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A deeper look into Cabot Oil & Gas’ 2Q financial performance

Kshitija Bhandaru

Why Cabot Oil & Gas slows after 2Q earnings despite beats (Part 2 of 6)

(Continued from Part 1)

Cabot’s 2Q financial performance

Cabot Oil & Gas’ (COG) revenue for the quarter was $533 million—up ~19% on a year-over-year (or YoY) basis and up ~5% on a sequential basis. Net income, excluding selected items, for the quarter was $115 million—an increase of 29% over last year’s comparable quarter and ~8% increase compared to the previous quarter.

Increase in revenues and net income were driven by increase in Marcellus and Eagle Ford output which increased 41% and 76%, respectively, on YoY basis.

Operating expenses higher on account of transportation costs

Operating expenses increased 13% YoY and 2.4% quarter-over-quarter. This was mainly due to transportation and gathering costs which were 59.5% higher YoY, and exploration expenses, which were 3.3% higher compared to that for the same period last year.

Free cash flow up despite price differentials

Discretionary cash flow amounted to $332 million—an increase of ~12% over last year’s comparable quarter and ~4% increase compared to the previous quarter.

For the quarter, Cabot generated ~$50 million as free cash flow. This is positive as it depicts that the company, despite the lower natural gas prices, generated free cash by achieving significant production levels.

Key ETFs

COG is a component of several key exchange-traded funds (or ETFs) including the Energy Select Sector SPDR Fund (XLE), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the iShares U.S. Energy ETF (IYE), and the Vanguard Energy ETF (VDE).

The following section discusses COG’s operational performance and future plans in greater detail.

 

 

 

Continue to Part 3

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