Cabot Oil & Gas Corporation (NYSE:COG) Q1 2020 Earnings Conference Call - Final Transcript

May 01, 2020 • 09:30 am ET


Cabot Oil & Gas Corporation (NYSE:COG) Q1 2020 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the Cabot Oil & Gas Corporation First Quarter 2020 Earnings Conference Call. [Operator Instructions]

I'd now like to turn the conference over to Dan Dinges, Chairman, President, Chief Executive Officer. Please go ahead.

Dan O. Dinges

Good morning. Thank you for joining us today for Cabot's First Quarter 2020 Earnings Call. Before I get into our performance for the first quarter, I'd like to say that our thoughts are with those who have been affected by COVID-19. I want to thank those individuals on the front lines, especially the health care workers, who have been working to keep us all safe during this pandemic. Additionally, I want to thank all of our employees for their tireless efforts to keep our operations running efficiently. While we are navigating through truly challenging times, I would never bet against the resiliency of the human spirit, and I do expect us to emerge from this period even stronger. As a reminder, on this morning's call, we will make forward-looking statements based on our current expectations. Additionally, some of our comments will reference non-GAAP financial measures. Forward-looking statements and other disclaimers as well as reconciliations to the most directly comparable GAAP financial measures were provided in yesterday's earnings release.

During the first quarter, Cabot generated positive net income of $53.9 million or $0.14 per share and $49.8 million of positive free cash flow despite a 49% decrease in realized prices relative to the prior year period, highlighting the company's ability to deliver profit and free cash flow even in the most challenging of markets. We returned approximately 80% of our free cash flow to shareholders during the quarter through our dividend, which currently yields approximately 2% on an annualized basis. We remain fully committed to our dividend, and based on current NYMEX futures for 2020, our program for the year is expected to generate enough free cash flow to fully cover our dividend. Our balance sheet remains iron-clad, with net debt-to-trailing 12 months EBITDAX ratio of 0.9 times. Our lenders group recently unanimously reaffirmed our $3.2 billion borrowing base under our revolving credit facility. Aggregate bank commitments under our credit facility remain at $1.5 billion, which results in approximately $1.7 billion of liquidity at the end of the first quarter when including over $200 million of cash on the balance sheet.

We have an $87 million tranche of debt maturing in July of this year, which we plan to pay off with a portion of our cash position. On the operational front, our production for the first quarter was 2.363 billion cubic foot per day, which was inside our guidance range for the quarter. We placed nine wells on production during the quarter, all of which were turned in line during February. We are currently operating two rigs and utilizing two completion crews. As previously disclosed, we expect sequential decline in production during the second quarter driven in large part by a lighter turn-in-line schedule during the first four and half months of the