Cabot Earnings Grow on Higher Yield - Analyst Blog
April 25 2013 - 4:30AM
Zacks
Independent oil and gas exploration
and production (E&P) company, Cabot Oil & Gas
Corporation (COG) reported strong first quarter 2013
results, thanks to enhanced output and higher crude oil prices.
These were partially offset by lower realized natural gas
prices.
Cabot posted earnings per share (excluding special items) of 26
cents, managing to beat the Zacks Consensus Estimate by a penny.
The bottom line showed a substantial improvement from the year-ago
adjusted profit of 14 cents per share.
During the three-month period ended Mar 31, 2013, Cabot generated
operating revenues of $373.3 million (up 37.2% year over year) with
the help of healthier production. However, the result was below the
Zacks Consensus Estimate of $381.0 million.
Volume Analysis
Overall production during the quarter was 89.3 billion cubic feet
equivalent (Bcfe) – 95.4% gas – up 49.6% from the prior-year
quarter. Natural gas volumes jumped 51.1% year over year to 85.2
billion cubic feet (Bcf), while liquid volumes increased 28.4% to
691 thousand barrels (MBbl). The expansion was driven by natural
gas production at the Appalachia region, where volumes swelled
61.1%.
Realized Prices
The average realized natural gas price fell 5.5% from the
corresponding quarter of 2012 to $3.45 per thousand cubic feet
(Mcf), while average oil price realization moved up 7.6% to $104.03
per barrel.
Costs & Expenses
Transportation and gathering costs came in at $46.2 million (up
52.8% year over year). As a result, total operating expenses
increased 27.2% over the first quarter of 2012 to $286.2
million.
Drilling Statistics, Capital Expenditure & Balance
Sheet
Net wells drilled during the quarter increased to 26 (from 23 in
the year-ago quarter) with a 97% success rate. Operating cash flows
were $212.7 million, while capital expenditures were $260.2
million. As of Mar 31, 2013, the company had $1,127.0 million in
total debt, with a debt-to-capitalization ratio of 34.7%.
Company Guidance
Cabot guides its 2013 volume growth in the range of 35% to 50%,
including an expected liquid growth of 35% to 50%.
Zacks Rating
The company currently retains a Zacks Rank #2 (Buy), implying that
it is expected to outperform the broader U.S. equity market over
the next 1 to 3 months.
Cabot's diversified asset portfolio is spread between low-risk/long
reserve-life Appalachian assets and large-volume/rapid-payout Gulf
Coast properties, with further variety from large prospect
inventories in the Rocky Mountains and the Anadarko Basin that have
a broad mix of production and payout profiles.
Moreover, Cabot has hedged around 45% of its projected 2013
production at attractive prices. This lowers the company’s
near-term commodity-price exposure, which is a key positive for
Cabot’s risk profile, given the current market volatility.
In addition to Cabot, there are other E&P companies that are
expected to perform well in the coming 1 to 3 months. These include
Zacks Rank #1 (Strong Buy) EPL Oil & Gas Inc.
(EPL), Harvest Natural Resources Inc. (HNR) and
Range Resources Corp. (RRC).
CABOT OIL & GAS (COG): Free Stock Analysis Report
EPL OIL&GAS INC (EPL): Free Stock Analysis Report
HARVEST NATURAL (HNR): Free Stock Analysis Report
RANGE RESOURCES (RRC): Free Stock Analysis Report
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