Cabot (COG) Releases Revised Guidance For Q419 And 2020

Cabot Oil & Gas Corporation (NYSE:COG) recently provided an update on its guidance for fourth-quarter 2019 operational results and also revised its 2020 outlook.

Management stated that its fourth-quarter production is estimated to be higher than the upper end of its earlier guided range. The company’s previous fourth-quarter output guidance was in the range of 2,375-2,425 million cubic feet of oil equivalent per day (Mmcfe/d) while its revised production is anticipated to be 2,457 Mmcfe/d.

Further, Cabot expects its realized natural gas price (including the impact of derivates) for the fourth quarter to be $2.15 per thousand cubic feet (Mcf) whereas its capital spending is forecast in the $160-$170 bracket.

2020 Guidance Update

With natural gas prices plunging to multi-year lows and Cabot being one of the most gas-weighted upstream players, the company's performance remains under pressure. So, with this revised outlook, Cabot trimmed its 2020 capital expenses by 27% year over year to $575 million from its earlier projection of $700-$725 million, which included non-drilling and completion capital.

Also, the company adjusted its production prediction to 2.4 billion cubic feet (Bcf) per day for the year from the earlier provided view of 2.1 Bcf.

Meanwhile, Cabot plans to generate free cash flow between $275 and $300 million, assuming an average price of $2.25 per MMBtu. Return on capital employed is expected to be 11-12%.

Capital Deployment Update

In the fourth quarter, the company repurchased 10 million shares for a weighted-average share price of $17.22, indicating an additional 5-million share buyback under its existing repurchase program. Now the company has 11 million shares outstanding under its current equity-repurchase authorization.

About Cabot

Cabot is an independent gas exploration player with properties for production, mainly in the continental United States. It focuses on high-impact natural gas-focused drilling in the Marcellus Shale. The company is scheduled to release fourth-quarter 2019 earnings on Feb 20, after the market closes. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 29 cents per share on revenues of $476.91 million.

Zacks Rank & Key Picks

Cabot carries a Zacks Rank #5 (Strong Sell).

Better-ranked players in the energy space include Marathon Oil Corporation (NYSE:MRO) , Chevron Corporation (NYSE:CVX) and TC Energy Corporation (TSX:TRP) , 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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