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    Cabot Oil & Gas Corporation Reports Fourth Quarter and Full-Year 2020 Results, Provides Updated Capital Return Framework

    February 23, 2021

    HOUSTON, Feb. 23, 2021 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) ("Cabot" or the "Company") today reported financial and operating results for the fourth quarter and full-year 2020 and provided its updated capital return framework.

    "Our results in 2020 demonstrated Cabot's ability to continue to generate profitability and positive free cash flow, even in the face of historically low natural gas prices, which is a testament to the tireless work of our dedicated employees who continue to deliver strong results from our safe, responsible, and sustainable operations in northeast Pennsylvania," stated Dan O. Dinges, Chairman, President and Chief Executive Officer. "Strong secular tailwinds from an improving natural gas supply and demand outlook are expected to drive a significant improvement in our financial performance in 2021, as we continue to focus on improving our financial returns, increasing our positive free cash flow generation, and further enhancing our capital return to shareholders."

    Fourth Quarter 2020 Financial Results

    Fourth quarter 2020 daily production was 2,375 million cubic feet equivalent (Mmcfe) per day (100 percent natural gas), exceeding the high-end of the Company's guidance range. During the fourth quarter of 2020, the Company drilled 15.0 net wells, completed 15.0 net wells, and placed 7.0 net wells on production.

    Fourth quarter 2020 net income was $131.2 million, or $0.33 per share, compared to $146.9 million, or $0.36 per share, in the prior-year period. Fourth quarter 2020 adjusted net income (non-GAAP) was $104.7 million, or $0.26 per share, compared to $120.8 million, or $0.30 per share, in the prior-year period. Fourth quarter 2020 EBITDAX (non-GAAP) was $229.8 million, compared to $300.3 million in the prior-year period.

    Fourth quarter 2020 net cash provided by operating activities was $307.8 million, compared to $263.0 million in the prior-year period. Fourth quarter 2020 discretionary cash flow (non-GAAP) was $220.3 million, compared to $277.5 million in the prior-year period. Fourth quarter 2020 free cash flow (non-GAAP) was $122.9 million, compared to $109.5 million in the prior-year period.

    Fourth quarter 2020 natural gas price realizations, including the impact of derivatives, were $1.90 per thousand cubic feet (Mcf), a decrease of 12 percent compared to the prior-year period. Excluding the impact of derivatives, fourth quarter 2020 natural gas price realizations were $1.89 per Mcf, representing a $0.77 discount to NYMEX settlement prices. "While a warmer start to the winter heating season and higher storage levels resulted in wider than anticipated differentials across the Appalachian Basin during the fourth quarter, we remain optimistic that the improving outlook for lower end-of-season inventories will provide tailwinds for regional natural gas prices during 2021," commented Dinges. Fourth quarter 2020 operating expenses (including interest expense) decreased to $1.39 per thousand cubic feet equivalent (Mcfe), a three percent improvement compared to the prior-year period.

    Cabot incurred a total of $105.8 million of capital expenditures in the fourth quarter of 2020 including $97.6 million of drilling and facilities capital, $2.6 million of leasehold acquisition capital, and $5.6 million of other capital.

    See the supplemental tables at the end of this press release for a reconciliation of non-GAAP measures including adjusted net income, discretionary cash flow, EBITDAX, free cash flow, net debt to adjusted capitalization ratio, and return on capital employed (ROCE).

    Full-Year 2020 Financial Results

    Full-year 2020 daily production was 2,344 Mmcfe per day (100 percent natural gas), exceeding the Company's full-year guidance range. The Company drilled 64.3 net wells, completed 77.3 net wells, and placed 69.2 net wells on production for the full-year 2020.

    Full-year 2020 net income was $200.5 million, or $0.50 per share, compared to $681.1 million, or $1.64 per share, for the prior-year period. Adjusted net income (non-GAAP) for the full-year 2020 was $214.0 million, or $0.54 per share, compared to $698.8 million, or $1.68 per share, for the prior-year period. Full-year 2020 EBITDAX (non-GAAP) was $719.3 million, compared to $1,408.6 million for the prior-year period.

    For the full-year 2020, net cash provided by operating activities was $778.2 million, compared to $1,445.8 million for the prior-year period. Full-year 2020 discretionary cash flow (non-GAAP) was $685.0 million, compared to $1,360.8 million for the prior-year period. Full-year 2020 free cash flow (non-GAAP) was $109.1 million, compared to $563.1 million for the prior-year period. Full-year 2020 ROCE (non-GAAP) was 7.6 percent, compared to 22.2 percent for the prior-year period.

    Full-year 2020 natural gas price realizations, including the impact of derivatives, were $1.68 per Mcf, a decrease of 31 percent compared to the prior-year period. Excluding the impact of derivatives, full-year 2020 natural gas price realizations were $1.64 per Mcf, representing a $0.44 discount to NYMEX settlement prices. Full-year 2020 operating expenses (including interest expense) decreased to $1.43 per Mcfe, a one percent improvement compared to the prior-year period.

    Cabot incurred a total of $569.8 million of capital expenditures in 2020 including $546.7 million of drilling and facilities capital, $5.8 million of leasehold acquisition capital, and $17.3 million of other capital.

    Financial Position and Liquidity

    As of December 31, 2020, Cabot had total debt of $1.1 billion and cash on hand of $140.1 million. The Company's net debt-to-adjusted capitalization ratio and net debt-to-trailing twelve months EBITDAX ratio were 31.0 percent and 1.4x, respectively, compared to 32.2 percent and 0.7x as of December 31, 2019.  The Company currently has no debt outstanding under its credit facility, resulting in approximately $1.6 billion of liquidity.

    Subsequent to the end of the year, the Company repaid $88.0 million of 5.42% senior notes that matured in January 2021.

    2020 Emissions Intensity Reduction

    "We are proud of our position as a leading supplier of natural gas, focused on supporting the goal of reducing total greenhouse gas (GHG) emissions while achieving energy independence in the United States. As the world moves to a low-carbon electric economy, the importance of natural gas—which is 100 percent of our production—should continue to steadily rise," noted Dinges. "From 2019 to 2020, we realized a 58 percent reduction in our GHG emissions intensity from 3.12 to 1.31 metric tons of CO2e per thousand barrels of oil equivalent (Mboe) and a 70 percent reduction in our methane emissions intensity from 0.083 to 0.025 percent, highlighting our industry-leading efficiency."

    Capital Return Framework

    Cabot also announced its updated capital return framework. The Company intends to implement a "base plus supplemental" dividend approach. Under this updated capital return framework, Cabot plans to continue to deliver its regular quarterly base dividend on the Company's common stock and to supplement its regular quarterly base dividends with an annual supplemental dividend to achieve its minimum capital return target of 50 percent of annual free cash flow. Any supplemental dividend is expected to be declared and paid annually, with the first payment expected to occur in the fourth quarter of 2021. Any excess free cash flow above the minimum capital return target of 50 percent of annual free cash flow will be utilized for balance sheet enhancement, additional supplemental dividends, or opportunistic share repurchases, depending on market conditions. In 2021, Cabot plans to retire its $188 million of current debt maturities (including the $88 million tranche that was repaid in January) with a portion of its excess free cash flow.

    "Our capital return framework reaffirms our commitment to returning a significant portion of our free cash flow to shareholders, while also preserving our balance sheet strength," said Dinges. "The supplemental component of this dividend approach allows us to focus on sustainable capital return that is appropriately tailored for where we are in the natural gas price cycle. We also expect to continue to grow our base dividend over time, as we have done five times since 2017. Our track record of generating positive free cash flow for the last five years, while far exceeding our annual target of returning at least 50 percent of free cash flow to shareholders, highlights our continued focus on disciplined capital allocation and enhancing returns to shareholders over time."

    2021 Guidance

    Cabot today reaffirmed its recently announced guidance for 2021. The Company's operating plan for the year is expected to deliver an average net production rate of 2,350 Mmcfe per day from a capital program of $530 to $540 million, representing a six percent reduction in capital spending year-over-year at the midpoint of the range. Cabot has also reaffirmed its first quarter 2021 production guidance range of 2,250 to 2,300 Mmcfe per day.

    Conference Call Webcast

    A conference call is scheduled for Wednesday, February 24, 2021, at 11:00 a.m. Eastern Time to discuss fourth quarter and full-year 2020 financial and operating results. To access the live audio webcast, please visit the Investor Relations section of the Company's website. A replay of the call will also be available on the Company's website.

    Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading independent natural gas producer with its entire resource base located in the continental United States. For additional information, visit the Company's website at www.cabotog.com.

    This press release includes forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements regarding future financial and operating performance and results, returns to shareholders, strategic pursuits and goals, market prices, future hedging and risk management activities, and other statements that are not historical facts contained in this report are forward-looking statements. The words "expect", "project", "estimate", "believe", "anticipate", "intend", "budget", "plan", "forecast", "outlook", "predict", "may", "should", "could", "will" and similar expressions are also intended to identify forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, the continuing effects of the COVID-19 pandemic and the impact thereof on the Company's business, financial condition and results of operations, the availability of cash on hand and other sources of liquidity to fund our capital expenditures, the repayment of our debt maturities and our dividends, actions by, or disputes among or between, the Organization of Petroleum Exporting Countries and other producer countries, market factors, market prices (including geographic basis differentials) of natural gas and crude oil, results of future drilling and marketing activity, future production and costs, pipeline projects, legislative and regulatory initiatives, electronic, cyber or physical security breaches and other factors detailed herein and in our other Securities and Exchange Commission (SEC) filings. In addition, the declaration and payment of any future dividends, whether regular quarterly base dividends or annual supplemental dividends, will depend on the Company's financial results, cash requirements, future prospects and other factors deemed relevant by the Board. See "Risk Factors" in Item 1A of the Company's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q for additional information about these risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.  Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not undertake any obligation to correct or update any forward-looking statement, whether as the result of new information, future events or otherwise, except as required by applicable law.

    OPERATING DATA



    Quarter Ended
    December 31,


    Twelve Months Ended
    December 31,


    2020


    2019


    2020


    2019

    PRODUCTION VOLUMES








    Natural gas (Bcf)

    218.5



    226.1



    857.7



    865.3


    Equivalent production (Bcfe)

    218.5



    226.1



    857.7



    865.3


    Daily equivalent production (Mmcfe/day)

    2,375



    2,457



    2,344



    2,371










    AVERAGE SALES PRICE








    Natural gas, including hedges ($/Mcf)

    $

    1.90



    $

    2.15



    $

    1.68



    $

    2.45


    Natural gas, excluding hedges ($/Mcf)

    $

    1.89



    $

    2.05



    $

    1.64



    $

    2.29










    AVERAGE UNIT COSTS ($/Mcfe)(1)








    Direct operations

    $

    0.08



    $

    0.09



    $

    0.09



    $

    0.09


    Transportation and gathering

    0.67



    0.66



    0.67



    0.66


    Taxes other than income

    0.02



    0.01



    0.02



    0.02


    Exploration

    0.02



    0.02



    0.02



    0.02


    Depreciation, depletion and amortization

    0.44



    0.47



    0.46



    0.47


    General and administrative (excluding stock-based compensation)

    0.08



    0.07



    0.07



    0.07


    Stock-based compensation

    0.03



    0.03



    0.05



    0.04


    Interest expense

    0.05



    0.06



    0.06



    0.06



    $

    1.39



    $

    1.43



    $

    1.43



    $

    1.44


















    WELLS DRILLED(2)








    Gross

    19



    25



    74



    96


    Net

    15.0



    23.0



    64.3



    94.0










    WELLS COMPLETED(2)








    Gross

    15



    28



    86



    99


    Net

    15.0



    26.0



    77.3



    97.0





    (1)

    Total unit cost may differ from the sum of the individual costs due to rounding.

    (2)

    Wells drilled represents wells drilled to total depth during the period. Wells completed includes wells completed during the period, regardless of when they were drilled.

     

    CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)



    Quarter Ended
    December 31,


    Twelve Months Ended
    December 31,

    (In thousands, except per share amounts)

    2020


    2019


    2020


    2019

    OPERATING REVENUES








    Natural gas

    $

    413,107



    $

    463,451



    $

    1,404,989



    $

    1,985,240


    Gain (loss) on derivative instruments

    43,621



    (2,158)



    61,404



    80,808


    Other

    50



    75



    231



    229



    456,778



    461,368



    1,466,624



    2,066,277


    OPERATING EXPENSES








    Direct operations

    18,539



    21,350



    73,403



    76,958


    Transportation and gathering

    145,539



    149,974



    571,102



    574,677


    Taxes other than income 

    3,675



    2,959



    14,380



    17,053


    Exploration

    4,750



    5,241



    15,419



    20,270


    Depreciation, depletion and amortization 

    96,497



    106,439



    390,903



    405,733


    General and administrative (excluding stock-based compensation)

    17,313



    15,692



    62,214



    64,090


    Stock-based compensation(1)

    7,221



    6,808



    43,177



    30,780



    293,534



    308,463



    1,170,598



    1,189,561


    Earnings (loss) on equity method investments



    69,302



    (59)



    80,496


    (Loss) gain on sale of assets 

    (352)



    2



    (491)



    (1,462)


    INCOME FROM OPERATIONS 

    162,892



    222,209



    295,476



    955,750


    Interest expense, net

    10,981



    14,650



    54,124



    54,952


    Other expense

    58



    144



    229



    574


    Income before income taxes

    151,853



    207,415



    241,123



    900,224


    Income tax expense

    20,647



    60,475



    40,594



    219,154


    NET INCOME

    $

    131,206



    $

    146,940



    $

    200,529



    $

    681,070


    Earnings per share - Basic

    $

    0.33



    $

    0.36



    $

    0.50



    $

    1.64


    Weighted-average common shares outstanding

    398,583



    404,581



    398,521



    415,514





    (1)

    Includes the impact of our performance share awards and restricted stock.

     

    CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)


    (In thousands)

    December 31,
    2020


    December 31,
    2019

    ASSETS




    Current assets

    $

    415,715



    $

    568,248


    Properties and equipment, net (Successful efforts method)

    4,044,606



    3,855,706


    Other assets

    63,211



    63,291



    $

    4,523,532



    $

    4,487,245






    LIABILITIES AND STOCKHOLDERS' EQUITY




    Current liabilities

    $

    202,226



    $

    241,034


    Current portion of long-term debt

    188,000



    87,000


    Long-term debt, net (excluding current maturities)

    945,924



    1,133,025


    Deferred income taxes

    774,195



    702,104


    Other liabilities

    197,480



    172,595


    Stockholders' equity

    2,215,707



    2,151,487



    $

    4,523,532



    $

    4,487,245


     

    CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)



    Quarter Ended
    December 31,


    Twelve Months Ended
    December 31,

    (In thousands)

    2020


    2019


    2020


    2019

    CASH FLOWS FROM OPERATING ACTIVITIES








    Net income

    $

    131,206



    $

    146,940



    $

    200,529



    $

    681,070


    Depreciation, depletion and amortization

    96,497



    106,439



    390,903



    405,733


    Deferred income tax expense

    25,264



    55,421



    71,777



    244,418


    Loss (gain) on sale of assets

    352



    (2)



    491



    1,462


    Exploratory dry hole cost

    1,621



    2,220



    3,632



    2,236


    (Gain) loss on derivative instruments

    (43,621)



    2,158



    (61,404)



    (80,808)


    Net cash received in settlement of derivative instruments

    1,689



    23,519



    35,218



    138,450


    Distribution of earnings from equity method investments



    3,115





    15,725


    Stock-based compensation and other

    6,592



    6,289



    40,796



    29,009


    Income charges not requiring cash

    727



    (68,555)



    3,020



    (76,530)


    Changes in assets and liabilities

    87,515



    (14,564)



    93,273



    85,026


    Net cash provided by operating activities

    307,842



    262,980



    778,235



    1,445,791










    CASH FLOWS FROM INVESTING ACTIVITIES








    Capital expenditures

    (97,425)



    (167,672)



    (575,847)



    (788,368)


    Proceeds from sale of assets

    493



    199



    828



    2,600


    Investment in equity method investments



    (361)



    (35)



    (9,338)


    Distribution of investment from equity method investments



    72





    1,728


    Proceeds from sale of equity method investments



    249,463



    (9,424)



    249,463


    Net cash provided by (used in) investing activities

    (96,932)



    81,701



    (584,478)



    (543,915)










    CASH FLOWS FROM FINANCING ACTIVITIES








    Net borrowings (repayments) of debt

    (28,000)





    (87,000)



    (7,000)


    Treasury stock repurchases



    (172,417)





    (519,863)


    Dividends paid

    (39,858)



    (40,793)



    (159,390)



    (145,515)


    Tax withholding on vesting of stock awards

    (3,109)



    (3)



    (9,459)



    (10,590)


    Capitalized debt issuance costs



    (1)





    (7,412)


    Net cash used in financing activities

    (70,967)



    (213,214)



    (255,849)



    (690,380)


    Net increase (decrease) in cash, cash equivalents and restricted cash

    $

    139,943



    $

    131,467



    $

    (62,092)



    $

    211,496


    Explanation and Reconciliation of Non-GAAP Financial Measures

    We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results and results of prior periods. In addition, we believe these measures are used by analysts and others in the valuation, rating and investment recommendations of companies within the oil and natural gas exploration and production industry. See the reconciliations throughout this release of GAAP financial measures to non-GAAP financial measures for the periods indicated. 

    We have also included herein certain forward-looking non-GAAP financial measures. Due to the forward-looking nature of these non-GAAP financial measures, we cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as future impairments and future changes in capital. Accordingly, we are unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures. Reconciling items in future periods could be significant.

    Reconciliation of Net Income to Adjusted Net Income and Adjusted Earnings Per Share

    Adjusted Net Income and Adjusted Earnings per Share are presented based on our belief that these non-GAAP measures enable a user of the financial information to understand the impact of these items on reported results. Adjusted Net Income is defined as net income plus gain and loss on sale of assets, gain and loss on derivative instruments, gain and loss on sale of equity method investment, stock-based compensation expense, severance expense, interest expense related to income tax reserves and tax effect on selected items. Additionally, this presentation provides a beneficial comparison to similarly adjusted measurements of prior periods. Adjusted Net Income and Adjusted Earnings per Share are not measures of financial performance under GAAP and should not be considered as alternatives to net income and earnings per share, as defined by GAAP.


    Quarter Ended
    December 31,


    Twelve Months Ended
    December 31,

    (In thousands, except per share amounts)

    2020


    2019


    2020


    2019

    As reported - net income

    $

    131,206



    $

    146,940



    $

    200,529



    $

    681,070


    Reversal of selected items:








    Loss (gain) on sale of assets

    352



    (2)



    491



    1,462


    (Gain) loss on derivative instruments(1)

    (41,932)



    25,677



    (26,186)



    57,642


    (Gain) loss on sale of equity method investment



    (66,412)



    24



    (66,412)


    Stock-based compensation expense

    7,221



    6,808



    43,177



    30,780


    Severance expense







    2,521


    Interest expense related to income tax reserves







    (3,052)


    Tax effect on selected items

    7,825



    7,739



    (4,000)



    (5,233)


    Adjusted net income

    $

    104,672



    $

    120,750



    $

    214,035



    $

    698,778


    As reported - earnings per share

    $

    0.33



    $

    0.36



    $

    0.50



    $

    1.64


    Per share impact of selected items

    (0.07)



    (0.06)



    0.04



    0.04


    Adjusted earnings per share

    $

    0.26



    $

    0.30



    $

    0.54



    $

    1.68


    Weighted-average common shares outstanding

    398,583



    404,581



    398,521



    415,514





    (1)

    This amount represents the non-cash mark-to-market changes of our commodity derivative instruments recorded in Gain (loss) on derivative instruments in the Condensed Consolidated Statement of Operations.

    Return on Capital Employed

    Return on Capital Employed (ROCE) is defined as Adjusted Net Income (defined above) plus after-tax net interest expense divided by average capital employed, which is defined as total debt plus stockholders' equity. ROCE is presented based on our belief that this non-GAAP measure is useful information to investors when evaluating our profitability and the efficiency with which we have employed capital over time. ROCE is not a measure of financial performance under GAAP and should not be considered an alternative to net income, as defined by GAAP.



    Twelve Months Ended December 31,

    (In thousands)


    2020


    2019

    Interest expense, net


    $

    54,124



    $

    54,952


    Interest expense related to income tax reserves (1)




    3,052


    Tax benefit


    (12,367)



    (13,241)


    After-tax interest expense, net (A)


    41,757



    44,763







    As reported - net income


    200,529



    681,070


    Adjustments to as reported - net income, net of tax


    13,506



    17,708


    Adjusted net income (B)


    214,035



    698,778







    Adjusted net income before interest expense, net (A + B)


    $

    255,792



    $

    743,541







    Total debt - beginning


    $

    1,220,025



    $

    1,226,104


    Stockholders' equity - beginning


    2,151,487



    2,088,159


    Capital employed - beginning


    3,371,512



    3,314,263







    Total debt - ending


    1,133,924



    1,220,025


    Stockholders' equity - ending


    2,215,707



    2,151,487


    Capital employed - ending


    3,349,631



    3,371,512







    Average capital employed (C)


    $

    3,360,572



    $

    3,342,888







    Return on average capital employed (ROCE) (A + B) / C


    7.6

    %


    22.2

    %




    (1)

    Interest expense related to income tax reserves is included in the adjustments to as reported - net income, net of tax. 

    Discretionary Cash Flow and Free Cash Flow Calculation and Reconciliation

    Discretionary Cash Flow is defined as net cash provided by operating activities excluding changes in assets and liabilities. Discretionary Cash Flow is widely accepted as a financial indicator of an oil and gas company's ability to generate cash which is used to internally fund exploration and development activities, pay dividends and service debt. Discretionary Cash Flow is presented based on our belief that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies that use the full cost method of accounting for oil and gas producing activities or have different financing and capital structures or tax rates. Discretionary Cash Flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities, as defined by GAAP, or as a measure of liquidity, or an alternative to net income, as defined by GAAP.

    Free Cash Flow is defined as Discretionary Cash Flow (defined above) less capital expenditures and investment in equity method investments. Free Cash Flow is an indicator of a company's ability to generate cash flow after spending the money required to maintain or expand its asset base. Free Cash Flow is presented based on our belief that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. Free Cash Flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities, as defined by GAAP, or as a measure of liquidity, or an alternative to net income, as defined by GAAP.



    Quarter Ended  
    December 31,


    Twelve Months Ended
    December 31,

    (In thousands)


    2020


    2019


    2020


    2019

    Net cash provided by operating activities


    $

    307,842



    $

    262,980



    $

    778,235



    $

    1,445,791


    Changes in assets and liabilities


    (87,515)



    14,564



    (93,273)



    (85,026)


    Discretionary cash flow


    220,327



    277,544



    684,962



    1,360,765


    Capital expenditures


    (97,425)



    (167,672)



    (575,847)



    (788,368)


    Investment in equity method investments




    (361)



    (35)



    (9,338)


    Free cash flow


    $

    122,902



    $

    109,511



    $

    109,080



    $

    563,059


    EBITDAX Calculation and Reconciliation

    EBITDAX is defined as net income plus interest expense, other expense, income tax expense, depreciation, depletion and amortization (including impairments), exploration expense, gain and loss on sale of assets, non-cash gain and loss on derivative instruments, earnings and loss on equity method investments, cash distributions received from equity method investments, and stock-based compensation expense. EBITDAX is presented based on our belief that this non-GAAP measure is useful information to investors when evaluating our ability to internally fund exploration and development activities and to service or incur debt without regard to financial or capital structure. EBITDAX is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activities or net income, as defined by GAAP, or as a measure of liquidity.


    Quarter Ended
    December 31,


    Twelve Months Ended
    December 31,

    (In thousands)

    2020


    2019


    2020


    2019

    Net income

    $

    131,206



    $

    146,940



    $

    200,529



    $

    681,070


    Plus (less):








    Interest expense, net

    10,981



    14,650



    54,124



    54,952


    Other expense

    58



    144



    229



    574


    Income tax expense

    20,647



    60,475



    40,594



    219,154


    Depreciation, depletion and amortization 

    96,497



    106,439



    390,903



    405,733


    Exploration

    4,750



    5,241



    15,419



    20,270


    Loss (gain) on sale of assets

    352



    (2)



    491



    1,462


    Non-cash (gain) loss on derivative instruments

    (41,932)



    25,677



    (26,186)



    57,642


    (Earnings) loss on equity method investments



    (69,302)



    59



    (80,496)


    Equity method investment distributions



    3,187





    17,453


    Stock-based compensation

    7,221



    6,808



    43,177



    30,780


    EBITDAX

    $

    229,780



    $

    300,257



    $

    719,339



    $

    1,408,594


    Net Debt Reconciliation

    The total debt to total capitalization ratio is calculated by dividing total debt by the sum of total debt and total stockholders' equity. This ratio is a measurement which is presented in our annual and interim filings and we believe this ratio is useful to investors in determining our leverage. Net Debt is calculated by subtracting cash and cash equivalents from total debt. Net Debt and the Net Debt to Adjusted Capitalization ratio are non-GAAP measures which we believe are also useful to investors since we have the ability to and may decide to use a portion of our cash and cash equivalents to retire debt. Additionally, as we may incur additional expenditures without increasing debt, it is appropriate to apply cash and cash equivalents to debt in calculating the Net Debt to Adjusted Capitalization ratio.

    (In thousands)

    December 31,
    2020


    December 31,
    2019

    Current portion of long-term debt

    $

    188,000



    $

    87,000


    Long-term debt, net

    945,924



    1,133,025


    Total debt

    $

    1,133,924



    $

    1,220,025


    Stockholders' equity

    2,215,707



    2,151,487


    Total capitalization

    $

    3,349,631



    $

    3,371,512






    Total debt

    $

    1,133,924



    $

    1,220,025


    Less: Cash and cash equivalents

    (140,113)



    (200,227)


    Net debt

    $

    993,811



    $

    1,019,798






    Net debt

    $

    993,811



    $

    1,019,798


    Stockholders' equity

    2,215,707



    2,151,487


    Total adjusted capitalization

    $

    3,209,518



    $

    3,171,285






    Total debt to total capitalization ratio

    33.9

    %


    36.2

    %

    Less: Impact of cash and cash equivalents

    2.9

    %


    4.0

    %

    Net debt to adjusted capitalization ratio

    31.0

    %


    32.2

    %

     

    Capital Expenditures




    Quarter Ended
    December 31,


    Twelve Months Ended
    December 31,

    (In thousands)


    2020


    2019


    2020


    2019

    Cash paid for capital expenditures


    $

    97,425



    $

    167,672



    $

    575,847



    $

    788,368


    Change in accrued capital costs


    10,022



    (4,306)



    (2,465)



    (2,870)


    Exploratory dry hole cost


    (1,621)



    (2,220)



    (3,632)



    (2,236)


    Capital expenditures


    $

    105,826



    $

    161,146



    $

    569,750



    $

    783,262


     

    Cision View original content:http://www.prnewswire.com/news-releases/cabot-oil--gas-corporation-reports-fourth-quarter-and-full-year-2020-results-provides-updated-capital-return-framework-301233954.html

    SOURCE Cabot Oil & Gas Corporation

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