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Cabot Oil & Gas: Are You Ready for Its 1Q17 Earnings?

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Part 2
Cabot Oil & Gas: Are You Ready for Its 1Q17 Earnings? PART 2 OF 5

Analyzing Cabot Oil & Gas’s Production Guidance

Production guidance for 2017

Cabot Oil & Gas (COG) provided a production growth guidance range of 5.0%–10.0% for 2017. In its 4Q16 earnings release, the company’s management said, “Based on our current outlook for 2017, we anticipate another year of production and reserves growth while generating positive free cash flow.”

Analyzing Cabot Oil &amp; Gas&#8217;s Production Guidance

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The company raised its 2017 capital budget from $575 million (provided in 3Q16) to $650 million. Cabot Oil & Gas’s 4Q16 earnings release noted that incremental capital will mainly be used for funding additional drilling and completion activities in the Eagle Ford Shale. Read Could Cabot Oil & Gas Favor Eagle Ford in the Future? to learn more.

Cabot Oil & Gas’s March 2017 presentation noted that improved Eagle Ford economics resulted in the budget increase discussed above, which should result in oil production volume growth in 2017. It expects its oil production to rise 15%.

Prominent players in the Eagle Ford Shale are Chesapeake Energy (CHK), Noble Energy (NBL), and Sanchez Energy (SN).

2016 results

Cabot Oil & Gas’s 2016 production was 627.1 Bcfe (billion cubic feet equivalent)—compared to 602.5 Bcfe in 2015. As you can see in the above graph, Cabot Oil & Gas’s annual production rose at a compound annual growth rate of 15% between 2013 and 2016.

Cabot Oil & Gas’s 4Q16 production volumes totaled 164.2 Bcfe (billion cubic feet equivalent). In comparison, the company’s 4Q15 production volumes were 151 Bcfe. Cabot Oil & Gas’s 3Q16 production volumes were 150.8 Bcfe.

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