Quarterly / Earnings Reports | Fourth Quarter (4Q) Update | Reserves | Capital Markets | Capital Expenditure | Capital Expenditure - 2021

Cabot Oil & Gas Talks 2021 Capex Plan; Details Q4, Full Year 2020 Results

Share Print Bookmark    |    Friday,February 05,2021

Cabot Oil & Gas Corp. reported its Q4 and full year 2020 results.

The company also announced its 2021 guidance.

2021 Guidance

Capital Budget: $530 to $540 million - down 7% at the midpoint from 2020

Average Net Production: 2,350 Mmcfe per day - relatively flat from 2020

CEO Dan O'Dinges said: "Our plan for 2021 highlights our commitment to disciplined capital allocation and free cash flow generation with a focus on maintaining our production flat year-over-year despite the expectation for a higher natural gas price environment this year. Our maintenance capital program in 2021 is expected to provide Cabot with significant opportunities to return additional capital to shareholders as we continue to target a minimum return of capital of at least 50 percent of free cash flow annually, which the Company has far exceeded each of the last five years, in addition to retiring our 2021 debt maturities."

Q4, Full Year 2020 Results

"Cabot Oil & Gas delivered another strong year operationally and financially in 2020, including its fifth consecutive year of positive free cash flow generation, despite the challenges presented by the COVID-19 pandemic and a depressed natural gas price environment, which resulted in the lowest natural gas price realizations in the Company's 31-year history as a public company," stated Dan O. Dinges, Chairman, President and Chief Executive Officer. "We remain positive on our outlook for significant free cash flow expansion this year, which is underpinned by improving fundamentals for natural gas supply and demand and lower capital spending year-over-year, allowing for an increase in our return of capital to shareholders and continued debt reduction in 2021."

Q4 and Full-Year 2020 Operational Update

Cabot expects its production for the fourth quarter of 2020 to be approximately 2,375 million cubic feet equivalent (Mmcfe) per day, exceeding the high-end of the Company's fourth quarter guidance range of 2,300 to 2,350 Mmcfe per day. Based on the expected production volumes for the fourth quarter, the Company expects its production for the full-year 2020 to be approximately 2,344 Mmcfe per day, exceeding the Company's full-year guidance range of 2,325 to 2,340 Mmcfe per day.

Natural gas price realizations, including the impact of hedges, are expected to be $1.90 per thousand cubic feet (Mcf) in the fourth quarter of 2020. Excluding the impact of hedges, natural gas price realizations for the fourth quarter are expected to be $1.89 per Mcf. For the full-year 2020, natural gas price realizations, including the impact of hedges, are expected to be $1.68 per Mcf. Excluding the impact of hedges, natural gas price realizations for the full-year are expected to be $1.64 per Mcf.

Cabot expects to have incurred approximately $106 million in capital expenditures associated with activity during the fourth quarter of 2020. Based on this anticipated level of spending during the quarter, the Company expects to have incurred approximately $570 million in capital expenditures associated with activity during the full-year of 2020, compared to the Company's 2020 capital program guidance of $575 million.

Year-End 2020 Estimated Proved Reserves

Cabot reported estimated year-end 2020 proved reserves of 13.7 trillion cubic feet equivalent (Tcfe), an increase of six percent over year-end 2019. The table below reconciles the components driving the 2020 reserve increase:

As of December 31, 2020, 100 percent of Cabot's year-end estimated proved reserves were natural gas and were located in the Marcellus Shale. Approximately 63 percent of the estimated year-end proved reserves were classified as proved developed and 37 percent were classified as proved undeveloped (PUD), including two percent of drilled and uncompleted PUDs.

Drill-bit finding and development (F&D) costs (non-GAAP) are expected to be $0.28 per thousand cubic feet equivalent (Mcfe), while all-sources F&D costs (non-GAAP) are expected to be $0.35 per Mcfe. "Our 2020 program delivered record-low drill-bit F&D costs, resulting in a year-over-year improvement in our all-sources F&D costs, despite a modest downward revision in our proved reserves due primarily to a downward performance revision related to certain proved developed producing properties and, to a lesser extent, PUD reserve reclassifications resulting from changes to the five-year development plan and pricing revisions," said Dinges.