared to 33.8 percent at December 31, 2013 (detailed in the table below). The Company's total debt was $1,222 million, of which $535 million is outstanding under the Company's revolving credit facility. Effective April 15, 2014, the lenders under the Company's revolving credit facility approved an increase in the Company's borrowing base from $2.3 billion to $3.1 billion as part of the annual redetermination process. Total lender commitments under the revolving credit facility remain unchanged at $1.4 billion, with $864 million of available credit under the facility at March 31, 2014. 2014 Guidance Update As a result of positive momentum in the Company's Eagle Ford program and the corresponding increase in rig count from two to three rigs beginning in the third quarter, Cabot's 2014 capital budget guidance has increased to $1.375 - $1.475 billion. The Company has also tightened its production guidance range for 2014 from 519 - 598 Bcfe to 530 - 585 Bcfe and initiated 2015 production growth guidance at 20 - 30 percent. Cabot's Marcellus natural gas price realizations for the month of April, before the effect of hedges, have averaged between $0.75 and $0.80 below the NYMEX settlement price, which is in line with the Company's expectations. For further disclosure on price realization guidance for 2014, please see the current investor presentation in the Investor Relations section of the Company's website. Conference Call A conference call is scheduled for Thursday, April 24, 2014, at 9:30 a.m. Eastern Time to discuss first quarter 2014 financial and operating results. To access the live audio webcast, please visit the Investor Relations section of the Company's website at www.cabotog.com. A replay of the call will also be available on the Company's website. The latest financial guidance, including the Company's hedge positions, is also available in the Investor Relations section of the Company's website. Cabot Oil & Gas Corporation, headquartered in Houston, Texas is a leading independent natural gas producer, with its entire resource base located in the continental United States. For additional information, visit the Company's homepage at www.cabotog.com. The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs, and other factors detailed in the Company's Securities and Exchange Commission filings. FOR MORE INFORMATION CONTACT Matt Kerin (281) 589-4642 OPERATING DATA Three Months Ended March 31, 2014 2013 PRODUCED NATURAL GAS (Bcf) & LIQUIDS (Mbbl) Natural Gas Appalachia 112.8 79.9 Other 3.0 5.3 Total 115.8 85.2 Crude/Condensate/NGL 686 691 Equivalent Production (Bcfe) 119.9 89.3 PRICES^(1) Average Produced Gas Sales Price ($/Mcf) Appalachia $ 3.71 $ 3.49 Other $ 4.97 $ 2.79 Total $ 3.74 $ 3.45 Average Crude/Condensate Price ($/Bbl) $ 97.76 $ 104.03 WELLS DRILLED Gross 27 32 Net 27 26 Gross success rate 100% 97% ^(1) These realized prices include the realized impact of derivative instrument settlements. Three Months Ended March 31, 2014 2013 Realized Impacts to Gas Pricing $ (0.61) $ 0.16 Realized Impacts to Oil Pricing $ (0.36) $ 3.24 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Three Months Ended March 31, 2014 2013 Operating Revenues Natural gas $ 432,809 $ 293,793 Crude oil and condensate 59,144 65,655 Brokered natural gas 13,153 10,893 Other 4,697 2,944 509,803 373,285 Operating Expenses Direct operations 35,834 31,497 Transportation and gathering 77,765 46,221 Brokered natural gas 11,860 8,389 Taxes other than income 13,044 11,687 Exploration 6,474 4,024 Depreciation, depletion and amortization 147,418 148,653 General and administrative (excluding stock-based 18,465 17,035 compensation) Stock-based compensation^(1) 3,171 18,669 314,031 286,175 Gain / (loss) on sale of assets (1,285) (96) Income from Operations 194,487 87,014 Interest expense and other 16,557 16,255 Income before income taxes 177,930 70,759 Income tax expense 70,899 27,935 Net Income $ 107,031 $ 42,824 Earnings per share - Basic $ 0.26 $ 0.10 Weighted average common shares outstanding 416,900 420,300 Includes the impact of the Company's performance share awards, ^(1) restricted stock, stock appreciation rights and expense associated with the Supplemental Employee Incentive Plan. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) March 31, December 31, 2014 2013 Assets Current assets $ 373,830 $ 378,899 Properties and equipment, net 4,710,569 4,546,227 Other assets 61,376 55,954 Total assets $ 5,145,775 $ 4,981,080 Liabilities and Stockholders' Equity Current liabilities $ 432,628 $ 407,905 Long-term debt 1,222,000 1,147,000 Deferred income taxes 1,074,497 1,067,912 Other liabilities 147,859 153,661 Stockholders' equity 2,268,791 2,204,602 Total liabilities and stockholders' equity $ 5,145,775 $ 4,981,080 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In thousands) Three Months Ended March 31, 2014 2013 Cash Flows From Operating Activities Net income $ 107,031 $ 42,824 Deferred income tax expense 57,603 23,574 (Gain) / loss on sale of assets 1,285 96 Exploration expense 2,040 666 Income charges not requiring cash 151,573 167,205 Changes in assets and liabilities (64,154) (21,680) Net cash provided by operations 255,378 212,685 Cash Flows From Investing Activities Capital expenditures (338,701) (260,169) Proceeds from sale of assets 108 486 Restricted cash 8,382 - Investment in equity method investment (5,937) (1,250) Net cash used in investing (336,148) (260,933) Cash Flows From Financing Activities Net increase (decrease) in debt 75,000 40,000 Dividends paid (8,332) (4,201) Stock-based compensation tax benefit 16,043 2,138 Other 90 32 Net cash provided by (used in) financing 82,801 37,969 Net increase (decrease) in cash and cash $ 2,031 $ (10,279) equivalents Selected Item Review and Reconciliation of Net Income and Earnings Per Share (In thousands, except per share amounts) Three Months Ended March 31, 2014 2013 As reported - net income $ 107,031 $ 42,824 Reversal of selected items, net of tax: (Gain) / loss on sale of 775 58 assets Stock-based compensation 1,913 11,337 expense Net income excluding selected items $ 109,719 $ 54,219 As reported - earnings per share $ 0.26 $ 0.10 Per share impact of reversing - 0.03 selected items Earnings per share including $ 0.26 $ 0.13 reversal of selected items Weighted average common shares 416,900 420,300 outstanding Discretionary Cash Flow Calculation and Reconciliation (In thousands) Three Months Ended March 31, 2014 2013 Discretionary Cash Flow As reported - net income $ 107,031 $ 42,824 Plus / (less): Deferred income tax expense 57,603 23,574 (Gain) / loss on sale of assets 1,285 96 Exploration expense 2,040 666 Income charges not requiring cash 151,573 167,205 Discretionary Cash Flow 319,532 234,365 Changes in assets and liabilities (64,154) (21,680) Net cash provided by operations $ 255,378 $ 212,685 Net Debt Reconciliation (In thousands) March 31, December 31, 2014 2013 Long-term debt $ 1,222,000 $ 1,147,000 Stockholders' equity 2,268,791 2,204,602 Total Capitalization $ 3,490,791 $ 3,351,602 Total debt $ 1,222,000 $ 1,147,000 Less: Cash and cash equivalents (25,431) (23,400) Net Debt $ 1,196,569 $ 1,123,600 Net debt $ 1,196,569 $ 1,123,600 Stockholders' equity 2,268,791 2,204,602 Total Adjusted Capitalization $ 3,465,360 $ 3,328,202 Total debt to total capitalization 35.0% 34.2% ratio Less: Impact of cash and cash 0.5% 0.4% equivalents Net Debt to Adjusted 34.5% 33.8% Capitalization Ratio SOURCE Cabot Oil & Gas Corporation Website: http://www.cabotog.com
Cabot Oil & Gas Corporation Announces First Quarter 2014 Financial and Operating Results
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