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Cabot Oil & Gas Q4 Earnings in Line with Estimates, Sales Lag

Nilanjan Choudhury

Domestic energy explorer Cabot Oil & Gas Corp. COG reported fourth quarter earnings per share – adjusted for special items – of 1 cent, in line with the Zacks Consensus Estimate but compared favorably with the year-ago quarter adjusted loss of 2 cents.

The exploration and production firm’s results were hamstrung by higher costs but received a kick from higher production. 

Houston, TX-based Cabot’s quarterly revenue improved 13% year-over-year to $316.5 million but missed the Zacks Consensus Estimate of $356 million.

Volume Analysis

Cabot’s overall production during the quarter totaled 164.2 billion cubic feet equivalent (Bcfe) – 97% gas – up 9% from the prior year quarter volume of 151.0 Bcfe. Natural gas output was 158.6 Bcf, while liquids production came in at 929.2 thousand barrels (MBbl).

Realized Prices

The average realized natural gas price was remained unchanged from the year-ago quarter at $1.94 per thousand cubic feet, while average crude/condensate price realization rose 14% to $42.94 per barrel. Meanwhile, natural gas liquids fetched $13.84 per barrel as against $11.69 a year back.

Costs & Expenses

Total operating expenses were 72% higher than the fourth quarter of 2015, rising to $756.2 million. In particular, transportation and gathering costs were up 7% year-over-year to $113.7 million, oil and gas property write-offs jumped almost threefold to $435.6 million. However, Cabot’s depreciation, depletion and amortization expenses was down by 6% from the year-ago period to $141.2 million.

Drilling Statistics, Capital Expenditure & Balance Sheet

Cabot drilled 10 net wells and completed 25 during the quarter. Operating cash flows were $139.7 million for the quarter (down 10% year-over-year), while capital expenditures totaled $130.1 million (down 4%). As of Dec 31, 2016, the company had $1,520.5 million in long-term debt (excluding current portion), with a debt-to-capitalization ratio of 37.2%.

Cabot Oil & Gas Corporation Price, Consensus and EPS Surprise


Cabot Oil & Gas Corporation Price, Consensus and EPS Surprise | Cabot Oil & Gas Corporation Quote

Proved Reserves

As of year-end 2016, the company had 8.6 trillion cubic feet equivalent in proved reserves (up 5% from 2015 and 97% natural gas).

Share Performance

Shares have fallen 3.6% year-to-date, while the Zacks categorized Oil & Gas - U.S. Exploration & Production industry lost 6.3% over the same period. Over the last 12 months, Encana stock has gained 16.1%.

Zacks Rank and Key Stock Picks

Currently, Cabot carries a Zacks Rank #3 (Hold).

Meanwhile, one can look at better-ranked energy players like Ultra Petroleum Corp. UPLMQ, Pioneer Natural Resources Co. PXD and Range Resources Corp. RRC. All the companies carry Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Houston, TX-based Ultra Petroleum is an independent energy firm engaged in the acquisition, development, exploration and production of oil and gas properties. The company’s operations are focused on the Green River Basin of southwest Wyoming, mainly covering the Pinedale and the Jonah fields. It surpassed estimates in each of the last three quarters.

Irving, TX-based Pioneer Natural Resources is an independent oil and gas exploration and production company, the asset base of which is anchored by the Spraberry oil field located in West Texas, the Hugoton gas field in Southwest Kansas and the West Panhandle gas field in Texas Panhandle. Over the past 30 days, the Zacks Consensus Estimate for 2017 and 2018 increased 58% and 41%, to $1.97 and $5.16 per share, respectively.

Finally, we have Range Resources, an oil and gas explorer primarily in the southwestern, Appalachian and Gulf Coast regions of the U.S. The 2017 Zacks Consensus Estimate for this company is 68 cents, representing some 125% earnings per share growth over 2016. Next year’s average forecast is 96 cents, pointing to 41% growth

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