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Cabot (COG) Incurs Loss as Expected in Q1, Revenues Beat

Domestic energy explorer Cabot Oil & Gas Corp. COG reported first-quarter loss per share – adjusted for special items – of 13 cents, in line with the Zacks Consensus Estimate. In the year-ago quarter, the company had reported adjusted earnings of 11 cents.

The exploration and production firm’s results were hamstrung by sharply lower oil and gas prices, partially offset by lower operating expenses.

Houston, TX-based Cabot’s quarterly revenues fell 39.4% year over year to $281.9 million, but beat the Zacks Consensus Estimate of $261 million.

Volume Analysis

Cabot’s overall production during the quarter totaled 160.3 billion cubic feet equivalent (Bcfe) – 95.5% gas – down from the prior-year quarter volume of 171.4 Bcfe. Natural gas output was 153.1 Bcf, while liquids production came in at 1,202 thousand barrels (MBbl).

Realized Prices

The average realized natural gas price (excluding hedges) was down 33.2% from the year-ago quarter to $1.49 per thousand cubic feet, while average crude/condensate price realization fell 37% to $27.65 per barrel. Meanwhile, natural gas liquids fetched $7.22 per barrel against $11.06 in the year-ago quarter.

Costs & Expenses

Total operating expenses were 10% lower than the first quarter of 2015, falling to $340.9 million. Transportation and gathering costs were down 9.5% year over year to $109.7 million. Moreover, Cabot’s depreciation, depletion and amortization expenses were down by 7.7% from the year-ago period to $161.9 million.

Drilling Statistics, Capital Expenditure & Balance Sheet

Net wells drilled during the quarter decreased to 10 from 42 in the year-ago period with a 100% success rate. Operating cash flows were $62.1 million for the quarter (down 76.8% year over year), while capital expenditures totaled $92.2 million (down 76.7%). As of Mar 31, 2016, the company had $1,583.2 million in long-term debt (excluding current portion), with a debt-to-capitalization ratio of almost 35%.  

Outlook

The company projects second-quarter 2016 natural gas production in the range of 1,575 to 1,600 Mmcf per day. Crude and condensate is anticipated in the range of 11,500–12,250 Bbls per day.  

For 2016, the company reaffirmed its capital spending at $325 million.

Zacks Rank & Stock Picks

Cabot currently carries a Zacks Rank #3 (Hold).      

Some better-ranked players in the energy sector are Vanguard Natural Resources, LLC VNR, PetroChina Co. Ltd. PTR and Braskem S.A. BAK. All the stocks sport a Zacks Rank #1 (Strong Buy).

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PETROCHINA ADR (PTR): Free Stock Analysis Report
 
BRASKEM SA (BAK): Free Stock Analysis Report
 
CABOT OIL & GAS (COG): Free Stock Analysis Report
 
VANGUARD NATURL (VNR): Free Stock Analysis Report
 
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