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Cabot (COG) Down 2.8% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Cabot Oil (COG - Free Report) . Shares have lost about 2.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cabot due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Cabot Q4 Earnings Meet Estimates, Sales Miss Mark

Cabot Oil & Gas Corporation’s fourth-quarter 2019 net income per share — adjusted for special items — of 30 cents met the Zacks Consensus Estimate. The in-line results can be attributed to lower costs and slightly higher-than-anticipated production. Precisely, the company’s production totaled 226.1 billion cubic feet equivalent (Bcfe), just ahead of the Zacks Consensus Estimate of 224 Bcfe.

However, the bottom line fell 45.5% from the year-ago figure of 55 cents as natural gas prices declined.

The company’s quarterly revenues of $461.4 million missed the Zacks Consensus Estimate of $478 million. Further, the top line was 35.6% below the prior-year quarter’s revenues of $716 million.

Production, Prices, Costs & Drilling Statistics

In the quarter under review, Cabot’s overall production summed 226.1 Bcfe comprising 100% natural gas. The figure was 9.6% higher than the prior-year volume of 206.3 Bcfe. 

Average realized natural gas price (excluding hedges) fell to $2.05 per thousand cubic feet from the year-ago quarter’s $3.22 and met the Zacks Consensus Estimate.

Total operating expenses were 18.02% lower than the figure reported in fourth-quarter 2018, decreasing to $308.5 million. While transportation and gathering costs were up 6.45% year over year to $149.9 million, Cabot did not incur any operating expense in brokered natural gas activity for which it spent $5.76 million in the year-ago period.

Notably, total average unit costs declined to $1.43 per thousand cubic feet equivalent (Mcfe) from the year-ago figure of $1.87.

Cabot drilled 25 wells and completed 28 during the quarter.

Financial Position

Operating cash flows were $263 million (down 16.8% year over year) while capital expenditures totaled $167.7 million (down 32.1%). Free cash flow (FCF) — a key metric to gauge a company’s financial health — was $109.5 million during the fourth quarter, plunging 54.6% from the year-earlier number. As of Dec 31, 2019, the company had cash and cash equivalents worth $200.2 million and total debt of $1.2 billion with a debt-to-capitalization ratio at 36.2%.

Proved Reserves

As of Dec 31, 2019, the company had 12.9 trillion cubic feet equivalent (Tcfe) in proved reserves, reflecting a year-over-year increase of 11%.

Guidance

For the first quarter of 2020, Cabot provided its net production outlook in the range of 2,350-2,400 million cubic feet equivalent a day.

Meanwhile, this Houston-based company reiterates its recently declared scheme wherein it trimmed 27% of 2020 capital expenses year over year to $575 million that included non-drilling and completion capital. Also, the company adjusted its production prediction to 2.4 billion cubic feet (Bcf) per day for the full year from the earlier provided view of 2.1 Bcf.

However, the exploration and production firm’s bottom line witnessed a healthy improvement from the year-ago quarter’s adjusted profit of 13 cents on higher realized natural gas prices.
 
 
Houston, TX-based Cabot’s quarterly revenue improved 78.9% year over year to $716.3 million and beat the Zacks Consensus Estimate of $655 million.
 
 
Production, Prices & Drilling Statistics
 
Cabot’s overall production during the quarter totaled 206.3 Bcfe – 100% gas – up 19.5% from the prior year quarter volume of 172.6 Bcfe. However, output came below the Zacks Consensus Estimate of 208 Bcfe. The average realized natural gas price increased 42.7% from the year-ago quarter to $3.11 per thousand cubic feet. Cabot drilled 37 net wells and completed 33 during the quarter.
 
Costs & Expenses
 
Total operating expenses were 49.5% lower than the fourth quarter of 2017, declining to $376.3 million. While transportation and gathering costs were up 17.9% year over year to $140.9 million, the absence of oil and gas property write-offs – that amounted to $414.3 million in the year-ago quarter – aided the significant fall in operating expenses. Meanwhile, Cabot’s depreciation, depletion and amortization expenses fell 9.7% from the year-ago period to $129.3 million.
 
 
Financial Position
 
Operating cash flows were $316.1 million for the quarter (up 76.4% year over year), while capital expenditures totaled $247 million (up 38.9%). As of Dec 31, 2018, the company had $1.2 billion in long-term debt, with a debt-to-capitalization ratio of 37%. During the quarter, Cabot repurchased approximately $259 million of its stock.
 
Proved Reserves
 
As of year-end 2018, Cabot had 11.6 trillion cubic feet equivalent in proved reserves, up 19% year over year.
 
Guidance
 
For the first quarter, Cabot provided its net production guidance in the range of 2,250-2,275 million cubic feet equivalent a day. Cabot also revised its expectations for 2019. It projects the production growth to be 20% as against the previous guidance in the 20-25% range. The production growth is based on a capital expenditure projection of $800 million (the earlier range was between $800-$850 million).
However, the exploration and production firm’s bottom line witnessed a healthy improvement from the year-ago quarter’s adjusted profit of 13 cents on higher realized natural gas prices.
 
 
Houston, TX-based Cabot’s quarterly revenue improved 78.9% year over year to $716.3 million and beat the Zacks Consensus Estimate of $655 million.
 
 
Production, Prices & Drilling Statistics
 
Cabot’s overall production during the quarter totaled 206.3 Bcfe – 100% gas – up 19.5% from the prior year quarter volume of 172.6 Bcfe. However, output came below the Zacks Consensus Estimate of 208 Bcfe. The average realized natural gas price increased 42.7% from the year-ago quarter to $3.11 per thousand cubic feet. Cabot drilled 37 net wells and completed 33 during the quarter.
 
Costs & Expenses
 
Total operating expenses were 49.5% lower than the fourth quarter of 2017, declining to $376.3 million. While transportation and gathering costs were up 17.9% year over year to $140.9 million, the absence of oil and gas property write-offs – that amounted to $414.3 million in the year-ago quarter – aided the significant fall in operating expenses. Meanwhile, Cabot’s depreciation, depletion and amortization expenses fell 9.7% from the year-ago period to $129.3 million.
 
 
Financial Position
 
Operating cash flows were $316.1 million for the quarter (up 76.4% year over year), while capital expenditures totaled $247 million (up 38.9%). As of Dec 31, 2018, the company had $1.2 billion in long-term debt, with a debt-to-capitalization ratio of 37%. During the quarter, Cabot repurchased approximately $259 million of its stock.
 
Proved Reserves
 
As of year-end 2018, Cabot had 11.6 trillion cubic feet equivalent in proved reserves, up 19% year over year.
 
Guidance
 
For the first quarter, Cabot provided its net production guidance in the range of 2,250-2,275 million cubic feet equivalent a day. Cabot also revised its expectations for 2019. It projects the production growth to be 20% as against the previous guidance in the 20-25% range. The production growth is based on a capital expenditure projection of $800 million (the earlier range was between $800-$850 million).
However, the exploration and production firm’s bottom line witnessed a healthy improvement from the year-ago quarter’s adjusted profit of 13 cents on higher realized natural gas prices.
 
 
Houston, TX-based Cabot’s quarterly revenue improved 78.9% year over year to $716.3 million and beat the Zacks Consensus Estimate of $655 million.
 
 
Production, Prices & Drilling Statistics
 
Cabot’s overall production during the quarter totaled 206.3 Bcfe – 100% gas – up 19.5% from the prior year quarter volume of 172.6 Bcfe. However, output came below the Zacks Consensus Estimate of 208 Bcfe. The average realized natural gas price increased 42.7% from the year-ago quarter to $3.11 per thousand cubic feet. Cabot drilled 37 net wells and completed 33 during the quarter.
 
Costs & Expenses
 
Total operating expenses were 49.5% lower than the fourth quarter of 2017, declining to $376.3 million. While transportation and gathering costs were up 17.9% year over year to $140.9 million, the absence of oil and gas property write-offs – that amounted to $414.3 million in the year-ago quarter – aided the significant fall in operating expenses. Meanwhile, Cabot’s depreciation, depletion and amortization expenses fell 9.7% from the year-ago period to $129.3 million.
 
 
Financial Position
 
Operating cash flows were $316.1 million for the quarter (up 76.4% year over year), while capital expenditures totaled $247 million (up 38.9%). As of Dec 31, 2018, the company had $1.2 billion in long-term debt, with a debt-to-capitalization ratio of 37%. During the quarter, Cabot repurchased approximately $259 million of its stock.
 
Proved Reserves
 
As of year-end 2018, Cabot had 11.6 trillion cubic feet equivalent in proved reserves, up 19% year over year.
 
Guidance
 
For the first quarter, Cabot provided its net production guidance in the range of 2,250-2,275 million cubic feet equivalent a day. Cabot also revised its expectations for 2019. It projects the production growth to be 20% as against the previous guidance in the 20-25% range. The production growth is based on a capital expenditure projection of $800 million (the earlier range was between $800-$850 million).
 
However, the exploration and production firm’s bottom line witnessed a healthy improvement from the year-ago quarter’s adjusted profit of 13 cents on higher realized natural gas prices.
 
 
Houston, TX-based Cabot’s quarterly revenue improved 78.9% year over year to $716.3 million and beat the Zacks Consensus Estimate of $655 million.
 
 
Production, Prices & Drilling Statistics
 
Cabot’s overall production during the quarter totaled 206.3 Bcfe – 100% gas – up 19.5% from the prior year quarter volume of 172.6 Bcfe. However, output came below the Zacks Consensus Estimate of 208 Bcfe. The average realized natural gas price increased 42.7% from the year-ago quarter to $3.11 per thousand cubic feet. Cabot drilled 37 net wells and completed 33 during the quarter.
 
Costs & Expenses
 
Total operating expenses were 49.5% lower than the fourth quarter of 2017, declining to $376.3 million. While transportation and gathering costs were up 17.9% year over year to $140.9 million, the absence of oil and gas property write-offs – that amounted to $414.3 million in the year-ago quarter – aided the significant fall in operating expenses. Meanwhile, Cabot’s depreciation, depletion and amortization expenses fell 9.7% from the year-ago period to $129.3 million.
 
 
Financial Position
 
Operating cash flows were $316.1 million for the quarter (up 76.4% year over year), while capital expenditures totaled $247 million (up 38.9%). As of Dec 31, 2018, the company had $1.2 billion in long-term debt, with a debt-to-capitalization ratio of 37%. During the quarter, Cabot repurchased approximately $259 million of its stock.
 
Proved Reserves
 
As of year-end 2018, Cabot had 11.6 trillion cubic feet equivalent in proved reserves, up 19% year over year.
 
Guidance
 
For the first quarter, Cabot provided its net production guidance in the range of 2,250-2,275 million cubic feet equivalent a day. Cabot also revised its expectations for 2019. It projects the production growth to be 20% as against the previous guidance in the 20-25% range. The production growth is based on a capital expenditure projection of $800 million (the earlier range was between $800-$850 million).
However, the exploration and production firm’s bottom line witnessed a healthy improvement from the year-ago quarter’s adjusted profit of 13 cents on higher realized natural gas prices.
 
 
Houston, TX-based Cabot’s quarterly revenue improved 78.9% year over year to $716.3 million and beat the Zacks Consensus Estimate of $655 million.
 
 
Production, Prices & Drilling Statistics
 
Cabot’s overall production during the quarter totaled 206.3 Bcfe – 100% gas – up 19.5% from the prior year quarter volume of 172.6 Bcfe. However, output came below the Zacks Consensus Estimate of 208 Bcfe. The average realized natural gas price increased 42.7% from the year-ago quarter to $3.11 per thousand cubic feet. Cabot drilled 37 net wells and completed 33 during the quarter.
 
Costs & Expenses
 
Total operating expenses were 49.5% lower than the fourth quarter of 2017, declining to $376.3 million. While transportation and gathering costs were up 17.9% year over year to $140.9 million, the absence of oil and gas property write-offs – that amounted to $414.3 million in the year-ago quarter – aided the significant fall in operating expenses. Meanwhile, Cabot’s depreciation, depletion and amortization expenses fell 9.7% from the year-ago period to $129.3 million.
 
 
Financial Position
 
Operating cash flows were $316.1 million for the quarter (up 76.4% year over year), while capital expenditures totaled $247 million (up 38.9%). As of Dec 31, 2018, the company had $1.2 billion in long-term debt, with a debt-to-capitalization ratio of 37%. During the quarter, Cabot repurchased approximately $259 million of its stock.
 
Proved Reserves
 
As of year-end 2018, Cabot had 11.6 trillion cubic feet equivalent in proved reserves, up 19% year over year.
 
Guidance
 
For the first quarter, Cabot provided its net production guidance in the range of 2,250-2,275 million cubic feet equivalent a day. Cabot also revised its expectations for 2019. It projects the production growth to be 20% as against the previous guidance in the 20-25% range. The production growth is based on a capital expenditure projection of $800 million (the earlier range was between $800-$850 million).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -45.83% due to these changes.

VGM Scores

At this time, Cabot has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cabot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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