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Cabot Oil & Gas’s Key Fundamentals: What Do the Numbers Say?

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Part 4
Cabot Oil & Gas’s Key Fundamentals: What Do the Numbers Say? PART 4 OF 9

Cabot Oil & Gas’s Free Cash Flow Trends

Cabot Oil & Gas’s cash flows

In 2Q17, Cabot Oil & Gas (COG) reported cash flows from operations (or CFO) of ~$260.6 million. That compares to $85.0 million in 2Q16. COG’s management noted in its 2Q17 earnings conference that its strong production growth along with an almost 100% increase in its Marcellus margins were the key drivers behind the year-over-year CFO growth.

Cabot Oil &amp; Gas’s Free Cash Flow Trends

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Free cash flows

COG’s free cash flow (or FCF) has remained positive for the fifth consecutive quarter, as you can see in the above graph. COG’s FCF was $75.6 million in 2Q17.

The company has returned more than $100.0 million of FCF to its shareholders. It expects to return $150.0 million to shareholders through dividends and buybacks in 2017.

Dan Dinges, COG’s chief executive officer, noted in the 2Q17 earnings conference, “While many of our industry peers are highlighting the ability to generate double-digit production growth within cash flow a few years from now at commodity price assumptions that are higher than the current strip, we are already delivering on this plan today.”

Cabot’s capex

COG’s capex (capital expenditure) in 2017 is expected to be $845.0 million. That includes $70.0 million of equity pipeline investments (assuming a July 1, 2018, in-service date for the Atlantic Sunrise pipeline project) and $125.0 million of exploratory leasing and testing capital. It has equity pipeline investments of $70.0 million.

About $610.0 million, or 72.0%, of Cabot’s 2017 E&P (exploration and production) capital will be used for D&C (drilling and completion) expenses.

COG’s management noted in the 2Q17 earnings conference that for its capital program for 2018, it has an objective to grow its production 15.0%–25.0%.

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