HOUSTON, Oct. 29 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation today announced that for the third consecutive quarter, the Company established new highs versus comparable historical quarters (excluding selected items). For the third quarter ended September 30, 2008, Cabot reported net income of $67.0 million, or $0.65 per share, and $60.1 million, or $0.58 per share after removing gains in the quarter related to stock compensation and unrealized hedge gains. This compares to a reported net income figure last year of $35.5 million, or $0.37 per share, and a selected items figure of $39.5 million, or $0.41 per share, after removing expenses for an impairment and stock compensation.
"While the last three months in the market have felt negative, the fundamentals around Cabot's operation are strong, and we continue to execute our plan," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "That effort has resulted in another extremely successful financial quarter, together with positive operational results."
The Company has created new third quarter benchmarks with cash flow from operations rising to $148.3 million versus $86.8 million in last year's third quarter. Discretionary cash flow totaled $161.0 million versus $121.7 million in last year's third quarter. "At a time in the business cycle when cash is king, we are pleased to be able to generate high levels of cash flow to fund our operating plan," commented Dinges.
Driving these results were higher realized prices and higher natural gas production levels. Realized natural gas prices grew 27 percent between comparable third quarters, reaching $8.66 per Mcf for 2008. Crude oil realizations also increased, moving higher to $99.34 per barrel, or by 40 percent between comparable third quarters. Production levels experienced double digit growth driven by an increase in natural gas production, primarily from the Company's Gulf Coast region. Oil volumes were essentially flat when comparing third quarters.
"We closed our east Texas acquisition in August giving us incremental production volumes above our original expectations, with some of this increment offset by hurricane impacts related to Gustav and Ike," said Dinges.
On the expense side, there was a general increase in levels between comparable quarters, due to continued inflationary pressures, higher prices and the inclusion of the acquired properties (that drove up the DD&A rate). Lower exploration expense, no impairments and lower stock compensation did offset some of the increases.
Year-to-Date
For 2008 and 2007 year-to-date periods, the reported net income figures were $167.6 million, or $1.68 per share, and $125.4 million, or $1.29 per share, respectively. The nine month net income results, after removal of selected items, were $187 million for net income, or $1.87 earnings per share for 2008, which compares favorably with the income reported in the nine months last year of $128.4 million, or $1.33 per share.
Cash flow from operations for the year-to-date period reached $424.7 million versus $328.6 million last year, while the discretionary cash flow comparison year-to-date was $446.5 million versus $341 million for 2008 and 2007, respectively.
Again, the significant up-tick in prices, together with increased volumes brought the better results. Natural gas prices increased 21 percent, while oil prices were up 53 percent between year-to-date 2008 and 2007 periods. Equivalent production volumes were nine percent higher during these same comparable periods.
Balance Sheet
"Clearly a topic on everyone's mind is the balance sheet and the Company's underlying liquidity levels," stated Dinges. Cabot Oil & Gas ended the quarter with approximately $47 million in cash and $165 million of capacity on its revolving credit facility. With debt totaling $820 million, the Company still has a 33 percent debt to capitalization ratio.
Conference Call
Listen in live to Cabot Oil & Gas Corporation's third quarter financial and operating results discussion with financial analysts on Thursday, October 30, 2008 at 9:30 a.m. EDT (8:30 a.m. CDT) at http://www.cabotog.com/. A teleconference replay will also be available at (800) 642-1687, (U.S./Canada) or (706) 645-9291 (International), pass code 66519033. The replay will be available through Saturday, November 1, 2008. 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 http://www.cabotog.com/.
Cabot Oil & Gas Corporation, headquartered in Houston, Texas is a leading independent natural gas producer with substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid-Continent; the East and in Canada. For additional information, visit the Company's Internet homepage at http://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 Quarter Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 PRODUCED NATURAL GAS (Bcf) & OIL (MBbl) Natural Gas East 6.4 6.2 18.3 18.2 Gulf Coast 9.3 6.8 24.4 19.7 West 6.5 6.6 20.0 19.4 Canada 0.8 1.0 3.4 3.0 Total 23.0 20.6 66.1 60.3 Crude/Condensate/Ngl East 5 7 17 20 Gulf Coast 152 154 432 463 West 44 50 123 140 Canada 6 4 17 14 Total 207 215 589 637 Equivalent Production (Bcfe) 24.2 21.9 69.6 64.1 PRICES Average Produced Gas Sales Price($/Mcf) East $8.44 $7.37 $8.78 $7.76 Gulf Coast $9.82 $7.82 $9.53 $7.95 West $7.37 $5.47 $7.58 $6.00 Canada $7.60 $4.95 $7.84 $5.63 Total (1) $8.66 $6.80 $8.64 $7.15 Average Crude/Condensate Price($/Bbl) East $106.23 $68.12 $104.63 $60.78 Gulf Coast $95.28 $71.16 $90.58 $62.27 West $112.24 $70.85 $109.60 $62.81 Canada $100.46 $63.47 $92.03 $54.97 Total (1) $99.34 $70.85 $94.93 $62.17 WELLS DRILLED Gross 132 137 333 359 Net 115 110 277 313 Gross Success Rate 99% 98% 99% 98% (1) These realized prices include the realized impact of derivative instrument settlements. Quarter Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Realized Impacts to Gas Pricing $(0.30) $1.40 $(0.42) $0.99 Realized Impacts to Oil Pricing $(15.39) $- $(15.05) $0.29 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Quarter Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Operating Revenues Natural Gas Production $200,279 $140,300 $569,527 $431,178 Brokered Natural Gas 23,855 15,179 86,663 66,357 Crude Oil and Condensate 20,002 15,084 55,089 39,289 Other 684 285 2,046 1,429 244,820 170,848 713,325 538,253 Operating Expenses Brokered Natural Gas Cost 20,891 13,223 75,321 57,973 Direct Operations - Field and Pipeline 24,974 20,996 65,101 57,131 Exploration 6,413 8,766 18,764 21,243 Depreciation, Depletion and Amortization 57,407 43,585 152,075 121,551 Impairment of Oil & Gas Properties - 4,614 - 4,614 General and Administrative (excluding Stock-Based Compensation) 9,486 7,831 31,265 28,380 Stock-Based Compensation (1) (9,695) 1,884 29,576 12,580 Taxes Other Than Income 20,627 14,379 56,749 42,123 130,103 115,278 428,851 345,595 Gain / (Loss) on Sale of Assets (2) - (49) 401 12,293 Income from Operations 114,717 55,521 284,875 204,951 Interest Expense and Other 10,486 3,921 22,684 11,464 Income Before Income Taxes 104,231 51,600 262,191 193,487 Income Tax Expense 37,241 16,147 94,601 68,111 Net Income $66,990 $35,453 $167,590 $125,376 Net Earnings Per Share - Basic $0.65 $0.37 $1.68 $1.29 Weighted Average Common Shares Outstanding 103,351 97,068 99,858 96,899 (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 Plan which commenced in January 2008. (2) Gain / (Loss) on Sale of Assets is primarily related to post-closing transactions associated with the sale in the third quarter of 2006 of offshore and certain south Louisiana properties. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) September 30, December 31, 2008 2007 Assets Current Assets $430,494 $221,413 Property, Equipment and Other Assets 3,023,400 1,939,334 Deferred Income Taxes 84,212 47,847 Total Assets $3,538,106 $2,208,594 Liabilities and Stockholders' Equity Current Liabilities $318,034 $252,266 Long-Term Debt, excluding Current Maturities 800,000 330,000 Deferred Income Taxes 674,007 481,770 Other Liabilities 75,047 74,301 Stockholders' Equity 1,671,018 1,070,257 Total Liabilities and Stockholders' Equity $3,538,106 $2,208,594 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In thousands) Quarter Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Cash Flows From Operating Activities Net Income $66,990 $35,453 $167,590 $125,376 Unrealized (Gain) / Loss on Derivatives (1,260) - 1,649 - Impairment of Oil & Gas Properties - 4,614 - 4,614 Income Charges Not Requiring Cash 47,948 45,511 162,446 135,094 (Gain) / Loss on Sale of Assets - 49 (401) (12,293) Deferred Income Tax Expense 40,944 27,318 96,459 66,930 Changes in Assets and Liabilities (1,707) (34,148) (10,768) (5,548) Stock-Based Compensation Tax Benefit (11,011) (811) (11,011) (6,857) Exploration Expense 6,413 8,766 18,764 21,243 Net Cash Provided by Operations 148,317 86,752 424,728 328,559 Cash Flows From Investing Activities Capital Expenditures (791,728) (145,032) (1,164,339) (416,963) Proceeds from Sale of Assets - 1 1,150 5,826 Exploration Expense (6,413) (8,766) (18,764) (21,243) Net Cash Used in Investing (798,141) (153,797) (1,181,953) (432,380) Cash Flows From Financing Activities Sale of Common Stock Proceeds 122 7 316,229 2,314 Net Increase in Debt 555,000 60,000 470,000 75,000 Capitalized Debt Issuance Costs (2,166) - (2,166) - Stock-Based Compensation Tax Benefit 11,011 811 11,011 6,857 Dividends Paid (3,100) (2,913) (8,973) (7,753) Net Cash Provided by Financing 560,867 57,905 786,101 76,418 Net Increase / (Decrease) in Cash and Cash Equivalents $(88,957) $(9,140) $28,876 $(27,403)
Selected Item Review and Reconciliation of Net Income and Earnings Per Share
(In thousands, except per share amounts) Quarter Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 As Reported - Net Income $66,990 $35,453 $167,590 $125,376 Reversal of Selected Items, Net of Tax: Impairment of Oil & Gas Properties - 2,870 - 2,870 (Gain) / Loss on Sale of Assets - 30 (253) (7,647) Stock-Based Compensation Expense (6,098) 1,172 18,625 7,825 Unrealized (Gain) / Loss on Derivatives (1) (793) - 1,040 - Net Income Excluding Selected Items $60,099 $39,525 $187,002 $128,424 As Reported - Net Earnings Per Share $0.65 $0.37 $1.68 $1.29 Per Share Impact of Reversing Selected Items (0.07) 0.04 0.19 0.04 Net Earnings Per Share Including Reversal of Selected Items $0.58 $0.41 $1.87 $1.33 Weighted Average Common Shares Outstanding 103,351 97,068 99,858 96,899 (1) This unrealized gain / (loss) is included in Natural Gas Production Revenues in the Condensed Consolidated Statement of Operations and represents the mark to market change related to a portion of a derivative not designated as a hedge in the second quarter of 2008. Discretionary Cash Flow Calculation and Reconciliation (In thousands) Quarter Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Discretionary Cash Flow As Reported - Net Income $66,990 $35,453 $167,590 $125,376 Plus / (Less): Unrealized (Gain) / Loss on Derivatives (1,260) - 1,649 - Impairment of Oil & Gas Properties - 4,614 - 4,614 Income Charges Not Requiring Cash 47,948 45,511 162,446 135,094 (Gain) / Loss on Sale of Assets - 49 (401) (12,293) Deferred Income Tax Expense 40,944 27,318 96,459 66,930 Exploration Expense 6,413 8,766 18,764 21,243 Discretionary Cash Flow 161,035 121,711 446,507 340,964 Changes in Assets and Liabilities (1,707) (34,148) (10,768) (5,548) Stock-Based Compensation Tax Benefit (11,011) (811) (11,011) (6,857) Net Cash Provided by Operations $148,317 $86,752 $424,728 $328,559 Net Debt Reconciliation (In thousands) September 30, December 31, 2008 2007 Current Portion of Long-Term Debt $20,000 $20,000 Long-Term Debt 800,000 330,000 Total Debt $820,000 $350,000 Stockholders' Equity 1,671,018 1,070,257 Total Capitalization $2,491,018 $1,420,257 Total Debt $820,000 $350,000 Less: Cash and Cash Equivalents (47,374) (18,498) Net Debt $772,626 $331,502 Net Debt $772,626 $331,502 Stockholders' Equity 1,671,018 1,070,257 Total Adjusted Capitalization $2,443,644 $1,401,759 Total Debt to Total Capitalization Ratio 32.9% 24.6% Less: Impact of Cash and Cash Equivalents 1.3% 1.0% Net Debt to Adjusted Capitalization Ratio 31.6% 23.6%
