-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SzZptMTnYNgq5SYh5CKT7wjA2oOGhFZpR4Y/iHEQRRKPtCwMV5sxd2bpmQpJ3vW5 IhrivY2TdXOHfBhaqkUaEA== 0000858470-97-000002.txt : 19970520 0000858470-97-000002.hdr.sgml : 19970520 ACCESSION NUMBER: 0000858470-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CABOT OIL & GAS CORP CENTRAL INDEX KEY: 0000858470 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 043072771 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10447 FILM NUMBER: 97608511 BUSINESS ADDRESS: STREET 1: 15375 MEMORIAL DR CITY: HOUSTON STATE: TX ZIP: 77079 BUSINESS PHONE: 7135894600 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ----------- FORM 10-Q ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission file number 1-10447 CABOT OIL & GAS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 04-3072771 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 15375 Memorial Drive, Houston, Texas 77079 (Address of principal executive offices including Zip Code) (281) 589-4600 (Registrant's telephone number) No Change (Former name, address and fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of April 30, 1997, there were 22,864,686 shares of Class A Common Stock, Par Value $.10 Per Share, outstanding. CABOT OIL & GAS CORPORATION INDEX TO FINANCIAL STATEMENTS
Part I. Financial Information Page Item 1. Financial Statements Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 1997 and 1996.................................................................... 3 Condensed Consolidated Balance Sheet at March 31, 1997 and December 31, 1996....................... 4 Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 1997 and 1996.................................................................... 5 Notes to Condensed Consolidated Financial Statements............................................... 6 Independent Certified Public Accountants' Report on Review of Interim Financial Information.................................................................... 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................................................... 9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K............................................................. 15 Signature .............................................................................................. 16
-2- CABOT OIL & GAS CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In Thousands, Except Per Share Amounts)
THREE MONTHS ENDED MARCH 31, 1997 1996 NET OPERATING REVENUES Natural Gas Production..................................................... $ 47,185 $ 33,608 Crude Oil & Condensate..................................................... 3,204 2,659 Brokered Natural Gas Margin................................................ 497 2,090 Other...................................................................... 1,906 2,841 -------- -------- 52,792 41,198 OPERATING EXPENSES Direct Operations.......................................................... 7,069 6,822 Exploration................................................................ 3,627 2,353 Depreciation, Depletion and Amortization................................... 10,504 9,753 Impairment of Unproved Properties.......................................... 723 705 General and Administrative................................................. 4,156 3,737 Taxes Other Than Income.................................................... 4,082 3,404 ------- -------- 30,161 26,774 Gain on Sale of Assets........................................................ 83 1,505 --------- -------- INCOME FROM OPERATIONS........................................................ 22,714 15,929 Interest Expense.............................................................. 4,561 4,849 ------- -------- Income Before Income Taxes.................................................... 18,153 11,080 Income Tax Expense............................................................ 7,069 4,431 ------- -------- NET INCOME.................................................................... 11,084 6,649 Dividend Requirement on Preferred Stock....................................... 1,391 1,391 ------- -------- Net Income Available to Common Stockholders................................... $ 9,693 $ 5,258 ======= ======== Earnings Per Share Available to Common........................................ $ 0.42 $ 0.23 ======== ========= Average Common Shares Outstanding............................................. 22,855 22,793 ======= =======
The accompanying notes are an integral part of these condensed consolidated financial statements. -3- CABOT OIL & GAS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In Thousands)
MARCH 31, DECEMBER 31, 1997 1996 Current Assets Cash and Cash Equivalents.................................................. $ 5,822 $ 1,367 Accounts Receivable........................................................ 39,653 67,810 Inventories................................................................ 5,156 8,797 Other...................................................................... 1,788 1,663 -------- -------- Total Current Assets..................................................... 52,419 79,637 Properties and Equipment (Successful Efforts Method).......................... 480,683 480,511 Other Assets.................................................................. 685 1,193 -------- -------- $ 533,787 $ 561,341 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable........................................................... $ 39,392 $ 56,338 Accrued Liabilities........................................................ 16,425 16,279 -------- -------- Total Current Liabilities................................................ 55,817 72,617 Long-Term Debt................................................................ 222,000 248,000 Deferred Income Taxes......................................................... 75,982 69,427 Other Liabilities............................................................. 10,116 10,593 Stockholders' Equity Preferred Stock: Authorized--5,000,000 Shares of $.10 Par Value Issued and Outstanding - $3.125 Cumulative Convertible Preferred; $50 Stated Value; 692,439 Shares in 1997 and 1996 - 6% Convertible Redeemable Preferred; $50 Stated Value; 1,134,000 Shares in 1997 and 1996........................ 183 183 Common Stock: Authorized--40,000,000 Shares of $.10 Par Value Issued and Outstanding--22,865,078 Shares and 22,847,345 Shares in 1997 and 1996, Respectively....................... 2,286 2,284 Additional Paid-in Capital................................................. 243,672 243,283 Accumulated Deficit........................................................ (76,268) (85,046) -------- -------- Total Stockholders' Equity............................................... 169,873 160,704 -------- -------- $ 533,787 $ 561,341 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. -4- CABOT OIL & GAS CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In Thousands)
THREE MONTHS ENDED MARCH 31, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES Net Income............................................................... $ 11,084 $ 6,649 Adjustment to Reconcile Net Income To Cash Provided by Operating Activities: Depletion, Depreciation and Amortization............................. 10,504 9,753 Impairment of Undeveloped Leasehold.................................. 723 705 Deferred Income Taxes................................................ 6,555 4,297 (Gain) Loss on Sale of Assets........................................ (83) (1,505) Exploration Expense.................................................. 3,627 2,353 Other, Net........................................................... 33 42 Changes in Assets and Liabilities: Accounts Receivable.................................................. 28,157 (11,838) Inventories.......................................................... 3,641 1,483 Other Current Assets................................................. (125) 549 Other Assets......................................................... 508 (24) Accounts Payable and Accrued Liabilities............................. (16,920) 3,064 Other Liabilities.................................................... (283) 554 ------- ------- Net Cash Provided by Operating Activities.......................... 47,421 16,082 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures..................................................... (11,582) (14,337) Proceeds from Sale of Assets............................................. 303 4,468 Exploration Expense...................................................... (3,627) (2,353) ------- ------- Net Cash Used by Investing Activities.............................. (14,906) (12,222) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Sale of Common Stock..................................................... 246 165 Decrease in Debt......................................................... (26,000) (1,000) Dividends Paid........................................................... (2,306) (2,303) ------- ------- Net Cash Used by Financing Activities.............................. (28,060) (3,138) ------- ------- Net Increase in Cash and Cash Equivalents................................... 4,455 722 Cash and Cash Equivalents, Beginning of Period.............................. 1,367 3,029 ------- ------- Cash and Cash Equivalents, End of Period.................................... $ 5,822 $ 3,751 ======= =======
The accompanying notes are an integral part of these condensed consolidated financial statements. -5- CABOT OIL & GAS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. FINANCIAL STATEMENT PRESENTATION During interim periods, the Company follows the accounting policies set forth in its Annual Report to Stockholders and its Report on Form 10-K filed with the Securities and Exchange Commission. Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the Annual Report to Stockholders when reviewing interim financial results. In the opinion of management, the accompanying interim financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. 2. PROPERTIES AND EQUIPMENT Properties and equipment are comprised of the following:
MARCH 31, DECEMBER 31, 1997 1996 (in thousands) Unproved oil and gas properties....................................... $ 15,514 $ 15,746 Proved oil and gas properties......................................... 822,778 811,726 Gathering and pipeline systems........................................ 150,929 150,910 Land, building and improvements....................................... 5,240 5,221 Other................................................................. 16,107 16,028 --------- --------- 1,010,568 999,631 Accumulated depreciation, depletion and amortization.................. (529,885) (519,120) --------- --------- $ 480,683 $ 480,511 ========= =========
3. ADDITIONAL BALANCE SHEET INFORMATION Certain balance sheet amounts are comprised of the following:
MARCH 31, DECEMBER 31, 1997 1996 (in thousands) Accounts Receivable Trade accounts.................................................... $ 34,883 $ 63,458 Other accounts.................................................... 5,399 5,021 ------- ------- 40,282 68,479 Allowance for doubtful accounts................................... (629) (669) -------- ------- $ 39,653 $ 67,810 ======= ======= Accounts Payable Trade accounts.................................................... $ 9,889 $ 12,277 Natural gas purchases............................................. 7,138 20,726 Royalty and other owners.......................................... 11,930 13,469 Capital costs..................................................... 4,642 5,409 Dividends payable................................................. 1,391 1,391 Taxes other than income........................................... 1,053 1,170 Other accounts.................................................... 3,349 1,896 ------- ------- $ 39,392 $ 56,338 ======= =======
-6- CABOT OIL & GAS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued 3. ADDITIONAL BALANCE SHEET INFORMATION, continued
MARCH 31, DECEMBER 31, 1997 1996 (in thousands) Accrued Liabilities Employee benefits................................................. $ 2,882 $ 4,432 Taxes other than income........................................... 7,896 8,407 Interest payable.................................................. 3,998 2,188 Other accrued..................................................... 1,649 1,252 ------- -------- $ 16,425 $ 16,279 ======= ======= Other Liabilities Postretirement benefits other than pension........................ $ 1,659 $ 1,853 Accrued pension cost.............................................. 4,149 4,022 Taxes other than income and other................................. 4,308 4,718 ------- ------- $ 10,116 $ 10,593 ======= =======
4. LONG-TERM DEBT At March 31, 1997, the Company had borrowed $142 million against an available credit line of $235 million. The available credit line is subject to adjustment from time-to-time on the basis of the projected present value (as determined by a petroleum engineer's report incorporating certain assumptions provided by the lender) of estimated future net cash flows from proved oil and gas reserves and other assets. The revolving term under this credit facility presently ends in June 1998 and is subject to renewal. 5. ACCOUNTING FOR LONG-LIVED ASSETS The Company adopted SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" in 1995. If the Company determines that an impairment event has occurred, through either adverse changes or a periodic review, the impairment is made on an economic unit basis. The Company performs a periodic review of all fields to determine if an impairment event has occurred. -7- Independent Certified Public Accountants' Report on Review of Interim Financial Information To the Board of Directors and Shareholders Cabot Oil & Gas Corporation: We have reviewed the accompanying condensed consolidated balance sheet of Cabot Oil & Gas Corporation as of March 31, 1997, and the related condensed consolidated statements of operations and cash flows for the three month period ended March 31, 1997 and 1996. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1996, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein); and, in our report dated March 7, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1996, is fairly stated in all material respects, in relation to the consolidated financial statements from which it has been derived. Coopers & Lybrand L.L.P. Houston, Texas May 13, 1997 -8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following review of operations for the first quarters of 1997 and 1996 should be read in conjunction with the Condensed Consolidated Financial Statements of the Company and the Notes thereto included elsewhere in this Form 10-Q and with the Consolidated Financial Statements, Notes and Management's Discussion and Analysis included in the Company's Form 10-K for the year ended December 31, 1996. Overview In addition to the substantial up swing in gas prices, the 6% increase in production to 16.0 Bcfe also contributed to the first quarter performance of 1997 with record earnings. Operating cash flows were also up significantly, increasing $31.3 million over the same quarter in 1996. Cash flows from operations funded (1) the $15.2 million of capital and exploration expenditures and (2) a $26.0 million reduction in outstanding debt. The Company drilled 17.6 net wells with a success rate of 83% compared to 35.8 net wells and a 91% success rate in the first quarter of 1996. In 1997 the Company plans to drill 157 net wells and spend $79 million in capital and exploration expenditures compared to 154 net wells and $73 million of capital and exploration expenditures in 1996. Natural gas production was 15.1 Bcf, up 0.9 Bcf compared to the 1996 first quarter. This production increase was due primarily to new production brought on by the expanded drilling program of 154 net wells in 1996 compared to only 55 net wells drilled in 1995 and to an average of 135 net wells per year over the previous five years. The Company's strategic pursuits are sensitive to energy commodity prices, particularly the price of natural gas. While gas prices in most regions of the U.S. were up sharply in January of 1997, gas prices dropped markedly in February and March of 1997, demonstrating significant price volatility in the first quarter of 1997. Consequently, there is considerable uncertainty about gas prices for the remainder of this year and beyond. The Company remains focused on the following goals established in 1995 and believes that progress toward these goals is appropriate in the current industry environment, enabling the Company to pursue its strategic objectives over the long term. (*) Increase cash flows, using a balance of increased production and reduced costs. Significant progress has been made toward this goal, and the Company expects to be profitable in 1997 if the Henry Hub average price is $1.80 or more, assuming a traditional correlation between Henry Hub prices and prices realized by the Company in its regional markets. (*) Maintain reserves per share while increasing production to protect long-term shareholder value. An aggressive 1997 drilling program is designed to result in 1997 production exceeding 1996, while reserves are also expected to increase. (*) Reduce debt as a percentage of total capitalization without diluting existing shareholder value. To achieve this goal, project returns will be compared with the marginal cost of debt when deciding whether to reinvest or pay down debt. Other financing alternatives will also be reviewed. The preceding paragraphs, discussing the Company's strategic pursuits and goals, contains forward-looking information. See Forward-Looking Information on page 14. -9- In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128") and Statement of Financial Accounting Standards No. 129, Disclosure of Information about Capital Structure ("SFAS 129"). These statements will be adopted by the Company effective December 31, 1997. SFAS 128 simplifies the computation of earnings per share by replacing primary and fully diluted presentations with the new basic and diluted disclosures. SFAS 129 establishes standards for disclosing information about an entity's capital structure. The Company has not determined the impact of these pronouncements on its financial statements. Financial Condition Capital Resources and Liquidity The Company's capital resources consist primarily of cash flows from its oil and gas properties and asset-based borrowing supported by its oil and gas reserves. The Company's level of earnings and cash flows depend on many factors, including the price of oil and natural gas and its ability to control and reduce costs. Demand for oil and gas has historically been subject to seasonal influences characterized by peak demand and higher prices in the winter heating season. Natural gas prices and demand were up significantly in January but trended down in February and March due to milder than normal winter heating in the first quarter of 1997. The primary source of cash for the Company during the first quarter of 1997 was from funds generated from operations. Primary uses of cash were funds used in operations, exploration and development expenditures, repayment of debt and dividends. The Company had a net cash inflow of $4.5 million in the first quarter of 1997. Net cash inflow from operating and financing activities totalled $19.3 million in the current quarter, sufficiently funding the $15.2 million of capital and exploration expenditures.
THREE MONTHS ENDED MARCH 31, 1997 1996 (in millions) Cash Flows Provided by Operating Activities............................... $ 47.4 $ 16.1 ====== ======
Cash flows from operating activities in the 1997 first quarter were higher by $31.3 million compared to the corresponding quarter of 1996 primarily due to higher natural gas prices and favorable changes in working capital.
THREE MONTHS ENDED MARCH 31, 1997 1996 (in millions) Cash Flows Used by Investing Activities................................... $ 14.9 $ 12.2 ====== =====
Cash flows used by investing activities in the first quarters of 1997 and 1996 were substantially attributable to capital and exploration expenditures of $15.2 million and $16.7 million, respectively. Proceeds from the sale of certain oil and gas properties in the first quarters of 1997 and 1996 were $0.3 million and $4.5 million, respectively.
THREE MONTHS ENDED MARCH 31, 1997 1996 (in millions) Cash Flows Used by Financing Activities................................... $ 28.1 $ 3.1 ===== ======
-10- Cash flows used by financing activities were primarily debt reductions under the Company's revolving credit facility and dividend payments. Under the Company's revolving credit facility, the available credit line, currently $235 million, is subject to adjustment on the basis of the projected present value of estimated future net cash flows from proved oil and gas reserves and other assets. The revolving term of the credit facility runs to June 1998. Management believes that the Company's has the ability to finance, if necessary, its capital requirements, including acquisitions. The Company's 1997 debt service is projected to be approximately $18.3 million. No principal payments are due in 1997. Capitalization information on the Company is as follows:
MARCH 31, DECEMBER 31, 1997 1996 (in millions) Long-Term Debt............................................................ $ 222.0 $ 248.0 Stockholders' Equity Common Stock.......................................................... 78.6 69.4 Preferred Stock....................................................... 91.3 91.3 ------ ----- Total ............................................................. 169.9 160.7 ----- ----- Total Capitalization...................................................... $ 391.9 $ 408.7 ===== ===== Debt to Capitalization.................................................... 56.7% 60.7%
Capital and Exploration Expenditures The following table presents major components of capital and exploration expenditures:
THREE MONTHS ENDED MARCH 31, 1997 1996 (in millions) Capital Expenditures Drilling and Facilities.......................................... $ 10.2 $ 11.5 Leasehold Acquisitions........................................... 1.1 0.4 Pipeline and Gathering .......................................... 0.2 0.2 Other............................................................ 0.1 0.2 ----- ------ 11.6 12.3 ----- ------ Proved Property Acquisitions..................................... -- 2.0 Exploration Expenses................................................... 3.6 2.4 ------ ------ Total............................................................ $ 15.2 $ 16.7 ====== ======
Total capital and exploration expenditures in the first quarter of 1997 decreased $1.5 million compared to the same quarter of 1996, primarily due to weather related delays that slowed drilling activity. The Company generally funds most of its capital and exploration activities, excluding oil and gas property acquisitions, with cash generated from operations, and budgets such capital expenditures based upon projected cash flows, exclusive of acquisitions. The Company has a $79.2 million capital and exploration expenditures budget for 1997 which includes $54.0 million for drilling and facilities, $14.9 million for exploration expenses and $1.2 million for proved property acquisitions. Compared to 1996 capital and exploration expenditures, the 1997 budgeted -11- expenditures are up 15%. The Company plans to drill 157 net wells in 1997 compared with 154 net wells drilled in 1996. During the first quarter of 1997, the Company paid dividends of $0.9 million on the Common Stock and $1.4 million in aggregate on the $3.125 convertible preferred stock and 6% convertible redeemable preferred stock. A regular dividend of $0.04 per share of Common Stock was declared for the quarter ending June 30, 1997, to be paid May 30, 1997 to shareholders of record as of May 16, 1997. Conclusion The Company's financial results depend upon many factors, particularly the price of natural gas, and its ability to market gas on economically attractive terms. While the Company's natural gas prices rose sharply in January and trended down in February and March of 1997, the average produced natural gas sales price received in the first quarter of 1997 was up 32% over the first quarter in 1996. The volatility of natural gas prices in recent years remains prevalent in 1997 with wide price swings in day-to-day trading on the Nymex futures market. Given this continued price volatility, management cannot predict with certainty what pricing levels will be for the remainder of 1997. Because future cash flows are subject to such variables, there can be no assurance that the Company's operations will provide cash sufficient to fully fund its capital expenditures if prices should return to the depressed levels of 1995. While the Company's 1997 plans include a significant increase in capital spending, potentially negative changes in industry conditions might require the Company to adjust its 1997 spending plan to ensure the availability of capital, including, among other things, reductions in capital expenditures or common stock dividends. The Company believes its capital resources, supplemented, if necessary, with external financing, are adequate to meet its capital requirements. The preceding paragraph contains forward-looking information. See Forward-Looking Information on page 14. -12- Results of Operations For the purpose of reviewing the Company's results of operations, "Net Income" is defined as net income available to common shareholders. Selected Financial and Operating Data
THREE MONTHS ENDED MARCH 31, 1997 1996 (in millions, except where noted) Net Operating Revenues...................................................... $ 52.8 $ 41.2 Operating Expenses.......................................................... 30.2 26.8 Operating Income............................................................ 22.7 15.9 Interest Expense............................................................ 4.6 4.8 Net Income.................................................................. 9.7 5.3 Earnings Per Share.......................................................... $ 0.42 $ 0.23 Natural Gas Production (Bcf) Appalachia............................................................. 6.6 6.7 West................................................................... 8.5 7.5 ----- ----- Total Company.......................................................... 15.1 14.2 ===== ===== Natural Gas Production Sales Prices ($/Mcf) Appalachia............................................................. $ 3.71 $ 3.00 West................................................................... $ 2.66 $ 1.81 Total Company.......................................................... $ 3.12 $ 2.37 Crude/Condensate Volume (MBbl).......................................................... 142 136 Price $/Bbl............................................................ $ 22.59 $ 19.55 Brokered Natural Gas Margin Volume (Bcf)........................................................... 9.1 9.4 Margin $/Mcf........................................................... $ 0.05 $ 0.22
First Quarters of 1997 and 1996 Compared Net Income and Revenues. The Company reported net income in the first quarter 1997 of $9.7 million, or $0.42 per share. During the corresponding quarter of 1996, the Company reported net income of $5.3 million, or $0.23 per share. Operating income and operating revenues increased $6.8 million and $11.6 million, respectively. Natural gas made up 89%, or $47.2 million, of net operating revenue. The increase in net operating revenues was driven primarily by a 32% increase in the average natural gas price, and in part by a 6% increase in natural gas production as discussed below. Net income and operating income were similarly impacted by the increase in the average natural gas price. Natural gas production volume in the Appalachian Region was virtually unchanged at 6.6 Bcf. Natural gas production volume in the Western Region was up 1.0 Bcf to 8.5 Bcf due primarily to new production brought on by drilling in 1996. The average Appalachian natural gas production sales price increased $0.71 per Mcf, or 24%, to $3.71, increasing net operating revenues by $4.7 million on 6.6 Bcf of production. In the Western Region, the -13- average natural gas production sales price increased $0.85 per Mcf, or 47%, to $2.66, increasing net operating revenues by $7.2 million on 8.5 Bcf of production. The overall weighted average natural gas production sales price increased $0.75 per Mcf, or 32%, to $3.12. Crude oil and condensate sales volumes were up 6 MBbl, or 4%, to 142 MBbl while crude oil prices increased $3.04 per Bbl, or 16%, to $22.59, increasing net operating revenues by approximately $0.4 million. The brokered natural gas margin decreased $1.6 million to $0.5 million primarily due to a $0.17 per Mcf decrease in the net margin to $0.05 per Mcf. Brokered gas market conditions in the first quarter of 1996 were exceptionally good. While market conditions in the first quarter of 1997 were less favorable than normal, they were more comparable to the first quarter of 1995 with a $0.07 per Mcf margin. Other net operating revenues decreased $0.9 million to $1.9 million due primarily to net miscellaneous revenues in the first quarter of 1996 related to a contract settlement. Costs and Expenses. Total costs and expenses from recurring operations increased $3.4 million, or 13%, due primarily to the following: (*) Exploration expense increased $1.3 million, or 54%, due to the dry hole expenses related to the expanded exploration activity in the drilling program for 1997. (*) Depreciation, depletion, amortization and impairment expense increased $0.8 million, or 7%, due to the increase in equivalent production. (*) Taxes other than income increased $0.7 million, or 20%, due to the increase in natural gas production revenues. (*) General and administrative expenses increased $0.4 million, or 11%, due to the timing of certain compensation expenses which were accrued later in 1996. Interest expense declined $0.3 million due to decreases in bank debt. Income tax expense was up $2.6 million due to the comparable increase in earnings before income tax. * * * Forward-Looking Information The statements regarding future financial performance and results and the other statements which are not historical facts contained in this report are forward-looking statements. The words "expect," "project," "estimate," "predict," and similar expressions are also intended to identify forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, market factors, market prices (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs and other factors detailed herein and in the Company's other Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. -14- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 15.1 -- Awareness letter of independent accountants. 27 -- Article 5. Financial Data Schedule for First Quarter 1997 Form 10-Q (b) Reports on Form 8-K None -15- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CABOT OIL & GAS CORPORATION (Registrant) By: /s/ Ray R. Seegmiller --------------------------- May 13, 1997 Ray R. Seegmiller, Executive Vice President and Chief Operating Officer (Principal Financial Officer and Officer Duly Authorized to Sign on Behalf of the Registrant) -16- EXHIBIT 15.1 Coopers & Lybrand L.L.P. Awareness Letter Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D. C. 20549 Re: Cabot Oil & Gas Corporation Registration Statements on Form S-8 We are aware that our report dated May 13, 1997 on our review of the interim consolidated financial information of Cabot Oil & Gas Corporation for the three month period ended March 31, 1997 and 1996 and included in this Form 10-Q is incorporated by reference in the Company's registration statements on Form S-8 filed with the Securities and Exchange Commission on June 23, 1990, November 1, 1993 and May 20, 1994. Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statement prepared or certified by us within the meanings of Section 7 and 11 of the Act. Coopers & Lybrand L.L.P. Houston, Texas May 13, 1997 -17- EX-27 2 ART. 5 FDS FOR FIRST QUARTER 10-Q
5 1,000 3-MOS DEC-31-1997 MAR-31-1997 5,822 0 40,281 (629) 5,156 52,419 1,012,044 (531,361) 533,787 55,817 222,000 154,820 0 91,321 (76,268) 533,787 50,886 52,792 30,161 30,161 0 0 4,561 18,153 7,069 9,693 0 0 0 9,693 0 0
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