Cabot Oil & Gas Stock Down ~8% after Q2 2018 Earnings



Cabot Oil & Gas’s stock performance

Following Cabot Oil & Gas’s (COG) second-quarter earnings release on July 27, COG stock fell 7.7% that day. The stock declined as a result of the company missing its earnings estimates. The markets seemed to have overlooked the fact that COG’s revenues had topped estimates.

COG’s revenues were lower on a YoY (year-over-year) basis, due to lower production volumes and natural gas price realizations. We’ll discuss this topic in the next part of this series.

On a YoY basis, COG stock has declined 9.41%. The Energy Select Sector SPDR ETF (XLE) has risen ~15.15% YoY. The S&P 500 ETF (SPY) has risen ~13.84% in the same period.

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Key Q2 2018 highlights and management commentary

During the second quarter, Cabot Oil & Gas (COG) repurchased 11.6 million shares. The company has repurchased 20.0 million shares year-to-date. COG management noted that since the second quarter of 2017, the company had lowered its outstanding shares by more than 5.0% to 441.2 million shares. 

Additionally, the company’s board authorized an increase in its share repurchase program by 20.0 million shares. This brings the current remaining authorization to 30.1 million shares or 7.0% of the total shares outstanding.

Among COG’s peers, Noble Energy (NBL) had announced a $750.0 million share repurchase program at the start of the year. Pioneer Natural Resources (PXD) had announced a $100.0 million share repurchase program at the beginning of the year.

Dan Dinges, CEO of Cabot Oil & Gas, commented in the company’s second-quarter earnings release, “Given our strong balance sheet and our outlook for continued free cash flow expansion, we believe we can execute on this expanded share repurchase program while continuing to reinvest in returns-focused growth in the Marcellus Shale.”

With the divesting of its Eagle Ford assets, which was completed in February, all of COG’s efforts are being focused on the Marcellus Shale.

Next, we’ll look at COG’s second-quarter operational performance and forecasts for 2018.


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