COTERRA ENERGY INC. HOUSTON, July 29, 2016 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) ("Cabot" or the "Company") today reported financial and operating results for the second quarter of 2016.
"Cabot's 2016 operating plan was designed to provide modest production growth while generating positive free cash flow despite a lower commodity price environment," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Our second quarter results delivered on this plan as the Company grew equivalent production 10 percent relative to the second quarter of last year while generating operating cash flow that exceeded our capital expenditures, pipeline investments, and dividends." Dinges added, "We anticipate significantly more positive free cash flow generation in the second half of the year based on the current commodity price outlook."
Second Quarter 2016 Financial Results
Equivalent production in the second quarter of 2016 was 151.8 billion cubic feet equivalent (Bcfe), consisting of 144.3 billion cubic feet (Bcf) of natural gas, 1.1 million barrels (Mmbbls) of crude oil and condensate, and 113,000 barrels (Bbls) of natural gas liquids (NGLs). The Company estimates that unscheduled downtime related to infrastructure maintenance negatively impacted natural gas production for the quarter by approximately 3.3 Bcf, or 36 million cubic feet (Mmcf) per day. "While our daily equivalent production for the quarter was in line with the mid-point of our guidance, the Company would have surpassed the high-end of our guidance range had we not experienced this unexpected downtime during the quarter," stated Dinges.
Cash flow from operating activities in the second quarter of 2016 was $85.2 million, compared to $171.2 million in the second quarter of 2015. Discretionary cash flow in the second quarter of 2016 was $97.6 million, compared to $183.2 million in the second quarter of 2015. Net loss in the second quarter of 2016 was $62.9 million, or $0.14 per share, compared to net loss of $27.5 million, or $0.07 per share, in the second quarter of 2015. Excluding the effect of selected items (detailed in the table below), net loss in the second quarter of 2016 was $30.2 million, or $0.07 per share, compared to net income of $14.6 million, or $0.03 per share, in the second quarter of 2015. EBITDAX in the second quarter of 2016 was $127.3 million, compared to $203.9 million in the second 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 (loss) excluding selected items, EBITDAX and net debt to adjusted capitalization ratio.
Natural gas price realizations, including the impact of derivatives, were $1.63 per thousand cubic feet (Mcf) in the second quarter of 2016, down 24 percent compared to the second quarter of 2015. Excluding the impact of derivatives, natural gas price realizations for the quarter implied a $0.40 discount to NYMEX settlement prices compared to a $0.89 discount to NYMEX settlement prices in the second quarter of 2015. Oil price realizations, including the impact of derivatives, were $40.30 per Bbl, down 28 percent compared to the second quarter of 2015. NGL price realizations were $12.43 per Bbl, down 29 percent compared to the second quarter of 2015.
Operating expenses (including financing) decreased to $2.22 per thousand cubic feet equivalent (Mcfe) in the second quarter of 2016, a 12 percent improvement compared to $2.52 per Mcfe in the second 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 $1.19 per Mcfe in the second quarter of 2016, a 12 percent improvement compared to $1.35 per Mcfe in the second quarter of 2015.
Cabot drilled seven net wells and completed 11 net wells during the second quarter of 2016, incurring a total of $70.9 million in capital expenditures associated with activity during this period.
Year-To-Date 2016 Financial Results
Equivalent production for the six-month period ended June 30, 2016 was 312.1 Bcfe, consisting of 297.4 Bcf of natural gas, 2.2 Mmbbls of crude oil and condensate, and 205,000 Bbls of NGLs.
For the six-month period ended June 30, 2016, cash flow from operating activities was $147.2 million, compared to $438.6 million for the six-month period ended June 30, 2015. Discretionary cash flow was $168.8 million for the six-month period ended June 30, 2016, compared to $423.4 million for the six-month period ended June 30, 2015. For the six-month period ended June 30, 2016, net loss was $114.1 million, or $0.25 per share, compared to net income of $12.7 million, or $0.03 per share, for the six-month period ended June 30, 2015. Excluding the effect of selected items, net loss was $85.6 million, or $0.19 per share, compared to net income of $64.0 million, or $0.15 per share, for the six-month period ended June 30, 2015. EBITDAX for the six-month period ended June 30, 2016 was $228.3 million, compared to $483.3 million for the six-month period ended June 30, 2015.
Natural gas price realizations, including the impact of derivatives, were $1.55 per Mcf for the six-month period ended June 30, 2016, down 33 percent compared to the six-month period ended June 30, 2015. Oil price realizations, including the impact of derivatives, were $34.06 per Bbl, down 32 percent compared to the six-month period ended June 30, 2015. NGL price realizations were $10.09 per Bbl, down 29 percent compared to the six-month period ended June 30, 2015.
Operating expenses (including financing) decreased to $2.24 per Mcfe for the six-month period ended June 30, 2016, a seven percent improvement compared to $2.41 per Mcfe for the six-month period ended June 30, 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 for the six-month period ended June 30, 2016, a nine percent improvement compared to $1.30 per Mcfe in the six-month period ended June 30, 2015.
Cabot drilled 17 net wells and completed 32 net wells during the six-month period ended June 30, 2016, incurring a total of $162.5 million in capital expenditures associated with activity during this period.
Operational Highlights
Marcellus Shale
During the second quarter of 2016, the Company averaged 1,535 Mmcf per day of net Marcellus production (1,798 gross operated Mmcf per day), an increase of 14 percent compared to the second quarter of 2015. During the second quarter, the Company drilled seven net wells, completed eight net wells and placed 12 net wells on production including a four-well pad that was placed on production 10 days prior to the quarter-end and had minimal impact on second quarter production as the wells were still cleaning up in line.
Cabot is currently operating one rig and recently added a second completion crew in the Marcellus Shale. "Based on continued efficiency gains, lower service costs and our improved outlook for natural gas price realizations, we are increasing our activity levels in our high-return Marcellus asset beginning with the addition of a second completion crew." Dinges added, "Cabot is the lowest cost producer in Northeast Pennsylvania and generates rates of return over 100 percent under current price expectations so we plan to opportunistically increase our market share during 2017 as we await the in-service of our new infrastructure projects beginning in late-2017."
Eagle Ford Shale
Cabot's net production in the Eagle Ford Shale during the second quarter of 2016 was 14,312 barrels of oil equivalent (Boe) per day, an increase of 10 percent sequentially compared to the first quarter of 2016. Net oil production during the quarter was 12,360 Bbls per day, an increase of four percent sequentially compared to the first quarter of 2016. During the second quarter, the Company did not drill any wells; however, Cabot completed and placed on production three net wells.
Cabot plans to drill two Eagle Ford wells during the third quarter and will not complete or place on production an additional Eagle Ford well until the fourth quarter.
Financial Position and Liquidity
As of June 30, 2016, Cabot had total debt of $1.5 billion and cash on hand of $517.5 million. The Company's net debt to adjusted capitalization ratio and net debt to trailing twelve months EBITDAX ratio were 26.2 percent and 1.8x, respectively, compared to 50.1 percent and 2.5x as of December 31, 2015.
Total commitments under the Company's revolving credit facility remain unchanged at $1.8 billion, with approximately $1.7 billion currently available to the Company. The Company currently has no debt outstanding under the credit facility, resulting in approximately $2.2 billion of liquidity.
Third Quarter and Full-Year 2016 Guidance
Cabot has provided third quarter net production guidance of 1,575 to 1,600 Mmcf per day for natural gas; 10,000 to 10,500 Bbls per day for crude oil and condensate; and 1,200 to 1,250 Bbls per day for NGLs. The Company expects its natural gas price realizations (before the impact of derivatives) to average between $0.80 and $0.90 below NYMEX settlement prices for the third quarter based on the assumption of an average NYMEX settlement price of approximately $2.80. "Despite a widening of basis in the third quarter due to higher NYMEX prices, our natural gas price realizations before the impact of derivatives are forecasted to be over 25 percent higher than our second quarter realizations based on the mid-point of our differential guidance,'' commented Dinges.
Cabot has increased its 2016 capital budget from $325 million to $345 million to reflect the incremental capital for the completion of an additional 15 to 20 net wells during the second half of the year, partially offset by efficiency gains and cost savings realized throughout the year. Since the production impact from these additional wells will not be realized until early 2017, the Company's 2016 production growth guidance range of two to seven percent remains unchanged. For further disclosure on Cabot's natural gas pricing exposure by index and updated unit cost guidance for the third 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, July 29, 2016, at 9:30 a.m. Eastern Time to discuss second 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 derivative 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
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
PRODUCTION VOLUMES
Natural gas (Bcf) 144.3 128.4 297.4 290.2
Crude oil and
condensate (Mbbl) 1,139.3 1,447.9 2,248.9 2,875.5
Natural gas liquids
(NGLs) (Mbbl) 112.9 164.2 205.0 330.1
Equivalent production
(Bcfe) 151.8 138.0 312.1 309.4
AVERAGE SALES PRICE
Natural gas, including
hedges ($/Mcf) $1.63 $2.15 $1.55 $2.32
Natural gas, excluding
hedges ($/Mcf) $1.55 $1.75 $1.52 $2.02
Crude oil and
condensate, including
hedges ($/Bbl) $40.30 $56.10 $34.06 $50.00
Crude oil and
condensate, excluding
hedges ($/Bbl) $40.51 $56.10 $34.16 $50.00
NGL ($/Bbl) $12.43 $17.44 $10.09 $14.23
AVERAGE UNIT COSTS
($/Mcfe)
Direct operations $0.17 $0.26 $0.17 $0.23
Transportation and
gathering 0.71 0.71 0.70 0.71
Taxes other than
income 0.06 0.08 0.05 0.07
Exploration 0.02 0.04 0.03 0.05
Depreciation,
depletion and
amortization 0.97 1.10 0.99 1.06
General and
administrative
(excluding stock-
based compensation) 0.09 0.08 0.10 0.09
Stock-based
compensation 0.05 0.06 0.06 0.05
Interest expense 0.14 0.18 0.15 0.15
---- ---- ---- ----
$2.22 $2.52 $2.24 $2.41
===== ===== ===== =====
WELLS DRILLED
Gross 7 44 17 87
Net 7 37 17 78
Gross success rate 100% 100% 100% 100%
WELLS COMPLETED
Gross 11 36 32 75
Net 11 33 32 72
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
OPERATING REVENUES
Natural gas $223,232 $224,806 $450,811 $584,997
Crude oil and condensate 46,156 81,233 76,833 143,791
Gain (loss) on derivative
instruments (27,184) (6,819) (8,190) 27,304
Brokered natural gas 2,596 3,813 5,776 8,640
Other 2,016 3,264 3,527 6,330
----- ----- ----- -----
246,816 306,297 528,757 771,062
OPERATING EXPENSES
Direct operations 26,477 36,112 52,513 72,129
Transportation and gathering 107,560 98,295 217,213 219,531
Brokered natural gas 2,021 2,885 4,587 6,624
Taxes other than income 8,973 11,611 14,967 22,891
Exploration 3,738 5,298 10,121 14,030
Depreciation, depletion and
amortization 147,533 152,513 309,420 328,009
General and administrative
(excluding stock-based
compensation) 12,946 11,354 30,715 27,972
Stock-based compensation(1) 7,301 8,624 17,906 14,535
----- ----- ------ ------
316,549 326,692 657,442 705,721
Earnings (loss) on equity
method investments (73) 1,512 1,935 2,933
Gain (loss) on sale of assets (878) (79) 477 59
---- --- --- ---
INCOME (LOSS) FROM OPERATIONS (70,684) (18,962) (126,273) 68,333
Loss on debt extinguishment 4,709 - 4,709 -
Interest expense 21,963 24,168 46,338 47,734
------ ------ ------ ------
Income (loss) before income
taxes (97,356) (43,130) (177,320) 20,599
Income tax expense (benefit) (34,446) (15,622) (63,216) 7,852
------- ------- ------- -----
NET INCOME (LOSS) $(62,910) $(27,508) $(114,104) $12,747
======== ======== ========= =======
Earnings (loss) per share -
Basic $(0.14) $(0.07) $(0.25) $0.03
Weighted-average common
shares outstanding 465,068 413,713 448,455 413,530
(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,
2016 2015
---- ----
ASSETS
Current
assets $659,238 $144,786
Properties
and
equipment,
net
(Successful
efforts
method) 4,762,680 4,976,879
Other
assets 148,552 131,373
$5,570,470 $5,253,038
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current
liabilities $228,490 $235,552
Long-
term
debt,
net
(excluding
current
maturities) 1,519,849 1,996,139
Deferred
income
taxes 745,085 807,236
Other
liabilities 199,447 204,923
Stockholders'
equity 2,877,599 2,009,188
--------- ---------
$5,570,470 $5,253,038
========== ==========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In thousands)
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(62,910) $(27,508) $(114,104) $12,747
Deferred income tax
expense (benefit) (35,322) (7,921) (64,294) 7,160
(Gain) loss on sale
of assets 878 79 (477) (59)
Exploratory dry hole
cost 18 16 18 178
(Gain) loss on
derivative
instruments 27,184 6,819 8,190 (27,304)
Net cash received
(paid) in settlement
of derivative
instruments 11,305 51,045 11,305 88,730
Income charges not
requiring cash 156,465 160,694 328,140 341,948
Changes in assets and
liabilities (12,464) (12,014) (21,534) 15,191
------- ------- ------- ------
Net cash provided by
operating activities 85,154 171,210 147,244 438,591
------ ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (67,162) (250,001) (159,399) (645,092)
Acquisitions - (16,149) - (16,300)
Proceeds from sale of
assets - (79) 49,828 3,002
Investment in equity
method investments (6,519) (5,036) (18,171) (10,114)
------ ------ ------- -------
Net cash used in
investing activities (73,681) (271,265) (127,742) (668,504)
------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase
(decrease) in debt (64,000) 118,000 (477,000) 243,000
Sale of common stock,
net 1 - 995,279 -
Dividends paid (9,300) (8,274) (17,582) (16,537)
Stock-based
compensation tax
benefit - 2,049 - 5,486
Capitalized debt
issuance costs - (7,838) (3,223) (7,838)
Other - (2,599) - 79
--- ------ --- ---
Net cash provided by
(used in) financing
activities (73,299) 101,338 497,474 224,190
------- ------- ------- -------
Net increase
(decrease) in cash
and cash equivalents $(61,826) $1,283 $516,976 $(5,723)
======== ====== ======== =======
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,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
As reported -net income
(loss) $(62,910) $(27,508) $(114,104) $12,747
Reversal of selected items:
(Gain) loss on sale of
assets 878 79 (477) (59)
(Gain) loss on derivative
instruments (1) 38,489 57,864 19,495 61,426
Loss on debt
extinguishment 4,709 - 4,709 -
Drilling rig termination
fees - 69 3,188 5,153
Stock-based compensation
expense 7,301 8,624 17,906 14,535
Tax effect on selected items (18,647) (24,553) (16,268) (29,836)
------- ------- ------- -------
Net income (loss)
excluding selected items $(30,180) $14,575 $(85,551) $63,966
======== ======= ======== =======
As reported -earnings
(loss) per share $(0.14) $(0.07) $(0.25) $0.03
Per share impact of
reversing selected items 0.07 0.10 0.06 0.12
---- ---- ---- ----
Earnings (loss) per share
including reversal of
selected items $(0.07) $0.03 $(0.19) $0.15
Weighted average common
shares outstanding 465,068 413,713 448,455 413,530
(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)
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
As reported -net
income (loss) $(62,910) $(27,508) $(114,104) $12,747
Plus (less):
Deferred income tax
expense (benefit) (35,322) (7,921) (64,294) 7,160
(Gain) loss on sale
of assets 878 79 (477) (59)
Exploratory dry hole
cost 18 16 18 178
(Gain) loss on
derivative
instruments 27,184 6,819 8,190 (27,304)
Net cash received
(paid) in
settlement of
derivative
instruments 11,305 51,045 11,305 88,730
Income charges not
requiring cash 156,465 160,694 328,140 341,948
------- ------- ------- -------
Discretionary cash
flow 97,618 183,224 168,778 423,400
Changes in assets
and liabilities (12,464) (12,014) (21,534) 15,191
------- ------- ------- ------
Net cash provided by
operations $85,154 $171,210 $147,244 $438,591
======= ======== ======== ========
EBITDAX Calculation and Reconciliation
(In thousands)
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
As reported -net income
(loss) $(62,910) $(27,508) $(114,104) $12,747
Plus (less):
Loss on debt
extinguishment 4,709 - 4,709 -
Interest expense 21,963 24,168 46,338 47,734
Income tax expense
(benefit) (34,446) (15,622) (63,216) 7,852
Depreciation, depletion
and amortization 147,533 152,513 309,420 328,009
Exploration 3,738 5,298 10,121 14,030
(Gain) loss on sale of
assets 878 79 (477) (59)
Non-cash (gain) loss on
derivative instruments 38,489 57,864 19,495 61,426
(Earnings) loss on equity
method investments 73 (1,512) (1,935) (2,933)
Stock-based compensation 7,301 8,624 17,906 14,535
----- ----- ------ ------
EBITDAX $127,328 $203,904 $228,257 $483,341
======== ======== ======== ========
Net Debt Reconciliation
(In thousands)
June 30, December 31,
2016 2015
---- ----
Current
portion
of
long-
term
debt $20,000 $20,000
Long-
term
debt,
net 1,519,849 1,996,139
--------- ---------
Total
debt $1,539,849 $2,016,139
Stockholders'
equity 2,877,599 2,009,188
--------- ---------
Total
capitalization $4,417,448 $4,025,327
Total
debt $1,539,849 $2,016,139
Less:
Cash
and
cash
equivalents (517,490) (514)
-------- ----
Net debt $1,022,359 $2,015,625
Net debt $1,022,359 $2,015,625
Stockholders'
equity 2,877,599 2,009,188
--------- ---------
Total
adjusted
capitalization $3,899,958 $4,024,813
Total
debt to
total
capitalization
ratio 34.9% 50.1%
Less:
Impact
of cash
and
cash
equivalents 8.7% -%
Net debt
to
adjusted
capitalization
ratio 26.2% 50.1%
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SOURCE Cabot Oil & Gas Corporation
