Cabot Oil & Gas’s Key Fundamentals: What Do the Numbers Say?
Cabot’s net debt-to-EBITDA
In a previous series, we looked at Cabot Oil & Gas’s (COG) key management objectives, strategies, and goals. In this series, we’ll look at its key fundamentals.
COG’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple rose steadily between 2Q15 and 4Q15 due to a rising net debt and a falling EBITDA trend.
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Net debt rose from $1.98 billion in 2Q15 to $2.02 billion in 4Q15. Its trailing 12-month adjusted EBITDA in 2Q15 was ~$1.2 billion, which fell to $636.0 million in 4Q15.
COG’s rising net-debt-to-EBITDA multiple trend was disrupted in 1Q16 after its net debt levels fell. Net debt in 1Q16 fell to $1.02 billion and has stayed at that level since then. The fall in net debt in 2Q16 compared to 4Q15 was due to lower long-term debt, which fell from $2.0 billion in 4Q15 to $1.58 billion in 1Q16. In 2Q17, COG’s long-term debt was $1.52 billion.
COG’s trailing 12-month adjusted EBITDA has also shown a mostly declining trend. In 4Q16, it was $464.0 million. But in 1Q17 and later in 2Q17, it rose 48.0% and 28.0%, respectively, compared to the previous quarter, while net debt continued to stay at the same level. That explains the fall in the net debt-to-EBITDA multiple for those periods. In 2Q17, COG’s net-debt-to-EBITDA multiple was 1.1x. It was 1.4x in 1Q17 and 2.4x in 2Q16.
Cabot’s liquidity and financial position
COG noted that as of June 30, 2017, its cash on hand was $516.5 million. Under its $1.8 billion revolving credit facility, it had $1.7 billion available, bringing its total liquidity at the end of the quarter to $2.2 billion.
The company’s total debt as of June 30, 2017, was $1.5 billion. In the next part of this series, we’ll look at COG’s total debt.