Cabot (COG) Slips To Loss In Q2, Revenues Miss Estimates

Domestic energy explorer Cabot Oil & Gas Corp. (NYSE:COG) reported second-quarter loss per share – adjusted for special items – of 7 cents, narrower than the Zacks Consensus Estimate of a loss of 8 cents. In the year-ago quarter, the company had reported adjusted earnings of 3 cents.

The exploration and production firm’s results were favored by higher production and lower operating cost, partially offset by sharply lower oil and gas prices.

Houston, TX-based Cabot’s quarterly revenues fell 19.4% year over year to $246.8 million and missed the Zacks Consensus Estimate of $278 million.

Volume Analysis

Cabot’s overall production during the quarter totaled 151.8 billion cubic feet equivalent (Bcfe) – 95.1% gas – up from the prior-year quarter volume of 138 Bcfe. Natural gas output was 144.3 Bcf, while liquids production came in at 1,252.2 thousand barrels (MBbl).

Realized Prices

The average realized natural gas price (excluding hedges) was down 11.4% from the year-ago quarter to $1.55 per thousand cubic feet, while average crude/condensate price realization fell 27.8% to $40.51 per barrel. Meanwhile, natural gas liquids fetched $12.43 per barrel compared with $17.44 a year ago.

Costs & Expenses

Total operating expenses were $316.6 million, 3% lower than the second quarter of 2015. Transportation and gathering costs increased 9.5% year over year to $107.6 million. However, Cabot’s depreciation, depletion and amortization expenses were down by 3.3% from the year-ago period to $147.5 million.

Drilling Statistics, Capital Expenditure & Balance Sheet

Net wells drilled during the quarter decreased to 11 from 33 in the year-ago period with 100% success rate. Operating cash flows were $85.2 million for the quarter (down 50.2% year over year), while capital expenditures totaled $67.2 million (down 73.1%). As of Jun 30, 2016, the company had $1,519.8 million in long-term debt (excluding current portion), with a debt-to-capitalization ratio of almost 34.6%.

Outlook

The company projects third-quarter 2016 natural gas production in the range of 1,575–1,600 Mmcf per day. Crude and condensate is anticipated in the range of 10,000–10,500 Bbls per day.

For 2016, the company improved its projected capital spending to $345 million from $325 million.

CABOT OIL & GAS Price, Consensus and EPS Surprise

Zacks Rank & Stock Picks

Cabot currently carries a Zacks Rank #2 (Buy). Other players in the energy sector that warrant a look include McDermott International Inc. (NYSE:MDR) , North Atlantic Drilling Limited (NYSE:NADL) and Dril-Quip, Inc. (NYSE:DRQ) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).