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Cabot (COG) Q3 Loss as Expected, Revenues Lag Estimates

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Domestic energy explorer Cabot Oil & Gas Corp. reported third-quarter loss per share – adjusted for special items – of 4 cents, in line with the Zacks Consensus Estimate. In the year-ago quarter, the company had reported adjusted loss of 1 cent.

 

The exploration and production firm’s results were favored by higher production and lower operating cost, partially offset by weak oil prices.
Houston, TX-based Cabot’s quarterly revenues inched up 1.7% year over year to $310.4 million but missed the Zacks Consensus Estimate of $314 million.

Volume Analysis

Cabot’s overall production during the quarter was 150.8 billion cubic feet equivalent (Bcfe) compared with the prior-year quarter volume of 142.1 Bcfe. Gas made up for 95.8% of the total production. Natural gas output was 144.4 Bcf, while liquids production came in at 1,071 thousand barrels (MBbl).    

Realized Prices
Average realized natural gas price (excluding hedges) was up 7.1% from the year-ago quarter to $1.80 per thousand cubic feet. Average crude/condensate price realization fell 8.2% year over year to $40.13 per barrel. Natural gas liquids were sold at $12.64 per barrel as against $10.11 a year back.      

Costs & Expenses


CABOT OIL & GAS Price, Consensus and EPS Surprise

 

Total operating expenses were $304.3 million, down 2.4% from the third quarter of 2015. Transportation and gathering costs increased 3.5% year over year to $105.7 million. However, Cabot’s depreciation, depletion and amortization expenses were down by 3.3% from the year-ago period to $139.5 million.

Drilling Statistics, Capital Expenditure & Balance Sheet

Net wells drilled during the quarter decreased to 11 from 27 in the year-ago period with 100% success rate. Operating cash flows were down 28% to $105.4 million for the quarter, while capital expenditures decreased 51% to $85.6 million, both on a year-over-year basis. As of Sep 30, 2016, the company had $1,520.2 million in long-term debt (excluding current portion), with a debt-to-capitalization ratio of almost 34.7%.   

Outlook

The company projects fourth-quarter 2016 natural gas production in the range of 1,650–1,725 Mmcf per day. Crude and condensate is anticipated in the range of 8,500–9,000 Bbls per day.    
For 2016, the company improved its projected capital spending to $380 million from $345 million.

Zacks Rank & Stock Picks

Cabot currently carries a Zacks Rank #3 (Hold).

Some better-ranked players from the broader energy sector include Enviva Partners, LP (EVA - Free Report) , Ultra Petroleum Corp. and W&T Offshore Inc. (WTI - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last four quarters, Enviva Partners posted an average positive earnings surprise of 0.19%.

Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.

In the last four quarters, W&T Offshore posted an average positive earnings surprise of 23.63%.

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