Cabot Oil & Gas Corporation (COG): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


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Based on the number of near-term challenges, we are lowering our recommendation for Cabot Oil & Gas to Underperform from Neutral. With oil in a freefall, the company's earnings and cash flows are bound to suffer, at least in the near-to-medium term. This is expected to limit its ability to deliver positive earnings surprises. Natural gas' volatile fundamentals and Cabot's high exposure to the commodity are also causes for concern. As it is, Cabot's steep valuation and miniscule payout keep us worried. Considering these factors, we see Cabot as a risky bet.


Cabot Oil and Gas (COG), based in Houston, Texas, is an independent oil and gas exploration company with producing properties mainly in the U.S. Founded over 100 years ago in Pennsylvania, Cabot originally operated in the Appalachian Mountains of the eastern U.S. before moving the bulk of its activities to the Gulf Coast. Today, the company has four domestic focus areas: the Appalachia, east and south Texas, and Oklahoma. As of year-end 2013, the company had 5.45 trillion cubic feet equivalent (Tcfe) in proved reserves (97% natural gas). Cabot's output totaled 413.6 billion cubic feet equivalent (Bcfe) in 2013, of which more than 95% was natural gas.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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