Cabot Oil & Gas Corporation (NYSE:COG) reported its financial and operating results for the second quarter of 2015. “Despite our strategic decision to curtail Marcellus volumes in the second quarter due to the adverse price environment, Cabot still generated production growth and reduced unit costs year-over-year,” said Dan O. Dinges, Chairman, President and Chief Executive Officer. “Our top-tier Marcellus asset affords us the ability to reduce our gross production volumes by approximately 500 million cubic feet (Mmcf) per day and still report positive normalized results.”

Second Quarter 2015 Financial Results

Equivalent production in the second quarter of 2015 was 138.0 billion cubic feet equivalent (Bcfe), consisting of 128.4 billion cubic feet (Bcf) of natural gas and 1.6 million barrels (Mmbbls) of liquids (crude oil/condensate/natural gas liquids). These figures represent increases of 8 percent, 5 percent, and 68 percent, respectively, compared to the second quarter of 2014.

Cash flow from operations in the second quarter of 2015 was $171.2 million, compared to $329.6 million in the second quarter of 2014. Discretionary cash flow in the second quarter of 2015 was $183.2 million, compared to $332.3 million in the second quarter of 2014. Net loss in the second quarter of 2015 was $27.5 million, or $0.07 per share, compared to net income of $118.4 million, or $0.28 per share, in the second quarter of 2014. Excluding the effect of selected items including a $36.5 million after-tax non-cash mark-to-market loss on natural gas derivatives, net income was $14.6 million, or $0.03 per share, in the second quarter of 2015, compared to $115.3 million, or $0.28 per share, in the second quarter of 2014. EBITDAX in the second quarter of 2015 was $203.9 million, compared to $367.1 million in the second quarter of 2014. Significant reductions in realized prices for both natural gas and oil were the primary drivers for the lower results in the quarter, partially offset by higher equivalent production. See the supplemental tables at the end of this press release for a reconciliation of non-GAAP measures including discretionary cash flow, net income excluding selected items, EBITDAX and net debt to adjusted capitalization ratio.

Natural gas price realizations, including the effect of hedges, were $2.15 per thousand cubic feet (Mcf) in the second quarter of 2015, down 38 percent compared to the second quarter of 2014. Excluding the impact of hedges, natural gas price realizations for the quarter were $1.75 per Mcf, representing an $0.89 discount to NYMEX settlement prices. Oil price realizations were $56.10 per barrel (Bbl), down 43 percent compared to the second quarter of 2014.

Total per unit costs (including financing) decreased to $2.52 per thousand cubic feet equivalent (Mcfe) in the second quarter of 2015, an improvement of 3 percent from $2.59 per Mcfe in the second quarter of 2014. “Our cash unit costs in the Marcellus during the second quarter were approximately $0.85 per Mcf, while our Eagle Ford cash unit costs were approximately $15.00 per Bbl,” expressed Dinges. “With the expectation of prolonged weakness in commodity prices, we continue to focus on reducing costs and maximizing operating efficiencies throughout the organization.”

Cabot drilled or participated in a total of 37 net wells during the second quarter of 2015 and incurred a total of $228.2 million in capital expenditures associated with activity during the second quarter. “For a majority of the second quarter the Company’s total rig count stood at four, with the expectation of holding this level flat through the remainder of the year and into the first part of 2016,” commented Dinges. “We do not believe that accelerating activity and allocating incremental capital in this commodity price environment is the appropriate investment decision, especially in light of a more favorable outlook for Cabot’s realized natural gas prices upon in-service of Constitution Pipeline in the second half of 2016.”

Year-To-Date 2015 Financial Results

Production during the six-month period ended June 30, 2015 was 309.4 Bcfe, consisting of 290.2 Bcf of natural gas and 3.2 Mmbbls of liquids. These figures represent increases of 25 percent, 22 percent, and 95 percent, respectively, compared to the six-month period ended June 30, 2014.

For the six-month period ended June 30, 2015, cash flow from operations was $438.6 million, compared to $584.9 million for the six-month period ended June 30, 2014. Discretionary cash flow was $423.4 million for the six-month period ended June 30, 2015, compared to $651.8 million for the six-month period ended June 30, 2014. For the six-month period ended June 30, 2015, net income was $12.7 million, or $0.03 per share, compared to $225.5 million, or $0.54 per share, for the six-month period ended June 30, 2014. Excluding the effect of selected items including a $38.8 million after-tax non-cash mark-to-market loss on natural gas derivatives, net income was $64.0 million, or $0.15 per share, compared to $225.0 million, or $0.54 per share, for the six-month period ended June 30, 2014. EBITDAX for the six-month period ended June 30, 2015 was $483.3 million, compared to $719.8 million for the six-month period ended June 30, 2014.

Natural gas price realizations, including the effect of hedges, were $2.32 per Mcf for the six-month period ended June 30, 2015, down 36 percent compared to the six-month period ended June 30, 2014. Oil price realizations were $50.00 per Bbl, down 49 percent compared to the six-month period ended June 30, 2014.

Total per unit costs (including financing) decreased to $2.41 per Mcfe for the six-month period ended June 30, 2015, an improvement of 8 percent from $2.63 per Mcfe for the six-month period ended June 30, 2014.

Cabot drilled or participated in a total of 78 net wells during the six-month period ended June 30, 2015 and incurred a total of $540.4 million in capital expenditures associated with activity during this period. “Over 80 percent of the net wells drilled during the first half of the year were on pad locations required to meet our obligation for continuous development or acreage capture,” stated Dinges. “We continue to prudently manage our capital program with a near-term focus on holding our acreage positions in our two core plays and improving our operating efficiencies.”

Operational Highlights

Marcellus Shale

During the second quarter of 2015, the Company averaged 1,341 Mmcf per day of net Marcellus production (1,575 gross operated Mmcf per day), an increase of 7 percent over the prior year’s comparable quarter. As previously announced, the Company curtailed a significant amount of its production volumes in the second quarter due to weakness in regional natural gas prices throughout Appalachia. Cabot does not anticipate an improvement in price realizations during the third quarter and as a result has initiated third quarter Marcellus gross production guidance at 1,550 to 1,600 Mmcf per day, in line with its guidance for the second quarter.

Cabot is currently operating three rigs in the Marcellus Shale and plans to remain at this level for the remainder of the year.

Eagle Ford Shale

Cabot’s net production in the Eagle Ford Shale during the second quarter of 2015 was 17,889 barrels of oil equivalent (Boe) per day, an increase of 74 percent over the prior year’s comparable quarter.

Cabot is currently operating one rig in the Eagle Ford Shale and plans to remain at this level for the remainder of the year.

Financial Position and Liquidity

As of June 30, 2015, the Company’s net debt to adjusted capitalization ratio was 48.0 percent, compared to 44.7 percent at December 31, 2014 (detailed in the table below). The Company’s total debt was $1,995 million, of which $383 million was outstanding under the Company’s $1.8 billion revolving credit facility.

Third Quarter and Full-Year 2015 Guidance

The Company has provided third quarter net production guidance of 1,375 to 1,425 Mmcf per day for natural gas and 15,750 to 17,000 Bbls per day for liquids. The Company expects its natural gas price realizations before the impact of hedges to average between $0.95 and $1.05 below NYMEX settlement prices for the third quarter.

Cabot’s full-year equivalent production growth guidance range of 10 to 18 percent remains unchanged. Cabot’s 2015 capital program also remains unchanged at $900 million. “We front-end loaded this year’s investment program, which will significantly reduce our run-rate capital spending for the second half of the year,” highlighted Dinges. For further disclosure on Cabot’s natural gas pricing exposure by index and updated unit cost guidance, please see the current Guidance slide in the Investor Relations section of the Company’s website. (Original Source)

Shares of Cabot Oil & Gas Corp closed yesterday at $27.60. COG has a 1-year high of $35.64 and a 1-year low of $26.01. The stock’s 50-day moving average is $31.52 and its 200-day moving average is $30.72.

On the ratings front, COG has been the subject of a number of recent research reports. In a report issued on July 13, Barclays analyst Jeffrey Robertson maintained a Buy rating on the stock, with a price target of $30, which implies an upside of 8.7% from current levels. Separately, on June 4, Deutsche Bank’s Josh Silverstein maintained a Hold rating on COG and has a price target of $34.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeffrey Robertson and Josh Silverstein have a total average return of 4.0% and -17.0% respectively. Robertson has a success rate of 44.8% and is ranked #1114 out of 3714 analysts, while Silverstein has a success rate of 0.0% and is ranked #3596.

Overall, 3 research analysts have assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $28.00 which is 1.4% above where the stock closed yesterday.

Cabot Oil & Gas Corp is an independent oil and gas company engaged in the development and exploration of oil and gas properties located in North America.