HOUSTON, Feb. 4, 2021 /PRNewswire/ -- Cabot Oil & Gas
Corporation (NYSE: COG) ("Cabot" or the "Company") today provided
an operational update for the fourth quarter and full-year 2020,
reported its year-end 2020 estimated proved reserves, and announced
2021 guidance.
"Cabot Oil & Gas delivered another strong year operationally
and financially in 2020, including its fifth consecutive year of
positive free cash flow generation, despite the challenges
presented by the COVID-19 pandemic and a depressed natural gas
price environment, which resulted in the lowest natural gas price
realizations in the Company's 31-year history as a public company,"
stated Dan O. Dinges, Chairman,
President and Chief Executive Officer. "We remain positive on our
outlook for significant free cash flow expansion this year, which
is underpinned by improving fundamentals for natural gas supply and
demand and lower capital spending year-over-year, allowing for an
increase in our return of capital to shareholders and continued
debt reduction in 2021."
Fourth Quarter and Full-Year 2020 Operational Update
Cabot expects its production for the fourth quarter of 2020 to
be approximately 2,375 million cubic feet equivalent (Mmcfe) per
day, exceeding the high-end of the Company's fourth quarter
guidance range of 2,300 to 2,350 Mmcfe per day. Based on the
expected production volumes for the fourth quarter, the Company
expects its production for the full-year 2020 to be approximately
2,344 Mmcfe per day, exceeding the Company's full-year guidance
range of 2,325 to 2,340 Mmcfe per day.
Natural gas price realizations, including the impact of hedges,
are expected to be $1.90 per thousand
cubic feet (Mcf) in the fourth quarter of 2020. Excluding the
impact of hedges, natural gas price realizations for the fourth
quarter are expected to be $1.89 per
Mcf. For the full-year 2020, natural gas price realizations,
including the impact of hedges, are expected to be $1.68 per Mcf. Excluding the impact of hedges,
natural gas price realizations for the full-year are expected to be
$1.64 per Mcf.
Cabot expects to have incurred approximately $106 million in capital expenditures associated
with activity during the fourth quarter of 2020. Based on this
anticipated level of spending during the quarter, the Company
expects to have incurred approximately $570
million in capital expenditures associated with activity
during the full-year of 2020, compared to the Company's 2020
capital program guidance of $575
million.
Year-End 2020 Estimated Proved Reserves
Cabot reported estimated year-end 2020 proved reserves of 13.7
trillion cubic feet equivalent (Tcfe), an increase of six percent
over year-end 2019. The table below reconciles the components
driving the 2020 reserve increase:
Estimated Proved
Reserves Reconciliation (in billion cubic feet equivalent,
Bcfe)
|
|
|
Balance at
December 31, 2019
|
|
12,903
|
|
Extensions,
discoveries and other additions
|
|
1,974
|
|
Revisions of prior
estimates
|
|
(347)
|
|
Production
|
|
(858)
|
|
Balance at
December 31, 2020
|
|
13,672
|
|
As of December 31, 2020, 100
percent of Cabot's year-end estimated proved reserves were natural
gas and were located in the Marcellus Shale. Approximately 63
percent of the estimated year-end proved reserves were classified
as proved developed and 37 percent were classified as proved
undeveloped (PUD), including two percent of drilled and uncompleted
PUDs.
Drill-bit finding and development (F&D) costs (non-GAAP) are
expected to be $0.28 per thousand
cubic feet equivalent (Mcfe), while all-sources F&D costs
(non-GAAP) are expected to be $0.35
per Mcfe. "Our 2020 program delivered record-low drill-bit F&D
costs, resulting in a year-over-year improvement in our all-sources
F&D costs, despite a modest downward revision in our proved
reserves due primarily to a downward performance revision related
to certain proved developed producing properties and, to a lesser
extent, PUD reserve reclassifications resulting from changes to the
five-year development plan and pricing revisions," said Dinges.
2021 Guidance
Cabot today announced its guidance for 2021. The Company's
operating plan for the year is expected to deliver an average net
production rate of 2,350 Mmcfe per day from a capital program of
$530 to $540
million, representing a six percent reduction in capital
spending year-over-year at the midpoint of the range. Cabot has
also provided its first quarter 2021 production guidance range of
2,250 to 2,300 Mmcfe per day. The sequential decline relative to
the fourth quarter of 2020 is a result of the decrease in operating
activity levels and capital spending during the second half of
2020. "Our plan for 2021 highlights our commitment to disciplined
capital allocation and free cash flow generation with a focus on
maintaining our production flat year-over-year despite the
expectation for a higher natural gas price environment this year,"
commented Dinges. "Our maintenance capital program in 2021 is
expected to provide Cabot with significant opportunities to return
additional capital to shareholders as we continue to target a
minimum return of capital of at least 50 percent of free cash flow
annually, which the Company has far exceeded each of the last five
years, in addition to retiring our 2021 debt maturities."
For further guidance on Cabot's natural gas pricing exposure by
index, weighted-average natural gas price differential, and unit
costs, please see the 2021 Guidance presentation in the Investor
Relations section of the Company's website.
Fourth Quarter and Full-Year 2020 Conference Call
A conference call is scheduled for Friday, February 19, 2021, at 9:30 a.m. Eastern Time to discuss fourth quarter
and full-year 2020 financial and operating results. The Company
plans to issue its financial and operating results on Thursday, February 18, 2021 after the market
closes. 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, the
continuing effects of the COVID-19 pandemic and the impact thereof
on the Company's business, financial condition and results of
operations, the availability of cash on hand and other sources of
liquidity to fund our capital expenditures, the repayment of our
debt maturities and our dividends, actions by, or disputes among or
between, the Organization of Petroleum Exporting Countries and
other producer countries, 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 Company's most recent Annual Report on Form 10-K and subsequent
Quarterly Reports on Form 10-Q 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.
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.
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 our 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,
|
|
2020
|
|
2019
|
Costs incurred in oil
and gas property acquisition, exploration and development
activities (In thousands)
|
|
|
|
Exploration
costs
|
$
|
15,419
|
|
|
$
|
20,270
|
|
Development
costs
|
546,646
|
|
|
761,326
|
|
Exploration and
development costs (A)
|
562,065
|
|
|
781,596
|
|
Property acquisition
costs, unproved
|
5,821
|
|
|
6,072
|
|
Total costs incurred
(B)
|
567,886
|
|
|
787,668
|
|
|
|
|
|
Extensions,
discoveries and other additions (Bcfe) (C)
|
1,974
|
|
|
2,116
|
|
Revision of prior
estimates (Bcfe) (D)
|
(347)
|
|
|
47
|
|
|
|
|
|
Drill-bit finding and
development costs ($ per Mcfe) (A) / (C)
|
$
|
0.28
|
|
|
$
|
0.37
|
|
All-sources finding
and development costs ($ per Mcfe) (B) / (C + D)
|
$
|
0.35
|
|
|
$
|
0.36
|
|
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SOURCE Cabot Oil & Gas Corporation