Cabot Oil & Gas Corp. Reports Operating Results (10-Q)
Cabot Oil & Gas Corp. has a market cap of $3.17 billion; its shares were traded at around $30.53 with a P/E ratio of 23 and P/S ratio of 3.6. The dividend yield of Cabot Oil & Gas Corp. stocks is 0.4%. Cabot Oil & Gas Corp. had an annual average earning growth of 15.9% over the past 10 years. GuruFocus rated Cabot Oil & Gas Corp. the business predictability rank of 4.5-star.COG is in the portfolios of Stanley Druckenmiller of Duquesne Capital Management, LLC, Robert Rodriguez of FPA Capital, Bill Gates of Bill & Melinda Gates Foundation Trust, First Pacific Advisors of First Pacific Advisors, LLC, Paul Tudor Jones of The Tudor Group, PRIMECAP Management, Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors, Pioneer Investments, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC.
Highlight of Business Operations: Our average realized natural gas price for the first half of 2010 was $5.99 per Mcf, 19% lower than the $7.38 per Mcf price realized in the first half of 2009. Our average realized crude oil price for the first half of 2010 was $97.04 per Bbl, 22% higher than the $79.55 per Bbl price realized in the first half of 2009. These realized prices include realized gains and losses resulting from commodity derivatives. For information about the impact of these derivatives on realized prices, refer to Results of Operations below. Commodity prices are determined by many factors that are outside of our control. Historically, commodity prices have been volatile, and we expect them to remain volatile. Commodity prices are affected by changes in market supply and demand, which are impacted by overall economic activity, weather, pipeline capacity constraints, inventory storage levels, basis differentials and other factors. As a result, we cannot accurately predict future natural gas, NGL and crude oil prices and, therefore, we cannot determine with any degree of certainty what effect increases or decreases will have on our future revenues, capital program or production volumes.
Operating revenues for the six months ended June 30, 2010 decreased by $30.7 million, or 7%, from the six months ended June 30, 2009 as the lower realized natural gas prices noted above more than offset the higher equivalent production. Natural gas production revenues decreased by $34.9 million, or 10 %, for the six months ended June 30, 2010 as compared to the six months ended June 30, 2009 due to the decrease in realized natural gas prices, partially offset by the increase in natural gas production. Crude oil and condensate revenues increased by $10.7 million, or 35%, for the first six months of 2010 as compared to the first six months of 2009, due to increases in realized crude oil prices and crude oil production. Brokered natural gas revenues decreased by $6.8 million, or 15%, due to a decreased sales price, partially offset by increased brokered volumes.
In June 2010, we sold our Woodford shale prospect located in Oklahoma to Continental Resources Inc. We received approximately $15.9 million in cash proceeds and recognized a $10.3 million gain on sale of assets. As a result of our decision to divest of certain oil and gas properties, we recognized an impairment loss of approximately $5.8 million related to the assets held for sale in the second quarter of 2010. In April 2009, we sold our Canadian properties to a privately held Canadian company for a $10.5 million loss. In the first quarter of 2009, we received approximately of $11.4 million in cash proceeds and recognized a $12.7 million gain on sale of assets primarily related to the sale of the Thornwood properties in the North region. Refer to Note 2 of the Notes to the Condensed Consolidated Financial Statements for further details.
At June 30, 2010, we had $353.0 million of borrowings outstanding under our unsecured credit facility at a weighted-average interest rate of 3.75%. The credit facility provides for an available credit line of $500 million and contains an accordion feature allowing us to increase the available credit line to $600 million, if any one or more of the existing banks or new banks agree to provide such increased commitment amount. The available credit line is subject to adjustment on the basis of the present value of estimated future net cash flows from proved oil and gas reserves (as determined by the banks based on our reserve reports and engineering reports) and certain other assets and the outstanding principal balance of our senior notes. As of June 30, 2010, our available credit under our credit facility is $146.0 million.
We reported net income in the second quarter of 2010 of $21.7 million, or $0.21 per share. For the second quarter of 2009, we reported net income of $25.5 million, or $0.25 per share. Net income decreased in the second quarter of 2010 by $3.8 million, primarily due to a decrease in operating revenues and an increase in operating expenses offset by an increase in gain / (loss) on sale of assets. Operating revenues decreased by $9.4 million primarily due to a reduction in natural gas production revenues partially offset by increases in crude oil condensate revenues, brokered natural gas revenues and other revenues. Operating expenses increased by $13.8 million between periods due primarily to increases in depreciation, depletion and amortization, impairment of unproved properties, partially offset by decreased general and administrative expenses, including stock-based compensation.
Our average total company realized natural gas production sales price, including the realized impact of derivative instruments, was $5.48 per Mcf for the three months ended June 30, 2010 compared to $7.25 per Mcf for the comparable period of the prior year. These prices include the realized impact of derivative instrument settlements, which increased the price by $1.44 per Mcf in 2010 and by $4.15 per Mcf in 2009. The following table excludes the unrealized gain from the change in fair value of our derivatives that do not qualify for hedging of $0.9 million for the quarter ended June 30, 2010 and the unrealized loss from the change in derivative fair value of $0.1 million for the quarter ended June 30, 2009, which have been included within Natural Gas Production Revenues in the Condensed Consolidated Statement of Operations.
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