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Cabot's (COG) Q1 Earnings Beat, FCF Soars, Dividend Rises

Zacks Equity Research

Cabot Oil & Gas Corporation COG reported first-quarter 2019 earnings per share — adjusted for special items — of 73 cents, surpassing the Zacks Consensus Estimate of 67 cents on the back of lower average unit costs, and price and output gains. The bottom line also increased significantly from the year-ago level of 28 cents.

However, the Texas-based upstream player reported revenues of 641.7 million, lagging the Zacks Consensus Estimate of 676 million. The top line, however, increased 35% from a year ago.

Cabot Oil & Gas Corporation Price, Consensus and EPS Surprise

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

Bringing good news for investors, the natural gas explorer raised quarterly dividend by 29% to 9 cents per share. This marks the fourth payout hike in the last two years. The dividend will be payable on May 29, 2019 to its shareholders of record as of May 15.

Production, Prices, Costs & Drilling Statistics

Cabot’s overall production during the quarter totaled 204.8 billion cubic feet equivalent (Bcfe) — 100% gas — up 20.7% from the prior-year quarter’s 169.6 Bcfe. The average realized natural gas price (excluding hedging) increased 23.6% from the year-ago quarter to $3.09 per thousand cubic feet. Cabot drilled 25 net wells and completed 14 during the quarter.

Total average unit costs declined to $1.48 per thousand cubic feet equivalent (Mcfe) from the year-ago figure of $1.58. While depreciation charges, interest expenses, general/administrative and direct costs per Mcfe declined, transportation and exploration expenses increased.

Financial Position

Operating cash flows were $585.3 million in the quarter (up 114.6% year over year), while capital expenditures totaled $195.6 million (up 25%). Free cash flow (FCF) — which is a key metric to gauge a company’s financial health— soared 248% y/y to $308.4 million. As of Mar 31, 2019, Cabot had $315 million in cash/cash equivalents and $1.2 billion in long-term debt, with a debt-to-capitalization ratio of 34.4%.


For the second quarter, Cabot provided its net production guidance in the range of 2,300-2,350 million cubic feet equivalent a day. Cabot reiterated full-year production growth guidance at 20%, based on a capital expenditure projection of $800 million.

Zacks Rank and Other Stocks to Consider

Cabot currently carries a Zacks Rank #2 (Buy).Other top-ranked players in the same industry include Murphy Oil Corp. MUR, W&T Offshore, Inc. WTI and Anadarko Petroleum Corp. APC. While Murphy Oil and W&T Offshore sport a Zacks Rank #1 (Strong Buy), Anadarko Petroleum carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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