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CABOT OIL'A'USD : Cabot Oil & Gas Announces Second Quarter Results

07/22/2010 | 09:05am US/Eastern
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HOUSTON, July 22, /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today reported second quarter net income of $21.7 million, or $0.21 per share, as compared to net income of $25.5 million, or $0.25 per share, in the second quarter of 2009. Removing the selected items in both periods, (which are detailed in the Selected Items Table and include the impact-related to the sale of assets, stock compensation and derivatives), the 2010 quarter's net income was $19.9 million, or $0.19 per share, as compared to $39.1 million, or $0.38 per share, for the second quarter of 2009.

Cash flow from operations for the 2010 second quarter totaled $127.1 million, while discretionary cash flow was $109.5 million. Comparatively, 2009 second quarter cash flow from operations was $147.9 million, and discretionary cash flow was $133.6 million.

Driving these results were lower natural gas realized prices partially offset by higher realized oil prices and higher production levels. "Our second quarter production level of 30.5 Bcfe is the highest quarterly level ever reported and was approximately 20 percent higher than the volumes reported in last year's second quarter," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Directionally this is very positive for Cabot and reflects only two weeks of production from phase one of the new compressor station in Pennsylvania." In terms of pricing, realized natural gas prices were $5.48 per Mcf in the 2010 second quarter versus $7.25 per Mcf in the 2009 second quarter that benefited from a significantly large hedge gain. Realized oil prices for the period increased 15 percent to $96.70 per barrel over last year's second quarter.

In terms of cost comparisons, per unit levels improved in this second quarter for nearly all of the expense categories versus last year's second quarter.

Year-to-Date

In the six months ended June 30, 2010, Cabot reported net income of $50.4 million, or $0.49 per share, compared to $73.1 million, or $0.71 per share, for the same period last year. The cash flow comparisons for the six months ended June 30, 2010 and June 30, 2009, respectively, are cash flow from operations of $243.2 million versus $300.4 million and discretionary cash flow of $241.0 million versus $271.7 million. The 2010 six-month net income figure, after removal of the selected items, was $50.4 million, or $0.49 per share, versus $81.3 million, or $0.78 per share, for the six-month period ended June 30, 2009.

"The same dynamic that drove the quarter results apply to the year-to-date periods - increased production and lower natural gas price realizations," stated Dinges. "Production was up approximately 12 percent for the six-month comparable periods while natural gas prices fell 19 percent and oil prices increased 22 percent." Per unit expenses, other than DD&A and exploration expense which was flat, were down between the year-to-date six-month comparable periods.

Conference Call

Listen in live to Cabot Oil & Gas Corporation's second quarter financial and operating results discussion with financial analysts on Thursday, July 22, 2010 at 4:00 p.m. EDT (3:00 p.m. CDT) at www.cabotog.com. A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), pass code 84971115. The replay will be available through Saturday, July 24, 2010. The latest financial guidance, including the Company's hedge positions, along with a replay of the web cast, which will be archived for one year, are available in the investor relations section of the Company's website at www.cabotog.com.

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 Internet 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.



                                  OPERATING DATA

                                                              Six Months
                                        Quarter Ended           Ended
                                           June 30,           June 30,
                                           --------           --------
                                         2010    2009       2010    2009
                                          ----    ----       ----    ----
    PRODUCED NATURAL GAS (Bcf) & OIL
     (MBbl)
    --------------------------------
    Natural Gas
      North                               17.1    11.9       31.5    22.6
      South                               11.8    12.0       22.8    25.3
      Canada                                 -     0.4          -     1.0
                                                              ---     ---
      Total                               28.9    24.3       54.3    48.9
                                          ====    ====       ====    ====

    Crude/Condensate/Ngl
      North                               28.0    32.0       51.0    59.0
      South                              221.0   163.0      416.0   328.0
      Canada                                 -     2.0          -     6.0
                                                              ---     ---
      Total                              249.0   197.0      467.0   393.0
                                         =====   =====      =====   =====



    Equivalent Production (Bcfe)          30.5    25.5       57.1    51.2

    PRICES
    ------
    Average Produced Gas Sales Price
     ($/Mcf)
      North                              $4.47   $6.29      $4.98   $6.72
      South                              $6.95   $8.30      $7.38   $8.12
      Canada                         $       -   $3.22  $       -   $3.40
      Total (1)                          $5.48   $7.25      $5.99   $7.38

    Average Crude/Condensate Price
     ($/Bbl)
      North                             $67.27  $52.61     $67.63  $42.73
      South                            $100.65  $90.15    $100.75  $86.72
      Canada                         $       -  $45.14  $       -  $36.46
      Total (1)                         $96.70  $83.76     $97.04  $79.55

    WELLS DRILLED
    -------------
      Gross                                 21      33         45      82
      Net                                   21      28         41      65
      Gross Success Rate                   100%    100%        98%     98%

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


                                        Quarter Ended       Six Months Ended
                                          June 30,              June 30,
                                          --------              --------
                                       2010         2009   2010          2009
                                       ----         ----   ----          ----
     Realized Impacts to Gas Pricing  $1.44        $4.15  $1.29         $3.74
     Realized Impacts to Oil Pricing $21.82       $30.78 $22.09        $34.87



               CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
                       (In thousands, except per share amounts)

                                      Quarter Ended        Six Months Ended
                                        June 30,                 June 30,
                                        --------                --------
                                     2010      2009         2010      2009
                                     ----      ----         ----      ----
    Operating Revenues
      Natural Gas Production          $159,761 $176,213 $325,842 $360,735
      Brokered Natural Gas              13,348   11,704   38,221   45,085
      Crude Oil and Condensate          21,211   16,210   41,193   30,452
      Other                              1,154      697    2,774    2,491
                                         -----      ---    -----    -----
                                       195,474  204,824  408,030  438,763
    Operating Expenses
      Brokered Natural Gas Cost         11,793   10,684   33,061   40,433
      Direct Operations -Field and
       Pipeline                         24,347   23,073   47,330   48,552
      Exploration                       10,233   10,397   18,659   16,863
      Depreciation, Depletion and
       Amortization                     76,726   61,838  150,224  126,930
      General and Administrative
       (excluding Stock-Based
       Compensation)                    10,469   10,946   22,991   22,882
      Stock-Based Compensation (1)       2,384    6,171    5,608   11,300
      Taxes Other Than Income           11,841   10,914   22,646   23,812
                                        ------   ------   ------   ------
                                       147,793  134,023  300,519  290,772
    Gain (Loss) on Sale of Assets (2)    4,387 (16,562)    5,146   (3,855)
                                         -----  -------    -----   ------
    Income from Operations              52,068   54,239  112,657  144,136
    Interest Expense and Other          15,769   15,046   30,681   29,272
                                        ------   ------   ------   ------
    Income Before Income Taxes          36,299   39,193   81,976  114,864
    Income Tax Expense                  14,617   13,691   31,598   41,782
                                        ------   ------   ------   ------
    Net Income                         $21,682  $25,502  $50,378  $73,082
                                       =======  =======  =======  =======
    Net Earnings Per Share - Basic       $0.21    $0.25    $0.49    $0.71
    Weighted Average Common Shares
     Outstanding                       103,915  103,640  103,855  103,581

    (1) Includes the impact of the Company's performance share awards and
     restricted stock amortization as well as expense related to stock 
    options and stock appreciation rights.  Also includes expense for 
    the Supplemental Employee Incentive Plans which commenced in 2008.

    (2) The gain on sale of assets in 2010 primarily relates to the sale
    of the Woodford Shale Prospect offset by an impairment charge related 
    to properties held for sale.  The loss on sale in 2009 primarily
     relates to the sale of our Canadian properties in April 2009, partially 
    offset by a gain on sale of assets from the first quarter 2009 sale of 
    Thornwood properties in the North region.


          CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                            (In thousands)

                                   June 30,       December 31,
                                        2010              2009
                                        ----              ----
    Assets
    Current Assets                  $248,257          $281,502
    Property, Equipment and
     Other Assets                  3,621,943         3,401,899
       Total Assets               $3,870,200        $3,683,401
                                  ==========        ==========

    Liabilities and
     Stockholders' Equity
    Current Liabilities             $226,833          $308,741
    Long-Term Debt                 1,015,000           805,000
    Deferred Income Taxes            675,824           644,801
    Other Liabilities                106,639           112,345
    Stockholders' Equity           1,845,904         1,812,514
       Total Liabilities and
        Stockholders' Equity      $3,870,200        $3,683,401
                                  ==========        ==========



               CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
                                      (In thousands)

                                     Quarter Ended    Six Months Ended
                                         June 30,      June 30,
                                         --------         --------
                                     2010      2009      2010    2009
                                     ----     ----      ----     ----

    Cash Flows From Operating
     Activities
    Net Income                    $21,682   $25,502   $50,378   $73,082
    Unrealized (Gain) Loss on
     Derivatives                     (942)      126      (355)     (815)
    Income Charges Not Requiring
     Cash                          79,802    69,151   158,579   140,443
    (Gain) Loss on Sale of
     Assets                        (4,387)   16,562    (5,146)    3,855
    Deferred Income Tax Expense    13,375    11,903    29,091    38,252
    Changes in Assets and
     Liabilities                   17,551    14,210     2,205    28,705
    Exploration Expense                 -    10,397     8,426    16,863
                                                                 ------
    Net Cash Provided by
     Operations                   127,081   147,851   243,178   300,385
                                  -------   -------   -------   -------

    Cash Flows From Investing
     Activities
    Capital Expenditures         (218,741) (132,338) (454,143) (309,833)
    Proceeds from Sale of Assets   15,940    64,604    16,742    79,667
    Net Cash Used in Investing   (202,801)  (67,734) (437,401) (230,166)
                                 --------   -------  --------  --------

    Cash Flows From Financing
     Activities
    Net Increase (Decrease) in
     Debt                         100,000   (62,000)  210,000   (52,000)
    Capitalized Debt Issuance
     Costs                         (1,986)  (10,409)   (1,986)  (10,409)
    Dividends Paid                 (3,117)   (3,110)   (6,228)   (6,213)
    Other                               3         1       (36)      150
    Net Cash Provided by (Used
     in) Financing                 94,900   (75,518)  201,750   (68,472)
                                   ------   -------   -------   -------

    Net Increase in Cash and
     Cash Equivalents             $19,180    $4,599    $7,527    $1,747
                                  =======    ======    ======    ======



    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,
                                      --------      --------
                                   2010  2009       2010    2009
                                   ----  ----      ----     ----

    As Reported - Net Income          $21,682  $25,502 $50,378  $73,082
    Reversal of Selected Items,
     Net of Tax:
            (Gain) Loss on Sale of
             Assets (1)                (2,720)   9,596  (3,191)   1,629
            Stock-Based Compensation
             Expense                    1,478    3,875   3,477    7,091
            Unrealized Loss (Gain) on
             Derivatives (2)             (584)      79    (220)    (511)
                                         ----      ---    ----     ----
    Net Income Excluding
     Selected Items                   $19,856  $39,052 $50,444  $81,291
                                      =======  ======= =======  =======
    As Reported -Net Earnings
     Per Share                          $0.21    $0.25   $0.49    $0.71
     Per Share Impact of
      Reversing Selected Items          (0.02)    0.13       -     0.07
                                        -----     ----     ---     ----
    Net Earnings Per Share
     Including Reversal of
     Selected Items                     $0.19    $0.38   $0.49    $0.78
    Weighted Average Common
     Shares Outstanding               103,915  103,640 103,855  103,581

    (1)  The gain on sale of assets in 2010 primarily relates to the sale
     of the Woodford Shale Prospect offset by an impairment charge related
     to properties held for sale.  The loss on sale in 2009 primarily 
     relates to the sale of our Canadian properties in April 2009, 
     partially offset by a gain on sale of assets from the first quarter
     2009 sale of Thornwood properties in the North region.   

    (2)  This unrealized loss (gain) is included in Natural Gas 
     Production Revenues in the Condensed Consolidated Statement of 
     Operations and represents the mark to market change related to
     the Company's natural gas basis swaps. 
      





     Discretionary Cash Flow Calculation and Reconciliation
                                    (In thousands)
                                            Quarter Ended Six Months Ended
                                               June 30,         June 30,
                                               --------         --------
                                             2010   2009       2010  2009
                                             ----  ----          ----  ----

     Discretionary Cash Flow
     As Reported - Net Income            $21,682   $25,502  $50,378   $73,082
     Plus / (Less):
     Unrealized Loss (Gain) on
      Derivatives                           (942)      126     (355)     (815)
     Income Charges Not Requiring Cash    79,802    69,151  158,579   140,443
     (Gain) Loss on Sale of Assets        (4,387)   16,562   (5,146)    3,855
     Deferred Income Tax Expense          13,375    11,903   29,091    38,252
     Exploration Expense                       -    10,397    8,426    16,863
                                             ---    ------    -----    ------
     Discretionary Cash Flow             109,530   133,641  240,973   271,680
     Changes in Assets and Liabilities    17,551    14,210    2,205    28,705
     Net Cash Provided by Operations    $127,081  $147,851 $243,178  $300,385
                                        ========  ======== ========  ========


                        Net Debt Reconciliation
                            (In thousands)

                                                             December
                                             June 30,           31,
                                                   2010           2009
                                                   ----           ----

       Long-Term Debt                        $1,015,000       $805,000
       Stockholders' Equity                   1,845,904      1,812,514
                                              ---------      ---------
            Total Capitalization             $2,860,904     $2,617,514

       Total Debt                            $1,015,000       $805,000
       Less:  Cash and Cash
        Equivalents                             (47,685)       (40,158)
                                                -------        -------
            Net Debt                           $967,315       $764,842

       Net Debt                                $967,315       $764,842
       Stockholders' Equity                   1,845,904      1,812,514
                                              ---------      ---------
            Total Adjusted Capitalization    $2,813,219     $2,577,356

      Total Debt to Total
       Capitalization Ratio                        35.5%          30.8%
       Less:  Impact of Cash and Cash
        Equivalents                                 1.1%           1.1%
                                                    ---            ---
            Net Debt to Adjusted
             Capitalization Ratio                  34.4%          29.7%

SOURCE Cabot Oil & Gas Corporation

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