cog-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM			10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission file number 1-10447



CABOT OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)


Delaware						04-3072771
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

Three Memorial City Plaza

840 Gessner Road, Suite 1400, Houston, Texas 77024

(Address of principal executive offices, including ZIP code)

(281) 589-4600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	COG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 28, 2021, there were 399,419,748 shares of Common Stock, Par Value $0.10 Per Share, outstanding.

Table of Contents

CABOT OIL & GAS CORPORATION

INDEX TO FINANCIAL STATEMENTS


		Page
Part I. Financial Information

Item 1.	Financial Statements

Condensed Consolidated Balance Sheet (Unaudited) at March 31, 2021 and December 31, 2020		3

Condensed Consolidated Statement of Operations (Unaudited) for the Three Months Ended March 31, 2021 and 2020		4



Condensed Consolidated Statement of Cash Flows (Unaudited) for the Three Months Ended March 31, 2021 and 2020		5

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) for the Three Months Ended March 31, 2021 and 2020		6

Notes to the Condensed Consolidated Financial Statements		7



Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21

Item 4.	Controls and Procedures	23

Part II. Other Information

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 5.	Other Information	24

Item 6.	Exhibits	25

Signatures		26

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)


(In thousands, except share amounts)	March 31, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	173,659	$	140,113
Restricted cash	11,578		11,578
Accounts receivable, net	197,843		214,724
Income taxes receivable	2,559		6,171
Inventories	15,870		15,270
Derivative instruments	9,574		26,209

Other current assets	832		1,650
Total current assets	411,915		415,715
Properties and equipment, net (Successful efforts method)	4,075,428		4,044,606




Other assets	63,509		63,211
	$	4,550,852	$	4,523,532

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	169,101	$	162,081
Current portion of long-term debt	100,000		188,000
Accrued liabilities	21,240		22,374
Income taxes payable	19,895		—
Interest payable	4,856		17,771




Total current liabilities	315,092		390,226
Long-term debt, net	946,123		945,924

Deferred income taxes	786,526		774,195
Asset retirement obligations	87,410		85,489

Postretirement benefits	31,203		30,713
Other liabilities	78,528		81,278
Total liabilities	2,244,882		2,307,825

Commitments and contingencies

Stockholders' equity
Common stock:
Authorized — 960,000,000 shares of $0.10 par value in 2021 and 2020, respectively
Issued — 478,377,066 shares and 477,828,813 shares in 2021 and 2020, respectively	47,838		47,783
Additional paid-in capital	1,808,232		1,804,354
Retained earnings	2,270,819		2,184,352
Accumulated other comprehensive income	2,282		2,419
Less treasury stock, at cost:
78,957,318 shares and 78,957,318 shares in 2021 and 2020, respectively	(1,823,201)		(1,823,201)
Total stockholders' equity	2,305,970		2,215,707
	$	4,550,852	$	4,523,532

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)


	Three Months Ended March 31,
(In thousands, except per share amounts)		2021		2020
OPERATING REVENUES
Natural gas		$	472,859	$	370,340
(Loss) gain on derivative instruments		(13,238)		16,062
Other		59		55
		459,680		386,457
OPERATING EXPENSES
Direct operations		16,876		17,244
Transportation and gathering		136,702		143,332
Taxes other than income		4,805		3,738
Exploration		2,627		2,190
Depreciation, depletion and amortization		94,148		100,135

General and administrative		29,155		33,429
		284,313		300,068
Loss on equity method investments		—		(59)
Gain on sale of assets		71		71
INCOME FROM OPERATIONS		175,438		86,401
Interest expense, net		12,377		14,211

Other expense		46		66
Income before income taxes		163,015		72,124
Income tax expense		36,661		18,214
NET INCOME		$	126,354	$	53,910

Earnings per share
Basic		$	0.32	$	0.14
Diluted		$	0.31	$	0.13

Weighted-average common shares outstanding
Basic		399,121		398,343
Diluted		401,811		399,897

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)


	Three Months Ended March 31,
(In thousands)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	126,354	$	53,910
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization	94,148		100,135

Deferred income tax expense	12,371		44,044
Gain on sale of assets	(71)		(71)

Loss (gain) on derivative instruments	13,238		(16,062)
Net cash received in settlement of derivative instruments	3,397		—
Loss on equity method investments	—		59

Amortization of debt issuance costs	715		750
Stock-based compensation and other	11,076		15,765
Changes in assets and liabilities:
Accounts receivable, net	16,881		73,327
Income taxes	23,507		(26,756)
Inventories	(600)		(4,317)
Other current assets	818		916
Accounts payable and accrued liabilities	3,425		(23,711)
Interest payable	(12,915)		(12,981)
Other assets and liabilities	(1,817)		(111)

Net cash provided by operating activities	290,527		204,897

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(123,617)		(148,702)

Proceeds from sale of assets	92		48
Investment in equity method investments	—		(35)

Proceeds from sale of equity method investments	—		(9,424)
Net cash used in investing activities	(123,525)		(158,113)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of debt	(88,000)		—


Dividends paid	(39,887)		(39,817)

Tax withholdings on vesting of stock awards	(5,569)		(6,313)


Net cash used in financing activities	(133,456)		(46,130)

Net increase in cash, cash equivalents and restricted cash	33,546		654
Cash, cash equivalents and restricted cash, beginning of period	151,691		213,783
Cash, cash equivalents and restricted cash, end of period	$	185,237	$	214,437

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)


(In thousands, except per share amounts)	Common Shares	Common Stock Par		Treasury Shares	Treasury Stock		Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance at December 31, 2020	477,829	$	47,783	78,957	$	(1,823,201)	$	1,804,354	$	2,419	$	2,184,352	$	2,215,707
Net income	—	—		—	—		—		—		126,354		126,354

Stock amortization and vesting	548	55		—	—		3,878		—		—		3,933



Cash dividends at $0.10 per share	—	—		—	—		—		—		(39,887)		(39,887)
Other comprehensive loss	—	—		—	—		—		(137)		—		(137)

Balance at March 31, 2021	478,377	$	47,838	78,957	$	(1,823,201)	$	1,808,232	$	2,282	$	2,270,819	$	2,305,970


(In thousands, except per share amounts)	Common Shares	Common Stock Par		Treasury Shares	Treasury Stock		Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance at December 31, 2019	476,882	$	47,688	78,957	$	(1,823,201)	$	1,782,427	$	1,360	$	2,143,213	$	2,151,487
Net income	—	—		—	—		—		—		53,910		53,910

Stock amortization and vesting	651	65		—	—		2,886		—		—		2,951



Cash dividends at $0.10 per share	—	—		—	—		—		—		(39,817)		(39,817)
Other comprehensive loss	—	—		—	—		—		(136)		—		(136)

Balance at March 31, 2020	477,533	$	47,753	78,957	$	(1,823,201)	$	1,785,313	$	1,224	$	2,157,306	$	2,168,395

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Financial Statement Presentation

During interim periods, Cabot Oil & Gas Corporation (the Company) follows the same accounting policies disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 (Form 10-K) filed with the Securities and Exchange Commission (SEC), except for any new accounting pronouncements adopted during the period. The interim financial statements should be read in conjunction with the notes to the consolidated financial statements and information presented in the Form 10-K. In management’s opinion, the accompanying interim condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary for a fair statement. The results for any interim period are not necessarily indicative of the expected results for the entire year.

2. Properties and Equipment, Net

Properties and equipment, net are comprised of the following:


(In thousands)	March 31, 2021		December 31, 2020
Proved oil and gas properties	$	7,196,548	$	7,068,605
Unproved oil and gas properties	43,060		49,829
Land, buildings and other equipment	92,858		92,566
	7,332,466		7,211,000
Accumulated depreciation, depletion and amortization	(3,257,038)		(3,166,394)
	$	4,075,428	$	4,044,606

At March 31, 2021, the Company did not have any projects that had exploratory well costs capitalized for a period of greater than one year after drilling.

3. Debt and Credit Agreements

The Company’s debt and credit agreements consisted of the following:


(In thousands)	March 31, 2021		December 31, 2020
6.51% weighted-average senior notes	$	37,000	$	37,000
5.58% weighted-average senior notes(1)	87,000		175,000

SEC Form 10-Q filed by Cabot Oil & Gas Corporation