SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2003
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
Commission file number 1-10447
CABOT OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)
| DELAWARE | 04-3072771 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification Number) |
1200 Enclave Parkway, Houston, Texas 77077
(Address of principal executive offices including Zip Code)
(281) 589-4600
(Registrant’s telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes x No ¨
As of July 28, 2003, there were 32,172,457 shares of Common Stock, Par Value $.10 Per Share, outstanding.
CABOT OIL & GAS CORPORATION
| Part I. Financial Information | Page | |
| Item 1. Financial Statements |
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| 3 | ||
| Condensed Consolidated Balance Sheet at June 30, 2003 and December 31, 2002 |
4 | |
| 5 | ||
| 6 | ||
| Report of Independent Accountant’s Review of Interim Financial Information |
16 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 | |
| Item 3. Quantitative and Qualitative Disclosures about Market Risk |
27 | |
| 29 | ||
| Part II. Other Information |
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| 30 | ||
| 31 | ||
| 32 | ||
2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In Thousands, Except Per Share Amounts)
| THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
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| 2003 |
2002 |
2003 |
2002 |
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| NET OPERATING REVENUES |
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| Natural Gas Production |
$ | 81,113 | $ | 55,300 | $ | 159,286 | $ | 101,806 | ||||||||
| Brokered Natural Gas |
23,370 | 15,687 | 55,220 | 29,385 | ||||||||||||
| Crude Oil and Condensate |
20,663 | 17,348 | 43,837 | 31,066 | ||||||||||||
| Change in Derivative Fair Value (Note 8) |
(650 | ) | (564 | ) | (1,194 | ) | (1,180 | ) | ||||||||
| Other |
2,260 | 1,813 | 5,523 | 3,580 | ||||||||||||
| 126,756 | 89,584 | 262,672 | 164,657 | |||||||||||||
| OPERATING EXPENSES |
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| Brokered Natural Gas Cost |
21,539 | 14,581 | 49,800 | 26,848 | ||||||||||||
| Direct Operations—Field and Pipeline |
13,825 | 11,921 | 24,751 | 24,156 | ||||||||||||
| Exploration |
15,663 | 10,824 | 29,054 | 17,880 | ||||||||||||
| Depreciation, Depletion and Amortization |
23,764 | 23,453 | 47,271 | 46,663 | ||||||||||||
| Impairment of Unproved Properties |
2,337 | 2,337 | 4,674 | 4,674 | ||||||||||||
| Impairment of Long-Lived Assets (Note 11) |
— | — | 87,926 | 1,063 | ||||||||||||
| General and Administrative |
6,172 | 9,572 | 12,767 | 15,311 | ||||||||||||
| Taxes Other Than Income |
8,651 | 7,475 | 18,875 | 13,627 | ||||||||||||
| 91,951 | 80,163 | 275,118 | 150,222 | |||||||||||||
| Gain on Sale of Assets |
45 | 429 | 605 | 411 | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS |
34,850 | 9,850 | (11,841 | ) | 14,846 | |||||||||||
| Interest Expense and Other |
5,952 | 6,331 | 11,577 | 12,557 | ||||||||||||
| Income (Loss) Before Income Taxes |
28,898 | 3,519 | (23,418 | ) | 2,289 | |||||||||||
| Income Tax Expense (Benefit) |
10,994 | 1,398 | (8,946 | ) | 966 | |||||||||||
| NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE |
17,904 | 2,121 | (14,472 | ) | 1,323 | |||||||||||
| CUMULATIVE EFFECT OF ACCOUNTING CHANGE (Note 12) |
— | — | (6,847 | ) | — | |||||||||||
| NET INCOME (LOSS) |
$ | 17,904 | $ | 2,121 | $ | (21,319 | ) | $ | 1,323 | |||||||
| Basic Earnings (Loss) Per Share—Before Accounting Change |
$ | 0.56 | $ | 0.07 | $ | (0.45 | ) | $ | 0.04 | |||||||
| Diluted Earnings (Loss) Per Share—Before Accounting Change |
$ | 0.55 | $ | 0.07 | $ | (0.45 | ) | $ | 0.04 | |||||||
| Basic Loss Per Share—Accounting Change |
$ | — | $ | — | $ | (0.22 | ) | $ | — | |||||||
| Diluted Loss Per Share—Accounting Change |
$ | — | $ | — | $ | (0.22 | ) | $ | — | |||||||
| Basic Earnings (Loss) Per Share |
$ | 0.56 | $ | 0.07 | $ | (0.67 | ) | $ | 0.04 | |||||||
| Diluted Earnings (Loss) Per Share |
$ | 0.55 | $ | 0.07 | $ | (0.67 | ) | $ | 0.04 | |||||||
| Average Common Shares Outstanding |
31,980 | 31,737 | 31,909 | 31,671 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In Thousands, except share amounts)
| JUNE 30, 2003 |
DECEMBER 31, 2002 |
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| ASSETS |
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| Current Assets |
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| Cash and Cash Equivalents |
$ | 3,262 | $ | 2,561 | ||||
| Accounts Receivable |
85,158 | 70,028 | ||||||
| Inventories |
9,960 | 15,252 | ||||||
| Other |
11,617 | 5,280 | ||||||
| Total Current Assets |
109,997 | 93,121 | ||||||
| Properties and Equipment, Net (Successful Efforts Method) |
890,535 | 971,754 | ||||||
| Other Assets |
6,799 | 7,013 | ||||||
| $ | 1,007,331 | $ | 1,071,888 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current Liabilities |
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| Accounts Payable |
$ | 98,196 | $ | 73,578 | ||||
| Accrued Liabilities |
70,977 | 48,312 | ||||||
| Total Current Liabilities |
169,173 | 121,890 | ||||||
| Long-Term Debt |
304,000 | 365,000 | ||||||
| Deferred Income Taxes |
160,549 | 200,207 | ||||||
| Other Liabilities |
57,855 | 34,134 | ||||||
| Stockholders’ Equity |
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| Common Stock: |
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| Authorized—80,000,000 Shares of $.10 Par Value Issued and Outstanding—32,473,091 Shares and 32,133,118 Shares in 2003 and 2002, Respectively |
3,247 | 3,213 | ||||||
| Additional Paid-in Capital |
358,577 | 353,093 | ||||||
| Retained Earnings (Accumulated Deficit) |
(12,113 | ) | 11,674 | |||||
| Accumulated Other Comprehensive Loss (Note 9) |
(29,573 | ) | (12,939 | ) | ||||
| Less Treasury Stock, at Cost: |
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| 302,600 Shares in 2003 and 2002 |
(4,384 | ) | (4,384 | ) | ||||
| Total Stockholders’ Equity |
315,754 | 350,657 | ||||||
| $ | 1,007,331 | $ | 1,071,888 | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In Thousands)
| THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
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| 2003 |
2002 |
2003 |
2002 |
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| CASH FLOWS FROM OPERATING ACTIVITIES |
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| Net Income (Loss) |
$ | 17,904 | $ | 2,121 | $ | (21,319 | ) | $ | 1,323 | |||||||
| Adjustments to Reconcile Net Income to Cash Provided by Operating Activities: |
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| Cumulative Effect of Accounting Change |
— | — | 6,847 | — | ||||||||||||
| Depletion, Depreciation and Amortization |
23,764 | 23,453 | 47,271 | 46,663 | ||||||||||||
| Impairment of Unproved Properties |
2,337 | 2,337 | 4,674 | 4,674 | ||||||||||||
| Impairment of Long-Lived Assets |
— | — | 87,926 | 1,063 | ||||||||||||
| Deferred Income Tax Expense |
1,762 | 422 | (25,248 | ) | (49 | ) | ||||||||||
| Gain on Sale of Assets |
(45 | ) | (429 | ) | (605 | ) | (411 | ) | ||||||||
| Exploration Expense |
15,663 | 10,824 | 29,054 | 17,880 | ||||||||||||
| Change in Derivative Fair Value |
650 | 564 | 1,194 | 1,180 | ||||||||||||
| Other |
472 | 1,542 | 333 | 2,907 | ||||||||||||
| Changes in Assets and Liabilities: |
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| Accounts Receivable |
23,312 | (1,080 | ) | (15,130 | ||||||||||||