Highlights of Cabot Oil & Gas’ 2Q earnings
Cabot Oil & Gas (COG), is an independent oil and gas exploration and production company, with operations focusing in the Marcellus Shale in Pennsylvania and the Eagle Ford Shale in Texas.
On July 24, COG reported its earnings for the second quarter ending June, 2014.
Revenue for the quarter was $533 million, beating the consensus estimate of $514 million. Revenues were up ~19% year-over-year (or YoY), and ~5% sequentially. Increase in revenues was driven by Marcellus and Eagle Ford outputs.
Net income, excluding selected items, was $115 million. It beat the consensus estimate of $105.6 million and was higher by 21% on a YoY basis. Earnings per share (or EPS) for the quarter amounted to $0.28, beating the consensus estimate by $0.03.
Total natural gas and liquids production for the quarter was 127.6 billion cubic feet equivalent (or bcfe), consisting of 121.8 billion cubic feet (0r bcf) of natural gas and 961,000 barrels of liquids—including crude oil, natural gas liquids (or NGLs), and condensates. Total production was up 34% YoY and ~7% sequentially.
It’s important to note that, COG has provided an annual production guidance of 28%–41% for 2014.
Stock drops despite beats
Despite a strong quarterly performance, COG stock showed negative market movement and closed ~1% lower than the previous market close.
Deep price discounts
Natural gas price differentials in the Marcellus Shale are likely the reason for the negative market movement.
Wide price differentials are bound to affect earnings of other companies, which also have major operations in the Marcellus. Chesapeake (CHK), which is scheduled to report its second quarter earnings this week, is also likely to be affected by this.
It’s important to note that COG, CHK, SWN, and DVN are all components of the Energy Select Sector SPDR ETF (XLE).
In the next section, we’ll discuss the second quarter performance in more detail.