SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 1-10447
CABOT OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-3072771
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
15375 Memorial Drive, Houston, Texas 77079
(Address of principal executive offices including Zip Code)
(713) 589-4600
(Registrant's telephone number)
No Change
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes /x/ No
As of May 2, 1994, there were 22,719,036 shares of Class A Common Stock, Par
Value $.10 Per Share, outstanding.
CABOT OIL & GAS CORPORATION
INDEX TO FINANCIAL STATEMENTS
Part I. Financial Information
Page
----
Item 1. Financial Statements
Consolidated Statement of Income for the Three Months Ended
March 31, 1994 and 1993.................................. 3
Consolidated Balance Sheet at March 31, 1994 and
December 31, 1993........................................ 4
Consolidated Statement of Cash Flows for the Three Months
Ended March 31, 1994 and 1993............................ 5
Notes to Consolidated Financial Statements................. 6
Independent Accountants' Report on Review of
Interim Financial Information............................ 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K..................... 17
Signature....................................................... 18
2
CABOT OIL & GAS CORPORATION
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(In Thousands, Except Per Share Amounts)
THREE MONTHS ENDED
MARCH 31,
------------------
1994 1993
--------- --------
REVENUES
Natural Gas................................ $63,748 $41,100
Crude Oil & Condensate..................... 1,100 763
Other...................................... 992 1,612
------- -------
65,840 43,475
COSTS AND EXPENSES
Costs of Natural Gas....................... 29,062 12,976
Direct Operations.......................... 7,459 6,895
Exploration................................ 1,017 1,872
Depreciation, Depletion and Amortization... 9,220 7,060
Impairment of Unproved Properties.......... 720 672
General and Administrative................. 4,180 4,214
Taxes Other Than Income.................... 2,615 2,233
------- -------
54,273 35,922
Gain on Sale of Assets....................... 13 737
------- -------
INCOME FROM OPERATIONS....................... 11,580 8,290
Interest Expense............................. 2,877 2,559
------- -------
Income Before Income Taxes................... 8,703 5,731
Income Taxes................................. 3,469 1,836
------- -------
NET INCOME................................... 5,234 3,895
Dividend Requirement on Preferred Stock...... 552 --
------- -------
Net Income Available to Common Stockholders.. $ 4,682 $ 3,895
======= =======
Earnings Per Share Available to Common....... $0.23 $0.19
======= =======
Average Common Shares Outstanding............ 20,584 20,465
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
3
CABOT OIL & GAS CORPORATION
CONSOLIDATED BALANCE SHEET
(In Thousands)
MARCH 31, DECEMBER 31,
1994 1993
----------- ------------
(UNAUDITED)
ASSETS
Current Assets
Cash and Cash Equivalents................................. $ 3,275 $ 2,897
Accounts Receivable....................................... 34,889 35,296
Inventories............................................... 2,794 5,693
Other..................................................... 752 752
--------- --------
Total Current Assets.................................... 41,710 44,638
Properties and Equipment (Successful Efforts Method)........ 404,084 400,270
Other Assets................................................ 77 93
--------- --------
445,871 445,001
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-Term Debt........................................... $ 2,570 $ 530
Accounts Payable.......................................... 31,583 26,538
Accrued Liabilities....................................... 10,802 10,223
--------- --------
Total Current Liabilities............................... 44,955 37,291
Long-Term Debt.............................................. 156,000 169,000
Deferred Income Taxes....................................... 81,502 78,698
Other Liabilities........................................... 5,986 6,483
Commitments and Contingencies (Note 6)
Stockholders' Equity
Preferred Stock:
Authorized--5,000,000 Shares of $.10 Par Value
Issued and Outstanding - $3.125 Cumulative Convertible
Preferred; $50 Stated Value; 692,439 Shares at
March 31, 1994 and December 31, 1993................ 69 69
Common Stock:
Authorized--40,000,000 Shares of $.10 Par Value
Issued and Outstanding--20,585,048 Shares and
20,465,000 Shares as of March 31, 1994 and
December 31, 1993, Respectively..................... 2,058 2,058
Additional Paid-in Capital................................ 143,304 143,264
Retained Earnings......................................... 11,997 8,138
--------- --------
Total Stockholders' Equity.............................. 157,428 153,529
--------- --------
$445,871 $445,001
========= ========
The accompanying notes are an integral part of these consolidated
financial statements.
4
CABOT OIL & GAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In Thousands)
THREE MONTHS ENDED
MARCH 31,
-------------------
1994 1993
------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income.......................................... $ 5,234 $ 3,895
Adjustment to Reconcile Net Income To Cash
Provided by Operating Activities:
Depletion, Depreciation and Amortization........ 9,940 7,732
Deferred Income Taxes........................... 2,804 1,638
(Gain) on Sale of Assets........................ (13) (737)
Exploration Expense............................. 1,017 1,872
Other, Net...................................... (403) (79)
Changes in Assets and Liabilities:
Accounts Receivable............................. 406 4,434
Inventories..................................... 2,899 3,088
Other Current Assets............................ 1 123
Other Assets.................................... 16 32
Accounts Payable and Accrued Liabilities........ 5,582 (5,801)
Other Liabilities............................... (312) 356
------- -------
Net Cash Provided by Operating Activities..... 27,171 16,553
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures................................ (13,544) (8,391)
Proceeds from Sale of Assets........................ 21 1,121
Exploration Expense................................. (1,017) (1,872)
------- -------
Net Cash Used by Investing Activities......... (14,540) (9,142)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of Common Stock................................ 40 --
Decrease in Debt.................................... (10,960) (6,980)
Dividends Paid...................................... (1,333) (819)
-------- -------
Net Cash Used by Financing Activities......... (12,253) (7,799)
-------- -------
Net Increase (Decrease) in Cash and Cash Equivalents.. 378 (388)
Cash and Cash Equivalents, Beginning of Period........ 2,897 1,102
-------- -------
Cash and Cash Equivalents, End of Period.............. $ 3,275 $ 714
======== =======
The accompanying notes are an integral part of these consolidated
financial statements.
5
CABOT OIL & GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. FINANCIAL STATEMENT PRESENTATION
During interim periods, the Company follows the accounting policies set
forth in its Annual Report to Stockholders and its Report on Form 10-K filed
with the Securities and Exchange Commission. Users of financial information
produced for interim periods are encouraged to refer to the footnotes contained
in the Annual Report to Stockholders when reviewing interim financial results.
In the opinion of management, the accompanying interim financial statements
contain all material adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation. Certain amounts in the prior
period financial statements have been reclassified to conform to the current
period presentation.
2. INVENTORIES
Inventories are comprised of the following:
MARCH 31, DECEMBER 31,
1994 1993
--------- ------------
(in thousands)
Natural gas in storage....................... $1,018 $4,722
Tubular goods and well equipment............. 1,949 1,712
Exchange balances............................ (173) (741)
------ ------
$2,794 $5,693
====== ======
3. PROPERTIES AND EQUIPMENT
Properties and equipment are comprised of the following:
MARCH 31, DECEMBER 31,
1994 1993
--------- ------------
(in thousands)
Unproved oil and gas properties....................... $ 14,480 $ 12,277
Proved oil and gas properties......................... 543,085 533,110
Gathering and pipeline systems........................ 135,366 134,262
Land, building and improvements....................... 5,922 7,376
Other................................................. 11,898 11,554
--------- ---------
710,751 698,579
Accumulated depreciation, depletion and amortization.. (306,667) (298,309)
--------- ---------
$ 404,084 $ 400,270
========= =========
6
CABOT OIL & GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
4. ADDITIONAL BALANCE SHEET INFORMATION
Certain balance sheet amounts are comprised of the following:
MARCH 31, DECEMBER 31,
1994 1993
--------- ------------
(in thousands)
Accounts Receivable
Trade accounts.............................. $32,797 $32,527
Income taxes................................ 997 1,660
Other accounts.............................. 1,739 1,753
------- -------
35,533 35,940
Allowance for doubtful accounts............. (644) (644)
------- -------
$34,889 $35,296
======= =======
Accounts Payable
Trade accounts.............................. $ 7,761 $ 8,727
Natural gas purchases....................... 10,926 4,301
Royalty and other owners.................... 6,139 5,445
Capital costs............................... 5,024 5,721
Other accounts.............................. 1,733 2,344
------- -------
$31,583 $26,538
======= =======
Accrued Liabilities
Employee benefits........................... $ 2,824 $ 3,702
Taxes other than income..................... 3,552 3,437
Interest payable............................ 2,947 1,092
Other accrued............................... 1,479 1,992
------- -------
$10,802 $10,223
======= =======
Other Liabilities
Postretirement benefits other than pension.. $ 1,579 $ 1,764
Accrued pension cost........................ 2,128 1,964
Taxes other than income..................... -- 2,176
Other....................................... 2,279 579
------- -------
$ 5,986 $ 6,483
======= =======
5. LONG-TERM DEBT
The Company has a $210 million revolving credit facility. At March 31, 1994,
there was a $180 million available credit line, against which $76 million was
borrowed. The available credit line is subject to adjustment on the basis of the
projected present value of estimated future net cash flows from proved oil and
gas reserves (as determined by a petroleum engineer's report incorporating
certain assumptions provided by the lender) and other assets. If supported by
such an adjustment, the available credit line may be increased to $210 million.
7
CABOT OIL & GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
5. LONG-TERM DEBT-continued
On May 2, 1994, the Company increased its borrowing against the available
credit line to $140 million in connection with the WERCO transaction (see Note
7. "Subsequent Event"). The Company has begun discussions with its bank group to
expand the available credit line due to the increase in the future net cash
flows applicable to the WERCO properties.
6. CONTINGENCIES
There have been no new developments with regard to contingencies as
described in Note 10. "Commitments and Contingencies" to the Consolidated
Financial Statements included in the Company's Form 10-K for the year ended
December 31, 1993.
In February 1993, Barby Energy Corporation and certain other parties filed
suit in Beaver County, Oklahoma against the Company to determine the rights and
interests of the parties in and to the oil, gas and other minerals underlying a
tract of land in Beaver County, Oklahoma, to quiet title to said mineral estate,
and for an accounting and payment of production proceeds attributable to said
mineral estate. Specifically at issue is whether there was continuous production
from an oil and gas well located on the property at issue since July 5, 1965.
Plaintiffs claim there was a cessation of production, and therefore, all right,
title and interest to such property reverted to them and that they are also
entitled to all revenues from such production since the date the cessation of
production occurred. This case is currently in the discovery process. The
Company believes that it owns a valid oil and gas lease covering the interest
claimed by the plaintiffs and that no cessation of production has occurred.
Trial is set for September 1994. Although no assurance can be given, the Company
believes that the ultimate outcome of this litigation will not have a material
adverse effect on the Company's financial position.
7. SUBSEQUENT EVENT
On May 2, 1994, the Company completed the merger between a Company
subsidiary and Washington Energy Resources Company ("WERCO"), a wholly-owned
subsidiary of Washington Energy Company. The Company acquired the stock of WERCO
in a tax-free exchange for total consideration of $168.6 million, subject to
certain post-closing adjustments. The merger will be recorded using the purchase
method. Excluded from the transaction are certain firm transportation, storage
and other contractual arrangements of WERCO's marketing affiliate which were
retained by Washington Energy Company.
The Company issued 2,133,000 shares of Common Stock and 1,134,000 shares of
6 percent convertible redeemable preferred stock ($50 per share stated value) to
Washington Energy Company in exchange for the capital stock of WERCO. The
preferred stock is convertible into 1,972,174 shares of Common Stock at $28.75
per share. In addition, the Company advanced cash to repay intercompany
indebtedness. The intercompany debt of WERCO was $63.6 million on March 31,
1994, as adjusted.
8
CABOT OIL & GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued
7. SUBSEQUENT EVENT - continued
The Company estimates WERCO's proved reserves at 191 Bcfe, of which 82% are
natural gas. WERCO's current net daily production is 42 million cubic feet of
natural gas, 290 barrels of natural gas liquids and 1,700 barrels of oil and
condensate. WERCO produces from 376 wells (116 net) and operates 184 wells (87
net).
9
Report of Independent Accountants
To the Board of Directors and Shareholders of
Cabot Oil & Gas Corporation:
We have reviewed the accompanying consolidated balance sheet of Cabot Oil &
Gas Corporation as of March 31, 1994, and the related consolidated statements of
income and cash flows for the three month period ended March 31, 1994 and 1993.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1993, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the year then ended (not presented herein); and, in our report dated
February 25, 1994, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of December 31, 1993, is fairly
stated in all material respects, in relation to the consolidated financial
statements from which it has been derived.
Coopers & Lybrand
Houston, Texas
May 10, 1994
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following review of operations for the first quarter of 1994 and 1993
should be read in conjunction with the Consolidated Financial Statements of the
Company and the Notes thereto included elsewhere in this Form 10-Q and with the
Consolidated Financial Statements and the Notes included in the Company's Form
10-K for the year ended December 31, 1993.
Overview
The Company continues to aggressively pursue its growth strategy through
the exploitation of current development drilling opportunities, selective
acquisitions and expanded marketing activities. The acquisition program is
focusing on opportunities to add strategically located properties in our
operating areas of the Appalachia and Anadarko Regions. Acquisitions in other
natural gas producing areas throughout the United States have potential
attraction where production and exploration opportunities are similar to such
areas where the Company has demonstrated expertise. Toward this end:
. The Company drilled 27 net wells and realized a drilling success rate of
96%. During the comparable 1993 period, the Company drilled 15 net wells with a
drilling success rate of 80%.
. On May 2, 1994, the Company completed the merger of Washington Energy
Resources Company ("WERCO"), a wholly-owned subsidiary of Washington Energy
Company, into a subsidiary of Cabot Oil & Gas Corporation. The stock of WERCO
was acquired in a tax-free exchange for total consideration of $168.6 million,
subject to certain post-closing adjustments. The Company estimates WERCO's
proved reserves at 191 Bcfe, of which 82% are natural gas. WERCO's current net
daily production is 42 million cubic feet of natural gas, 290 barrels of natural
gas liquids and 1,700 barrels of oil and condensate. WERCO produces from 376
wells (116 net) and operates 184 wells (87 net). WERCO's properties are located
in the Green River Basin of Wyoming and in South Texas. The merger diversifies
the Company's reserve base and markets and expands its exploitation, exploration
and development opportunities outside the Company's Appalachian and Anadarko
areas.
Financial Condition
Capital Resources and Liquidity
The Company's capital resources consist primarily of cash flows from its
oil and gas properties and asset-based borrowing supported by its oil and gas
reserves. The Company's level of earnings and cash flows depend on many factors,
including the price of oil and natural gas and its ability to market production
on a cost-effective basis. Demand for oil and gas is subject to seasonal
influences characterized by peak demand and higher prices in the winter heating
season.
Primary sources of cash for the Company were from funds generated from
operations and bank borrowings. Primary uses of cash were funds used in
operations, exploration and development expenditures, acquisitions, repayment of
debt and dividends.
The Company had a net cash inflow of $0.4 million in the first quarter of
1994. Net cash inflow from operating and investing activities totalled $12.6
million in the current quarter, funding capital expenditures of $13.5 million
and a $13 million debt reduction of the Company's revolving credit facility.
11
THREE MONTHS ENDED
MARCH 31,
------------------
1994 1993
-------- --------
(in millions)
Cash Flows Provided by Operating Activities.............. $ 27.2 $ 16.6
====== ======
Cash flows from operating activities in the 1994 first quarter were higher
by $10.6 million compared to the corresponding quarter of 1993 primarily due to
higher profitability and a lower funding requirement of working capital, most
notably on purchased gas payables.
THREE MONTHS ENDED
MARCH 31,
------------------
1994 1993
------- --------
(in millions)
Cash Flows Used by Investing Activities................... $ 14.5 $ 9.1
====== =====
Cash flows used by investing activities in the first quarters of 1994 and
1993 were substantially attributable to capital and exploration expenditures,
$14.6 million and $10.3 million, respectively.
THREE MONTHS ENDED
MARCH 31,
------------------
1994 1993
-------- --------
(in millions)
Cash Flows Used by Financing Activities................... $ 12.3 $ 7.8
====== =====
Cash flows used by financing activities are primarily debt reductions under
the Company's revolving credit facility.
Under the Company's revolving credit facility, the available credit line,
currently $180 million, is subject to adjustment on the basis of the projected
present value of estimated future net cash flows from proved oil and gas
reserves (as determined by a petroleum engineer's report incorporating certain
assumptions provided by the lender) and other assets. If supported by such an
adjustment, the borrowing presently may be increased to $210 million. After
closing the WERCO transaction on May 2, 1994, the debt outstanding under the
facility was $140 million. The Company has begun discussions with the banks to
further expand its borrowing capacity under such agreement to encompass the
future net cash flows applicable to the WERCO properties.
The Company's 1994 debt service is projected to be approximately $13.0
million, excluding the WERCO transaction. No principal payments are due in 1994.
12
Capitalization information on the Company is as follows:
MARCH 31, DECEMBER 31,
1994 1993
--------- ------------
(in millions)
Stockholders' Equity
Common Stock............................... $122.8 $118.9
Preferred Stock............................ 34.6 34.6
Long-Term Debt................................. 156.0 169.0
------ ------
Total Capitalization........................... $313.4 $322.5
====== ======
Debt to Capitalization......................... 49.8% 52.4%
The debt-to-capitalization at March 31, 1994 of 49.8% excludes the impact for
the WERCO transaction.
Capital and Exploration Expenditures
The following table presents major components of capital and exploration
expenditures:
THREE MONTHS ENDED MARCH 31,
----------------------------
1994 1993
--------- -----------
(in millions)
Capital Expenditures
Drilling and Facilities.............. $ 9.1 $ 5.4
Leasehold Acquisitions............... 1.1 0.2
Proved Property Acquisitions......... 1.9 1.8
Pipeline and Gathering............... 1.1 0.6
Other................................ 0.4 0.4
------ ------
13.6 8.4
Exploration Expenses...................... 1.0 1.9
------ ------
Total................................ $ 14.6 $ 10.3
====== ======
Total capital and exploration expenditures in the first quarter 1994
increased $4.3 million compared to the same quarter of 1993 primarily due to the
greater number of net wells drilled.
The Company generally funds most of its capital and exploration activities,
excluding oil and gas property acquisitions, with cash generated from operations
and budgets such capital expenditures based upon projected cash flows, exclusive
of acquisitions.
The Company has a $81.2 million capital and exploration expenditures budget
for 1994, excluding the WERCO transaction, which should permit the Company to
continue to expand its reserves and production. The 1994 budget includes $21.1
million for development and exploration expenditures attributable to oil and gas
properties acquired from Emax Oil Company in September 1993 (the "Emax
Acquisition") and $8.8 million for two acquisitions in West Virginia from CNG
Transmission Corporation. The Company plans to drill 188 wells, 171 net to its
interest, compared with 162 wells, 150 net, drilled in 1993. Capital dedicated
to the drilling program for 1994 is $39.7 million, excluding the WERCO
transaction.
Dividends were paid on the Common Stock totalling $0.8 million and on the
Company's $3.125 convertible preferred stock totalling $0.5 million. A regular
dividend of $0.04 per share of Common Stock was declared for the quarter ending
March 31, 1994. The dividend will be paid May 31, 1994 to shareholders of record
as of May 6, 1994.
13
Other Capital Requirements
Subsequent Acquisition On May 2, 1994, the Company completed the merger
between a Company subsidiary and Washington Energy Resources Company, ("WERCO"),
a wholly-owned subsidiary of Washington Energy Company. See Note 7. "Subsequent
Event" of the Notes to the Consolidated Financial Statements for further
discussion.
Contingencies
As discussed in Note 6. "Contingencies" to the Consolidated Financial
Statements included in this Form 10-Q and in Note 10. "Commitments and
Contingencies" to the Consolidated Financial Statements included in the Form 10-
K for the year ended December 31, 1993, the Company is a defendant in numerous
lawsuits and is involved in other gas contract issues. Although no assurances
can be given, it is the Company's opinion that these suits and claims should not
result in final judgements or settlements which, in the aggregate, would have a
material adverse effect on the financial position of the Company.
Conclusion
The Company's financial results depend upon many variables, particularly the
price of natural gas, and its ability to market gas on economically attractive
terms. The Company's average first quarter 1994 natural gas price increased 10%
over the average natural gas price received for the first quarter 1993. However,
given the inherent price volatility of natural gas prices in recent years,
management cannot predict with certainty, a continuing trend of higher prices
for the remainder of 1994. Because future cash flows are subject to such
variables, there can be no assurance that the Company's operations will provide
cash sufficient to fully fund its capital expenditures.
In addition, the Company has adopted a plan to pursue potential acquisitions
as part of its stated corporate strategy. Such acquisitions may require capital
resources beyond those provided from operations. The Company's ability to fund
such acquisitions, if necessary, with external financing is dependent, among
other things, upon available borrowing capacity under its committed bank line
and the Company's access to and the general conditions of debt and equity
capital markets.
However, the Company believes its capital resources, supplemented, if
necessary, with external financing, are adequate to meet its capital
requirements, including acquisitions.
14
Results of Operations
For the purpose of reviewing the Company's results of operations, "Net
Income" is defined as net income available to common shareholders.
Selected Financial and Operating Data
THREE MONTHS ENDED MARCH 31,
----------------------------
1994 1993
----------- -----------
(in millions)
Revenues...................... $ 65.8 $ 43.5
Costs and Expenses............ 54.3 35.9
Interest Expense.............. 2.9 2.6
Net Income.................... 4.7 3.9
Earnings Per Share............ $ 0.23 $ 0.19
Natural Gas Production (Bcf)
Appalachia................ 7.2 6.6
Anadarko.................. 5.1 4.5
------ ------
Total Company............. 12.3 11.1
====== ======
Natural Gas Sales (Bcf)
Appalachia................ 16.9 11.5
Anadarko.................. 6.9 5.4
------ ------
Total Company............. 23.8 16.9
====== ======
Natural Gas Prices ($/Mcf)
Appalachia................ $ 2.94 $ 2.72
Anadarko.................. $ 2.04 $ 1.81
Total Company............. $ 2.68 $ 2.43
Crude/Condensate
Volume (MBbl)............. 82 43
Price $/Bbl............... $13.43 $17.90
First Quarters of 1994 and 1993 Compared
Net Income and Revenues Net income was $4.7 million, up $0.8 million, or
$0.04 per share, compared with the 1993 first quarter. Income from operations
increased $3.3 million, or 40%. Operating revenues increased $22.4 million, or
51%. Natural gas made up 97%, or $63.7 million, of operating revenue. The
increase in operating revenues was driven primarily by an increase in the
average natural gas prices and an increase in gas purchased for resale as
discussed below.
Natural gas sales volumes were up 5.4 Bcf to 16.9 Bcf in the Appalachian
Region primarily due to a 4.6 Bcf increase in gas purchased for resale.
Production volume in the Appalachian Region was up 0.6 Bcf, or 9%, primarily due
to the oil and gas properties from Emax Acquisition. Production volume in the
Anadarko Region was up 0.6 Bcf, or 13%, including 1.2 Bcf of production from the
oil and gas properties acquired in May 1993 from Harken Anadarko Partners, L.P.
(the "Harvard Acquisition"). Natural gas sales volumes in the Anadarko Region
were up 1.5 Bcf, including 2.3 Bcf of sales from the Harvard Acquisition.
15
The average Appalachian natural gas sales price increased $0.22 per Mcf, or
8%, to $2.94, increasing operating revenues by approximately $3.7 million. In
the Anadarko Region, the average natural gas sales price increased $0.23 per
Mcf, or 13%, to $2.04, increasing operating revenues by approximately $1.6
million. Due to the weighted mix of sales volume, the overall weighted average
natural gas sales price increased $0.25 per Mcf, or 10%, to $2.68.
Crude oil and condensate sales increased 39 MBbl, or 91%, due primarily to
the Harvard Acquisition.
Costs and Expenses Total costs and expenses increased $18.4 million, or 51%,
due primarily to the following:
. The costs of natural gas increased $16.1 million, to $29.1 million. The
increase was primarily due to a $0.50 per Mcf increase in the average price of
gas purchased for resale and a 5.4 Bcf increase in gas purchased for resale and
gas exchanges.
. Direct operations expenses increased $0.6 million, or 8% due primarily to
$0.9 million of operating expenses attributable to the Harvard and Emax
Acquisitions.
. Exploration expense decreased $0.9 million, or 46%, due primarily to
lower dry hole expenses.
. Depreciation, depletion, amortization and impairment expense increased
$2.2 million, or 29%, due to the $1.8 million attributable to the Harvard and
Emax Acquisitions.
. General and administrative costs were relatively unchanged compared to the
first quarter of 1993.
. Taxes other than income increased $0.4 million, or 17%, due primarily to
higher production.
Income tax expense was up $1.6 million due to the comparable increase in
earnings before income tax and to an increase in the effective tax rate.
16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
15.1 -- Awareness letter of independent accountants.
(b) Reports on Form 8-K
Current Report on Form 8-K, dated May 2, 1994.
Filed on May 11, 1994
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABOT OIL & GAS CORPORATION
(Registrant)
By: /s/ John U. Clarke
------------------------
May 10, 1994 John U. Clarke, Executive
Vice President, Chief Financial
Officer and Chief Administrative Officer
(Principal Financial Officer and Officer
Duly Authorized to Sign on Behalf of the
Registrant)
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