Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO


FOR RELEASE		FOR MORE INFORMATION CONTACT
February 22, 2011		Scott Schroeder (281) 589-4993

Cabot Oil & Gas Corporation Announces 2010 Results,

Record Production of over 130 Bcfe

HOUSTON, February 22, 2011 - Cabot Oil & Gas Corporation (NYSE: COG) today announced its 2010 financial results, including net income of $103.4 million, or $0.99 per share, cash flow from operations of $484.9 million and discretionary cash flow of $457.6 million. These results compare to 2009 net income of $148.3 million, or $1.43 per share, cash flow from operations of $614.1 million and discretionary cash flow of $604.6 million. The full year selected items, detailed in an attached table, net to a reduction of $1.0 million, or $0.01 per share, on reported net income.

“Overall 2010 was a transitional year, as we streamlined our operations in the Marcellus and migrated our South region to 100 percent of its capital allocated towards liquids. Additionally, for 2010, Cabot posted tremendous operational numbers, reported net income of over $100 million for the sixth consecutive year and solidified its balance sheet for the long-term,” said Dan O. Dinges, Chairman, President and Chief Executive Officer.

For 2010 equivalent production surpassed the 130 Bcfe level for the first time, establishing a new benchmark for both absolute levels and for year-over-year growth, which totaled 26.8 percent. The price comparison for natural gas realizations was $5.54 per Mcf in 2010 versus $7.47 per Mcf in 2009, while oil increased over 14 percent year-over-year to $97.91 per barrel in 2010. Gains associated with the hedge portfolio once again added significantly to price realizations and improved overall revenues in 2010 by $173 million. In absolute terms, total operating expenses plus interest expense increased 15 percent; with the 26 plus percent improvement in production, the per unit expense comparisons dropped nine percent year-to-year. “We anticipate this trend towards lower unit cost levels to continue in 2011,” commented Dinges.

As it relates to the tax provision, due to the increased activity in the Pennsylvania Marcellus, a true-up of deferred taxes was required to reflect a larger portion of activity taking place in higher state tax jurisdictions. “As we continue to expand our programs and presence in Pennsylvania, we will continue to monitor its impact on deferred taxes, making adjustments to deferred taxes when required as part of our annual fourth quarter evaluation,” said Dinges. This rate change increased the effective tax rate for the year to 47.9 percent, requiring a 55.8 percent effective tax rate for the fourth quarter. This change and the gain were the large selected items in the fourth quarter.

Fourth Quarter

The reported 2010 fourth quarter figures included net income of $49.1 million, or $0.47 per share, $117.4 million for cash flow from operations and $83.4 million for discretionary cash flow. These

compare to net income of $36.4 million, or $0.34 per share, cash flow from operations of $196.9 million and discretionary cash flow of $174.1 million in the previous year. Removing the selected items, which are highlighted in the table, net income would be $20.0 million, or $0.19 per share, for the 2010 fourth quarter versus $53.8 million, or $0.51 per share in the comparable 2009 period. Lower commodity prices and overall higher absolute (but lower per unit) expenses, partially offset by higher production, drove the results.

Balance Sheet

In 2010, the Company placed $175 million of new 10, 12 and 15 year senior notes, repaid $75 million of senior notes that were to mature in 2011 and extended its Credit Facility out five years. “Financially, we continue to have a solid balance sheet, and we retain a significant level of flexibility as evident by our 32.9 percent net debt to adjusted total capital ratio,” added Dinges.

Conference Call

Listen in live to Cabot Oil & Gas Corporation’s 2010 year-end and fourth quarter financial and operating results discussion with financial analysts on Wednesday, February 23, 2011 at 9:30 a.m. EST (8:30 a.m. CST) 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 34679366. The replay will be available through Friday, February 25, 2011. 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.

CABOT OIL & GAS RESULTS — Page 3

OPERATING DATA


	Quarter Ended						Twelve Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
PRODUCED NATURAL GAS (Bcf) & OIL (MBbl)
Natural Gas
North		25.7			13.4			81.0			48.2
South		10.6			11.6			44.5			48.8
Canada		—			—			—			1.0

Total		36.3			25.0			125.5			98.0


Crude/Condensate/Ngl
North		24.0			25.5			100.0			118.4
South		174.0			193.6			759.0			719.6
Canada		—			—			—			6.7

Total		198.0			220.1			859.0			844.7


Equivalent Production (Bcfe)		37.5			26.3			130.6			103.0

PRICES
Average Produced Gas Sales Price ($/Mcf)
North	$	4.14		$	6.67		$	4.59		$	6.59
South	$	7.19		$	8.94		$	7.26		$	8.42
Canada	$	—		$	—		$	—		$	3.72
Total ⁽¹⁾	$	5.02		$	7.73		$	5.54		$	7.47

Average Crude/Condensate Price ($/Bbl)
North	$	75.06		$	75.16		$	69.31		$	54.11
South	$	102.91		$	96.64		$	101.65		$	90.86
Canada	$	—		$	—		$	—		$	33.97
Total ⁽¹⁾	$	99.53		$	94.23		$	97.91		$	85.52

WELLS DRILLED
Gross		30			24			113			143
Net		20			22			87			119
Gross Success Rate		100	%		83	%		98	%		95	%

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

	Quarter Ended						Twelve Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
Realized Impacts to Gas Pricing	$	1.25		$	3.47		$	1.23		$	3.80
Realized Impacts to Oil Pricing	$	18.66		$	21.40		$	22.31		$	28.25

CABOT OIL & GAS RESULTS — Page 4

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)


	Quarter Ended					Twelve Months Ended
	December 31,					December 31,
	2010		2009			2010		2009
Operating Revenues
Natural Gas	$	181,641	$	191,192		$	694,577	$	729,734
Brokered Natural Gas		15,385		21,166			65,281		75,283
Crude Oil and Condensate		18,664		19,910			79,091		69,936
Other		1,185		1,224			5,086		4,323

		216,875		233,492			844,035		879,276

Operating Expenses
Brokered Natural Gas Cost		13,124		18,811			56,466		67,030
Direct Operations - Field and Pipeline		25,846		22,421			99,642		93,985
Exploration		14,401		19,526			42,725		50,784
Depreciation, Depletion and Amortization		91,504		62,293			327,083		251,260
Impairment of Oil & Gas Properties		5,114		17,622			40,903		17,622
General and Administrative (excluding Stock-Based Compensation)		24,018		10,725			64,767		43,236
Stock-Based Compensation ⁽¹⁾		5,484		8,546			14,410		25,138
Taxes Other Than Income		6,759		10,118			37,894		44,649

		186,250		170,062			683,890		593,704
Gain (Loss) on Sale of Assets ⁽²⁾		100,883		(20	)		106,294		(3,303	)

Income from Operations		131,508		63,410			266,439		282,269
Interest Expense and Other		20,502		14,850			67,941		58,979

Income Before Income Taxes		111,006		48,560			198,498		223,290
Income Tax Expense ⁽³⁾		61,897		12,196			95,112		74,947

Net Income	$	49,109	$	36,364		$	103,386	$	148,343

Net Earnings Per Share - Basic	$	0.47	$	0.34		$	0.99	$	1.43
Weighted-Average Common Shares Outstanding		103,979		103,654			103,911		103,616

⁽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 a gain from the sale of our Pennsylvania gathering infrastructure, a gain from the sale of our investment in equity securities of Tourmaline, a gain from the sale of certain oil and gas properties in the Texas Panhandle and a gain on the sale of our Woodford shale properties, partially offset by a charge on certain oil and gas properties in Colorado. The loss on sale of assets in 2009 primarily relates to a loss on our April 2009 sale of our Canadian properties, partially offset by a gain on sale of assets from the first quarter 2009 sale of the Thornwood properties in the North.

⁽³⁾

Income tax expense for the quarter and year ended December 31, 2010 includes an unfavorable adjustment due to a charge to income tax expense to reflect an increase in our state rates used in establishing deferred income taxes mainly due to a shift in our state apportionment factors to higher rate states, primarily in Pennsylvania as a result of our increased focus on development of our Marcellus shale properties.

CABOT OIL & GAS RESULTS — Page 5

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(In thousands)


	December 31,		December 31,
	2010		2009
Assets
Current Assets	$	203,008	$	281,502
Property, Equipment and Other Assets		3,802,023		3,401,899

Total Assets	$	4,005,031	$	3,683,401


Liabilities and Stockholders’ Equity
Current Liabilities	$	303,835	$	308,741
Long-Term Debt		975,000		805,000
Deferred Income Taxes		714,953		644,801
Other Liabilities		138,543		112,345
Stockholders’ Equity		1,872,700		1,812,514

Total Liabilities and Stockholders’ Equity	$	4,005,031	$	3,683,401

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(In thousands)


	Quarter Ended						Twelve Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
Cash Flows From Operating Activities
Net Income	$	49,109		$	36,364		$	103,386		$	148,343
Unrealized (Gain) Loss on Derivatives		388			1,536			226			1,954
Impairment of Oil and Gas Properties		5,114			17,622			40,903			17,622
Income Charges Not Requiring Cash		97,116			71,958			345,877			280,819
(Gain) Loss on Sale of Assets		(100,883	)		20			(106,294	)		3,303
Deferred Income Tax Expense		31,344			27,042			61,809			101,815
Changes in Assets and Liabilities		34,047			23,559			27,455			23,202
Stock-Based Compensation Tax Benefit		—			(705	)		(108	)		(13,790	)
Exploration Expense		1,184			19,526			11,657			50,784

Net Cash Provided by Operations		117,419			196,922			484,911			614,052


Cash Flows From Investing Activities
Capital Expenditures		(199,128	)		(185,030	)		(857,251	)		(611,207	)
Proceeds from Sale of Assets		222,477			—			243,510			80,180

Net Cash Provided by (Used in) Investing		23,349			(185,030	)		(613,741	)		(531,027	)


Cash Flows From Financing Activities
Net Increase (Decrease) in Debt		(120,000	)		(5,000	)		170,000			(62,000	)
Retirement of Treasury Stock		—			—			—			—
Capitalized Debt Issuance Costs		(125	)		—			(13,821	)		(10,409	)
Stock-Based Compensation Tax Benefit		—			705			108			13,790
Dividends Paid		(3,119	)		(3,109	)		(12,467	)		(12,432	)
Other		837			—			801			83

Net Cash Provided by (Used in) Financing		(122,407	)		(7,404	)		144,621			(70,968	)


Net Increase in Cash and Cash Equivalents	$	18,361		$	4,488		$	15,791		$	12,057

CABOT OIL & GAS RESULTS — Page 6

Selected Item Review and Reconciliation of Net Income and Earnings Per Share

(In thousands, except per share amounts)


	Quarter Ended December 31,					Twelve Months Ended December 31,
	2010			2009		2010			2009
As Reported - Net Income	$	49,109		$	36,364	$	103,386		$	148,343
Reversal of Selected Items, Net of Tax (If Applicable):
Impairment of Oil & Gas Properties and Other Assets		3,171			11,102		25,360			11,102
(Gain) Loss on Sale of Assets ⁽¹⁾		(62,547	)		13		(65,902	)		1,283
Stock-Based Compensation Expense		3,400			5,384		8,934			15,798
Pension Expense ⁽²⁾		4,245			—		8,083			—
PaDEP Settlement and Related Legal Fees ⁽³⁾		3,409			—		3,409			—
Unrealized (Gain) Loss on Derivatives ⁽⁴⁾		241			968		140			1,231
Income Tax Expense ⁽⁵⁾		18,973			—		18,973			—

Net Income Excluding Selected Items	$	20,001		$	53,831	$	102,383		$	177,757

As Reported - Net Earnings Per Share	$	0.47		$	0.34	$	0.99		$	1.43
Per Share Impact of Reversing Selected Items	$	(0.28	)		0.17		(0.01	)		0.29

Net Earnings Per Share Including Reversal of Selected Items	$	0.19		$	0.51	$	0.98		$	1.72

Weighted-Average Common Shares Outstanding		103,979			103,654		103,911			103,616

⁽¹⁾

⁽²⁾

On July 28, 2010, the Company notified its employees of its plan to terminate its qualified and non-qualified pension plans, effective September 30, 2010. This amount represents curtailment losses related to the plan terminations and expenses related to the acceleration of amortization of prior service costs and actuarial losses over the expected amortization period until final distribution of assets from each plan. Pension expense is included in General and Administrative Expense in the Consolidated Statement of Operations.

⁽³⁾	Represents costs associated with the December 2010 Settlement Agreement and Consent Order with the PaDEP and associated legal fees.

⁽⁴⁾	This unrealized (gain) loss is included in Natural Gas Revenues in the Consolidated Statement of Operations and represents the mark to market change related to the Company’s natural gas basis swaps.

⁽⁵⁾

Represents an unfavorable charge to income tax expense to reflect an increase in our state rates used in establishing deferred income taxes mainly due to a shift in our state apportionment factors to higher rate states, primarily in Pennsylvania as a result of our increased focus on development of our Marcellus shale properties.

Discretionary Cash Flow Calculation and Reconciliation

(In thousands)


	Quarter Ended December 31,						Twelve Months Ended December 31,
	2010			2009			2010			2009
Discretionary Cash Flow
As Reported - Net Income	$	49,109		$	36,364		$	103,386		$	148,343
Plus / (Less):
Unrealized (Gain) Loss on Derivatives		388			1,536			226			1,954
Impairment of Oil & Gas Properties		5,114			17,622			40,903			17,622
Income Charges Not Requiring Cash		97,116			71,958			345,877			280,819
(Gain) Loss on Sale of Assets		(100,883	)		20			(106,294	)		3,303
Deferred Income Tax Expense		31,344			27,042			61,809			101,815
Exploration Expense		1,184			19,526			11,657			50,784

Discretionary Cash Flow		83,372			174,068			457,564			604,640
Changes in Assets and Liabilities		34,047			23,559			27,455			23,202
Stock-Based Compensation Tax Benefit		—			(705	)		(108	)		(13,790	)

Net Cash Provided by Operations	$	117,419		$	196,922		$	484,911		$	614,052

Net Debt Reconciliation

(In thousands)


	December 31, 2010			December 31, 2009

Long-Term Debt		975,000			805,000
Stockholders’ Equity		1,872,700			1,812,514

Total Capitalization	$	2,847,700		$	2,617,514

Total Debt	$	975,000		$	805,000
Less: Cash and Cash Equivalents		(55,949	)		(40,158	)

Net Debt	$	919,051		$	764,842

Net Debt	$	919,051		$	764,842
Stockholders’ Equity		1,872,700			1,812,514

Total Adjusted Capitalization	$	2,791,751		$	2,577,356

Total Debt to Total Capitalization Ratio		34.2	%		30.8	%
Less: Impact of Cash and Cash Equivalents		1.3	%		1.1	%

Net Debt to Adjusted Capitalization Ratio		32.9	%		29.7	%