UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549  
FORM 8-K  
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934  
Date of Report (date of earliest event reported): July 29, 2016
CABOT OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
1-10447
 
04-3072771
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
Three Memorial City Plaza
 
 
840 Gessner Road, Suite 1400
 
 
Houston, Texas
 
77024
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code:  (281) 589-4600
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)



Item 2.02       Results of Operations and Financial Condition.
On July 29, 2016 , we issued a press release with respect to our 2016 second quarter earnings. The press release is furnished as Exhibit 99.1 to this Current Report. The press release contains certain measures (discussed below) which may be deemed “non-GAAP financial measures” as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended. In each case, the most directly comparable GAAP financial measure and information reconciling the GAAP and non-GAAP measures is also included in the press release.
Exhibit 99.1 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
From time to time management discloses Discretionary Cash Flow, EBITDAX, Net Income Excluding Selected Items, Earnings per Share Excluding Selected Items and Net Debt calculations and ratios. These non-GAAP financial measures, to the extent included in Exhibit 99.1, are reconciled to the most comparable GAAP financial measures in Exhibit 99.1.
Discretionary Cash Flow is defined as net income plus non-cash charges and exploratory dry hole cost. 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 management’s 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.
EBITDAX is defined as net income plus interest expense, income taxes expense, depreciation, depletion and amortization (including property impairments), exploration expense, gains and losses resulting from the sale of assets, non-cash gains and losses on derivative instruments, and stock-based compensation expense and other. EBITDAX is presented based on management’s 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 alternative to cash flows from operating activities or net income, as defined by GAAP, or as a measure of liquidity.
Net Income Excluding Selected Items and Earnings per Share Excluding Selected Items are presented based on management’s belief that these non-GAAP measures enable a user of the financial information to understand the impact of these items on reported results. Additionally, this presentation provides a beneficial comparison to similarly adjusted measurements of prior periods. Net Income and Earnings per Share Excluding Selected Items is not a measure of financial performance under GAAP and should not be considered as an alternative to net income and earnings per share, as defined by GAAP.
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 management believes this ratio is useful to investors in determining the Company’s leverage. Net Debt and the Net Debt to Total Capitalization ratio are non-GAAP measures which have been presented in Exhibit 99.1. Net Debt is calculated by subtracting cash and cash equivalents from total debt. Management believes that these measurements are also useful to investors since the Company has the ability to and may decide to use a portion of its cash and cash equivalents to retire debt. Additionally, as the Company may incur additional expenditures without increasing debt, it is appropriate to apply cash and cash equivalents to debt in calculating the Net Debt to Total Capitalization ratio.

2


Item 9.01                                            Financial Statements and Exhibits.
(d)                                  Exhibits 
99.1                         Press release issued by Cabot Oil & Gas Corporation dated July 29, 2016

3


SIGNATURE  
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
CABOT OIL & GAS CORPORATION
 
 
 
 
 
By:
/s/ TODD M. ROEMER
 
 
Todd M. Roemer
 
 
Controller
Date: July 29, 2016


4


EXHIBIT INDEX  
99.1

—
Press release issued by Cabot Oil & Gas Corporation dated July 29, 2016

5


Exhibit 99.1
July 29, 2016
 
FOR MORE INFORMATION CONTACT
 
 
Matt Kerin (281) 589-4642
Cabot Oil & Gas Corporation Announces Second Quarter 2016 Financial and Operating Results
HOUSTON, July 29, 2016/PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) (“Cabot” or the “Company”) today reported financial and operating results for the second quarter of 2016.
"Cabot's 2016 operating plan was designed to provide modest production growth while generating positive free cash flow despite a lower commodity price environment," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Our second quarter results delivered on this plan as the Company grew equivalent production 10 percent relative to the second quarter of last year while generating operating cash flow that exceeded our capital expenditures, pipeline investments, and dividends.” Dinges added, “We anticipate significantly more positive free cash flow generation in the second half of the year based on the current commodity price outlook.”
Second Quarter 2016 Financial Results
Equivalent production in the second quarter of 2016 was 151.8 billion cubic feet equivalent (Bcfe), consisting of 144.3 billion cubic feet (Bcf) of natural gas, 1.1 million barrels (Mmbbls) of crude oil and condensate, and 113,000 barrels (Bbls) of natural gas liquids (NGLs). The Company estimates that unscheduled downtime related to infrastructure maintenance negatively impacted natural gas production for the quarter by approximately 3.3 Bcf, or 36 million cubic feet (Mmcf) per day. “While our daily equivalent production for the quarter was in line with the mid-point of our guidance, the Company would have surpassed the high-end of our guidance range had we not experienced this unexpected downtime during the quarter,” stated Dinges.
Cash flow from operating activities in the second quarter of 2016 was $85.2 million, compared to $171.2 million in the second quarter of 2015. Discretionary cash flow in the second quarter of 2016 was $97.6 million, compared to $183.2 million in the second quarter of 2015. Net loss in the second quarter of 2016 was $62.9 million, or $0.14 per share, compared to net loss of $27.5 million, or $0.07 per share, in the second quarter of 2015. Excluding the effect of selected items (detailed in the table below), net loss in the second quarter of 2016 was $30.2 million, or $0.07 per share, compared to net income of $14.6 million, or $0.03 per share, in the second quarter of 2015. EBITDAX in the second quarter of 2016 was $127.3 million, compared to $203.9 million in the second quarter of 2015. See the supplemental

1


tables at the end of this press release for a reconciliation of non-GAAP measures including discretionary cash flow, net income (loss) excluding selected items, EBITDAX and net debt to adjusted capitalization ratio.
Natural gas price realizations, including the impact of derivatives, were $1.63 per thousand cubic feet (Mcf) in the second quarter of 2016, down 24 percent compared to the second quarter of 2015. Excluding the impact of derivatives, natural gas price realizations for the quarter implied a $0.40 discount to NYMEX settlement prices compared to a $0.89 discount to NYMEX settlement prices in the second quarter of 2015. Oil price realizations, including the impact of derivatives, were $40.30 per Bbl, down 28 percent compared to the second quarter of 2015. NGL price realizations were $12.43 per Bbl, down 29 percent compared to the second quarter of 2015.
Operating expenses (including financing) decreased to $2.22 per thousand cubic feet equivalent (Mcfe) in the second quarter of 2016, a 12 percent improvement compared to $2.52 per Mcfe in the second quarter of 2015. Cash operating expenses (excluding depreciation, depletion and amortization; stock-based compensation; exploratory dry hole cost; and amortization of debt issuance costs) decreased to $1.19 per Mcfe in the second quarter of 2016, a 12 percent improvement compared to $1.35 per Mcfe in the second quarter of 2015.
Cabot drilled seven net wells and completed 11 net wells during the second quarter of 2016, incurring a total of $70.9 million in capital expenditures associated with activity during this period.
Year-To-Date 2016 Financial Results
Equivalent production for the six-month period ended June 30, 2016 was 312.1 Bcfe, consisting of 297.4 Bcf of natural gas, 2.2 Mmbbls of crude oil and condensate, and 205,000 Bbls of NGLs.
For the six-month period ended June 30, 2016, cash flow from operating activities was $147.2 million, compared to $438.6 million for the six-month period ended June 30, 2015. Discretionary cash flow was $168.8 million for the six-month period ended June 30, 2016, compared to $423.4 million for the six-month period ended June 30, 2015. For the six-month period ended June 30, 2016, net loss was $114.1 million, or $0.25 per share, compared to net income of $12.7 million, or $0.03 per share, for the six-month period ended June 30, 2015. Excluding the effect of selected items, net loss was $85.6 million, or $0.19 per share, compared to net income of $64.0 million, or $0.15 per share, for the six-month period ended June 30, 2015. EBITDAX for the six-month period ended June 30, 2016 was $228.3 million, compared to $483.3 million for the six-month period ended June 30, 2015.
Natural gas price realizations, including the impact of derivatives, were $1.55 per Mcf for the six-month period ended June 30, 2016, down 33 percent compared to the six-month period ended June 30, 2015. Oil price realizations, including the impact of derivatives, were $34.06 per Bbl, down 32 percent compared to the six-month period ended June 30, 2015. NGL price realizations were $10.09 per Bbl, down 29 percent compared to the six-month period ended June 30, 2015.
Operating expenses (including financing) decreased to $2.24 per Mcfe for the six-month period ended June 30, 2016, a seven percent improvement compared to $2.41 per Mcfe for the six-month period ended June 30, 2015. Cash operating

2


expenses (excluding depreciation, depletion and amortization; stock-based compensation; exploratory dry hole cost; and amortization of debt issuance costs) decreased to $1.18 per Mcfe for the six-month period ended June 30, 2016, a nine percent improvement compared to $1.30 per Mcfe in the six-month period ended June 30, 2015.
Cabot drilled 17 net wells and completed 32 net wells during the six-month period ended June 30, 2016, incurring a total of $162.5 million in capital expenditures associated with activity during this period.
Operational Highlights
Marcellus Shale
During the second quarter of 2016, the Company averaged 1,535 Mmcf per day of net Marcellus production (1,798 gross operated Mmcf per day), an increase of 14 percent compared to the second quarter of 2015. During the second quarter, the Company drilled seven net wells, completed eight net wells and placed 12 net wells on production including a four-well pad that was placed on production 10 days prior to the quarter-end and had minimal impact on second quarter production as the wells were still cleaning up in line.
Cabot is currently operating one rig and recently added a second completion crew in the Marcellus Shale. “Based on continued efficiency gains, lower service costs and our improved outlook for natural gas price realizations, we are increasing our activity levels in our high-return Marcellus asset beginning with the addition of a second completion crew.” Dinges added, “Cabot is the lowest cost producer in Northeast Pennsylvania and generates rates of return over 100 percent under current price expectations so we plan to opportunistically increase our market share during 2017 as we await the in-service of our new infrastructure projects beginning in late-2017.”
Eagle Ford Shale
Cabot's net production in the Eagle Ford Shale during the second quarter of 2016 was 14,312 barrels of oil equivalent (Boe) per day, an increase of 10 percent sequentially compared to the first quarter of 2016. Net oil production during the quarter was 12,360 Bbls per day, an increase of four percent sequentially compared to the first quarter of 2016. During the second quarter, the Company did not drill any wells; however, Cabot completed and placed on production three net wells.
Cabot plans to drill two Eagle Ford wells during the third quarter and will not complete or place on production an additional Eagle Ford well until the fourth quarter.
Financial Position and Liquidity
As of June 30, 2016, Cabot had total debt of $1.5 billion and cash on hand of $517.5 million. The Company’s net debt to adjusted capitalization ratio and net debt to trailing twelve months EBITDAX ratio were 26.2 percent and 1.8x, respectively, compared to 50.1 percent and 2.5x as of December 31, 2015.

3


Total commitments under the Company’s revolving credit facility remain unchanged at $1.8 billion, with approximately $1.7 billion currently available to the Company. The Company currently has no debt outstanding under the credit facility, resulting in approximately $2.2 billion of liquidity.
Third Quarter and Full-Year 2016 Guidance
Cabot has provided third quarter net production guidance of 1,575 to 1,600 Mmcf per day for natural gas; 10,000 to 10,500 Bbls per day for crude oil and condensate; and 1,200 to 1,250 Bbls per day for NGLs. The Company expects its natural gas price realizations (before the impact of derivatives) to average between $0.80 and $0.90 below NYMEX settlement prices for the third quarter based on the assumption of an average NYMEX settlement price of approximately $2.80. “Despite a widening of basis in the third quarter due to higher NYMEX prices, our natural gas price realizations before the impact of derivatives are forecasted to be over 25 percent higher than our second quarter realizations based on the mid-point of our differential guidance,’’ commented Dinges.
Cabot has increased its 2016 capital budget from $325 million to $345 million to reflect the incremental capital for the completion of an additional 15 to 20 net wells during the second half of the year, partially offset by efficiency gains and cost savings realized throughout the year. Since the production impact from these additional wells will not be realized until early 2017, the Company’s 2016 production growth guidance range of two to seven percent remains unchanged. For further disclosure on Cabot's natural gas pricing exposure by index and updated unit cost guidance for the third quarter, please see the current Guidance slide in the Investor Relations section of the Company's website.
Conference Call
A conference call is scheduled for Friday, July 29, 2016, at 9:30 a.m. Eastern Time to discuss second quarter 2016 financial and operating results. To access the live audio webcast, please visit the Investor Relations section of the Company's website at www.cabotog.com . A replay of the call will also be available on the Company's website. The latest financial guidance, including the Company's derivative positions, is also available in the Investor Relations section of 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 .
The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs, and other factors detailed in the Company's Securities and Exchange Commission filings.
FOR MORE INFORMATION CONTACT
Matt Kerin (281) 589-4642

4


 
OPERATING DATA

 
Quarter Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
PRODUCTION VOLUMES
 
 
 
 
 
 
 
Natural gas (Bcf)
144.3

 
128.4

 
297.4

 
290.2

Crude oil and condensate (Mbbl)
1,139.3

 
1,447.9

 
2,248.9

 
2,875.5

Natural gas liquids (NGLs) (Mbbl)
112.9

 
164.2

 
205.0

 
330.1

Equivalent production (Bcfe)
151.8

 
138.0

 
312.1

 
309.4

 
 
 
 
 
 
 
 
AVERAGE SALES PRICE
 
 
 
 
 
 
 
Natural gas, including hedges ($/Mcf)
$
1.63

 
$
2.15

 
$
1.55

 
$
2.32

Natural gas, excluding hedges ($/Mcf)
$
1.55

 
$
1.75

 
$
1.52

 
$
2.02

Crude oil and condensate, including hedges ($/Bbl)
$
40.30

 
$
56.10

 
$
34.06

 
$
50.00

Crude oil and condensate, excluding hedges ($/Bbl)
$
40.51

 
$
56.10

 
$
34.16

 
$
50.00

NGL ($/Bbl)
$
12.43

 
$
17.44

 
$
10.09

 
$
14.23

 
 
 
 
 
 
 
 
AVERAGE UNIT COSTS ($/Mcfe)
 
 
 
 
 
 
 
Direct operations
$
0.17

 
$
0.26

 
$
0.17

 
$
0.23

Transportation and gathering
0.71

 
0.71

 
0.70

 
0.71

Taxes other than income
0.06

 
0.08

 
0.05

 
0.07

Exploration
0.02

 
0.04

 
0.03

 
0.05

Depreciation, depletion and amortization
0.97

 
1.10

 
0.99

 
1.06

General and administrative (excluding stock-based compensation)
0.09

 
0.08

 
0.10

 
0.09

Stock-based compensation
0.05

 
0.06

 
0.06

 
0.05

Interest expense
0.14

 
0.18

 
0.15

 
0.15

 
$
2.22

 
$
2.52

 
$
2.24

 
$
2.41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WELLS DRILLED
 
 
 
 
 
 
 
Gross
7

 
44

 
17

 
87

Net
7

 
37

 
17

 
78

Gross success rate
100
%
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
 
WELLS COMPLETED
 
 
 
 
 
 
 
Gross
11

 
36

 
32

 
75

Net
11

 
33

 
32

 
72




5



CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
 
Quarter Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
OPERATING REVENUES
 

 
 

 
 

 
 

   Natural gas
$
223,232

 
$
224,806

 
$
450,811

 
$
584,997

   Crude oil and condensate
46,156

 
81,233

 
76,833

 
143,791

   Gain (loss) on derivative instruments
(27,184
)
 
(6,819
)
 
(8,190
)
 
27,304

   Brokered natural gas
2,596

 
3,813

 
5,776

 
8,640

   Other
2,016

 
3,264

 
3,527

 
6,330

 
246,816

 
306,297

 
528,757

 
771,062

OPERATING EXPENSES
 

 
 

 
 

 
 

Direct operations
26,477

 
36,112

 
52,513

 
72,129

Transportation and gathering
107,560

 
98,295

 
217,213

 
219,531

Brokered natural gas
2,021

 
2,885

 
4,587

 
6,624

Taxes other than income
8,973

 
11,611

 
14,967

 
22,891

Exploration
3,738

 
5,298

 
10,121

 
14,030

Depreciation, depletion and amortization
147,533

 
152,513

 
309,420

 
328,009

General and administrative (excluding stock-based compensation)
12,946

 
11,354

 
30,715

 
27,972

Stock-based compensation (1)
7,301

 
8,624

 
17,906

 
14,535

 
316,549

 
326,692

 
657,442

 
705,721

Earnings (loss) on equity method investments
(73
)
 
1,512

 
1,935

 
2,933

Gain (loss) on sale of assets
(878
)
 
(79
)
 
477

 
59

INCOME (LOSS) FROM OPERATIONS
(70,684
)
 
(18,962
)
 
(126,273
)
 
68,333

Loss on debt extinguishment
4,709

 
—

 
4,709

 
—

Interest expense
21,963

 
24,168

 
46,338

 
47,734

Income (loss) before income taxes
(97,356
)
 
(43,130
)
 
(177,320
)
 
20,599

Income tax expense (benefit)
(34,446
)
 
(15,622
)
 
(63,216
)
 
7,852

NET INCOME (LOSS)
$
(62,910
)
 
$
(27,508
)
 
$
(114,104
)
 
$
12,747

Earnings (loss) per share - Basic
$
(0.14
)
 
$
(0.07
)
 
$
(0.25
)
 
$
0.03

Weighted-average common shares outstanding
465,068

 
413,713

 
448,455

 
413,530

 
(1) Includes the impact of the Company’s performance share awards, restricted stock, stock appreciation rights and expense associated with the Supplemental Employee Incentive Plan.


6



CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands)
 
June 30,
2016
 
December 31,
2015
ASSETS
 

 
 

Current assets
$
659,238

 
$
144,786

Properties and equipment, net (Successful efforts method)
4,762,680

 
4,976,879

Other assets
148,552

 
131,373

 
$
5,570,470

 
$
5,253,038

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Current liabilities
$
228,490

 
$
235,552

Long-term debt, net (excluding current maturities)
1,519,849

 
1,996,139

Deferred income taxes
745,085

 
807,236

Other liabilities
199,447

 
204,923

Stockholders' equity
2,877,599

 
2,009,188

 
$
5,570,470

 
$
5,253,038



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In thousands)
 
Quarter Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 

 
 

 
 

 
 

Net income (loss)
$
(62,910
)
 
$
(27,508
)
 
$
(114,104
)
 
$
12,747

Deferred income tax expense (benefit)
(35,322
)
 
(7,921
)
 
(64,294
)
 
7,160

(Gain) loss on sale of assets
878

 
79

 
(477
)
 
(59
)
Exploratory dry hole cost
18

 
16

 
18

 
178

(Gain) loss on derivative instruments
27,184

 
6,819

 
8,190

 
(27,304
)
Net cash received (paid) in settlement of derivative instruments
11,305

 
51,045

 
11,305

 
88,730

Income charges not requiring cash
156,465

 
160,694

 
328,140

 
341,948

Changes in assets and liabilities
(12,464
)
 
(12,014
)
 
(21,534
)
 
15,191

Net cash provided by operating activities
85,154

 
171,210

 
147,244

 
438,591

 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 

 
 

 
 

 
 

Capital expenditures
(67,162
)
 
(250,001
)
 
(159,399
)
 
(645,092
)
Acquisitions
—

 
(16,149
)
 
—

 
(16,300
)
Proceeds from sale of assets
—

 
(79
)
 
49,828

 
3,002

Investment in equity method investments
(6,519
)
 
(5,036
)
 
(18,171
)
 
(10,114
)
Net cash used in investing activities
(73,681
)
 
(271,265
)
 
(127,742
)
 
(668,504
)
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 

 
 

 
 

 
 

Net increase (decrease) in debt
(64,000
)
 
118,000

 
(477,000
)
 
243,000

Sale of common stock, net
1

 
—

 
995,279

 
—

Dividends paid
(9,300
)
 
(8,274
)
 
(17,582
)
 
(16,537
)
Stock-based compensation tax benefit
—

 
2,049

 
—

 
5,486

Capitalized debt issuance costs
—

 
(7,838
)
 
(3,223
)
 
(7,838
)
Other
—

 
(2,599
)
 
—

 
79

Net cash provided by (used in) financing activities
(73,299
)
 
101,338

 
497,474

 
224,190

 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
$
(61,826
)
 
$
1,283

 
$
516,976

 
$
(5,723
)

7


Selected Item Review and Reconciliation of Net Income and Earnings Per Share
(In thousands, except per share amounts)
 
Quarter Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
As reported - net income (loss)
$
(62,910
)
 
$
(27,508
)
 
$
(114,104
)
 
$
12,747

Reversal of selected items:
 

 
 

 
 

 
 

(Gain) loss on sale of assets
878

 
79

 
(477
)
 
(59
)
(Gain) loss on derivative instruments (1)
38,489

 
57,864

 
19,495

 
61,426

Loss on debt extinguishment
4,709

 
—

 
4,709

 
—

Drilling rig termination fees
—

 
69

 
3,188

 
5,153

Stock-based compensation expense
7,301

 
8,624

 
17,906

 
14,535

Tax effect on selected items
(18,647
)
 
(24,553
)
 
(16,268
)
 
(29,836
)
Net income (loss) excluding selected items
$
(30,180
)
 
$
14,575

 
$
(85,551
)
 
$
63,966

As reported - earnings (loss) per share
$
(0.14
)
 
$
(0.07
)
 
$
(0.25
)
 
$
0.03

Per share impact of reversing selected items
0.07

 
0.10

 
0.06

 
0.12

Earnings (loss) per share including reversal of selected items
$
(0.07
)
 
$
0.03

 
$
(0.19
)
 
$
0.15

Weighted average common shares outstanding
465,068

 
413,713

 
448,455

 
413,530

 
(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.



Discretionary Cash Flow Calculation and Reconciliation
(In thousands)
 
Quarter Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
As reported - net income (loss)
$
(62,910
)
 
$
(27,508
)
 
$
(114,104
)
 
$
12,747

Plus (less):
 

 
 

 
 

 
 

Deferred income tax expense (benefit)
(35,322
)
 
(7,921
)
 
(64,294
)
 
7,160

(Gain) loss on sale of assets
878

 
79

 
(477
)
 
(59
)
Exploratory dry hole cost
18

 
16

 
18

 
178

(Gain) loss on derivative instruments
27,184

 
6,819

 
8,190

 
(27,304
)
Net cash received (paid) in settlement of derivative instruments
11,305

 
51,045

 
11,305

 
88,730

Income charges not requiring cash
156,465

 
160,694

 
328,140

 
341,948

Discretionary cash flow
97,618

 
183,224

 
168,778

 
423,400

Changes in assets and liabilities
(12,464
)
 
(12,014
)
 
(21,534
)
 
15,191

Net cash provided by operations
$
85,154

 
$
171,210

 
$
147,244

 
$
438,591



8


EBITDAX Calculation and Reconciliation
(In thousands)
 
Quarter Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
As reported - net income (loss)
$
(62,910
)
 
$
(27,508
)
 
$
(114,104
)
 
$
12,747

Plus (less):
 
 
 
 
 
 
 
Loss on debt extinguishment
4,709

 
—

 
4,709

 
—

Interest expense
21,963

 
24,168

 
46,338

 
47,734

Income tax expense (benefit)
(34,446
)
 
(15,622
)
 
(63,216
)
 
7,852

Depreciation, depletion and amortization
147,533

 
152,513

 
309,420

 
328,009

Exploration
3,738

 
5,298

 
10,121

 
14,030

(Gain) loss on sale of assets
878

 
79

 
(477
)
 
(59
)
Non-cash (gain) loss on derivative instruments
38,489

 
57,864

 
19,495

 
61,426

(Earnings) loss on equity method investments
73

 
(1,512
)
 
(1,935
)
 
(2,933
)
Stock-based compensation
7,301

 
8,624

 
17,906

 
14,535

EBITDAX
$
127,328

 
$
203,904

 
$
228,257

 
$
483,341




Net Debt Reconciliation
(In thousands)
 
June 30,
2016
 
December 31,
2015
Current portion of long-term debt
$
20,000

 
$
20,000

Long-term debt, net
1,519,849

 
1,996,139

Total debt
$
1,539,849

 
$
2,016,139

Stockholders’ equity
2,877,599

 
2,009,188

Total capitalization
$
4,417,448

 
$
4,025,327

 
 
 
 
Total debt
$
1,539,849

 
$
2,016,139

Less: Cash and cash equivalents
(517,490
)
 
(514
)
Net debt
$
1,022,359

 
$
2,015,625

 
 
 
 
Net debt
$
1,022,359

 
$
2,015,625

Stockholders’ equity
2,877,599

 
2,009,188

Total adjusted capitalization
$
3,899,958

 
$
4,024,813

 
 
 
 
Total debt to total capitalization ratio
34.9
%
 
50.1
%
Less: Impact of cash and cash equivalents
8.7
%
 
—
%
Net debt to adjusted capitalization ratio
26.2
%
 
50.1
%

9