Independent oil and gas exploration and production (E&P)
Cabot Oil & Gas Corporation
) reported strong first quarter 2013 results, thanks to enhanced
output and higher crude oil prices. These were partially offset
by lower realized natural gas prices.
Cabot posted earnings per share (excluding special items) of 26
cents, managing to beat the Zacks Consensus Estimate by a penny.
The bottom line showed a substantial improvement from the
year-ago adjusted profit of 14 cents per share.
During the three-month period ended Mar 31, 2013, Cabot generated
operating revenues of $373.3 million (up 37.2% year over year)
with the help of healthier production. However, the result was
below the Zacks Consensus Estimate of $381.0 million.
Overall production during the quarter was 89.3 billion cubic feet
equivalent (Bcfe) - 95.4% gas - up 49.6% from the prior-year
quarter. Natural gas volumes jumped 51.1% year over year to 85.2
billion cubic feet (Bcf), while liquid volumes increased 28.4% to
691 thousand barrels (MBbl). The expansion was driven by natural
gas production at the Appalachia region, where volumes swelled
The average realized natural gas price fell 5.5% from the
corresponding quarter of 2012 to $3.45 per thousand cubic feet
(Mcf), while average oil price realization moved up 7.6% to
$104.03 per barrel.
Costs & Expenses
Transportation and gathering costs came in at $46.2 million (up
52.8% year over year). As a result, total operating expenses
increased 27.2% over the first quarter of 2012 to $286.2 million.
Drilling Statistics, Capital Expenditure & Balance
Net wells drilled during the quarter increased to 26 (from 23 in
the year-ago quarter) with a 97% success rate. Operating cash
flows were $212.7 million, while capital expenditures were $260.2
million. As of Mar 31, 2013, the company had $1,127.0 million in
total debt, with a debt-to-capitalization ratio of 34.7%.
Cabot guides its 2013 volume growth in the range of 35% to 50%,
including an expected liquid growth of 35% to 50%.
The company currently retains a Zacks Rank #2 (Buy), implying
that it is expected to outperform the broader U.S. equity market
over the next 1 to 3 months.
Cabot's diversified asset portfolio is spread between
low-risk/long reserve-life Appalachian assets and
large-volume/rapid-payout Gulf Coast properties, with further
variety from large prospect inventories in the Rocky Mountains
and the Anadarko Basin that have a broad mix of production and
Moreover, Cabot has hedged around 45% of its projected 2013
production at attractive prices. This lowers the company's
near-term commodity-price exposure, which is a key positive for
Cabot's risk profile, given the current market volatility.
In addition to Cabot, there are other E&P companies that are
expected to perform well in the coming 1 to 3 months. These
include Zacks Rank #1 (Strong Buy)
EPL Oil & Gas Inc.
Harvest Natural Resources Inc.
Range Resources Corp.
CABOT OIL & GAS (COG): Free Stock Analysis
EPL OIL&GAS INC (EPL): Free Stock Analysis
HARVEST NATURAL (HNR): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
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