EXHIBIT 99.1
[Cabot Oil & Gas Corporation Letterhead]
NEWS RELEASE
1200 Enclave Parkway, Houston, Texas 77077
P. O. Box 4544, Houston, Texas 77210-4544
(281) 589-4600
| FOR IMMEDIATE RELEASE | FOR MORE INFORMATION CONTACT: | |
| July 29, 2003 | Scott Schroeder (281) 589-4993 |
CABOT OIL & GAS ANNOUNCES RECORD SECOND QUARTER FINANCIAL RESULTS
HOUSTON, July 29, 2003 – Cabot Oil & Gas Corporation (NYSE:COG) today announced second quarter net income of $17.9 million, or $.56 per share, and discretionary cash flow of $62.5 million. These results compare favorably to net income of $2.1 million, or $.07 per share, and discretionary cash flow of $40.8 million for the 2002 second quarter. Also for the second quarter of 2003, cash flow from operations was $80.3 million, up 50 percent versus $53.5 million in the comparable period for last year.
Higher realized commodity prices drove the significant increases in net income and cash flows over last year’s comparable quarter. Realized natural gas prices averaged $4.50 per Mcf in the second quarter of 2003, up 51 percent, versus the $2.99 per Mcf reported during the same period last year. Oil prices exhibited strong gains with a $29.27 per barrel realization for the 2003 second quarter versus $24.19 per barrel during last year’s comparable period.
Consistent with the Company’s public guidance, daily production was down slightly in the second quarter of 2003 versus the level reported in the second quarter of 2002, with the Company recording production of 245.3 Mmcfe per day versus 250.8 Mmcfe per day, respectively. Production was up 1 percent sequentially compared to the 242.9 Mmcfe per day produced during the first three months of 2003.
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“This was our best second quarter ever in terms of both earnings and cash flow,” said Dan O. Dinges, Chairman, President and Chief Executive Officer. “The strong prices, consistent production volumes and lower debt levels made this a standout quarter.”
In terms of expenses, the strength of commodity prices was more than enough to offset a 28 percent increase in benefit costs that impacted the Direct Operations and General and Administrative expense categories, a 45 percent increase in exploration expense and a 16 percent rise in production taxes due to these high prices. “The increase in exploration expense was a direct result of the significantly larger exploration program the Company has planned for this year, including more seismic investment and dry hole exposure,” commented Dinges. Last year’s second quarter General and Administrative expense included a $3.6 million impact of a chief executive officer retirement.
Year-to-Date
For the first six months of the year, the Company recorded a net loss of $21.3 million, or $.67 per share, and discretionary cash flow of $130.1 million. For comparison, last year’s first half results were a profit of $1.3 million, or $.04 per share, and discretionary cash flow of $75.2 million. Cash flow from operations was $139.8 million in the first half of 2003 versus $83 million in the comparable period for last year.
The period January through June 2003 encompasses the first quarter effects of the Kurten field impairment, a $54.4 million after-tax charge, and the adoption of SFAS No. 143 “Accounting for Asset Retirement Obligations,” a $6.8 million after-tax item. Excluding the impact of these non-cash selected items, Cabot’s net income was $39.9 million, or $1.25 per share for the first six months.
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“We expect, based on our existing hedge position and the continuing strength of commodity prices, Cabot will realize a profit for the year, overcoming the $61.2 million in (after-tax) non-cash selected items,” added Dinges.
As of June 30, 2003, the Company’s long-term debt was $304 million, down from $397 million at June 30, 2002. “The $93 million reduction in debt year-over-year and a $61 million reduction in the first six months have been made possible by higher realized prices and our ongoing commitment to prudent spending,” said Dinges. “Our debt to total capitalization ratio now stands at 49 percent. We have focused on strengthening our financial position and pursuing opportunities that expose Cabot to further growth potential, including adding to our capital program.”
Listen in live to Cabot Oil & Gas Corporation’s second quarter earnings discussion with financial analysts on Wednesday, July 30 at 9:30 AM EDT (8:30 AM CDT) at www.cabotog.com. A teleconference replay will also be available at (888) 203-1112 (international (719) 457-0820), reservation number 472122. The audio webcast and teleconference replay will be available beginning July 30 at 12:30 PM EDT.
The latest financial guidance and replay of the webcast, which will be archived for one year, are available in the investor relations section of the Company’s website at www.cabotog.com.
Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading independent natural gas producer with substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid-Continent; and the East. For additional information, visit the Company’s Internet homepage at www.cabotog.com.
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* * *
The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs, and other factors detailed in the Company’s Securities and Exchange Commission filings.
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CABOT OIL & GAS RESULTS — Page 5
OPERATING DATA
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
PRODUCED NATURAL GAS (Bcf) & OIL (MBbl) | ||||||||||||||||
Natural Gas | ||||||||||||||||
Gulf Coast | 7.4 | 7.7 | 14.1 | 15.2 | ||||||||||||
West | 6.0 | 6.4 | 12.1 | 12.8 | ||||||||||||
East | 4.6 | 4.4 | 9.0 | 8.9 | ||||||||||||
Total | 18.0 | 18.5 | 35.2 | 36.9 | ||||||||||||
Crude/Condensate | ||||||||||||||||
Gulf Coast | 648 | 656 | 1,344 | 1,266 | ||||||||||||
West | 51 | 53 | 100 | 103 | ||||||||||||
East | 7 | 8 | 13 | 16 | ||||||||||||
Total | 706 | 717 | 1,457 | 1,385 | ||||||||||||
Natural Gas Liquids | 6 | 5 | 35 | 20 | ||||||||||||
Equivalent Production (Bcfe) | 22.3 | 22.8 | 44.2 | 45.3 | ||||||||||||
PRICES | ||||||||||||||||
Average Produced Gas Sales Price ($/Mcf) | ||||||||||||||||
Gulf Coast | $ | 4.96 | $ | 3.35 | $ | 4.92 | $ | 2.99 | ||||||||
West | $ | 3.60 | $ | 2.40 | $ | 3.61 | $ | 2.27 | ||||||||
East | $ | 4.92 | $ | 3.31 | $ | 5.13 | $ | 3.08 | ||||||||
Total | $ | 4.50 | $ | 2.99 | $ | 4.52 | $ | 2.76 | ||||||||
Crude/Condensate Price ($/Bbl) | ||||||||||||||||
Gulf Coast | $ | 29.30 | $ | 24.16 | $ | 30.10 | $ | 22.41 | ||||||||
West | $ | 28.47 | $ | 25.23 | $ | 30.22 | $ | 23.17 | ||||||||
East | $ | 31.83 | $ | 21.87 | $ | 29.05 | $ | 19.18 | ||||||||
Total | $ | 29.27 | $ | 24.19 | $ | 30.10 | $ | 22.43 | ||||||||
WELLS DRILLED | ||||||||||||||||
Gross | 43 | 33 | 68 | 54 | ||||||||||||
Net | 37.1 | 24.2 | 55.6 | 36.5 | ||||||||||||
Gross Success Rate | 95 | % | 94 | % | 93 | % | 94 | % | ||||||||
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CABOT OIL & GAS RESULTS — Page 6
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In Thousands, Except Per Share Amounts)
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Operating Revenues | ||||||||||||||||
Natural Gas Production | $ | 81,113 | $ | 55,300 | $ | 159,286 | $ | 101,806 | ||||||||
Brokered Natural Gas | 23,370 | 15,687 | 55,220 | 29,385 | ||||||||||||
Crude Oil and Condensate | 20,663 | 17,348 | 43,837 | 31,066 | ||||||||||||
Change in Derivative Fair Value | (650 | ) | (564 | ) | (1,194 | ) | (1,180 | ) | ||||||||
Other | 2,260 | 1,813 | 5,523 | 3,580 | ||||||||||||
| 126,756 | 89,584 | 262,672 | 164,657 | |||||||||||||
Operating Expenses | ||||||||||||||||
Brokered Natural Gas Cost | 21,539 | 14,581 | 49,800 | 26,848 | ||||||||||||
Direct Operations—Field and Pipeline | 13,825 | 11,921 | 24,751 | 24,156 | ||||||||||||
Exploration | 15,663 | 10,824 | 29,054 | 17,880 | ||||||||||||
Depreciation, Depletion and Amortization | 26,101 | 25,790 | 51,945 | 51,337 | ||||||||||||
Impairment of Long-Lived Assets | — | — | 87,926 | 1,063 | ||||||||||||
General and Administrative | 6,172 | 9,572 | 12,767 | 15,311 | ||||||||||||
Taxes Other Than Income | 8,651 | 7,475 | 18,875 | 13,627 | ||||||||||||
| 91,951 | 80,163 | 275,118 | 150,222 | |||||||||||||
Gain on Sale of Assets | 45 | 429 | 605 | 411 | ||||||||||||
Income (Loss) from Operations | 34,850 | 9,850 | (11,841 | ) | 14,846 | |||||||||||
Interest Expense and Other | 5,952 | 6,331 | 11,577 | 12,557 | ||||||||||||
Income (Loss) Before Income Taxes | 28,898 | 3,519 | (23,418 | ) | 2,289 | |||||||||||
Income Tax Expense (Benefit) | 10,994 | 1,398 | (8,946 | ) | 966 | |||||||||||
Net Income (Loss) Before Cumulative Effect of Accounting Change | 17,904 | 2,121 | (14,472 | ) | 1,323 | |||||||||||
Cumulative Effect of Accounting Change (1) | — | — | (6,847 | ) | — | |||||||||||
Net Income (Loss) | $ | 17,904 | $ | 2,121 | $ | (21,319 | ) | $ | 1,323 | |||||||
Net Earnings (Loss) Per Share—Basic | $ | 0.56 | $ | 0.07 | $ | (0.67 | ) | $ | 0.04 | |||||||
Average Common Shares Outstanding | 31,980 | 31,737 | 31,909 | 31,671 | ||||||||||||
| (1) | Cumulative effect of accounting change relates to the adoption of SFAS 143, “Accounting for Asset Retirement Obligations.” |
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CABOT OIL & GAS RESULTS — Page 7
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In Thousands)
| June 30, 2003 | Dec. 31, 2002 | |||||
Assets | ||||||
Current Assets | $ | 109,997 | $ | 93,121 | ||
Property, Equipment and Other Assets | 897,334 | 978,767 | ||||
Total Assets | $ | 1,007,331 | $ | 1,071,888 | ||
Liabilities and Stockholders’ Equity | ||||||
Current Liabilities | $ | 169,173 | $ | 121,890 | ||
Long-Term Debt | 304,000 | 365,000 | ||||
Deferred Income Taxes | 160,549 | 200,207 | ||||
Other Liabilities | 57,855 | 34,134 | ||||
Stockholders’ Equity | 315,754 | 350,657 | ||||
Total Liabilities and Stockholders’ Equity | $ | 1,007,331 | $ | 1,071,888 | ||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In Thousands)
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Cash Flows From Operating Activities | ||||||||||||||||
Net Income (Loss) | $ | 17,904 | $ | 2,121 | $ | (21,319 | ) | $ | 1,323 | |||||||
Cumulative Effect of Accounting Change | — | — | 6,847 | — | ||||||||||||
Change in Derivative Fair Value | 650 | 564 | 1,194 | 1,180 | ||||||||||||
Impairment of Long-Lived Assets | — | — | 87,926 | 1,063 | ||||||||||||
Income Charges Not Requiring Cash | 26,572 | 27,333 | 52,278 | 54,244 | ||||||||||||
Gain on Sale of Assets | (45 | ) | (429 | ) | (605 | ) | (411 | ) | ||||||||
Deferred Income Taxes | 1,762 | 422 | (25,248 | ) | (49 | ) | ||||||||||
Changes in Assets and Liabilities | 17,751 | 12,644 | 9,677 | 7,799 | ||||||||||||
Exploration Expense | 15,663 | 10,824 | 29,054 | 17,880 | ||||||||||||
Net Cash Provided by Operations | 80,257 | 53,479 | 139,804 | 83,029 | ||||||||||||
Cash Flows From Investing Activities | ||||||||||||||||
Capital Expenditures | (30,078 | ) | (30,126 | ) | (51,399 | ) | (71,188 | ) | ||||||||
Proceeds from Sale of Assets | 758 | 3,445 | 2,360 | 3,443 | ||||||||||||
Exploration Expense | (15,663 | ) | (10,824 | ) | (29,054 | ) | (17,880 | ) | ||||||||
Net Cash Used by Investing | (44,983 | ) | (37,505 | ) | (78,093 | ) | (85,625 | ) | ||||||||
Cash Flows From Financing Activities | ||||||||||||||||
Sale of Common Stock | 1,960 | 3,031 | 2,458 | 3,136 | ||||||||||||
Increase (Decrease) in Debt | (34,000 | ) | (15,000 | ) | (61,000 | ) | 4,000 | |||||||||
Dividends Paid | (1,195 | ) | (1,271 | ) | (2,468 | ) | (2,536 | ) | ||||||||
Net Cash Provided (Used) by Financing | (33,235 | ) | (13,240 | ) | (61,010 | ) | 4,600 | |||||||||
Net Increase in Cash and Cash Equivalents | $ | 2,039 | $ | 2,734 | $ | 701 | $ | 2,004 | ||||||||
CABOT OIL & GAS RESULTS — Page 8
Selected Item Review and Reconciliation of Net Income (Loss) and Earnings (Loss) Per Share
(In Thousands, Except Per Share Amounts)
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||
As Reported—Net Income (Loss) | $ | 17,904 | $ | 2,121 | $ | (21,319 | ) | $ | 1,323 | ||||
Reversal of Selected Items, Net of Tax: | |||||||||||||
Retirement of Executive Officer | — | 2,204 | — | 2,204 | |||||||||
Impairment of Long-Lived Assets | — | — | 54,338 | 652 | |||||||||
Cumulative Effect of Accounting Change | — | — | 6,847 | — | |||||||||
Net Income Including Reversal of Selected Items | $ | 17,904 | $ | 4,325 | $ | 39,866 | $ | 4,179 | |||||
As Reported—Net Earnings (Loss) Per Share | $ | 0.56 | $ | 0.07 | $ | (0.67 | ) | $ | 0.04 | ||||
Per Share Impact of Reversing Selected Items | 0.00 | 0.07 | 1.92 | 0.09 | |||||||||
Net Earnings Per Share Including Reversal of Selected Items | $ | 0.56 | $ | 0.14 | $ | 1.25 | $ | 0.13 | |||||
Average Common Shares Outstanding | 31,980 | 31,737 | 31,909 | 31,671 | |||||||||
Discretionary Cash Flow Calculation and Reconciliation
(In Thousands)
Quarter Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Discretionary Cash Flow | ||||||||||||||||
As Reported—Net Income (Loss) | $ | 17,904 | $ | 2,121 | $ | (21,319 | ) | $ | 1,323 | |||||||
Plus: | ||||||||||||||||
Cumulative Effect of Accounting Change | — | — | 6,847 | — | ||||||||||||
Change in Derivative Fair Value | 650 | 564 | 1,194 | 1,180 | ||||||||||||
Impairment of Long-Lived Assets | — | — | 87,926 | 1,063 | ||||||||||||
Income Charges Not Requiring Cash | 26,572 | 27,333 | 52,278 | 54,244 | ||||||||||||
Gain on Sale of Assets | (45 | ) | (429 | ) | (605 | ) | (411 | ) | ||||||||
Deferred Income Taxes | 1,762 | 422 | (25,248 | ) | (49 | ) | ||||||||||
Exploration Expense | 15,663 | 10,824 | 29,054 | 17,880 | ||||||||||||
Discretionary Cash Flow | 62,506 | 40,835 | 130,127 | 75,230 | ||||||||||||
Plus: Changes in Assets and Liabilities | 17,751 | 12,644 | 9,677 | 7,799 | ||||||||||||
Net Cash Provided by Operations | $ | 80,257 | $ | 53,479 | $ | 139,804 | $ | 83,029 | ||||||||
