Independent oil and gas exploration company,
Cabot Oil & Gas Corporation
) reported strong fourth-quarter 2013 results, primarily aided by
significant increase in production levels. The favorable results
led to a 2.2% share price rise on the NYSE, in after-market trade
The domestic energy explorer reported earnings per share
(excluding special items) of 18 cents, above the Zacks Consensus
Estimate of 17 cents and the year-ago adjusted profit of 14
During the three-month period ended Dec 31, 2013, Texas-based
Cabot generated operating revenues of $487.5 million, up 31.8%
year over year. The top line also beat the Zacks Consensus
Estimate of $479.0 million.
For the year ended Dec 31, 2013, Cabot reported income (excluding
non-operating items) of 72 cents per share, above the Zacks
Consensus Estimate of 65 cents. The figure also came ahead of
year-ago adjusted profit of 34 cents per share. Revenues came in
at $1,746.3 million, up from $1,204.6 million in 2012.
Cabot's overall production during the quarter totaled 121.9
billion cubic feet equivalent (Bcfe) - 95.7% gas - up 54.7% from
the prior-year quarter. Natural gas volumes surged 56.0% year
over year to 116.7 billion cubic feet (Bcf), while liquids
volumes improved 34.3% to 869 thousand barrels (MBbl). Impressive
operating performance by the company in the Marcellus shale
region aided the results.
Average realized natural gas price was down 12.0% from the
year-ago quarter to $3.44 per thousand cubic feet (Mcf).
Moreover, average oil price realization decreased 9.3% to $95.57
Costs & Expenses
Transportation and gathering costs increased 53.5% year over year
to $69.8 million, while depreciation, depletion and amortization
expensed were up 56.9% at $182.0 million. As a result, total
operating expenses increased 36.0% over the fourth quarter of
2012 to $337.0 million. However, Cabot was able to cut
exploration costs by 27.8% from the year-ago quarter to $5.7
Drilling Statistics, Capital Expenditure & Balance
Net wells drilled during the quarter increased to 43 (from 36 in
the year-ago period) with a 100% success rate. Operating cash
flows came in at $257.9 million, while capital expenditures
totaled $351.2 million. As of Dec 31, 2013, Cabot had $1,147.0
million in long-term debt, with a debt-to-capitalization ratio of
Increase in Proved Reserves
As of Dec 31, 2013, Cabot's proved reserves grossed 5,454 Bcfe,
reflecting an increase of roughly 42.0% from 3,842 Bcfe reserves
reported at the end of 2012. Improved well performances in the
Marcellus Shale area favored the results.
Cabot entered into a definitive gas sale and purchase contract
with an affiliate of
WGL Holdings Inc.
), an utility gas distribution company. Per the deal, Cabot is
expected to sell roughly 500,000 million British thermal unit of
natural gas per day for 15 years. Cabot intends to start selling
from the second half of 2017.
Cabot has also inked a binding Precedent contract with
Transcontinental Gas Pipe Line Company LLC (Transco). Per the
deal, Transco will construct new pipeline system spanning 177
miles from Susquehanna County's Zick region to Lancaster County,
Pennsylvania. Once the pipeline project is operational, Cabot
will be able to transport 850,000 million British thermal unit of
natural gas per day from its gas producing area in Susquehanna
Cabot has lowered its 2014 production growth guidance to 25-45%
range. Moreover, the company expects its 2014 capital budget to
lie in the band of $1.3−$1.4 billion, lower than its previous
Zacks Rank & Stock Picks
Cabot currently carries a Zacks Rank #3 (Hold), implying that it
is expected to perform in-line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can look at better-ranked players in the oil and
gas exploration and production sector like
Athlon Energy Inc.
Matador Resources Company
). Both the stocks sport a Zacks Rank #1 (Strong Buy).
ATHLON ENERGY (ATHL): Free Stock Analysis
CABOT OIL & GAS (COG): Free Stock Analysis
MATADOR RESOURC (MTDR): Free Stock Analysis
WGL HLDGS INC (WGL): Free Stock Analysis
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