COTERRA ENERGY INC. HOUSTON, April 29, 2016 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) ("Cabot" or the "Company") today reported financial and operating results for the first quarter of 2016.
"Cabot's results for the quarter highlight our commitment to financial discipline, which was evident by our ability to fully fund our investing activities with operating cash flow and proceeds from a non-core divestiture," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Our positive results for the quarter were due in large part to continued enhancements to our industry-leading cost structure and improvements in our natural gas price differentials, which exceeded our expectations for the quarter. Based on our current outlook for the remainder of the year, we are well-positioned to deliver production growth while spending within our operating cash flow, which differentiates Cabot in this challenged market environment."
First Quarter 2016 Financial Results
Equivalent production in the first quarter of 2016 was 160.3 billion cubic feet equivalent (Bcfe), consisting of 153.1 billion cubic feet (Bcf) of natural gas, 1.1 million barrels (Mmbbls) of crude oil and condensate, and 92,000 barrels (Bbls) of natural gas liquids (NGLs).
Cash flow from operations in the first quarter of 2016 was $62.1 million, compared to $267.4 million in the first quarter of 2015. Discretionary cash flow in the first quarter of 2016 was $71.2 million, compared to $240.2 million in the first quarter of 2015. Net loss in the first quarter of 2016 was $51.2 million, or $0.12 per share, compared to net income of $40.3 million, or $0.10 per share, in the first quarter of 2015. Excluding the effect of selected items (detailed in the table below), net loss in the first quarter of 2016 was $55.4 million, or $0.13 per share, compared to net income of $49.2 million, or $0.12 per share, in the first quarter of 2015. EBITDAX in the first quarter of 2016 was $100.9 million, compared to $279.4 million in the first quarter of 2015. 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 were $1.49 per thousand cubic feet (Mcf) in the first quarter of 2016, down 39 percent compared to the first quarter of 2015. Natural gas price realizations for the quarter implied a $0.60 discount to NYMEX settlement prices compared to a $0.75 discount to NYMEX settlement prices in the first quarter of 2015 (excluding the impact of hedges). Oil price realizations were $27.65 per Bbl, down 37 percent compared to the first quarter of 2015. NGL price realizations were $7.22 per Bbl, down 35 percent compared to the first quarter of 2015.
Operating expenses (including financing) decreased to $2.26 per thousand cubic feet equivalent (Mcfe) in the first quarter of 2016, a 3 percent improvement compared to $2.33 per Mcfe in the first quarter of 2015. Cash operating expenses (excluding depreciation, depletion and amortization; stock-based compensation; exploratory dry hole cost; and amortization of debt issuance costs) decreased to $1.18 per Mcfe in the first quarter of 2016, a 6 percent improvement compared to $1.26 per Mcfe in the first quarter of 2015.
Cabot drilled 10 net wells and completed 21 net wells during the first quarter of 2016, incurring a total of $91.7 million in capital expenditures associated with activity during this period.
Operational Highlights
Marcellus Shale
During the first quarter of 2016, the Company averaged 1,628 million cubic feet (Mmcf) per day of net Marcellus production (1,913 gross operated Mmcf per day), an increase of 10 percent sequentially compared to the fourth quarter of 2015. During the first quarter, the Company drilled 7 net wells, completed 12 net wells and placed 8 net wells on production.
Cabot is currently operating 1 rig in the Marcellus Shale and plans to remain at this level for the remainder of the year.
Eagle Ford Shale
Cabot's net production in the Eagle Ford Shale during the first quarter of 2016 was 12,975 barrels of oil equivalent (Boe) per day, a decrease of 13 percent sequentially compared to the fourth quarter of 2015. Net oil production during the quarter was 11,908 Bbls per day, a decrease of 6 percent sequentially compared to the fourth quarter of 2015. In addition to natural production declines resulting from reduced operating activity, the primary driver of the lower sequential equivalent production was unscheduled downtime at a third-party processing plant which impacted natural gas and NGL volumes for a significant portion of the quarter. During the first quarter, the Company drilled 3 net wells and completed and placed on production 9 net wells, the majority of which were placed on production late in the quarter.
Cabot is not currently operating a rig in the Eagle Ford Shale and plans to drill 3 additional wells in 2016, all of which are scheduled for the second half of the year.
Non-Core Asset Sale
During the first quarter of 2016, the Company completed the divestiture of certain non-core oil and gas properties in East Texas to an undisclosed buyer for approximately $57 million. At December 31, 2015, proved reserves associated with these properties were 16.7 Bcfe (80% natural gas / 15% NGLs / 5% oil).
Financial Position and Liquidity
During the first quarter of 2016, Cabot closed on an offering of 50.6 million shares of its common stock (including the over-allotment option) for net proceeds of $995.6 million. The Company used a portion of the net proceeds to repay borrowings outstanding under its revolving credit facility.
As of March 31, 2016, Cabot had total debt of $1.6 billion and cash on hand of $579.3 million. The Company's net debt to adjusted capitalization ratio and net debt to trailing twelve months EBITDAX ratio were 25.8 percent and 1.6x, respectively, compared to 50.1 percent and 2.5x as of December 31, 2015.
Effective April 19, 2016, Cabot's borrowing base was unanimously approved by its 20 lenders at $3.2 billion. With $1.6 billion of senior notes outstanding, this leaves the Company with approximately $1.6 billion of available commitments under the $1.8 billion credit facility. The Company currently has no debt outstanding under the credit facility, resulting in approximately $2.2 billion of liquidity. Cabot's next annual borrowing base redetermination is scheduled for April 2017.
2016 Derivative Position Update
The Company has approximately 52 Bcf of natural gas swaps for the period of April to October 2016 at a weighted average price of approximately $2.51 per Mcf and 1.4 Mmbbls of crude oil collars for the period of April to December 2016 at a weighted average floor and ceiling price of $38.00 per Bbl and $47.28 per Bbl, respectively.
Second Quarter and Full Year 2016 Guidance
Cabot has provided second quarter net production guidance of 1,575 to 1,600 Mmcf per day for natural gas; 11,500 to 12,250 Bbls per day for crude oil and condensate; and 1,400 to 1,600 Bbls per day for NGLs. The Company expects its natural gas price realizations (before the impact of hedges) to average between $0.50 and $0.55 below NYMEX settlement prices for the second quarter based on current market indications.
Cabot has reaffirmed its $325 million capital budget and its production growth guidance range of 2 to 7 percent for 2016. The Company has also adjusted its 2016 guidance range for contributions to its equity method investments in the Constitution and Atlantic Sunrise pipelines to $30 million to $35 million, down from $80 million to $150 million, to reflect the current expectation for a second half of 2017 in-service date for Atlantic Sunrise and a second half of 2018 in-service date for Constitution. For further disclosure on Cabot's natural gas pricing exposure by index and updated unit cost guidance for the second quarter, please see the current Guidance slide in the Investor Relations section of the Company's website.
Conference Call
A conference call is scheduled for Friday, April 29, 2016, at 9:30 a.m. Eastern Time to discuss first quarter 2016 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 website 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,
---------
2016 2015
---- ----
PRODUCTION
VOLUMES
Natural gas (Bcf) 153.1 161.8
Crude/condensate
(Mbbl) 1,110.0 1,428.0
Natural gas
liquids (NGLs)
(Mbbl) 92.0 166.0
Equivalent
production
(Bcfe) 160.3 171.4
AVERAGE SALES
PRICE
Natural gas,
including hedges
($/Mcf) $1.49 $2.46
Natural gas,
excluding hedges
($/Mcf) $1.49 $2.23
Crude/
condensate,
including hedges
($/Bbl) $27.65 $43.82
Crude/
condensate,
excluding hedges
($/Bbl) $27.65 $43.82
NGL ($/Bbl) $7.22 $11.06
AVERAGE UNIT
COSTS ($/Mcfe)
Direct operations $0.16 $0.21
Transportation
and gathering 0.68 0.71
Taxes other than
income 0.04 0.07
Exploration 0.04 0.05
Depreciation,
depletion and
amortization 1.01 1.02
General and
administrative
(excluding
stock-based
compensation) 0.11 0.10
Stock-based
compensation 0.07 0.03
Interest expense 0.15 0.14
---- ----
$2.26 $2.33
===== =====
WELLS DRILLED
Gross 10 43
Net 10 42
Gross success
rate 100% 100%
WELLS COMPLETED
Gross 21 39
Net 21 39
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31,
---------
2016 2015
---- ----
OPERATING REVENUES
Natural
gas $227,578 $360,191
Crude
oil and
condensate 30,676 62,558
Gain
(loss)
on
derivative
instruments 18,994 34,123
Brokered
natural
gas 3,180 4,827
Other 1,513 3,066
----- -----
281,941 464,765
OPERATING EXPENSES
Direct
operations 26,035 36,017
Transportation
and
gathering 109,652 121,235
Brokered
natural
gas 2,566 3,739
Taxes
other
than
income 5,994 11,280
Exploration 6,383 8,732
Depreciation,
depletion
and
amortization 161,887 175,497
General
and
administrative
(excluding
stock-
based
compensation) 17,770 16,619
Stock-
based
compensation(1) 10,606 5,910
------ -----
340,893 379,029
Earnings
(loss)
on
equity
method
investments 2,009 1,421
Gain
(loss)
on sale
of
assets 1,354 138
----- ---
INCOME
(LOSS)
FROM
OPERATIONS (55,589) 87,295
Interest
expense 24,375 23,566
------ ------
Income
(loss)
before
income
taxes (79,964) 63,729
Income
tax
expense
(benefit) (28,770) 23,474
------- ------
NET
INCOME
(LOSS) $(51,194) $40,255
======== =======
Earnings
(loss)
per
share -
Basic $(0.12) $0.10
Weighted-
average
common
shares
outstanding 431,841 413,344
(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)
March 31, December 31,
2016 2015
---- ----
ASSETS
Current
assets $720,687 $144,786
Properties
and
equipment,
net
(Successful
efforts
method) 4,837,814 4,976,879
Other
assets 144,207 131,373
$5,702,708 $5,253,038
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current
liabilities $199,382 $235,552
Long-
term
debt,
net
(excluding
current
maturities) 1,583,192 1,996,139
Deferred
income
taxes 780,295 807,236
Other
liabilities 195,779 204,923
Stockholders'
equity 2,944,060 2,009,188
--------- ---------
$5,702,708 $5,253,038
========== ==========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In thousands)
Three Months Ended
March 31,
---------
2016 2015
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES
Net
income
(loss) $(51,194) $40,255
Deferred
income
tax
expense
(benefit) (28,973) 15,081
(Gain)
loss on
sale of
assets (1,354) (138)
Exploratory
dry hole
cost - 162
(Gain)
loss on
derivative
instruments (18,994) (34,123)
Net cash
received
(paid)
in
settlement
of
derivative
instruments - 37,685
Income
charges
not
requiring
cash 171,675 181,254
Changes
in
assets
and
liabilities (9,070) 27,205
------ ------
Net cash
provided
by
operating
activities 62,090 267,381
------ -------
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital
expenditures (92,237) (395,242)
Proceeds
from
sale of
assets 49,828 3,081
Investment
in
equity
method
investments (11,652) (5,078)
------- ------
Net cash
used in
investing
activities (54,061) (397,239)
------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES
Net
increase
(decrease)
in debt (413,000) 125,000
Sale of
common
stock,
net 995,278 -
Dividends
paid (8,282) (8,263)
Stock-
based
compensation
tax
benefit - 3,437
Capitalized
debt
issuance
costs (3,223) -
Other - 2,678
--- -----
Net cash
provided
by
financing
activities 570,773 122,852
------- -------
Net
increase
(decrease)
in cash
and cash
equivalents $578,802 $(7,006)
======== =======
Selected Item Review and Reconciliation of Net Income and Earnings Per Share
(In thousands, except per share amounts)
Three Months Ended
March 31,
---------
2016 2015
---- ----
As
reported
-
net
income
(loss) $(51,194) $40,255
Reversal
of
selected
items,
net
of
tax:
(Gain)
loss
on
sale
of
assets (862) (87)
(Gain)
loss
on
derivative
instruments
(1) (12,087) 2,246
Drilling
rig
termination
fees 2,028 3,059
Stock-
based
compensation
expense 6,749 3,726
----- -----
Net
income
(loss)
excluding
selected
items $(55,366) $49,199
======== =======
As
reported
-
earnings
(loss)
per
share $(0.12) $0.10
Per
share
impact
of
reversing
selected
items (0.01) 0.02
----- ----
Earnings
per
share
including
reversal
of
selected
items $(0.13) $0.12
Weighted
average
common
shares
outstanding 431,841 413,344
(1) 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)
Three Months Ended
March 31,
---------
2016 2015
---- ----
As
reported
-net
income
(loss) $(51,194) $40,255
Plus (less):
Deferred
income
tax
expense
(benefit) (28,973) 15,081
(Gain)
loss on
sale of
assets (1,354) (138)
Exploratory
dry hole
cost - 162
(Gain)
loss on
derivative
instruments (18,994) (34,123)
Net cash
received
(paid) in
settlement
of
derivative
instruments - 37,685
Income
charges
not
requiring
cash 171,675 181,254
------- -------
Discretionary
Cash Flow 71,160 240,176
Changes in
assets
and
liabilities (9,070) 27,205
------ ------
Net cash
provided
by
operations $62,090 $267,381
======= ========
EBITDAX Calculation and Reconciliation
(in thousands)
Three Months Ended
March 31,
---------
2016 2015
---- ----
As reported
-net
income
(loss) $(51,194) $40,255
Plus (less):
Interest
expense 24,375 23,566
Income tax
expense
(benefit) (28,770) 23,474
Depreciation,
depletion
and
amortization 161,887 175,497
Exploration 6,383 8,732
(Gain) loss
on sale of
assets (1,354) (138)
Non-cash
(gain) loss
on
derivative
instruments (18,994) 3,562
(Earnings)
loss on
equity
method
investments (2,009) (1,421)
Stock-based
compensation 10,606 5,910
------ -----
EBITDAX $100,930 $279,437
======== ========
Net Debt Reconciliation
(In thousands)
March 31, December 31,
2016 2015
---- ----
Current portion of long-
term debt $20,000 $20,000
Long-term debt, net 1,583,192 1,996,139
--------- ---------
Total debt $1,603,192 $2,016,139
Stockholders' equity 2,944,060 2,009,188
--------- ---------
Total Capitalization $4,547,252 $4,025,327
Total debt $1,603,192 $2,016,139
Less: Cash and cash
equivalents (579,316) (514)
-------- ----
Net Debt $1,023,876 $2,015,625
Net debt $1,023,876 $2,015,625
Stockholders' equity 2,944,060 2,009,188
--------- ---------
Total Adjusted
Capitalization $3,967,936 $4,024,813
Total debt to total
capitalization ratio 35.3% 50.1%
Less: Impact of cash and
cash equivalents 9.5% - %
--- --- ---
Net Debt to Adjusted
Capitalization Ratio 25.8% 50.1%
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-announces-first-quarter-2016-financial-and-operating-results-300259862.html
SOURCE Cabot Oil & Gas Corporation
