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Cabot Oil (COG) Q1 Earnings Beat Estimates on Output Ramp-Up

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Cabot Oil & Gas Corporation’s  first-quarter 2020 net income per share — adjusted for special items — of 14 cents beat the Zacks Consensus Estimate of 13 cents. Better-than-expected results can be attributed to higher year-over-year production. However, the bottom line plunged 80.8% from the year-ago figure of 73 cents as natural gas prices declined.

The company’s quarterly revenues of $386.46 million missed the Zacks Consensus Estimate of $387 million. Further, the top line decreased 39.8% from the prior-year number of $641.7 million.

Production, Prices, Costs & Drilling Statistics

In the quarter under review, Cabot’s overall production summed 215 Bcfe comprising 100% natural gas. The figure was 5% higher than the prior-year volume of 204.8 Bcfe. 

Average realized natural gas price (excluding hedges) fell to $1.72 per thousand cubic feet from the year-ago quarter’s $3.09 and also missed the Zacks Consensus Estimate of $1.76.

Total operating expenses were $300.06 million, up 3.15% from the figure reported in first-quarter 2019. The transportation and gathering costs rose 4.4% year over year to $143.3 million.

Notably, total average unit costs declined to $1.46 per thousand cubic feet equivalent (Mcfe) from the year-ago figure of $1.48.

Cabot drilled 22 wells and completed 13 during the quarter.

Cabot Oil & Gas Corporation Price, Consensus and EPS Surprise

Cabot Oil & Gas Corporation Price, Consensus and EPS Surprise

Cabot Oil & Gas Corporation price-consensus-eps-surprise-chart | Cabot Oil & Gas Corporation Quote

Financial Position

Operating cash flows were $204.9 million (down 65% year over year) while capital expenditures totaled $148.7 million (down 24%). Free cash flow (FCF) — a key metric to gauge a company’s financial health — was $49.8 million during the first quarter, slumping 83.5% from the year-earlier number. As of Mar 31, 2020, the company had cash and cash equivalents worth $202.8 million and total debt of $1.04 billion with a debt-to-capitalization of 32.5%.

In a separate press release, Cabot’s board of directors declared a regular dividend of 10 cents per share on the company's common stock. The dividend will be payable May 28, 2020 to all its shareholders of record as of May 14, 2020.

Guidance

For the second quarter of 2020, Cabot provided its net production outlook in the range of 2,175-2,225 million cubic feet equivalent a day.

Meanwhile, this Houston-based company reiterates its capital expense projection at $575 million. Also, the company adjusted its production view from the earlier guidance of 2.4 billion cubic feet (Bcf) to the 2.35-2.37 Bcf per day range for the full year.

Zacks Rank & Key Picks

Cabot currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Comstock Resources, Inc. (CRK - Free Report) , Murphy USA Inc. (MUSA - Free Report) and Pioneer Energy Services Corp. (PESXQ - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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