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Cabot Oil (COG) Q3 Earnings Top Estimates, Revenues Miss Mark

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Zacks Equity Research
·4 min read
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Cabot Oil & Gas Corporation’s COG third-quarter 2020 net income per share — adjusted for special items — of 9 cents beat the Zacks Consensus Estimate of 7 cents. Better-than-expected results can be attributed to year-over-year increase in the production volumes. However, the bottom line plunged 69% from the year-ago figure of 29 cents as natural gas prices declined.

The company’s quarterly revenues of $291.04 million missed the Zacks Consensus Estimate of $347 million. Moreover, the top line decreased 32.2% from the prior-year number of $429 million.

Production, Prices, Costs & Drilling Statistics

In the quarter under review, Cabot’s overall production summed 221.4 Bcfe comprising 100% natural gas. The figure improved marginally from the prior-year volume of 220.7 Bcfe. 

Average realized natural gas price (excluding hedges) fell to $1.51 per thousand cubic feet from the year-ago quarter’s $1.89.

Total operating expenses were $298.6 million, down 1.5% from the figure reported in third-quarter 2019. The depreciation and amortization costs fell 10.1% year over year to $99.65 million.

Notably, total average unit costs decreased to $1.41 per thousand cubic feet equivalent (Mcfe) from the year-ago figure of $1.43.

Cabot drilled 14 wells and completed 22 during the quarter.

Cabot Oil Gas Corporation Price, Consensus and EPS Surprise

Cabot Oil  Gas Corporation Price, Consensus and EPS Surprise
Cabot Oil Gas Corporation Price, Consensus and EPS Surprise

Cabot Oil Gas Corporation price-consensus-eps-surprise-chart | Cabot Oil Gas Corporation Quote

Financial Position

Operating cash flows were $129.1 million (down 52.4% year over year) while capital expenditures totaled $147.2 million (down 26.1%). As of Sep 30, 2020, the company had cash and cash equivalents worth $170,000 and total debt of $973.7 million with debt-to-capitalization of 31.5%.

In a separate press release, Cabot’s board of directors approved a regular dividend of 10 cents per share on the company's common stock, payable Nov 23, 2020 to all its shareholders of record as of Nov 12, 2020.

Guidance

For the fourth quarter of 2020, Cabot reiterates its net production outlook in the range of 2,300-2,350 million cubic feet equivalent a day (Mmcfe).

Going by the latest NYMEX futures, Cabot projects free cash flow generation of $125-$150 million for the fourth quarter. This will mark the company's fifth straight year of positive free cash flow even though it anticipates the minimal average yearly NYMEX natural gas price since 1995.

Meanwhile, this Houston-based company maintains its production view in the 2,325-2,340 Mmcfe per day band for the full year, which is built around a capital spending of $575 million.

For 2021, Cabot projects its production guidance of 2,350 Mmcfe per day from an expected capital program of $530-$540 million. 

Zacks Rank & Key Picks

Cabot currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Oasis Petroleum Inc. OASPQ, Antero Resources Corporation AR and Earthstone Energy, Inc. ESTE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Cabot Oil Gas Corporation (COG) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
Earthstone Energy, Inc. (ESTE) : Free Stock Analysis Report
 
Oasis Petroleum Inc. (OASPQ) : Free Stock Analysis Report
 
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