Cabot Oil and Gas (COG) is scheduled to release second quarter earnings for fiscal year 2011 on July 27. The company's stock has benefited recently from news about the BHP Billiton acquisition of Petrohawk for a 65 percent premium. Analysts remain bullish on the company, and Jefferies recently raised their target price, citing operations at Pennsylvania's Marcellus Shale well that are expected to double output in 2011 compared with 2010.
Q1 Highlights
- Cabot Oil & Gas reported total revenue amounting to $209.03 million, a decline of 3.4 percent year-over-year compared with $216.35 million.
- Natural gas revenue grew marginally to $170.1 million year-over-year from $169.9 million. Brokered natural gas revenue was $18.4 million, a year-over-year decline of 26 percent, and crude oil and condensate revenue came in at $18.6 million, a fall of 5.2 percent.
- Income from operation for the quarter was $36.4 million, a year-over-year decline of 40 percent compared with $60.6 million.
- Net profit reported on a non-GAAP basis was $20.73 million, a decrease of 32.3 percent as against a net profit of $30.6 million.
- Diluted EPS for the quarter was $0.20 as compared with $0.30 in the corresponding year-ago quarter.
Analysts expect Cabot Oil & Gas to earn between $0.13 and $0.59 per share this quarter, with a consensus estimate of $0.29 and a coefficient variance of 38.24. Revenue this quarter is projected to fall between $244 million and $259 million, with a consensus estimate of $251 million. In the comparable year-ago quarter, the company earned $0.19 per share on revenue of $195 million. The company has a large presence in the Marcellus Shale well, which is expected to produce 3.5 billion cubic feet of natural gas a day in 2011, making it America's biggest natural gas supply. Increased activity in the area can be expected to boost the company's revenue this quarter and going into 2012. Although natural gas prices have been on a decline, higher volumes should help offset any pressure to top line growth. The company's vast natural gas reserves also make it a potential takeover target as bigger companies look to ramp up production.
COG last traded at $71.93 on July 22 and has been trading in the range of $26.62 to $72.38. The stock currently has an average target price of $78.23. Analysts have a mean recommendation of Overweight.