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 JUNE 30, 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 June 30, 1994, there were 22,721,552 shares of Common Stock, Par Value
$.10 Per Share, outstanding.

CABOT OIL & GAS CORPORATION
INDEX TO FINANCIAL STATEMENTS

Part I. Financial Information Page No.
--------

Item 1. Financial Statements

Condensed Consolidated Statement of Income for the Three and Six Months
Ended June 30, 1994 and 1993 3

Condensed Consolidated Balance Sheet at June 30, 1994 and
December 31, 1993 4

Condensed Consolidated Statement of Cash Flows for the Three and Six
Months Ended June 30, 1994 and 1993 5

Notes to Condensed 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 19

Signature 20

CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(In Thousands, Except Per Share Amounts)

Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
1994 1993 1994 1993
--------- --------- -------- --------

REVENUES
Natural Gas............................... $52,492 $35,646 $116,240 $76,746
Crude Oil and Condensate.................. 2,801 1,762 3,902 2,525
Other..................................... 1,160 971 2,151 2,583
------- ------- -------- -------
56,453 38,379 122,293 81,854

COSTS AND EXPENSES
Costs of Natural Gas...................... 22,400 10,851 51,463 23,827
Direct Operations......................... 8,697 7,030 16,156 13,925
Exploration............................... 2,095 1,734 3,112 3,605
Depreciation, Depletion and Amortization.. 13,615 7,620 22,834 14,680
Impairment of Unproved Properties......... 970 720 1,690 1,392
General and Administrative................ 4,187 4,287 8,366 8,502
Taxes Other Than Income................... 2,978 2,287 5,593 4,520
------- ------- -------- -------
54,942 34,529 109,214 70,451
Gain (Loss) On Sale Of Assets............. 2 (27) 15 710
------- ------- -------- -------
INCOME FROM OPERATIONS.................... 1,513 3,823 13,094 12,113
Interest Expense.......................... 3,798 2,472 6,675 5,031
------- ------- -------- -------
Income (Loss) Before Income Taxes......... (2,285) 1,351 6,419 7,082
Income Tax Expense (Benefit).............. (901) 411 2,568 2,247
------- ------- -------- -------
NET INCOME (LOSS)......................... (1,384) 940 3,851 4,835
Dividend Requirement On Preferred Stock... 1,096 373 1,648 373
------- ------- -------- -------
NET INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS.................... $(2,480) $ 567 $ 2,203 $ 4,462
======= ======= ======== =======
EARNINGS (LOSS) PER COMMON SHARE.......... $(0.11) $0.03 $0.10 $0.22
======= ======= ======== =======
Average Common Shares Outstanding......... 21,992 20,486 21,292 20,476
======= ======= ======== =======

See accompanying notes to these condensed consolidated
financial statements.

CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In Thousands)

JUNE 30, DECEMBER 31,
1994 1993
-------- ------------

ASSETS
Current Assets
Cash and Cash Equivalents................................... $ 3,096 $ 2,897
Accounts Receivable......................................... 39,061 35,296
Inventories................................................. 6,510 5,693
Other....................................................... 1,293 752
-------- --------
Total Current Assets...................................... 49,960 44,638

Properties And Equipment (Successful Efforts Method).......... 618,564 400,270
Other Assets.................................................. 1,079 93
-------- --------
$669,603 $445,001
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-Term Debt............................................. $ 1,232 $ 530
Accounts Payable............................................ 58,579 26,538
Accrued Liabilities......................................... 11,841 10,223
-------- --------
Total Current Liabilities................................. 71,652 37,291

Long-Term Debt................................................ 228,336 169,000
Deferred Income Taxes......................................... 112,621 78,698
Other Liabilities............................................. 5,438 6,483
Stockholders' Equity
Preferred Stock:
Authorized - 5,000,000 Shares of $.10 Par Value
Issued and Outstanding - $3.125 Cumulative Convertible;
$50 Stated Value; 692,439 Shares in 1994 and 1993
- 6% Convertible Redeemable; $50 Stated Value; 1,134,000
Shares in 1994............................................ 183 69
Common Stock:
Authorized - 40,000,000 Shares of $.10 Par Value
Issued and Outstanding - 22,721,552 Shares and
20,583,220 Shares in 1994 and 1993, Respectively.......... 2,273 2,058
Additional Paid-In Capital.................................. 240,492 143,264
Retained Earnings........................................... 8,608 8,138
-------- --------
Total Stockholders' Equity................................ 251,556 153,529
-------- --------
$669,603 $445,001
======== ========

See accompanying notes to these condensed consolidated
financial statements.

CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Thousands)

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -----------------
1994 1993 1994 1993
---------- --------- ------ -------

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)............................. $( 1,384) $ 940 $ 3,851 $ 4,835
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Depletion, Depreciation and Amortization.. 14,585 8,340 24,524 16,072
Deferred Income Taxes..................... (771) 208 2,033 1,846
(Gain) Loss on Sale of Assets............. (2) 27 (15) (710)
Exploration Expense....................... 2,095 1,734 3,112 3,605
Other, Net................................ (370) (54) (772) (165)
Changes in Assets and Liabilities:
Accounts Receivable....................... 9,052 3,248 9,458 7,683
Inventories............................... (3,309) (1,151) (410) 1,937
Other Current Assets...................... 74 (1,374) 75 (1,253)
Other Assets.............................. 5 46 21 78
Accounts Payable & Accrued Liabilities.... 2,823 4,936 8,405 (863)
Other Liabilities......................... (365) 527 (677) 914
-------- ------- --------- --------
Net Cash Provided By Operating Activities..... 22,433 17,427 49,605 33,979
-------- ------- --------- --------

CASH FLOWS FROM INVESTING ACTIVITIES
Cost of Major Acquisition (1)................. (68,888) - (68,888) -
Capital Expenditures.......................... (21,391) (7,286) (34,934) (15,677)
Proceeds from Sale of Assets.................. 156 4 176 1,125
Exploration Expense........................... (2,095) (1,734) (3,112) (3,605)
-------- ------- --------- --------
Net Cash Used By Investing Activities......... (92,218) (9,016) (106,758) (18,157)
-------- ------- --------- --------

CASH FLOWS FROM FINANCING ACTIVITIES
Sale of Common Stock.......................... 58 605 98 605
Increase (Decrease) in Debt................... 70,998 (7,830) 60,038 (14,810)
Dividends Paid................................ (1,450) (819) (2,784) (1,638)
-------- ------- --------- --------
Net Cash Provided (Used) By Financing
Activities.................................. 69,606 (8,044) 57,352 (15,843)
-------- ------- --------- --------

Net Increase (Decrease) In Cash
and Cash Equivalents.......................... (179) 367 199 (21)
Cash and Cash Equivalents, Beginning of Period.. 3,275 714 2,897 1,102
-------- ------- --------- --------
Cash and Cash Equivalents, End of Period........ $ 3,096 $ 1,081 $ 3,096 $ 1,081
======== ======= ========= ========

_______________
(1) Excludes non-cash consideration of $97.5 million of the Company's common
stock and preferred stock issued in the WERCO Acquisition (See Note 7).

See accompanying notes to these condensed consolidated
financial statements.

CABOT OIL & GAS CORPORATION

NOTES TO CONDENSED 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.

The year-end condensed consolidated balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles.

2. INVENTORIES

Inventories are comprised of the following:

JUNE 30, DECEMBER 31,
1994 1993
--------- -------------
(in thousands)

Natural gas in storage................................ $ 4,621 $ 4,722
Tubular goods and well equipment...................... 2,285 1,712
Exchange balances..................................... (396) (741)
--------- ---------
$ 6,510 $ 5,693
========= =========

3. PROPERTIES AND EQUIPMENT

Properties and equipment comprised the following:

JUNE 30, DECEMBER 31,
1994 1993
-------- ------------
(in thousands)

Unproved oil and gas properties....................... $ 18,861 $ 12,277
Proved oil and gas properties......................... 761,829 533,110
Gathering and pipeline systems........................ 137,701 134,262
Land, building and improvements....................... 7,950 7,376
Other................................................. 12,436 11,554
--------- ---------
938,777 698,579
Accumulated depreciation, depletion and amortization.. (320,213) (298,309)
--------- ---------
$ 618,564 $ 400,270
========= =========

CABOT OIL & GAS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

4. ADDITIONAL BALANCE SHEET INFORMATION

Certain balance sheet amounts comprised the following:

JUNE 30, DECEMBER 31,
1994 1993
--------- -------------
(in thousands)

Accounts Receivable
Trade accounts.............................. $33,786 $32,527
Joint interest billing...................... 4,382 1,168
Income taxes................................ 847 1,660
Other accounts.............................. 690 585
------- -------
39,705 35,940
Allowance for doubtful accounts............. (644) (644)
------- -------
$39,061 $35,296
======= =======
Accounts Payable
Trade accounts.............................. $21,808 $ 8,727
Natural gas purchases....................... 7,192 4,301
Royalty and other owners.................... 13,877 5,445
Capital costs............................... 8,763 5,721
Taxes other than income..................... 4,945 831
Other accounts.............................. 1,994 1,513
------- -------
$58,579 $26,538
======= =======

Accrued Liabilities
Employee benefits........................... $ 3,103 $ 3,702
Taxes other than income..................... 4,265 3,437
Interest payable............................ 1,478 1,092
Other accrued............................... 2,995 1,992
------- -------
$11,841 $10,223
======= =======
Other Liabilities
Postretirement benefits other than pension.. $ 1,396 $ 1,764
Accrued pension cost........................ 1,870 1,964
Other....................................... 2,172 2,755
------- -------
$ 5,438 $ 6,483
======= =======

5. LONG-TERM DEBT

Under the Company's revolving credit facility at June 30, 1994, there was a
$270 million available credit line, against which $148 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 $300 million. The
recent increase in the available credit line from $180 million to $270 million
on May 31, 1994 was due to the additional value associated with the WERCO
Acquisition (See Note 7) and the reserve additions from the Company's drilling
program.

CABOT OIL & GAS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

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 and in Note 6. "Contingencies" to the Condensed Consolidated Financial
Statements included in the Company's Form 10-Q for the quarter ended March 31,
1994.

7. MAJOR ACQUISITION

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 approximately $166.3 million, subject to certain
post-closing adjustments. The acquisition, effective May 2, 1994, was recorded
using the purchase method. Excluded from the transaction were 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.

CABOT OIL & GAS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

The oil and gas properties, located in the Green River Basin of Wyoming and in
the Gulf Coast, have approximately 191 billion cubic feet equivalent of proved
reserves of which 82% is natural gas. Average net daily production from such
properties in June, 1994 was approximately 42.6 million cubic feet of natural
gas, 1,435 barrels of oil and 423 barrels of natural gas liquids. The
properties include 376 wells (116 net), of which 184 wells (87 net) are operated
by the Company.

The following represents the pro forma results of operations as if such
acquisition had occurred at the beginning of the current year, as well as the
preceding year:

SIX MONTHS ENDED JUNE 30,
-------------------------
1994 1993
------- --------
(in thousands)

Total Revenue................................. $144,294 $107,570
======== ========

Net Income Available to Common Shares......... $ 356 $ 1,953
======== ========

Earnings per Common Share..................... $ 0.02 $ 0.09
======== ========

The pro forma results of operations presented above do not purport to be
indicative of the results of future operations, nor are they indicative of
historical operations had the acquisition occurred as of the assumed dates.

Report of Independent Accountants

To the Stockholders and Board of Directors of
Cabot Oil & Gas Corporation:

We have reviewed the accompanying condensed consolidated balance sheet of
Cabot Oil & Gas Corporation as of June 30, 1994 and the related condensed
consolidated statements of income and cash flows for the three and six month
periods ended June 30, 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 condensed 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 condensed 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 L.L.P.

Houston, Texas
August 10, 1994

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following review of operations for the three and six month periods ended
June 30, 1994 and 1993 should be read in conjunction with the Condensed
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 pursue its growth strategy through the exploitation
of current development drilling opportunities, selective acquisitions and
expanded marketing activities. The acquisition program is focused on
opportunities to add strategically located properties in areas where the Company
presently has operations and in certain other natural gas producing areas
throughout the United States which have production and exploration opportunities
similar to areas where the Company has demonstrated expertise. Toward this end:

. The Company drilled 91 net wells in the second quarter of 1994 with a
success rate of 97%, as compared to 22 net wells drilled in the second quarter
of 1993 with a 91% success rate. During the first half of this year, net wells
drilled were 117 with a success rate of 97% which compared favorably to the net
drilling results for the first half of 1993, 37 net wells with an 87% success
rate.

. The Company reflected the first two months of operating results from the
recently completed merger of Washington Energy Resources Company into a
subsidiary of Cabot Oil and Gas Corporation (the "WERCO Acquisition").
Operating results from the WERCO Acquisition included 3,190 MMcfe of production,
total revenues of $9.2 million and discretionary cash flows of $3.3 million.
The WERCO Acquisition has resulted in: the establishment of two new operating
regions, Rocky Mountains region and Gulf Coast region; an increase in reserves
which now exceeds one trillion cubic feet equivalent of natural gas; and the
expansion of the Company's production base by approximately 36% annualized.

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 $0.2 million in the first half of 1994.
Net cash inflow from operating and financing activities totalled $107 million in
the first half, funding capital and exploration expenditures of $106.8 million,
including the $69 million cash consideration attributable to the WERCO
Acquisition.

SIX MONTHS ENDED JUNE 30,
-------------------------
1994 1993
---- ----
(in millions)

Cash Flows Provided by Operating Activities.. $49.6 $34.0
===== =====

Cash flows from operating activities in the first half of 1994 were higher by
$15.6 million compared to the corresponding first half of 1993 primarily due to
the WERCO Acquisition and a lower funding requirement of working capital, most
notably on vouched payables and accrued capital costs.

SIX MONTHS ENDED JUNE 30,
-------------------------
1994 1993
---- ----
(in millions)

Cash Flows Used by Investing Activities........ $106.8 $18.2
====== =====

Cash flows used by investing activities in the first six months of 1994 and
1993 were substantially attributable to capital and exploration expenditures,
$106.9 million (including $68.9 million for the WERCO Acquisition) and $19.3
million, respectively.

SIX MONTHS ENDED JUNE 30,
-------------------------
1994 1993
---- ----
(in millions)

Cash Flows Provided (Used) by Financing Activities $57.4 $(15.8)
===== =======

Cash flows provided by financing activities in 1994 were primarily from debt
increases under the revolving credit facility to partially fund the WERCO
Acquisition. Cash flows used by financing activities in 1993 were a result of
debt reductions under the revolving credit facility.

Under the Company's revolving credit facility, the available credit line,
currently $270 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 $300 million. The
recent increase in the Company's available credit line from $180 million to $270
million is primarily due to the WERCO Acquisition and the reserve additions from
the Company's drilling program.

The Company's 1994 debt service is projected to be approximately $15.4
million, including the WERCO Acquisition. No principal payments are due in
1994.

Capitalization information on the Company is as follows:

JUNE 30, DECEMBER 31,
1994 1993
--------- -------------
(in millions)

Stockholders' Equity
Common Stock..................................... $160.4 $118.9
Preferred Stock.................................. 91.2 34.6
Long-Term Debt.................................... 228.3 169.0
------ ------
Total Capitalization.............................. $479.9 $322.5
====== ======
Debt to Capitalization............................ 47.6% 52.4%

The debt-to-capitalization at June 30, 1994 of 47.6% includes the impact of the
WERCO Acquisition.

CAPITAL AND EXPLORATION EXPENDITURES

The following table presents major components of capital and exploration
expenditures:

SIX MONTHS ENDED JUNE 30,
-------------------------
1994 1993
---- ----
(in millions)

Capital Expenditures
WERCO Acquisition (1)............................... $207.6 $ -
Drilling and Facilities............................. 26.9 10.8
Leasehold Acquisitions.............................. 1.8 0.5
Proved Property Acquisitions (2).................... 1.9 37.6
Pipeline and Gathering.............................. 3.5 1.8
Other............................................... 0.9 0.8
------ ------
242.6 51.5
Exploration Expenses................................. 3.1 3.6
------ ------
Total.............................................. $245.7 $ 55.1
====== ======

- - ---------------
(1) Includes the $97.5 million non-cash consideration of the Company's
preferred and Common stock.

(2) Includes the $35.8 million non-cash consideration for the Emax
Acquisition, described below.

Total capital and exploration expenditures in the first half of 1994,
excluding the WERCO Acquisition and the Emax Acquisition in 1993, increased
$17.5 million compared to the same period in 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 $98.8 million capital and exploration expenditures budget
for 1994, which should permit the Company to continue to expand its reserves and
production. The 1994 budget includes $17.6 million for development and
exploration activity related to the WERCO Acquisition, $21.1 million for
development and exploration expenditures attributable to 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 closing, of which, is dependent upon the timing of regulatory approval by
the

Federal Energy Regulatory Commission. The Company plans to drill 231 wells, 183
net to its interest, compared with 162 wells, 150 net, drilled in 1993. Capital
dedicated to the drilling program for 1994 is $52.2 million, including the
drilling activity attributable to the WERCO Acquisition.

Dividends were paid on the Common Stock totalling $1.7 million and on the
Company's $3.125 convertible preferred stock totalling $1.1 million. A regular
dividend of $0.04 per share of Common Stock was declared for the quarter ending
June 30, 1994. The dividend will be paid August 31, 1994 to shareholders of
record as of August 17, 1994.

CONTINGENCIES

As discussed in Note 6. "Contingencies" to the Condensed Consolidated
Financial Statements included in this Form 10-Q and in Note 10. "Commitments and
Contingencies" to the Condensed 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 second quarter 1994 natural gas price decreased
11% over the average natural gas price received for the second quarter of 1993.
The second quarter decline in gas prices offset the 10% increase in prices
experienced in the first quarter when compared to the 1993 first quarter. Given
the inherent price volatility of natural gas prices in recent years, management
cannot predict with certainty, pricing levels 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.

RESULTS OF OPERATIONS

For the purpose of reviewing the Company's results of operations, "Net Income
(Loss)" is defined as net income (loss) available to common stockholders.

SELECTED FINANCIAL AND OPERATING DATA

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1994 1993 1994 1993
-------- ------ ------ ------
(IN MILLIONS)

Revenues............................... $ 56.5 $ 38.4 $122.3 $ 81.9
Costs and Expenses..................... 54.9 34.5 109.2 70.5
Operating Income....................... 1.5 3.8 13.1 12.1
Interest Expense....................... 3.8 2.5 6.7 5.0
Net Income (Loss)...................... (2.5) 0.6 2.2 4.5
Earnings Per Share..................... $(0.11) $ 0.03 $ 0.10 $ 0.22

Natural Gas Production (Bcf)
Appalachia........................ 7.3 6.3 14.5 12.9
Anadarko.......................... 4.9 4.7 10.1 9.2
Rocky Mountains................... 1.8 - 1.8 -
Gulf Coast 0.7 - 0.7 -
------ ------ ------ ------
Total Company..................... 14.7 11.0 27.1 22.1
====== ====== ====== ======

Natural Gas Sales (Bcf)
Appalachia........................ 13.5 8.7 30.5 20.2
Anadarko.......................... 6.7 6.1 13.5 11.5
Rocky Mountains................... 3.1 - 3.1 -
Gulf Coast........................ 1.1 - 1.1 -
------ ------ ------ ------
Total Company..................... 24.4 14.8 48.2 31.7
====== ====== ====== ======

Natural Gas Prices ($/Mcf)
Appalachia........................ $ 2.47 $ 2.69 $ 2.73 $ 2.71
Anadarko.......................... $ 1.76 $ 2.02 $ 1.90 $ 1.92
Rocky Mountains................... $ 1.73 - $ 1.73 -
Gulf Coast........................ $ 1.89 - $ 1.89 -
Total Company..................... $ 2.15 $ 2.42 $ 2.41 $ 2.42

Crude/Condensate
Volume (MBbl)..................... 171 94 253 137
Price $/Bbl....................... $16.38 $18.68 $15.42 $18.44

SECOND QUARTERS OF 1994 AND 1993 COMPARED

Net Income (Loss) and Revenues. The Company recorded a net loss of $2.5
million, down $3.1 million, or $0.14 per share, compared with the 1993 second
quarter. Income from operations decreased $2.3 million. Operating revenues
increased $18.1 million. Natural gas made up 93%, or $52.5 million, of
operating revenue. The increase in operating revenues was primarily
attributable to the WERCO Acquisition ($9.2 million) and to an increase in the
natural gas purchased for resale ($8.7 million), net of storage. Earnings and
operating income, however, were negatively impacted by an 11% decline in the
average natural gas price, and higher depreciation expense and additional
financing cost associated with the WERCO Acquisition as discussed below.

The Company added two new operating regions through the WERCO Acquisition, the
Rocky Mountains region and Gulf Coast region. Operating results from the WERCO
Acquisition for the two months ended June 30, 1994 were as follows: 2.5 Bcf of
natural gas production, 4.2 Bcf of natural gas sales, 87 MBbl of oil production
and total operating revenues of $9.2 million. Total natural gas and oil
revenues were $7.4 million and $1.5 million, respectively. The average natural
gas price for the two months ended June 30, 1994 was $1.77 per Mcf.

Natural gas sales volumes were up 4.8 Bcf to 13.5 Bcf in the Appalachian
Region primarily due to a 4.4 Bcf increase in gas purchased for resale.
Production volumes in the Appalachian Region were up 1.0 Bcf, or 16%, primarily
due to the oil and gas properties acquired from Emax Oil Company in September
1993 (the "Emax Acquisition"). Production volumes in the Anadarko Region were
up 0.2 Bcf, or 6%.

The average Appalachian natural gas sales price decreased $0.22 per Mcf, or
8%, to $2.47, decreasing operating revenues by approximately $3.1 million. In
the Anadarko Region, the average natural gas sales price decreased $0.26 per
Mcf, or 13%, to $1.76, decreasing operating revenues by approximately $1.8
million. Due to the weighted mix of sales volume, including the newly
established Rocky Mountains region and Gulf Coast region, the overall weighted
average natural gas sales price decreased $0.27 per Mcf, or 11%, to $2.15.

Crude oil and condensate sales increased 77 MBbl, or 82%, due primarily to the
WERCO Acquisition.

Costs and Expenses Total costs and expenses increased $20.4 million, or 59%,
due primarily to the following:

. The costs of natural gas increased $11.5 million, to $22.4 million. The
WERCO Acquisition increased the cost of natural gas by $3.2 million. The
remaining $8.3 million increase was primarily due to a 4.8 Bcf increase in
gas purchased for resale and partially offset by a 0.6 Bcf increase in gas
put into storage.

. Direct operations expenses increased $1.7 million, or 23% due to $1.0
million of operating expenses attributable to the WERCO Acquisition and $0.7
million attributable to the Emax Acquisition and the properties acquired in
May, 1993 from Harken Anadarko Partners, L.P. (the "Harvard Acquisition").

. Exploration expense increased $0.4 million, or 21%, due to the WERCO
Acquisition.

. Depreciation, depletion, amortization and impairment expense increased $6.2
million, or 75%, due primarily to the Company's pursuit of its acquisition
strategy. As a result, the WERCO Acquisition caused an increase of $4.2
million and the Harvard and Emax Acquisitions resulted in a $1.5 million
increase.

. General and administrative costs were down $0.5 million, excluding $0.4
million attributable to the WERCO Acquisition, primarily due to a $0.3
million increase in the second quarter of 1993. The increase in the 1993
second quarter was due to a restatement required by the early adoption of
SFAS 112 in the fourth quarter of 1993. Therefore, the Company
retroactively recognized certain postemployment costs in the second quarter
of 1993.

. Taxes other than income increased $0.7 million, or 30%, due primarily to the
WERCO Acquisition.

Income tax expense was down $1.3 million due to the comparable decrease in
earnings before income tax and to an increase in the effective tax rate.

Dividend requirement on preferred stock was up $0.7 million due primarily to
the $0.5 million associated with the 6% Convertible Redeemable Preferred Stock
issued in connection with the WERCO Acquisition. The remaining $0.2 million
increase is attributable to the $3.125 Cumulative Convertible Preferred Stock,
originally issued May 2, 1993, and, accordingly, reflected only 2 months of
dividends in the second quarter of 1993.

FIRST SIX MONTHS OF 1994 AND 1993 COMPARED

Net Income and Revenues. Net income was $2.2 million, down $2.3 million, or
$0.12 per share, compared with the first half of 1993. Income from operations
increased $1.0 million. Operating revenues increased $40.4 million. Natural
gas made up 95%, or $116.2 million, of operating revenue. The increase in
operating revenues was primarily due to the WERCO Acquisition ($9.2 million), an
increase in the natural gas purchased for resale ($24.7 million) and an increase
in production volumes ($6.4 million). Net income and operating income, however,
were negatively impacted by higher depreciation expense and additional financing
cost (impacted net income only) associated with the WERCO Acquisition as
discussed below.

Given that the operating results from the WERCO Acquisition is for the two
months ended June 30, 1994, refer to the operational discussion of the WERCO
Acquisition in the Results of Operations - Second Quarters of 1994 and 1993
Compared on pages 15 and 16.

Natural gas sales volumes were up 10.3 Bcf to 30.5 Bcf in the Appalachian
Basin primarily attributable to an increase in natural gas purchased for resale
and, to a lesser extent, increased production. Production volume for the first
half was up 1.6 Bcf to 14.5 Bcf in the Appalachian Basin primarily due to the
Emax Acquisition. Production volume in the Anadarko Region was up 0.9 Bcf, or
10%, to 10.1 Bcf primarily due to the Harvard Acquisition. Natural gas sales
volumes in the Anadarko Region were up 2.0 Bcf due to higher production and
natural gas purchased for resale.

The average Appalachian natural gas sales price increased $0.02 per Mcf to
$2.73, increasing operating revenues by approximately $0.6 million. In the
Anadarko Region, the average natural gas sales price decreased $0.02 per Mcf to
$1.90, decreasing operating revenues by approximately $0.3 million. Due to the
weighted mix of sales volumes including the newly established Rocky Mountains
region and Gulf Coast region, the overall weighted average natural gas sales
price decreased $0.01 per Mcf to $2.41.

Crude oil and condensate sales increased 116 MBbl to 253 MBbl due primarily to
the Harvard Acquisition (54 MBbl) and the WERCO Acquisition (87 MBbl).

Total costs and expenses increased $38.7 million, or 55%, to $109.2 million
due primarily to the following:

. The costs of natural gas increased $27.6 million to $51.5 million. The
WERCO Acquisition increased the cost of natural gas by $3.2 million. The
remaining $24.4 million was primarily due to a 9.7 Bcf increase in
natural gas purchased for resale, net of storage, and a $0.20 per Mcf
increase in the average price of gas purchased for resale.

. Direct operations expenses increased $2.2 million, or 16%, to $16.2 due
primarily to $1.0 million of operating expenses attributable to the WERCO
Acquisition and $1.6 million increased operating expenses attributable to
the Emax and Harvard Acquisitions. Higher operating costs were offset
somewhat by reduced costs on the Company's core properties.

. Exploration expense decreased $1.0 million, or 28%, to $2.6 million,
excluding $0.5 million related to the WERCO Acquisition, due primarily to
higher dry hole expenses in the six months ended June 30, 1993.

. Depreciation, depletion, amortization and impairment expense increased
$8.5 million, or 53%, due primarily to the Company's pursuit of its
acquisition strategy. As a result, the WERCO Acquisition caused an
increase of $4.2 million and the Harvard and Emax Acquisitions resulted
in a $3.3 million increase.

. General and administrative costs were down $0.5 million, excluding $0.4
million attributable to the WERCO Acquisition, primarily due to a $0.3
million increase in the 1993 second quarter. The increase in the 1993
second quarter was due to a restatement required by the early adoption of
SFAS 112 in the fourth quarter of 1993. Therefore, the Company
retroactively recognized certain post-employment costs in the second
quarter of 1993.

. Taxes other than income increased $1.1 million, or 24%, to $5.6 million
due primarily to the WERCO Acquisition ($0.6 million) and to higher
production.

Income tax expense was up $0.3 million, or 14%, to $2.6 million due to an
increase in the effective tax rate.

The dividend requirement on preferred stock was up $1.3 million due
primarily to the $0.5 million associated with the 6% Convertible Redeemable
Preferred Stock issued in connection with the WERCO Acquisition. The remaining
$0.8 million increase is attributable to the $3.125 Cumulative Convertible
Preferred Stock, originally issued May 3, 1993, and accordingly, reflected only
2 months of dividends in the first half of 1993.

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

Form 8-K/A, Amendment No, 1 to Current Report, Dated May 2, 1994. Filed
on July 18, 1994.

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
--------------------------
August 10, 1994 John U. Clarke, Executive Vice
President, Chief Financial Officer
and Chief Administrative Officer