Cabot Oil & Gas $COG announced missing Q3 earnings expectations for the third quarter of 2017 before the market opened Friday. Q3 daily boe production growth rose 12% YoY, with cash flow from operating activities $189.1M compared to $105.4M for the year-ago quarter.
Cabot Oil & Gas $COG announced missing Q3 earnings expectations for the third quarter of 2017 before the market opened Friday. Q3 daily boe production growth rose 12% YoY, with cash flow from operating activities $189.1M compared to $105.4M for the year-ago quarter. The stock closed 8.43% Higher.
Earnings: Q3 EPS of $0.07 misses by $0.01.
Revenue of $385.42M (+24.2% Y/Y) misses by $15.43M.
Reaction: Cabot Oil & Gas Corporation Oct 27, 4:00 PM EDT $26.75 +2.08 (8.43%)
Third Quarter 2017 Financial and Operating Highlights
- Equivalent daily production growth of 12 percent relative to the prior-year comparable quarter
- Net income of $17.6 million compared to a net loss of $10.3 million in the prior-year comparable quarter
- Adjusted net income (non-GAAP) of $32.0 million compared to an adjusted net loss of $16.7 million in the prior-year comparable quarter
- EBITDAX (non-GAAP) of $218.6 million, an increase of 57 percent relative to the prior-year comparable quarter
- Cash flow from operating activities of $189.1 million, an increase of 79 percent relative to the prior-year comparable quarter
- Generated positive free cash flow (non-GAAP) for the sixth consecutive quarter
- Natural gas price realizations improved by 16 percent relative to the prior-year comparable quarter
- Operating expenses per unit improved by four percent relative to the prior-year comparable quarter
Cabot expects its natural gas price realizations to average $0.45 to $0.50 below NYMEX for the full year of 2018. Based on current strip prices and these differential assumptions, the Company’s 2018 program would deliver the following highlights:
- Double-digit, corporate-wide returns
- Positive free cash flow of over $200 million at the mid-point of the capital budget range
- Net debt to LTM EBITDAX below 1.0x at year-end 2018
- Production growth of 15 to 20 percent
- Positions the Company for significant growth in free cash flow and production in 2019 and beyond
Three-Year Marcellus Outlook
Based on the Company’s current three-year plan in the Marcellus Shale, Cabot anticipates delivering a three-year Marcellus production compounded annual growth rate (CAGR) from 2017 to 2020 of 20+ percent and a three-year Marcellus discretionary cash flow CAGR of 25+ percent assuming current strip prices (which implies an average realized natural gas price of approximately $2.50 per Mcf during this period). Based on this plan, Cabot’s Marcellus asset would generate approximately $2.5 billion of cumulative pre-tax free cash flow from 2018 to 2020 while averaging between $750 and $850 million of annual Marcellus capital expenditures over this period. This plan is subject to market conditions and infrastructure timing and only includes the benefit of our future infrastructure projects that are currently under construction (Atlantic Sunrise pipeline project, Moxie Freedom power generation plant, Lackawanna Energy Center power generation plant, and Tennessee Gas Pipeline’s Orion Project).
Last Quarter Earnings: Cabot Oil and Gas $COG Misses Earnings, Raises Production Guidance
Cabot Oil & Gas Overview
- 2016 Production: 627 Bcfe (4% growth)
- 2016 Year-End Proved Reserves: 8.6 Tcfe (5% growth)
- 2017E Net D&C Activity: 95 wells drilled / 90 wells completed
- 2017E Production Growth: 8% – 12%
- 2017E Total Program Spending: $845 mm (includes $70 mm of pipeline investments and up to $125 mm of exploratory leasing / testing capital)
- >3,000 Remaining Undrilled Locations
- Year-End 2016 Net Producing Horizontal Wells: 517
- 2017E Net D&C activity: 60 wells drilled / 51 wells completed
- Inventory Life Based on 2017E Activity: ~50 years
EAGLE FORD SHALE
- >1,100 Remaining Undrilled Locations
- Year-End 2016 Net Producing Horizontal Wells: 207
- 2017E Net D&C activity: 30 wells drilled / 39 wells completed
- Inventory Life Based on 2017E Activity: ~36 years
About Cabot Oil and Gas
Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties exclusively in the continental United States. As of December 31, 2016 the Company had approximately 8.6 Tcfe of total proved reserves. Cabot continues to refine its operating focus, narrowing its natural gas development effort to the Marcellus Shale in northeast Pennsylvania and its oil development effort to the Eagle Ford Shale in south Texas.
Top U.S. Natural Gas Producers:
Q1 2017 Production – MMcf/day
1 ExxonMobil 3,011
2 Chesapeake Energy 2,344
3 Southwestern Energy Co. 2,033
4 Anadarko 1,859
5 EQT 1,827+
6 Cabot Oil & Gas 1,820
7 BP 1,594
8 Antero Resources 1,544
9 Range Resources 1,292
10 Rice Energy 1,258+
+ EQT bought Rice Energy for $6.7 Billion, After closing the Rice deal EQT’s output will total 3.6 billion cubic feet per day of natural gas, going ahead of the U.S. production of Exxon Mobil and Chesapeake Energy.
Since the inception of Cabot’s horizontal drilling program in 2008, the Company’s Marcellus Shale position in northeast Pennsylvania has developed into the cornerstone asset of its portfolio and has been the primary driver of record production and reserve growth during this period.
The Company plans to drill approximately 60 net wells in the Marcellus Shale during 2017, with approximately 67% of the Company’s drilling and completion capital allocated to the area.
Cabot has approximately 179,000 net acres in the dry gas window of the Marcellus Shale, primarily in Susquehanna County, Pennsylvania. Cabot’s Marcellus Shale properties accounted for 93% of both the Company’s proved reserves and total net production as of year-end 2016.
EAGLE FORD SHALE
Cabot’s oil-weighted drilling activity is focused on its 84,000 net acre position in the Eagle Ford Shale, principally located in Atascosa, Frio and La Salle Counties, Texas.
Cabot plans to operate one rig all year in the Eagle Ford, with a focus on drilling longer laterals to maximize efficiencies. Additionally, a completion crew will be utilized all year as we anticipate a 50 percent increase in 2017 exit-to-exit oil volumes. The Company currently plans to drill approximately 30 net wells in the Eagle Ford Shale in 2017, with 33% of the Company’s drilling and completion capital allocated to the area.
Source: Cabot Oil and Gas
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