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| Cabot Oil & Gas Announces 2002 Financial and Reserve Results; Year-Over-Year Double Digit Production Growth |
HOUSTON, Feb. 18 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced 2002 net income of $16.1 million, or $.51 per share, and discretionary cash flow of $178.8 million, or $5.63 per share. These results compare to 2001 net income of $47.1 million, or $1.56 per share, and discretionary cash flow of $230.5 million, or $7.61 per share. Lower realized commodity prices were the main factor in the decline in reported results. The Company's average realized natural gas price fell more than 30% in 2002 to $3.02 per Mcf compared to an average realization of $4.36 per Mcf in 2001. Oil prices declined from $24.91 to $23.79 per barrel. The Company experienced a 12% increase in equivalent production year-over- year. For 2002 Cabot reported equivalent production of 91.1 Bcfe, compared to 81.1 Bcfe produced in 2001. This increase was the result of a full year of production from the Cody acquisition (8%), versus a five-month contribution in 2001, and organic drilling results (4%). Cody's full year impact also contributed to increases in both absolute dollars and unit costs for direct operations and depreciation, depletion and amortization, which were more than offset by a $31 million reduction in exploration expense for 2002. "The year 2002 ended up with strong momentum," stated Dan O. Dinges, Chairman and Chief Executive Officer. "We recorded our second highest level of discretionary cash flow, our second straight year of double-digit production growth and we reduced long-term debt by $28 million." Fourth Quarter For the December quarter, Cabot reported net income of $8.7 million, or $0.27 per share, compared to a net loss of $15.6 million, or $.49 per share, in the fourth quarter of 2001. Discretionary cash flow increased to $58.1 million, or $1.82 per share, versus $33.9 million, or $1.07 per share, in the prior year period. Lower production levels in the fourth quarter of 2002 were more than offset by a 33% increase in realized natural gas prices and a 23% increase in realized oil prices. Lower exploration expense also contributed to the improved results. Selected Items For the fourth quarter, the Company's results included two selected items, both of which had the impact of reducing reported results, including a charge associated with SFAS 133, Accounting for Derivatives, and an impairment of long-lived assets under SFAS 144. Excluding these items, net income would have been $11.5 million, or $.36 per share. For the full year, in addition to the previously mentioned selected items, Cabot incurred costs associated with an executive officer retirement and a revision to acquisition tax basis. Excluding the combination of these items provides Cabot with net income of $20.6 million, or $.65 per share, for 2002. For a complete comparison of these matters see the table below the Condensed Consolidated Statement of Operations for the after-tax amounts associated with all reported selected items. The Securities and Exchange Commission (SEC) recently issued a new Item 12 of Form 8-K and Regulation G in response to requirements specified by the Sarbanes-Oxley Act of 2002. The intent is for the SEC to bring press releases under their reporting jurisdiction and to better regulate the use of non-GAAP financial measures. These rules become effective March 28, 2003, and the Company will fully implement them at that time. Presently, Cabot is evaluating the impact of the rules on its practice of identifying selected items and the disclosure of Discretionary Cash Flow in its press releases. Reserves Total proved reserves increased slightly to 1,171.3 Bcfe at December 31, 2002, compared to 1,154.1 Bcfe in the prior year. Reserve replacement from all sources (additions, revisions and purchases) for the year was 136% of production and 105% from drilling and revisions, even though a reduced capital program was implemented in 2002. Reserve replacement costs for the year were estimated at $.90 per Mcfe from all sources and $1.07 per Mcfe from additions and revisions. Cabot's reserve to production ratio was reduced to 12.9 years at December 31, 2002, down from 14.2 years at December 31, 2001. Listed below are reserve-related disclosures that will be part of the 2002 Form 10-K. Supplemental Oil & Gas Information for the Year Ended December 31, 2002 2002 Proved Reserve Reconciliation Proved Reserves Natural Gas (Mmcf) Liquids (MBbls) Total (Mmcfe) Beginning of Year 1,036,004 19,684 1,154,109 Revisions 14,405 1,871 25,631 Additions 64,945 851 70,053 Production (73,670) (2,909) (91,126) Purchases 26,262 261 27,828 Sales (6,987) (1,365) (15,179) End of Year 1,060,959 18,393 1,171,316 Developed (% of reserves) 77.2% 72.1% 76.8% Estimated Proved Reserves by Area at December 31, 2002 Natural Gas (Mmcf) Liquids (A) (MBbls) Developed Undeveloped Total Developed Undeveloped Total Gulf Coast 137,531 58,203 195,734 10,415 4,541 14,956 West 341,340 71,141 412,481 2,415 585 3,000 East 340,541 112,203 452,744 437 --- 437 Total 819,412 241,547 1,060,959 13,267 5,126 18,393 Total (B) (Mmcfe) Developed Undeveloped Total Gulf Coast 200,022 85,445 285,467 West 355,828 74,652 430,480 East 343,166 112,203 455,369 Total 899,016 272,300 1,171,316 (A) Liquids include crude oil, condensate and natural gas liquids. (B) Natural gas equivalents are determined using the ratio of 6 Mcf of natural gas to 1 Bbl of crude oil, condensate or natural gas liquids. Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities - 2002 (C) ($000) Property Acquisition Costs - Proved $8,799 Property Acquisition Costs - Unproved 4,869 Exploration and Extension Well Costs 52,012 Development Costs 55,165 Total Costs $120,845 (C) Includes administrative exploration costs of $8,942, which are excluded from the company's calculation of reserve replacement costs. Outlook "We intend to stay within our $150 million program that includes testing 30 exploration prospects (a three-fold increase over our 2002 program) during the course of 2003," said Dinges. "At the price levels where we are hedged and the existing commodity prices, we believe there should be opportunity for further debt reduction and the opportunity to evaluate, if desired, additional drilling exposures." Listen in live to Cabot Oil & Gas Corporation's full year and fourth quarter earnings discussion with financial analysts on Wednesday, February 19, 2003, at 9:30 AM EST (8:30 AM CST) at http://www.cabotog.com . A teleconference replay will also be available at (888) 203-1112 (international (719) 457-0820), reservation number 556856. The audio webcast and teleconference replay will be available from February 19 at 12:30 PM EST until February 26, 2003, at 5 PM EST. Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading domestic independent natural gas producer and marketer with substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid-Continent; and the East. For additional information, visit the Company's Internet homepage at http://www.cabotog.com . The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs and other factors detailed in the Company's Securities and Exchange Commission filings. OPERATING DATA Quarter Ended Year Ended Dec. 31, Dec. 31, 2002 2001 2002 2001 NATURAL GAS (Bcf) & OIL (MBbl) Produced Natural Gas Gulf Coast 7.2 8.3 30.4 25.6 West 6.4 6.8 25.3 26.2 East 4.5 4.5 18.0 17.4 Total 18.1 19.6 73.7 69.2 Crude/Condensate Gulf Coast 657 535 2,620 1,621 West 52 59 216 252 East 9 7 33 35 Total 718 601 2,869 1,908 Natural Gas Liquids 10 14 40 88 Equivalent Production (Bcfe) 22.4 23.3 91.1 81.1 PRICES Average Produced Gas Sales Price ($/Mcf) Gulf Coast $4.28 $2.92 $3.34 $4.44 West $3.02 $2.31 $2.39 $3.88 East $4.32 $3.58 $3.38 $4.96 Total $3.82 $2.87 $3.02 $4.36 Crude/Condensate Price ($/Bbl) Gulf Coast $25.02 $20.55 $23.69 $24.78 West $26.89 $20.36 $25.24 $26.01 East $24.06 $15.61 $22.09 $23.03 Total $25.15 $20.47 $23.79 $24.91 WELLS DRILLED Gross 23 54 108 208 Net 16.3 33.7 72.2 153.6 Gross Success Rate 91% 83% 93% 87% CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In Thousands, Except Per Share Amounts) Quarter Ended Year Ended Dec. 31, Dec. 31, 2002 2001 2002 2001 Net Operating Revenues Natural Gas Production $68,417 $55,519 $221,101 $301,671 Crude Oil and Condensate 15,756 12,312 67,548 47,544 Brokered Natural Gas 18,506 9,568 58,729 90,710 Other 871 2,919 6,378 7,117 103,550 80,318 353,756 447,042 Operating Expenses Brokered Natural Gas Cost 16,388 8,834 53,007 87,785 Direct Operations - Field and Pipeline 14,239 11,602 50,047 41,217 Exploration 12,484 31,411 40,167 71,165 Taxes Other Than Income 5,834 7,177 24,734 28,341 Administrative 7,100 7,492 28,377 25,650 Bad Debt --- 2,270 --- 2,270 Depreciation, Depletion and Amortization 26,766 28,421 105,860 88,422 Impairment of Long-Lived Assets 1,657 5,131 2,720 6,852 84,468 102,338 304,912 351,702 Gain on Sale of Assets 49 284 244 26 Income (Loss) from Operations 19,131 (21,736) 49,088 95,366 Interest Expense and Other 6,440 6,268 25,311 20,817 Income (Loss) Before Income Taxes 12,691 (28,004) 23,777 74,549 Income Tax Expense (Benefit) 4,036 (12,403) 7,674 27,465 Net Income (Loss) $8,655 $(15,601) $16,103 $47,084 Net Income (Loss) Per Share - Basic $0.27 $(0.49) $0.51 $1.56 Average Common Shares Outstanding 31,811 31,602 31,737 30,276 Results from Operations Excluding Selected Items Net Income (Loss) Applicable to Common $8,655 $(15,601) $16,103 $47,084 After-Tax Impact for Selected Items: Retirement of Executive Officer (2,205) Revision of Tax Basis on Acquisition 790 Change in Derivative Fair Value (1,792) (397) (1,424) 87 Impairment of Long-Lived Assets (1,026) (3,145) (1,684) (4,200) Bad Debt Expense (1,392) (1,392) Severance Tax Refund 695 Net Income (Loss) Excluding Selected Items $11,473 $(10,667) $20,626 $51,894 Net Income (Loss) Per Common Share $0.36 $(0.34) $0.65 $1.71 CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In Thousands) Dec. 31 Dec. 31, 2002 2001 Assets Current Assets $93,121 $84,987 Property, Equipment and Other Assets 961,750 984,044 Total Assets $1,054,871 $1,069,031 Liabilities and Stockholders' Equity Current Liabilities $123,024 $110,240 Long-Term Debt 365,000 393,000 Deferred Income Taxes 200,207 200,859 Other Liabilities 15,983 18,380 Stockholders' Equity 350,657 346,552 Total Liabilities and Stockholders' Equity $1,054,871 $1,069,031 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In Thousands) Quarter Ended Year Ended Dec. 31 Dec. 31 2002 2001 2002 2001 Cash Flows From Operating Activities Net Income (Loss) $8,655 $(15,601) $16,103 $47,084 Income Charges Not Requiring Cash 31,526 34,874 114,844 98,127 Gain on Sale of Assets (49) (284) (244) (26) Deferred Income Taxes 5,439 (16,500) 7,882 14,157 Exploration Expense 12,484 31,411 40,167 71,165 Changes in Assets and Liabilities (1,195) 1,737 (13,611) 19,928 Net Cash Provided by Operations 56,860 35,637 165,141 250,435 Cash Flows From Investing Activities Capital Expenditures (**) (16,540) (38,119) (103,189) (314,914) Proceeds from Sale of Assets 1,017 931 4,688 6,829 Exploration Expense (12,484) (31,411) (40,167) (71,165) Net Cash Used by Investing (28,007) (68,599) (138,668) (379,250) Cash Flows From Financing Activities Sale of Common Stock 311 --- 3,461 7,749 Increase (Decrease) in Debt (30,000) 26,000 (28,000) 124,000 Common Dividends (1,271) (1,264) (5,079) (4,802) Net Cash Provided (Used) by Financing (30,960) 24,736 (29,618) 126,947 Net Decrease in Cash and Cash Equivalents $(2,107) $(8,226) $(3,145) $(1,868) Discretionary Cash Flow (*) $58,055 $33,900 $178,752 $230,507 (*) Net income plus non-cash charges and exploration which can also be derived by subtracting Changes in Assets and Liabilities from Net Cash Provided by Operations. Excludes net proceeds on property sales. (**) Excludes the non-cash consideration of $49.9 million in common stock issued in connection with the acquisition of Cody Company in August 2001.SOURCE Cabot Oil & Gas Corporation
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CONTACT:
Scott Schroeder of Cabot Oil & Gas
Corporation, +1-281-589-4993
