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Cabot (COG) Down 8.2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Cabot Oil (COG). Shares have lost about 8.2% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

Cabot Q1 Earnings Beat Estimates, Sales Miss Mark

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.

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.

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 estimates revision. The consensus estimate has shifted 20.19% due to these changes.

VGM Scores

Currently, Cabot has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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 #2 (Buy). We expect an above average return from the stock in the next few months.


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