HOUSTON, Feb. 20, 2020 /PRNewswire/ -- Cabot Oil
& Gas Corporation (NYSE: COG) ("Cabot" or the "Company") today reported
financial and operating results for the fourth quarter and
full-year 2019.
"Our 2019 results highlight the strength of our company, which
was demonstrated by the generation of record levels for net income,
operating cash flow, free cash flow, production, proved reserves
and operating expenses," said Dan O.
Dinges, Chairman, President and Chief Executive Officer.
"While we continue to manage through headwinds from lower natural
gas prices, our low cost structure and low leverage position will
allow us to continue to generate positive free cash flow and
economic corporate returns, maintain our financial strength, and
return capital to shareholders during these challenging times for
the natural gas markets."
Full-Year 2019 Highlights
- Net income of $681.1 million (or
$1.64 per share); adjusted net income
(non-GAAP) of $698.8 million (or
$1.68 per share)
- Free cash flow (non-GAAP) of $563.1
million, marking the fourth consecutive year of positive
free cash flow
- Return on capital employed (ROCE) (non-GAAP) of 22.2
percent
- Returned $665.4 million of
capital to shareholders through dividends and share repurchases,
including a 43 percent increase in the quarterly dividend per share
and a seven percent reduction in weighted-average shares
outstanding
- Production of 865.3 billion cubic feet equivalent (Bcfe), an
increase of 18 percent year-over-year
- Proved reserves of 12.9 trillion cubic feet equivalent (Tcfe),
an increase of 11 percent year-over-year
- Operating expenses per unit of $1.44 per thousand cubic feet equivalent (Mcfe),
an 18 percent improvement year-over-year
- All-sources and drill-bit finding and development (F&D)
costs (non-GAAP) of $0.36 and
$0.37 per Mcfe, respectively
- Reduced net debt-to-EBITDAX (non-GAAP) to 0.7x at year-end
2019
See the supplemental tables at the end of this press release for
a reconciliation of non-GAAP measures including adjusted net
income, discretionary cash flow, EBITDAX, free cash flow, net debt
to adjusted capitalization ratio, ROCE, pre-tax present value of
future net cash flows (pre-tax PV-10) and F&D costs.
Fourth Quarter 2019 Financial Results
Fourth quarter 2019 daily production was 2,457 Mmcfe per day
(100 percent natural gas), exceeding the high-end of the Company's
guidance range and representing a 10 percent increase relative to
the fourth quarter of 2018.
Fourth quarter 2019 net income was $146.9
million, or $0.36 per share,
compared to $275.0 million, or
$0.64 per share, in the prior-year
period. Fourth quarter 2019 adjusted net income (non-GAAP) was
$120.8 million, or $0.30 per share, compared to $235.8 million, or $0.55 per share, in the prior-year period. Fourth
quarter 2019 EBITDAX (non-GAAP) was $300.3
million, compared to $464.4
million in the prior-year period.
Fourth quarter 2019 net cash provided by operating activities
was $263.0 million, compared to
$316.1 million in the prior-year
period. Fourth quarter 2019 discretionary cash flow (non-GAAP) was
$277.5 million, compared to
$492.8 million in the prior-year
period. Fourth quarter 2019 free cash flow (non-GAAP) was
$109.5 million, compared to
$241.4 million in the prior-year
period.
Fourth quarter 2019 natural gas price realizations, including
the impact of derivatives, were $2.15
per thousand cubic feet (Mcf), a decrease of 31 percent compared to
the prior-year period. Excluding the impact of derivatives, fourth
quarter 2019 natural gas price realizations were $2.05 per Mcf, representing a $0.45 discount to NYMEX settlement prices
compared to a $0.42 discount in the
prior-year period.
Fourth quarter 2019 operating expenses (including interest
expense) decreased to $1.43 per Mcfe,
a 24 percent improvement compared to the prior-year period. All
operating expenses per unit decreased relative to the prior-year
period except for direct operations, which increased slightly
primarily due to higher workover expense compared to the prior-year
period.
Cabot incurred a total of
$161.1 million of capital
expenditures in the fourth quarter of 2019 including $155.5 million of drilling and facilities
capital, $0.8 million of leasehold
acquisition capital, and $4.8 million
of other capital. Additionally, the Company contributed
$0.4 million to its recently divested
equity method pipeline investments. See the supplemental table at
the end of this press release reconciling the capital expenditures
during the fourth quarter of 2019.
Full-Year 2019 Financial Results
Full-year 2019 daily production was 2,371 Mmcfe per day (100
percent natural gas), representing an 18 percent increase relative
to the prior-year period.
Full-year 2019 net income was $681.1
million, or $1.64 per share,
compared to $557.0 million, or
$1.25 per share, for the prior-year
period. Adjusted net income (non-GAAP) for the full-year 2019 was
$698.8 million, or $1.68 per share, compared to $531.2 million, or $1.19 per share, for the prior-year period.
Full-year 2019 EBITDAX (non-GAAP) was $1.4
billion, compared to $1.3
billion for the prior-year period.
For the full-year 2019, net cash provided by operating
activities was $1.4 billion, compared
to $1.1 billion for the prior-year
period. Full-year 2019 discretionary cash flow (non-GAAP) was
$1.4 billion, compared to
$1.3 billion for the prior-year
period. Full-year 2019 free cash flow (non-GAAP) was $563.1 million, compared to $296.6 million for the prior-year period.
Full-year 2019 ROCE (non-GAAP) improved to 22.2 percent, compared
to 15.9 percent for the prior-year period.
Full-year 2019 natural gas price realizations, including the
impact of derivatives, were $2.45 per
Mcf, a decrease of four percent compared to the prior-year
period.
Full-year 2019 operating expenses (including interest expense)
decreased to $1.44 per Mcfe, an 18
percent improvement compared to the prior-year period. All
operating expenses per unit decreased relative to the prior-year
period.
Cabot incurred a total of
$783.3 million of capital
expenditures in 2019 including $761.5
million of drilling and facilities capital, $6.1 million of leasehold acquisition capital,
and $15.7 million of other capital.
Additionally, the Company contributed $9.3
million to its recently divested equity method pipeline
investments in 2019. See the supplemental table at the end of
this press release reconciling the capital expenditures for the
year.
Return of Capital
Cabot returned $665.4 million of capital to shareholders through
dividends and share repurchases in 2019, representing 118 percent
of the Company's free cash flow. During the year, Cabot increased its quarterly dividend per
share by 43 percent and repurchased 25.5 million shares. Since
reactivating the share repurchase program in the second quarter of
2017, Cabot has reduced its shares
outstanding by over 14 percent to 398.6 million shares. The Company
currently has 11.0 million remaining shares authorized under its
share repurchase program (or approximately three percent of its
current shares outstanding). Cabot
continues to target a minimum return of capital of at least 50
percent of free cash flow annually.
Financial Position and Liquidity
As of December 31, 2019,
Cabot had total debt of
$1.2 billion and cash on hand of
$200.2 million. The Company's net
debt-to-adjusted capitalization ratio and net debt-to-trailing
twelve months EBITDAX ratio were 32.2 percent and 0.7x,
respectively, compared to 37.0 percent and 1.0x as of December 31, 2018. The Company currently
has no debt outstanding under its credit facility, resulting in
approximately $1.7 billion of
liquidity.
Upper Marcellus Operations Update
During 2018 and 2019, Cabot
placed 25 Upper Marcellus wells on production. Excluding four wells
that were located on a pad where the Company had an underperforming
lateral placement pilot test, the average estimated ultimate
recovery (EUR) per thousand lateral feet was 2.7 Bcf. "We believe
the results from our recent Upper Marcellus wells highlight the
Upper Marcellus as a distinct, economic interval that exceeds the
average well productivity across the basin," stated Dinges. "Our
prolific acreage position in northeast Pennsylvania provides us with over two decades
of remaining drilling locations, including nine years of remaining
Lower Marcellus inventory." The Company plans to test an additional
five Upper Marcellus wells in 2020 to further optimize lateral
placement and completion design.
Year-End 2019 Proved Reserves
Cabot reported year-end proved
reserves of 12.9 Tcfe, an increase of 11 percent over year-end
2018. The table below reconciles the components driving the 2019
reserve increase:
Proved Reserves
Reconciliation (in Bcfe)
|
|
|
Balance at
December 31, 2018
|
|
11,605
|
Revisions of prior
estimates
|
|
47
|
Extensions,
discoveries and other additions
|
|
2,116
|
Production
|
|
(865)
|
Balance at
December 31, 2019
|
|
12,903
|
As of December 31, 2019, 100
percent of Cabot's year-end proved
reserves were natural gas and were located in the Marcellus Shale.
Approximately 62 percent of the year-end proved reserves were
classified as proved developed and 38 percent were classified as
proved undeveloped (PUD), including six percent of drilled and
uncompleted PUDs
Total costs incurred during 2019 were $787.7 million, which included $761.3 million for development costs,
$20.3 million for exploration costs,
and $6.1 million for lease
acquisition costs. All-sources F&D costs (non-GAAP) were
$0.36 per Mcfe, while drill-bit
F&D costs (non-GAAP) were $0.37
per Mcfe in 2019.
The SEC price used for reporting Cabot's year-end 2019 proved reserves, which
has been adjusted for basis and quality differentials, was
$2.35 per Mcf, a nine percent
year-over-year decrease. Assuming the SEC price, the pre-tax PV–10
(non-GAAP) of the year-end 2019 proved reserves was $7.5 billion, an eight percent decrease compared
to $8.1 billion at year-end 2018.
First Quarter and Full-Year 2020 Guidance
Cabot has provided its first
quarter 2020 production guidance range of 2,350 to 2,400 Mmcfe per
day, representing a three percent sequential decline at the
midpoint of the range relative to the fourth quarter of 2019. Based
on the timing of wells being placed on production throughout the
year, the Company anticipates an additional sequential decline in
the second quarter of 2020 before increasing volumes in the second
half of the year.
Cabot has also reaffirmed its
recently announced plan to deliver an average net production rate
of approximately 2,400 Mmcfe per day in 2020 from a capital program
of $575 million. Based on the current
NYMEX futures curve, this plan is expected to generate enough free
cash flow to cover the Company's dividend while also providing a
modest amount of excess free cash flow for further return of
capital to shareholders or debt repayment. At a $2.25 average NYMEX price, the plan is expected
to deliver between $275 and
$300 million of free cash flow and
generate a return on capital employed between 11 and 12 percent.
The Company continues to analyze the outlook for the natural gas
markets in 2020 and beyond and is prepared to reduce capital
spending further if market conditions warrant it.
Conference Call Webcast
A conference call is scheduled for Friday, February 21, 2020, at 9:30 a.m. Eastern Time to discuss fourth quarter
and full-year 2019 financial and operating results. To access the
live audio webcast, please visit the Investor Relations section of
the Company's website. A replay of the call will also be available
on the Company's website.
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 website at
www.cabotog.com.
This press release includes forward‐looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The statements regarding future financial and operating
performance and results, returns to shareholders, strategic
pursuits and goals, market prices, future hedging and risk
management activities, and other statements that are not historical
facts contained in this report are forward-looking statements. The
words "expect", "project", "estimate", "believe", "anticipate",
"intend", "budget", "plan", "forecast", "outlook", "predict",
"may", "should", "could", "will" 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 geographic basis
differentials) of natural gas and crude oil, results of future
drilling and marketing activity, future production and costs,
pipeline projects, legislative and regulatory initiatives,
electronic, cyber or physical security breaches and other factors
detailed herein and in our other Securities and Exchange Commission
(SEC) filings. See "Risk Factors" in Item 1A of the Form 10-K and
subsequent public filings for additional information about these
risks and uncertainties. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those
indicated. Any forward-looking statement speaks only as of
the date on which such statement is made, and the Company does not
undertake any obligation to correct or update any forward-looking
statement, whether as the result of new information, future events
or otherwise, except as required by applicable law.
FOR MORE INFORMATION CONTACT
Matt Kerin (281) 589-4642
OPERATING
DATA
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
PRODUCTION
VOLUMES
|
|
|
|
|
|
|
|
Natural gas
(Bcf)
|
226.1
|
|
|
206.3
|
|
|
865.3
|
|
|
729.9
|
|
Crude oil and
condensate (Mbbl)
|
—
|
|
|
—
|
|
|
—
|
|
|
754.0
|
|
Natural gas liquids
(NGLs) (Mbbl)
|
—
|
|
|
—
|
|
|
—
|
|
|
75.1
|
|
Equivalent production
(Bcfe)
|
226.1
|
|
|
206.3
|
|
|
865.3
|
|
|
735.0
|
|
Daily equivalent
production (Mmcfe/day)
|
2,457
|
|
|
2,243
|
|
|
2,371
|
|
|
2,014
|
|
|
|
|
|
|
|
|
|
AVERAGE SALES
PRICE
|
|
|
|
|
|
|
|
Natural gas,
including hedges ($/Mcf)
|
$
|
2.15
|
|
|
$
|
3.11
|
|
|
$
|
2.45
|
|
|
$
|
2.54
|
|
Natural gas,
excluding hedges ($/Mcf)
|
$
|
2.05
|
|
|
$
|
3.22
|
|
|
$
|
2.29
|
|
|
$
|
2.58
|
|
Crude oil and
condensate, including hedges ($/Bbl)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
63.68
|
|
Crude oil and
condensate, excluding hedges ($/Bbl)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
64.68
|
|
NGL
($/Bbl)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21.51
|
|
|
|
|
|
|
|
|
|
AVERAGE UNIT COSTS
($/Mcfe)(1)
|
|
|
|
|
|
|
|
Direct
operations
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
Transportation and
gathering
|
0.66
|
|
|
0.68
|
|
|
0.66
|
|
|
0.68
|
|
Taxes other than
income
|
0.01
|
|
|
0.03
|
|
|
0.02
|
|
|
0.03
|
|
Exploration
|
0.02
|
|
|
0.22
|
|
|
0.02
|
|
|
0.15
|
|
Depreciation,
depletion and amortization
|
0.47
|
|
|
0.63
|
|
|
0.47
|
|
|
0.57
|
|
General and
administrative (excluding stock-based compensation)
|
0.07
|
|
|
0.07
|
|
|
0.07
|
|
|
0.09
|
|
Stock-based
compensation
|
0.03
|
|
|
0.08
|
|
|
0.04
|
|
|
0.05
|
|
Interest
expense
|
0.06
|
|
|
0.08
|
|
|
0.06
|
|
|
0.10
|
|
|
$
|
1.43
|
|
|
$
|
1.87
|
|
|
$
|
1.44
|
|
|
$
|
1.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WELLS
DRILLED(2)
|
|
|
|
|
|
|
|
Gross
|
25
|
|
|
37
|
|
|
96
|
|
|
97
|
|
Net
|
23.0
|
|
|
35.1
|
|
|
94.0
|
|
|
95.1
|
|
|
|
|
|
|
|
|
|
WELLS
COMPLETED(2)
|
|
|
|
|
|
|
|
Gross
|
28
|
|
|
33
|
|
|
99
|
|
|
94
|
|
Net
|
26.0
|
|
|
32.0
|
|
|
97.0
|
|
|
93.0
|
|
_______________________________________________________________________________
|
(1)
|
Total unit cost
may differ from the sum of the individual costs due to
rounding.
|
(2)
|
Wells drilled
represents wells drilled to total depth during the period. Wells
completed includes wells completed during the period, regardless of
when they were drilled.
|
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(In thousands,
except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Natural
gas
|
$
|
463,451
|
|
|
$
|
663,547
|
|
|
$
|
1,985,240
|
|
|
$
|
1,881,150
|
|
Crude oil and
condensate
|
—
|
|
|
—
|
|
|
—
|
|
|
48,722
|
|
Gain (loss) on
derivative instruments
|
(2,158)
|
|
|
46,060
|
|
|
80,808
|
|
|
44,432
|
|
Brokered natural
gas
|
—
|
|
|
6,155
|
|
|
—
|
|
|
209,530
|
|
Other
|
75
|
|
|
539
|
|
|
229
|
|
|
4,314
|
|
|
461,368
|
|
|
716,301
|
|
|
2,066,277
|
|
|
2,188,148
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Direct
operations
|
21,350
|
|
|
16,889
|
|
|
76,958
|
|
|
69,646
|
|
Transportation and
gathering
|
149,974
|
|
|
140,883
|
|
|
574,677
|
|
|
496,731
|
|
Brokered natural
gas
|
—
|
|
|
5,761
|
|
|
—
|
|
|
184,198
|
|
Taxes other than
income
|
2,959
|
|
|
7,208
|
|
|
17,053
|
|
|
22,642
|
|
Exploration
|
5,241
|
|
|
45,654
|
|
|
20,270
|
|
|
113,820
|
|
Depreciation,
depletion and amortization
|
106,439
|
|
|
129,269
|
|
|
405,733
|
|
|
417,479
|
|
General and
administrative (excluding stock-based compensation)
|
15,692
|
|
|
15,113
|
|
|
64,090
|
|
|
63,494
|
|
Stock-based
compensation(1)
|
6,808
|
|
|
15,516
|
|
|
30,780
|
|
|
33,147
|
|
|
308,463
|
|
|
376,293
|
|
|
1,189,561
|
|
|
1,401,157
|
|
Earnings on equity
method investments
|
69,302
|
|
|
2,146
|
|
|
80,496
|
|
|
1,137
|
|
Gain (loss) on sale
of assets
|
2
|
|
|
(1,477)
|
|
|
(1,462)
|
|
|
(16,327)
|
|
INCOME FROM
OPERATIONS
|
222,209
|
|
|
340,677
|
|
|
955,750
|
|
|
771,801
|
|
Interest expense,
net
|
14,650
|
|
|
15,624
|
|
|
54,952
|
|
|
73,201
|
|
Other
expense
|
144
|
|
|
116
|
|
|
574
|
|
|
463
|
|
Income before income
taxes
|
207,415
|
|
|
324,937
|
|
|
900,224
|
|
|
698,137
|
|
Income tax
expense
|
60,475
|
|
|
49,893
|
|
|
219,154
|
|
|
141,094
|
|
NET
INCOME
|
$
|
146,940
|
|
|
$
|
275,044
|
|
|
$
|
681,070
|
|
|
$
|
557,043
|
|
Earnings per share -
Basic
|
$
|
0.36
|
|
|
$
|
0.64
|
|
|
$
|
1.64
|
|
|
$
|
1.25
|
|
Weighted-average
common shares outstanding
|
404,581
|
|
|
430,978
|
|
|
415,514
|
|
|
445,538
|
|
_______________________________________________________________________________
|
(1)
|
Includes the
impact of our performance share awards and restricted
stock.
|
CONDENSED
CONSOLIDATED BALANCE SHEET (Unaudited)
|
|
|
|
|
(In
thousands)
|
December
31,
2019
|
|
December
31,
2018
|
ASSETS
|
|
|
|
Current
assets
|
$
|
568,248
|
|
|
$
|
544,545
|
|
Properties and
equipment, net (Successful efforts method)
|
3,855,706
|
|
|
3,463,606
|
|
Other
assets
|
63,291
|
|
|
190,678
|
|
|
$
|
4,487,245
|
|
|
$
|
4,198,829
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities
|
241,034
|
|
|
$
|
287,264
|
|
Current portion of
long-term debt
|
87,000
|
|
|
—
|
|
Long-term debt, net
(excluding current maturities)
|
1,133,025
|
|
|
1,226,104
|
|
Deferred income
taxes
|
702,104
|
|
|
458,597
|
|
Other
liabilities
|
172,595
|
|
|
138,705
|
|
Stockholders'
equity
|
2,151,487
|
|
|
2,088,159
|
|
|
$
|
4,487,245
|
|
|
$
|
4,198,829
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(In
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income
|
$
|
146,940
|
|
|
$
|
275,044
|
|
|
$
|
681,070
|
|
|
$
|
557,043
|
|
Deferred income tax
expense
|
55,421
|
|
|
97,804
|
|
|
244,418
|
|
|
229,603
|
|
(Gain) loss on sale
of assets
|
(2)
|
|
|
1,477
|
|
|
1,462
|
|
|
16,327
|
|
Exploratory dry hole
cost
|
2,220
|
|
|
41,316
|
|
|
2,236
|
|
|
97,741
|
|
(Gain) loss on
derivative instruments
|
2,158
|
|
|
(46,060)
|
|
|
(80,808)
|
|
|
(44,432)
|
|
Net cash received
(paid) in settlement of derivative instruments
|
23,519
|
|
|
(21,277)
|
|
|
138,450
|
|
|
(41,631)
|
|
Distribution of
earnings from equity method investments
|
3,115
|
|
|
1,296
|
|
|
15,725
|
|
|
1,296
|
|
Income charges not
requiring cash
|
44,173
|
|
|
143,204
|
|
|
358,212
|
|
|
452,416
|
|
Changes in assets and
liabilities
|
(14,564)
|
|
|
(176,753)
|
|
|
85,026
|
|
|
(163,460)
|
|
Net cash provided by
operating activities
|
262,980
|
|
|
316,051
|
|
|
1,445,791
|
|
|
1,104,903
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Capital
expenditures
|
(167,672)
|
|
|
(246,967)
|
|
|
(788,368)
|
|
|
(894,470)
|
|
Proceeds from sale of
assets
|
199
|
|
|
2,825
|
|
|
2,600
|
|
|
678,350
|
|
Investment in equity
method investments
|
(361)
|
|
|
(4,397)
|
|
|
(9,338)
|
|
|
(77,263)
|
|
Distribution of
investment from equity method investments
|
72
|
|
|
—
|
|
|
1,728
|
|
|
—
|
|
Proceeds from sale of
equity method investments
|
249,463
|
|
|
—
|
|
|
249,463
|
|
|
—
|
|
Net cash provided by
(used in) investing activities
|
81,701
|
|
|
(248,539)
|
|
|
(543,915)
|
|
|
(293,383)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net borrowings
(repayments) of debt
|
—
|
|
|
(60,000)
|
|
|
(7,000)
|
|
|
(297,000)
|
|
Treasury stock
repurchases
|
(172,417)
|
|
|
(291,036)
|
|
|
(519,863)
|
|
|
(872,761)
|
|
Dividends
paid
|
(40,793)
|
|
|
(30,184)
|
|
|
(145,515)
|
|
|
(111,369)
|
|
Tax withholding on
vesting of stock awards
|
(3)
|
|
|
(82)
|
|
|
(10,590)
|
|
|
(8,150)
|
|
Capitalized debt
issuance costs
|
(1)
|
|
|
—
|
|
|
(7,412)
|
|
|
—
|
|
Net cash used in
financing activities
|
(213,214)
|
|
|
(381,302)
|
|
|
(690,380)
|
|
|
(1,289,280)
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
$
|
131,467
|
|
|
$
|
(313,790)
|
|
|
$
|
211,496
|
|
|
$
|
(477,760)
|
|
Explanation and Reconciliation of Non-GAAP
Financial Measures
We report our financial results in accordance with accounting
principles generally accepted in the
United States (GAAP). However, we believe certain non-GAAP
performance measures may provide financial statement users with
additional meaningful comparisons between current results and
results of prior periods. In addition, we believe these measures
are used by analysts and others in the valuation, rating and
investment recommendations of companies within the oil and natural
gas exploration and production industry. See the reconciliations
throughout this release of GAAP financial measures to non-GAAP
financial measures for the periods indicated.
We have also included herein certain forward-looking non-GAAP
financial measures. Due to the forward-looking nature of these
non-GAAP financial measures, we cannot reliably predict certain of
the necessary components of the most directly comparable
forward-looking GAAP measures, such as future impairments and
future changes in capital. Accordingly, we are unable to present a
quantitative reconciliation of such forward-looking non-GAAP
financial measures to their most directly comparable
forward-looking GAAP financial measures. Reconciling items in
future periods could be significant.
Reconciliation of Net Income to Adjusted Net
Income and Adjusted Earnings Per Share
Adjusted Net Income and Adjusted Earnings per Share are
presented based on our belief that these non-GAAP measures enable a
user of the financial information to understand the impact of these
items on reported results. Adjusted Net Income is defined as net
income plus gain and loss on sale of assets, gain and loss on
derivative instruments, gain on sale of equity method investment,
stock-based compensation expense, severance expense, interest
expense related to income tax reserves and tax effect on selected
items. Additionally, this presentation provides a beneficial
comparison to similarly adjusted measurements of prior
periods. Adjusted Net Income and Adjusted Earnings per Share
are not measures of financial performance under GAAP and should not
be considered as alternatives to net income and earnings per share,
as defined by GAAP.
|
Quarter Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
(In thousands,
except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
As reported - net
income
|
$
|
146,940
|
|
|
$
|
275,044
|
|
|
$
|
681,070
|
|
|
$
|
557,043
|
|
Reversal of selected
items:
|
|
|
|
|
|
|
|
(Gain) loss on sale
of assets
|
(2)
|
|
|
1,477
|
|
|
1,462
|
|
|
16,327
|
|
(Gain) loss on
derivative instruments(1)
|
25,677
|
|
|
(67,337)
|
|
|
57,642
|
|
|
(86,063)
|
|
Gain on sale of
equity method investment
|
(66,412)
|
|
|
—
|
|
|
(66,412)
|
|
|
—
|
|
Stock-based
compensation expense
|
6,808
|
|
|
15,516
|
|
|
30,780
|
|
|
33,147
|
|
Severance
expense
|
—
|
|
|
—
|
|
|
2,521
|
|
|
28
|
|
Interest expense
related to income tax reserves
|
—
|
|
|
(538)
|
|
|
(3,052)
|
|
|
3,116
|
|
Tax effect on
selected items
|
7,739
|
|
|
11,619
|
|
|
(5,233)
|
|
|
7,637
|
|
Adjusted net
income
|
$
|
120,750
|
|
|
$
|
235,781
|
|
|
$
|
698,778
|
|
|
$
|
531,235
|
|
As reported -
earnings per share
|
$
|
0.36
|
|
|
$
|
0.64
|
|
|
$
|
1.64
|
|
|
$
|
1.25
|
|
Per share impact of
selected items
|
(0.06)
|
|
|
(0.09)
|
|
|
0.04
|
|
|
(0.06)
|
|
Adjusted earnings per
share
|
$
|
0.30
|
|
|
$
|
0.55
|
|
|
$
|
1.68
|
|
|
$
|
1.19
|
|
Weighted-average
common shares outstanding
|
404,581
|
|
|
430,978
|
|
|
415,514
|
|
|
445,538
|
|
_______________________________________________________________________________
|
(1)
|
This amount
represents the non-cash mark-to-market changes of our commodity
derivative instruments recorded in Gain (loss) on derivative
instruments in the Condensed Consolidated Statement of
Operations.
|
Return on Capital Employed
Return on Capital Employed (ROCE) is defined as Adjusted Net
Income (defined above) plus after-tax net interest expense divided
by average capital employed, which is defined as total debt plus
stockholders' equity. ROCE is presented based on our belief that
this non-GAAP measure is useful information to investors when
evaluating our profitability and the efficiency with which we have
employed capital over time. ROCE is not a measure of financial
performance under GAAP and should not be considered an alternative
to net income.
|
|
Twelve Months Ended December 31,
|
(In
thousands)
|
|
2019
|
|
2018
|
Interest expense,
net
|
|
$
|
54,952
|
|
|
$
|
73,201
|
|
Interest expense
related to income tax reserves (1)
|
|
3,052
|
|
|
(3,116)
|
|
Tax
benefit
|
|
(13,241)
|
|
|
(16,004)
|
|
After-tax interest
expense, net (A)
|
|
44,763
|
|
|
54,081
|
|
|
|
|
|
|
As reported - net
income
|
|
681,070
|
|
|
557,043
|
|
Adjustments to as
reported - net income, net of tax
|
|
17,708
|
|
|
(25,808)
|
|
Adjusted net income
(B)
|
|
698,778
|
|
|
531,235
|
|
|
|
|
|
|
Adjusted net income
before interest expense, net (A + B)
|
|
$
|
743,541
|
|
|
$
|
585,316
|
|
|
|
|
|
|
Total debt -
beginning
|
|
$
|
1,226,104
|
|
|
$
|
1,521,891
|
|
Stockholders' equity
- beginning
|
|
2,088,159
|
|
|
2,523,905
|
|
Capital employed -
beginning
|
|
3,314,263
|
|
|
4,045,796
|
|
|
|
|
|
|
Total debt -
ending
|
|
1,220,025
|
|
|
1,226,104
|
|
Stockholders' equity
- ending
|
|
2,151,487
|
|
|
2,088,159
|
|
Capital employed -
ending
|
|
3,371,512
|
|
|
3,314,263
|
|
|
|
|
|
|
Average capital
employed (C)
|
|
$
|
3,342,888
|
|
|
$
|
3,680,030
|
|
|
|
|
|
|
Return on average
capital employed (ROCE) (A + B) / C
|
|
22.2
|
%
|
|
15.9
|
%
|
_______________________________________________________________________________
|
(1)
|
Interest expense
related to income tax reserves is included in the adjustments to as
reported - net income, net of tax.
|
Discretionary Cash Flow and Free Cash Flow
Calculation and Reconciliation
Discretionary Cash Flow is defined as net cash provided by
operating activities excluding changes in assets and
liabilities. Discretionary Cash Flow is widely accepted as a
financial indicator of an oil and gas company's ability to generate
cash which is used to internally fund exploration and development
activities, pay dividends and service debt. Discretionary Cash
Flow is presented based on our belief that this non-GAAP measure is
useful information to investors when comparing our cash flows with
the cash flows of other companies that use the full cost method of
accounting for oil and gas producing activities or have different
financing and capital structures or tax rates. Discretionary
Cash Flow is not a measure of financial performance under GAAP and
should not be considered as an alternative to cash flows from
operating activities, as defined by GAAP, or as a measure of
liquidity, or an alternative to net income.
Free Cash Flow is defined as Discretionary Cash Flow (defined
above) less capital expenditures and investment in equity method
investments. Free Cash Flow is an indicator of a company's ability
to generate cash flow after spending the money required to maintain
or expand its asset base. Free Cash Flow is presented based on our
belief that this non-GAAP measure is useful information to
investors when comparing our cash flows with the cash flows of
other companies. Free Cash Flow is not a measure of financial
performance under GAAP and should not be considered as an
alternative to cash flows from operating activities, as defined by
GAAP, or as a measure of liquidity, or an alternative to net
income.
|
|
Quarter
Ended
December
31,
|
|
Twelve Months Ended
December 31,
|
(In
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net cash provided by
operating activities
|
|
$
|
262,980
|
|
|
$
|
316,051
|
|
|
$
|
1,445,791
|
|
|
$
|
1,104,903
|
|
Changes in assets and
liabilities
|
|
14,564
|
|
|
176,753
|
|
|
(85,026)
|
|
|
163,460
|
|
Discretionary cash
flow
|
|
277,544
|
|
|
492,804
|
|
|
1,360,765
|
|
|
1,268,363
|
|
Capital
expenditures
|
|
(167,672)
|
|
|
(246,967)
|
|
|
(788,368)
|
|
|
(894,470)
|
|
Investment in equity
method investments
|
|
(361)
|
|
|
(4,397)
|
|
|
(9,338)
|
|
|
(77,263)
|
|
Free cash
flow
|
|
$
|
109,511
|
|
|
$
|
241,440
|
|
|
$
|
563,059
|
|
|
$
|
296,630
|
|
EBITDAX Calculation and Reconciliation
EBITDAX is defined as net income plus interest expense, other
expense, income tax expense, depreciation, depletion and
amortization (including impairments), exploration expense, gain and
loss on sale of assets, non-cash gain and loss on derivative
instruments, earnings and loss on equity method investments, cash
distributions received from equity method investments, and
stock-based compensation expense. EBITDAX is presented based on our
belief that this non-GAAP measure is useful information to
investors when evaluating our ability to internally fund
exploration and development activities and to service or incur debt
without regard to financial or capital structure. EBITDAX is not a
measure of financial performance under GAAP and should not be
considered as an alternative to cash flows from operating
activities or net income, as defined by GAAP, or as a measure of
liquidity.
|
Quarter
Ended
December
31,
|
|
Twelve Months Ended
December 31,
|
(In
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
|
$
|
146,940
|
|
|
$
|
275,044
|
|
|
$
|
681,070
|
|
|
$
|
557,043
|
|
Plus
(less):
|
|
|
|
|
|
|
|
Interest expense,
net
|
14,650
|
|
|
15,624
|
|
|
54,952
|
|
|
73,201
|
|
Other
expense
|
144
|
|
|
116
|
|
|
574
|
|
|
463
|
|
Income tax
expense
|
60,475
|
|
|
49,893
|
|
|
219,154
|
|
|
141,094
|
|
Depreciation,
depletion and amortization
|
106,439
|
|
|
129,269
|
|
|
405,733
|
|
|
417,479
|
|
Exploration
|
5,241
|
|
|
45,654
|
|
|
20,270
|
|
|
113,820
|
|
(Gain) loss on sale
of assets
|
(2)
|
|
|
1,477
|
|
|
1,462
|
|
|
16,327
|
|
Non-cash (gain) loss
on derivative instruments
|
25,677
|
|
|
(67,337)
|
|
|
57,642
|
|
|
(86,063)
|
|
Earnings on equity
method investments
|
(69,302)
|
|
|
(2,146)
|
|
|
(80,496)
|
|
|
(1,137)
|
|
Equity method
investment distributions
|
3,187
|
|
|
1,296
|
|
|
17,453
|
|
|
1,296
|
|
Stock-based
compensation
|
6,808
|
|
|
15,516
|
|
|
30,780
|
|
|
33,147
|
|
EBITDAX
|
$
|
300,257
|
|
|
$
|
464,406
|
|
|
$
|
1,408,594
|
|
|
$
|
1,266,670
|
|
Net Debt Reconciliation
The total debt to total capitalization ratio is calculated by
dividing total debt by the sum of total debt and total
stockholders' equity. This ratio is a measurement which is
presented in our annual and interim filings and we believe this
ratio is useful to investors in determining our leverage. Net Debt
is calculated by subtracting cash and cash equivalents from total
debt. Net Debt and the Net Debt to Adjusted Capitalization
ratio are non-GAAP measures which we believe are also useful to
investors since we have the ability to and may decide to use a
portion of our cash and cash equivalents to retire debt.
Additionally, as we may incur additional expenditures without
increasing debt, it is appropriate to apply cash and cash
equivalents to debt in calculating the Net Debt to Adjusted
Capitalization ratio.
(In
thousands)
|
December
31,
2019
|
|
December
31,
2018
|
Current portion of
long-term debt
|
$
|
87,000
|
|
|
$
|
—
|
|
Long-term debt,
net
|
1,133,025
|
|
|
1,226,104
|
|
Total debt
|
$
|
1,220,025
|
|
|
$
|
1,226,104
|
|
Stockholders'
equity
|
2,151,487
|
|
|
2,088,159
|
|
Total
capitalization
|
$
|
3,371,512
|
|
|
$
|
3,314,263
|
|
|
|
|
|
Total debt
|
$
|
1,220,025
|
|
|
$
|
1,226,104
|
|
Less: Cash and cash
equivalents
|
(200,227)
|
|
|
(2,287)
|
|
Net debt
|
$
|
1,019,798
|
|
|
$
|
1,223,817
|
|
|
|
|
|
Net debt
|
$
|
1,019,798
|
|
|
$
|
1,223,817
|
|
Stockholders'
equity
|
2,151,487
|
|
|
2,088,159
|
|
Total adjusted
capitalization
|
$
|
3,171,285
|
|
|
$
|
3,311,976
|
|
|
|
|
|
Total debt to total
capitalization ratio
|
36.2
|
%
|
|
37.0
|
%
|
Less: Impact of cash
and cash equivalents
|
4.0
|
%
|
|
—
|
%
|
Net debt to adjusted
capitalization ratio
|
32.2
|
%
|
|
37.0
|
%
|
Capital
Expenditures
|
|
|
|
Quarter
Ended
December
31,
|
|
Twelve Months
Ended
December
31,
|
(In
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash paid for capital
expenditures
|
|
$
|
167,672
|
|
|
$
|
246,967
|
|
|
$
|
788,368
|
|
|
$
|
894,470
|
|
Change in accrued
capital costs
|
|
(4,306)
|
|
|
17,326
|
|
|
(2,870)
|
|
|
19,346
|
|
Exploratory dry hole
cost
|
|
(2,220)
|
|
|
(41,316)
|
|
|
(2,236)
|
|
|
(97,741)
|
|
Capital
expenditures
|
|
$
|
161,146
|
|
|
$
|
222,977
|
|
|
$
|
783,262
|
|
|
$
|
816,075
|
|
Finding and Development Costs
Drill-Bit Finding and Development Cost is defined as costs
incurred in exploration and development activities as defined by
GAAP divided by reserve extensions, discoveries and other
additions. All-Sources Finding and Development Cost is defined as
costs incurred in property acquisition, exploration and development
activities, as defined by GAAP, divided by the total of reserve
extensions, discoveries and other additions and revision of prior
estimates. Drill-Bit Finding and Development Cost and All-Sources
Finding and Development Cost are presented based on management's
belief that these non-GAAP measures are useful information to
investors to evaluate how much it costs to add proved reserves.
These calculations do not include the future development costs
required for the development of proved undeveloped reserves and may
not be comparable to similarly titled measurements used by other
companies.
|
Year Ended
December 31,
|
|
2019
|
|
2018
|
Costs incurred in oil
and gas property acquisition, exploration and development
activities (In thousands)
|
|
|
|
Exploration
costs
|
$
|
20,270
|
|
|
$
|
94,309
|
|
Development
costs
|
761,326
|
|
|
778,574
|
|
Exploration and
development costs (A)
|
781,596
|
|
|
872,883
|
|
Property acquisition
costs, unproved
|
6,072
|
|
|
29,851
|
|
Total costs incurred
(B)
|
787,668
|
|
|
902,734
|
|
|
|
|
|
Extensions,
discoveries and other additions (Bcfe) (C)
|
2,116
|
|
|
2,244
|
|
Revision of prior
estimates (Bcfe) (D)
|
47
|
|
|
780
|
|
|
|
|
|
Drill-bit finding and
development costs ($ per Mcfe) (A) / (C)
|
$
|
0.37
|
|
|
$
|
0.39
|
|
All-sources finding
and development costs ($ per Mcfe) (B) / (C + D)
|
$
|
0.36
|
|
|
$
|
0.30
|
|
Pre-Tax Present Value of Future Net Cash Flows
Calculation and Reconciliation
Pre-Tax Present Value of Future Net Cash Flows, discounted at
10% annual rate (Pre-Tax PV-10), is defined as Standardized Measure
of Discounted Future Net Cash Flows plus Future Income Tax
Expenses, discounted at 10% annual rate. Year-end Pre-Tax PV-10
value is presented based on our belief that this non-GAAP measure
is useful information to investors and creditors when comparing
Pre-Tax PV-10 values as a basis for comparison of our relative size
and value of reserves as compared with other companies. Pre-Tax
PV-10 is not a measure under GAAP and should not be considered as
alternative to Standardized Measure of Discounted Future Net Cash
Flows, as defined by GAAP.
(In
thousands)
|
December
31,
2019
|
|
December
31,
2018
|
Standardized Measure
of Discounted Future Net Cash Flows
|
$
|
5,861,117
|
|
|
$
|
6,483,308
|
|
Plus: Future Income
Tax Expenses, discounted at 10% annual rate
|
1,639,288
|
|
|
1,651,488
|
|
Pre-tax Present Value
of Future Net Cash Flows, discounted at 10% annual rate
|
$
|
7,500,405
|
|
|
$
|
8,134,796
|
|
View original
content:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-reports-fourth-quarter-and-full-year-2019-results-301008782.html
SOURCE Cabot Oil & Gas Corporation