CABOT OIL & GAS CORP (Form: 10-Q, Received: 07/29/2011 12:16:32)

UNITED STATES

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, 2011

¨	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

incorporation or organization)

(I.R.S. Employer

Identification Number)

Three Memorial City Plaza

840 Gessner Road, Suite 1400, Houston, Texas 77024

(Address of principal executive offices including ZIP code)

(281) 589-4600

(Registrant’s telephone number, including area code)

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer x		Accelerated filer ¨		Non-accelerated filer ¨		Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of July 25, 2011, there were 104,488,502 shares of Common Stock, Par Value $.10 Per Share, outstanding.

CABOT OIL & GAS CORPORATION

INDEX TO FINANCIAL STATEMENTS


	Page
Part I. Financial Information

Item 1. Financial Statements

Condensed Consolidated Statement of Operations for the Three Months and Six Months Ended June 30, 2011 and 2010		3

Condensed Consolidated Balance Sheet at June 30, 2011 and December 31, 2010		4

Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2011 and 2010		5

Notes to the Condensed Consolidated Financial Statements		6

Report of Independent Registered Public Accounting Firm on Review of Interim Financial Information		20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

Item 3. Quantitative and Qualitative Disclosures about Market Risk		30

Item 4. Controls and Procedures		32

Part II. Other Information

Item 1. Legal Proceedings		32

Item 1A. Risk Factors		32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32

Item 5. Other Information		32

Item 6. Exhibits		33

Signatures		34

PART I. FINANCIAL INFORMATION

ITEM 1.

Financial Statements

CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except per share amounts)	2011		2010		2011		2010
OPERATING REVENUES
Natural Gas	$	200,357	$	164,528	$	370,455	$	334,399
Brokered Natural Gas		11,072		13,348		29,480		38,221
Crude Oil and Condensate		28,042		21,211		46,634		41,193
Other		1,225		1,154		3,153		2,774

		240,696		200,241		449,722		416,587
OPERATING EXPENSES
Brokered Natural Gas Cost		9,796		11,793		25,158		33,061
Direct Operations		22,579		24,347		49,586		47,330
Transportation and Gathering		16,074		4,767		28,942		8,557
Taxes Other Than Income		5,877		11,841		14,028		22,646
Exploration		4,592		10,233		10,900		18,659
Depreciation, Depletion and Amortization		83,225		76,726		160,349		150,224
General and Administrative		26,006		12,853		50,305		28,599

		168,149		152,560		339,268		309,076
Gain / (Loss) on Sale of Assets		34,071		4,387		32,554		5,146

INCOME FROM OPERATIONS		106,618		52,068		143,008		112,657
Interest Expense and Other		18,044		15,769		35,411		30,681

Income Before Income Taxes		88,574		36,299		107,597		81,976
Income Tax Expense		33,897		14,617		40,034		31,598

NET INCOME	$	54,677	$	21,682	$	67,563	$	50,378

Earnings Per Share
Basic	$	0.53	$	0.21	$	0.65	$	0.49
Diluted	$	0.52	$	0.21	$	0.64	$	0.48
Weighted-Average Shares Outstanding
Basic		104,264		103,915		104,204		103,855
Diluted		105,337		104,964		105,088		104,838
Dividends Per Common Share	$	0.03	$	0.03	$	0.06	$	0.06

The accompanying notes are an integral part of these condensed consolidated financial statements.

CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)


(In thousands, except share amounts)	June 30, 2011			December 31, 2010
ASSETS
Current Assets
Cash and Cash Equivalents	$	39,314		$	55,949
Accounts Receivable, Net		117,314			94,488
Income Taxes Receivable		7,893			—
Inventories		24,044			29,667
Deferred Income Taxes		—			257
Derivative Instruments		40,344			16,926
Other Current Assets		6,929			5,721

Total Current Assets		235,838			203,008
Properties and Equipment, Net (Successful Efforts Method)		3,967,716			3,762,760
Other Assets		46,606			39,263

	$	4,250,160		$	4,005,031


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts Payable	$	223,838		$	229,981
Income Taxes Payable		—			25,957
Deferred Income Taxes		9,778			—
Accrued Liabilities		53,108			47,897

Total Current Liabilities		286,724			303,835
Pension and Postretirement Benefits		34,869			34,053
Long-Term Debt		1,095,000			975,000
Deferred Income Taxes		757,612			714,953
Asset Retirement Obligation		74,048			72,311
Other Liabilities		35,708			32,179

Total Liabilities		2,283,961			2,132,331

Commitments and Contingencies
Stockholders’ Equity
Common Stock:
Authorized—240,000,000 Shares of $0.10 Par Value in 2011 and 2010 Issued—104,467,059 Shares and 104,210,084 Shares in 2011 and 2010, respectively		10,447			10,421
Additional Paid-in Capital		727,021			720,920
Retained Earnings		1,209,705			1,148,391
Accumulated Other Comprehensive Income/(Loss)		22,375			(3,683	)
Less Treasury Stock, at Cost:
202,200 Shares in 2011 and 2010, respectively		(3,349	)		(3,349	)

Total Stockholders’ Equity		1,966,199			1,872,700

	$	4,250,160		$	4,005,031

The accompanying notes are an integral part of these condensed consolidated financial statements.

CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)


	Six Months Ended June 30,
(In thousands)	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	67,563		$	50,378
Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:
Depreciation, Depletion and Amortization		160,349			150,224
Deferred Income Tax Expense		36,886			29,091
(Gain) / Loss on Sale of Assets		(32,554	)		(5,146	)
Exploration Expense		504			8,426
Unrealized Loss / (Gain) on Derivative Instruments		886			(355	)
Amortization of Debt Issuance Costs		2,253			2,136
Stock-Based Compensation Expense and Other		19,576			6,219
Changes in Assets and Liabilities:
Accounts Receivable, Net		(22,826	)		1,200
Income Taxes		(33,850	)		5,083
Inventories		5,623			4,456
Other Current Assets		(1,208	)		1,061
Accounts Payable and Accrued Liabilities		10,821			(5,937	)
Other Assets and Liabilities		6,678			(3,658	)

Net Cash Provided by Operating Activities		220,701			243,178

CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures		(404,214	)		(454,143	)
Proceeds from Sale of Assets		54,336			16,742

Net Cash Used in Investing Activities		(349,878	)		(437,401	)

CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from Debt		220,000			210,000
Repayments of Debt		(100,000	)		—
Dividends Paid		(6,250	)		(6,228	)
Capitalized Debt Issuance Costs		(1,025	)		(1,986	)
Other		(183	)		(36	)

Net Cash Provided by Financing Activities		112,542			201,750

Net (Decrease) / Increase in Cash and Cash Equivalents		(16,635	)		7,527
Cash and Cash Equivalents, Beginning of Period		55,949			40,158

Cash and Cash Equivalents, End of Period	$	39,314		$	47,685

The accompanying notes are an integral part of these condensed consolidated financial statements.

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. FINANCIAL STATEMENT PRESENTATION

During interim periods, Cabot Oil & Gas Corporation (the Company) follows the same accounting policies used in its Annual Report on Form 10-K for the year ended December 31, 2010 (Form 10-K) filed with the Securities and Exchange Commission (SEC). The interim financial statements should be read in conjunction with the notes to the consolidated financial statements and information presented in the Form 10-K. In management’s opinion, the accompanying interim condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary for a fair statement. The results for any interim period are not necessarily indicative of the expected results for the entire year.

Certain reclassifications have been made to prior year statements to conform with current year presentation. These reclassifications have no impact on previously reported net income.

With respect to the unaudited financial information of the Company as of June 30, 2011 and for the three and six months ended June 30, 2011 and 2010, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated July 29, 2011 appearing herein states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited financial information because that report is not a “report” or a “part” of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

Recently Issued Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The amendments in this Update generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This Update results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. The amendments in this Update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The Company does not expect this guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.

In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05, “Presentation of Comprehensive Income,” requiring most entities to present items of net income and other comprehensive income either in one continuous statement—referred to as the statement of comprehensive income—or in two separate, but consecutive, statements of net income and other comprehensive income. The new requirements are effective for public entities for fiscal years (including interim periods) beginning after December 15, 2011. The Company does not expect this guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.

2. PROPERTIES AND EQUIPMENT, NET

Properties and equipment, net are comprised of the following:


(In thousands)	June 30, 2011			December 31, 2010
Proved Oil and Gas Properties	$	5,152,151		$	4,794,650
Unproved Oil and Gas Properties		492,258			490,181
Gathering and Pipeline Systems		237,333			237,043
Land, Building and Other Equipment		78,943			86,248

		5,960,685			5,608,122
Accumulated Depreciation, Depletion and Amortization		(1,992,969	)		(1,845,362	)

	$	3,967,716		$	3,762,760

At June 30, 2011, the Company did not have any projects that had exploratory well costs that were capitalized for a period of greater than one year after drilling.

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

Haynesville/Bossier Shale Joint Ventures

During the first six months of 2011, the Company entered into two participation agreements with third parties related to certain of its Haynesville and Bossier Shale leaseholds in East Texas. Under the terms of the participation agreements, the third parties will fund 100% of the cost to drill and complete certain Haynesville and Bossier Shale wells in the related leaseholds over a multi-year period in exchange for a 75% working interest in the leaseholds. During the first six months of 2011, Cabot received a reimbursement of drilling costs of approximately $11.2 million associated with the participation agreements.

In May 2011, the Company sold certain of its Haynesville and Bossier Shale oil and gas properties in East Texas to a third party. The Company received approximately $47.0 million in cash proceeds and recognized a $34.2 million gain on sale of assets.

Other Divestitures

In June 2010, the Company sold its Woodford shale prospect located in Oklahoma to Continental Resources Inc. The Company received approximately $15.9 million in cash proceeds and recognized a $10.3 million gain on sale of assets.

In June 2010, primarily as a result of the Company’s decision to divest of certain oil and gas properties in Colorado, an impairment loss of approximately $5.8 million was recognized. The impairment charge was included in Gain / (Loss) on Sale of Assets in the Condensed Consolidated Statement of Operations. Fair value of the impaired properties was determined using a market approach which considered the execution of a purchase and sale agreement the Company entered into on June 30, 2010. Accordingly, the inputs associated with the fair value of these properties were considered level 2 in the fair value hierarchy.

Subsequent Event

In July 2011, the Company entered into a purchase and sale agreement to sell certain oil and gas properties located in Colorado, Utah and Wyoming for $285 million in cash. This transaction is expected to close in the fourth quarter 2011, subject to customary closing conditions and adjustments.

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

3. ADDITIONAL BALANCE SHEET INFORMATION

Certain balance sheet amounts are comprised of the following:


(In thousands)	June 30, 2011			December 31, 2010
ACCOUNTS RECEIVABLE, NET
Trade Accounts	$	109,924		$	91,077
Joint Interest Accounts		10,368			4,901
Other Accounts		759			2,603

		121,051			98,581
Allowance for Doubtful Accounts		(3,737	)		(4,093	)

	$	117,314		$	94,488

INVENTORIES
Natural Gas in Storage	$	10,605		$	13,371
Tubular Goods and Well Equipment		12,941			17,072
Pipeline Imbalances		498			(776	)

	$	24,044		$	29,667

OTHER CURRENT ASSETS
Drilling Advances	$	25		$	2,796
Prepaid Balances		4,670			2,925
Restricted Cash		2,234			—

	$	6,929		$	5,721

OTHER ASSETS
Rabbi Trust Deferred Compensation Plan		16,231			15,788
Debt Issuance Costs		19,808			22,061
Derivative Instruments		9,231			—
Other Accounts		1,336			1,414

	$	46,606		$	39,263

ACCOUNTS PAYABLE
Trade Accounts	$	24,758		$	27,401
Natural Gas Purchases		7,519			3,596
Royalty and Other Owners		47,956			36,034
Accrued Capital Costs		129,652			146,824
Taxes Other Than Income		(219	)		2,655
Drilling Advances		498			523
Wellhead Gas Imbalances		4,376			5,142
Other Accounts		9,298			7,806

	$	223,838		$	229,981

ACCRUED LIABILITIES
Employee Benefits	$	8,475		$	10,790
Pension and Postretirement Benefits		1,688			1,688
Taxes Other Than Income		15,695			14,576
Interest Payable		24,915			19,488
Derivative Instruments		1,160			—
Other Accounts		1,175			1,355

	$	53,108		$	47,897

OTHER LIABILITIES
Rabbi Trust Deferred Compensation Plan	$	26,399		$	21,600
Derivative Instruments		—			2,180
Other Accounts		9,309			8,399

	$	35,708		$	32,179

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

4. LONG-TERM DEBT

The Company’s debt consisted of the following:


(In thousands)	June 30, 2011		December 31, 2010
Long-Term Debt
7.33% Weighted-Average Fixed Rate Notes	$	95,000	$	95,000
6.51% Weighted-Average Fixed Rate Notes		425,000		425,000
9.78% Notes		67,000		67,000
5.58% Weighted-Average Fixed Rate Notes		175,000		175,000
Credit Facility		333,000		213,000

	$	1,095,000	$	975,000

Effective April 1, 2011, the lenders under the Company’s revolving credit facility approved an increase in the Company’s Borrowing Base from $1.5 billion to $1.7 billion as part of the annual redetermination under the terms of the credit facility.

At June 30, 2011, the Company had $333.0 million of borrowings outstanding under its revolving credit facility at a weighted-average interest rate of 4.3% and $566.8 million available for future borrowings. In addition, the Company had letters of credit outstanding at June 30, 2011 of $0.3 million.

5. EARNINGS PER COMMON SHARE

Basic EPS is computed by dividing net income (the numerator) by the weighted-average number of common shares outstanding for the period (the denominator). Diluted EPS is similarly calculated except that the denominator is increased using the treasury stock method to reflect the potential dilution that could occur if outstanding stock options and stock appreciation rights were exercised and stock awards were vested at the end of the applicable period.

The following is a calculation of basic and diluted weighted-average shares outstanding for the three and six months ended June 30, 2011 and 2010:

Three Months Ended
June 30,

Six Months Ended
June 30,

(In thousands)

2011

2010

2011

2010

Weighted-Average Shares—Basic

104,264

103,915

104,204

103,855

Dilution Effect of Stock Options, Stock Appreciation Rights and Stock Awards at End of Period

1,073

1,049

884

983

Weighted-Average Shares—Diluted

105,337

104,964

105,088

104,838

Weighted-Average Stock Awards and Shares

Excluded from Diluted Earnings per Share due to the Anti-Dilutive Effect

634

429

6. COMMITMENTS AND CONTINGENCIES

Contingencies

The Company is a defendant in various legal proceedings arising in the normal course of business. When deemed necessary, the Company establishes reserves for certain legal proceedings. All known liabilities are accrued based on an estimation process that includes the advice of legal counsel and subjective judgment of management. While the outcome and impact of such legal proceedings on the Company cannot be predicted with certainty, management believes that the resolution of these proceedings through settlement or adverse judgment will not have a material adverse effect on the Company’s condensed consolidated financial position or cash flow. Operating results, however, could be significantly impacted in the reporting periods in which such matters are resolved.

Environmental Matters

On November 4, 2009, the Company and the Pennsylvania Department of Environmental Protection (PaDEP) entered into a single settlement agreement (Consent Order) covering a number of separate, unrelated environmental issues occurring in 2008 and 2009, including releases of drilling mud and other substances, record keeping violations at various wells and alleged natural gas contamination of 13 water wells in Susquehanna County, Pennsylvania. The Company paid an aggregate $120,000 civil penalty with respect to all the matters covered by the Consent Order, which were consolidated at the request of the PaDEP.

On April 15, 2010, the Company and the PaDEP reached agreement on modifications to the Consent Order (First Modified Consent Order). In the First Modified Consent Order, the PaDEP and the Company agreed that the Company will provide a permanent source

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

of potable water to 14 households, most of which the Company has already been supplying with water. The Company agreed to plug and abandon three vertical wells in close proximity to two of the households and to bring into compliance a fourth well in the nine square mile area of concern in Susquehanna County. The Company agreed to complete these actions prior to any new well drilling permits being issued for drilling in Pennsylvania, and prior to initiating hydraulic fracturing of seven wells already drilled in the area of concern. The Company also agreed to postpone drilling of new wells in the area of concern until all obligations under the consent orders are fulfilled. In addition, the Company agreed to take certain other actions if requested by the PaDEP, which could include the plugging and abandonment of up to 10 additional wells. Under the First Modified Consent Order, the Company paid a $240,000 civil penalty and agreed to pay an additional $30,000 per month until all obligations under the First Modified Consent Order are satisfied.

On July 19, 2010, the Company and the PaDEP entered a Second Modification to Consent Order (Second Modified Consent Order) under which the Company and the PaDEP agreed that the Company has satisfactorily plugged and abandoned the three vertical wells and brought the fourth well into compliance. As a result, the Company and the PaDEP agreed that the PaDEP will commence the processing and issuance of new well drilling permits outside the area of concern so long as the Company continues to provide temporary potable water and offers to provide gas/water separators to the 14 households. No penalties were assessed under the Second Modified Consent Order.

As required by the Second Modified Consent Order, the Company made offers to provide whole-house water treatment systems to the 14 households. As required by the First Modified Consent Order, on August 5, 2010 the Company filed with the PaDEP its report, prepared by its experts, finding that the Company’s well drilling and development activities are not the source of methane gas reported to be in the groundwater and water wells in the area of concern.

Despite the Company’s vigorous efforts to comply with the various consent orders, in a September 14, 2010 letter to the Company, the PaDEP rejected the Company’s expert report and determined that the Company’s drilling activities continue to cause the unpermitted discharge of natural gas into the groundwater and continue to affect residential water supplies in the area of concern. The PaDEP directed the Company, in accordance with the First Modified Consent Order, to plug or take other remedial actions at the remaining 10 wells and to contact the PaDEP to discuss connecting the impacted water supplies into a community public water system to permanently eliminate the continuing adverse affect to those water supplies.

The Company believed that it was in full compliance with the various consent orders. In a September 28, 2010 reply letter to the PaDEP, the Company disagreed with the PaDEP’s rejection of the Company’s expert report, disagreed that the remaining 10 wells continue to impact groundwater and affect residential water supplies and disagreed that a community public water system is necessary or feasible. The Company believed that offering installation of a whole-house water treatment system to the 14 households constituted compliance with the Company’s obligations under these consent orders.

On December 15, 2010, the Company entered a global settlement agreement and new consent order with the PaDEP (Global Settlement Agreement), which supersedes the Consent Order, the First Modified Consent Order and the Second Modified Consent Order. Under the Global Settlement Agreement, among other things, the Company agreed to pay a total of $4.2 million into separate escrow accounts for the benefit of each affected household, pay $500,000 to the PaDEP to reimburse the PaDEP for its costs, remediate two wells in the affected area, provide pressure, water quality and well headspace data to the PaDEP and offer water treatment to the affected households. The Global Settlement Agreement settles all outstanding issues and claims that are known and that could have been brought against the Company by the PaDEP relating to the wells in the affected area and the Consent Order, the First Modified Consent Order and the Second Modified Consent Order. It also allows the Company to begin hydraulic fracturing in the affected areas after providing the PaDEP with well pressure data and to commence drilling new wells in the affected area in the second quarter of 2011. Under the Global Settlement Agreement, the Company has no obligation to connect the impacted water supplies to a community public water system.

As of the date of this report, the Company is in continuing discussions with the PaDEP to address the results of our well pressure tests, water quality sampling and well headspace screenings. We have requested PaDEP approval to resume hydraulic fracturing and new well drilling operations in the affected area.

On January 11, 2011, certain of the affected households appealed the Global Settlement Agreement to the Pennsylvania Environmental Hearing Board. A hearing on the merits of this appeal is not expected to occur until 2012.

As of June 30, 2011, the Company has paid $1.3 million in fines and penalties to the PaDEP related to this matter, paid $2.0 million to seven of the affected households and accrued a $2.2 million settlement liability that represents the unpaid escrow balance, which is included in Other Liabilities in the Condensed Consolidated Balance Sheet.

Transportation Agreements

During the first half of 2011, the Company amended certain gas transportation and gathering agreements with third party pipelines that increased the minimum daily quantity, increased the transportation fee and/or extended the term of the agreement.

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

Future minimum obligations under gas transportation agreements as of June 30, 2011 are as follows:


(In thousands)
2011	$	25,562
2012		55,882
2013		55,816
2014		55,816
2015		55,816
Thereafter		548,898

	$	797,790

For further information on the Company’s gas transportation agreements, please refer to Note 8 of the Notes to the Consolidated Financial Statements in the Form 10-K.

Drilling Rig Commitments

As of June 30, 2011, the Company does not have any outstanding drilling commitments with initial terms greater than one year.

7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company periodically enters into commodity derivative instruments to hedge its exposure to price fluctuations on natural gas and crude oil production. The Company’s credit agreement restricts the ability of the Company to enter into commodity hedges other than to hedge or mitigate risks to which the Company has actual or projected exposure or as permitted under the Company’s risk management policies and not subjecting the Company to material speculative risks. All of the Company’s derivatives are used for risk management purposes and are not held for trading purposes. As of June 30, 2011, the Company had 42 derivative contracts open: 27 natural gas price swap arrangements, five natural gas collar arrangements, six natural gas basis swaps, one crude oil price collar arrangement and three crude oil price swap arrangements. During the first half of 2011, the Company entered into 31 new derivative contracts covering anticipated natural gas and crude oil production for 2011, 2012 and 2013.

As of June 30, 2011, the Company had the following outstanding commodity derivatives:

Commodity and Derivative Type

Weighted-Average
Contract Price

Volume

Contract Period

Derivatives Designated as Hedging Instruments

Natural Gas Swaps

$6.24

per Mcf

6,508

Mmcf

Jul. 2011 - Dec. 2011

Natural Gas Swaps

$5.18

per Mcf

118,049

Mmcf

Jul. 2011 - Dec. 2012

Natural Gas Swaps

$5.28

per Mcf

17,854

Mmcf

Jan. 2012 - Dec. 2012

Natural Gas Collars

$6.17 Ceiling/$5.13 Floor

per Mcf

17,805

Mmcf

Jan. 2013 - Dec. 2013

Crude Oil Collars

$93.25 Ceiling /$80.00 Floor

per Bbl

184

Mbbl

Jul. 2011 - Dec. 2011

Crude Oil Swaps

$106.20

per Bbl

184

Mbbl

Jul. 2011 - Dec. 2011

Crude Oil Swaps

$105.00

per Bbl

366

Mbbl

Jan. 2012 - Dec. 2012

Derivatives Not Designated as Hedging Instruments

Natural Gas Basis Swaps

$(0.27)

per Mcf

16,123

Mmcf

Jan. 2012 - Dec. 2012

The change in fair value of derivatives designated as hedges that is effective is recorded to Accumulated Other Comprehensive Income / (Loss) in Stockholders’ Equity in the Condensed Consolidated Balance Sheet. The ineffective portion of the change in fair value of derivatives designated as hedges, and the change in fair value of derivatives not designated as hedges, are recorded currently in earnings as a component of Natural Gas Revenue and Crude Oil and Condensate Revenue, as appropriate, in the Condensed Consolidated Statement of Operations.

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

The following schedules reflect the fair value of derivative instruments on the Company’s condensed consolidated financial statements:

Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet


		Fair Value Asset (Liability)
(In thousands)	Balance Sheet Location	June 30, 2011			December 31, 2010
Derivatives Designated as Hedging Instruments
Commodity Contracts	Derivative Instruments (current assets)		41,886		$	16,926
Commodity Contracts	Accrued Liabilities		(1,160	)		—
Commodity Contracts	Other Assets		10,755			—

			51,481			16,926
Derivatives Not Designated as Hedging Instruments
Commodity Contracts	Derivative Instruments (current assets)		(1,542	)		—
Commodity Contracts	Other Assets		(1,524	)		—
Commodity Contracts	Other Liabilities		—			(2,180	)

			(3,066	)		(2,180	)

		$	48,415		$	14,746

At June 30, 2011 and December 31, 2010, unrealized gains of $51.5 million ($31.9 million, net of tax) and $16.9 million ($10.5 million, net of tax), respectively, were recorded in Accumulated Other Comprehensive Income / (Loss). Based upon estimates at June 30, 2011, the Company expects to reclassify $25.3 million in after-tax income associated with its commodity hedges from Accumulated Other Comprehensive Income / (Loss) to the Condensed Consolidated Statement of Operations over the next 12 months.

Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations


Derivatives Designated as Hedging Instruments (In thousands)	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)									Location of Gain (Loss) Reclassified from Accumulated OCI into Income (In thousands)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
	Three Months Ended June 30,					Six Months Ended June 30					Three Months Ended June 30,					Six Months Ended June 30,
	2011		2010			2011		2010			2011			2010		2011			2010
Commodity Contracts	$	48,314	$	(2,071	)	$	60,887	$	54,756	Natural Gas Revenues	$	13,667		$	41,812	$	27,148		$	70,253
										Crude Oil and Condensate Revenues		(514	)		4,779		(816	)		9,362

											$	13,153		$	46,591	$	26,332		$	79,615

For the three and six months ended June 30, 2011 and 2010, respectively, there was no ineffectiveness recorded in our Condensed Consolidated Statement of Operations related to our derivative instruments.


Derivatives Not Designated as Hedging Instruments (In thousands)	Location of Gain (Loss) Recognized in Income on Derivative	Three Months Ended June 30,					Six Months Ended June 30,
		2011			2010		2011			2010
Commodity Contracts	Natural Gas Revenues	$	(903	)	$	942	$	(886	)	$	355

Additional Disclosures about Derivative Instruments and Hedging Activities

The use of derivative instruments involves the risk that the counterparties will be unable to meet their obligation under the agreement. The Company enters into derivative contracts with multiple counterparties in order to limit its exposure to individual counterparties. The Company also has netting arrangements with all of its counterparties that allow it to offset payables against receivables from separate derivative contracts with that counterparty.

The counterparties to the Company’s derivative instruments are also lenders under its credit facility. The Company’s credit facility and derivative instruments contain certain cross default and acceleration provisions that may require immediate payment of its derivative liability in certain situations.

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

8. FAIR VALUE MEASUREMENTS

Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures,” established a formal framework for measuring fair values of assets and liabilities in financial statements that are already required by generally accepted accounting principles (GAAP) to be measured at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The transaction is based on a hypothetical transaction in the principal or most advantageous market considered from the perspective of the market participant that holds the asset or owes the liability.

The Company utilizes market data or assumptions that market participants who are independent, knowledgeable and willing and able to transact would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the observability of those inputs. ASC 820 establishes formal fair value hierarchy based on the inputs used to measure fair value. The hierarchy gives the highest priority to Level 1 measurements and the lowest priority to Level 3 measurements, and accordingly, Level 1 measurements should be used whenever possible.

The Company has classified its assets and liabilities into these levels depending upon the data relied on to determine the fair values. For further information regarding the fair value hierarchy, refer to Note 14 of the Notes to the Consolidated Financial Statements in the Form 10-K.

Non-Financial Assets and Liabilities

The Company discloses or recognizes its non-financial assets and liabilities, such as impairments of long-lived assets, at fair value on a nonrecurring basis. During the three and six month periods ended June 30, 2010, the Company recorded an impairment related to certain oil and gas properties held for sale. Refer to Note 2 for additional disclosures related to fair value associated with the impaired properties. As none of the Company’s other non-financial assets and liabilities were impaired as of June 30, 2011 and 2010 and no other fair value measurements were required to be recognized on a non-recurring basis, additional disclosures are not provided.

Financial Assets and Liabilities

Our financial assets and liabilities are measured at fair value on a recurring basis. The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of June 30, 2011
Assets
Rabbi Trust Deferred Compensation Plan	$	16,231	$	—	$	—	$	16,231
Derivative Contracts		—		—		49,575		49,575

Total Assets	$	16,231	$	—	$	49,575	$	65,806

Liabilities
Rabbi Trust Deferred Compensation Plan	$	26,399	$	—	$	—	$	26,399
Derivative Contracts		—		—		1,160		1,160

Total Liabilities	$	26,399	$	—	$	1,160	$	27,559


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2010
Assets
Rabbi Trust Deferred Compensation Plan	$	15,788	$	—	$	—	$	15,788
Derivative Contracts		—		—		16,926		16,926

Total Assets	$	15,788	$	—	$	16,926	$	32,714

Liabilities
Rabbi Trust Deferred Compensation Plan	$	21,600	$	—	$	—	$	21,600
Derivative Contracts		—		—		2,180		2,180

Total Liabilities	$	21,600	$	—	$	2,180	$	23,780

The Company’s investments associated with its Rabbi Trust Deferred Compensation Plan consist of mutual funds and deferred shares of the Company’s common stock that are publicly traded and for which market prices are readily available.

The derivative contracts were measured based on quotes from the Company’s counterparties. Such quotes have been derived using valuation models that consider various inputs including current market and contractual prices for the underlying instruments, quoted forward prices for natural gas and crude oil, volatility factors and interest rates, such as a LIBOR curve for a similar length of time as the derivative contract term as applicable. These estimates are verified using relevant NYMEX futures contracts or are compared to multiple quotes obtained from counterparties for reasonableness. The Company measured the non-performance risk of its counterparties by reviewing credit default swap spreads for the various financial institutions in which it has derivative transactions, while non-performance risk of the Company is evaluated using a market credit spread provided by the Company’s bank. As of both June 30, 2011 and December 31, 2010, the impact of non-performance risk relative to the Company’s derivative contracts was $0.1 million.

The following table sets forth a reconciliation of changes for the three- and six-month periods ended June 30, 2011 and 2010 in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy:

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)


	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2011			2010			2011			2010
Balance at beginning of period	$	14,158		$	135,532		$	14,746		$	112,307
Total Gains or (Losses) (Realized or Unrealized):
Included in Earnings ⁽¹⁾		12,249			47,534			25,446			79,972
Included in Other Comprehensive Income		35,161			(48,672	)		34,555			(24,861	)
Settlements		(13,153	)		(46,591	)		(26,332	)		(79,615	)
Transfers In and/or Out of Level 3		—			—			—			—

Balance at end of period	$	48,415		$	87,803		$	48,415		$	87,803

⁽¹⁾

A loss of $0.9 million the three and six months ended June 30, 2011, respectively, and and a gain of $0.9 million and $0.4 million for the three and six months ended June 30, 2010, respectively, was unrealized and included in Natural Gas Revenues in the Condensed Consolidated Statement of Operations.

There were no transfers between Level 1 and Level 2 measurements for the three and six months ended June 30, 2011 and 2010.

Fair Value of Other Financial Instruments

The estimated fair value of financial instruments is the amount at which the instrument could be exchanged currently between willing parties. The carrying amounts reported in the Condensed Consolidated Balance Sheet for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments.

The fair value of long-term debt is the estimated cost to acquire the debt, including a credit spread for the difference between the issue rate and the period end market rate. The credit spread is the Company’s default or repayment risk. The credit spread (premium or discount) is determined by comparing the Company’s fixed-rate notes and credit facility to new issuances (secured and unsecured) and secondary trades of similar size and credit statistics for both public and private debt. The fair value of all of the notes and credit facility is based on interest rates currently available to the Company.

The Company uses available market data and valuation methodologies to estimate the fair value of debt. The carrying amounts and fair values of long-term debt are as follows:

June 30, 2011

December 31, 2010

(In thousands)

Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value

Long-Term Debt

1,095,000

1,231,089

975,000

1,100,830

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

9. COMPREHENSIVE INCOME / (LOSS)

Comprehensive Income / (Loss) includes Net Income and certain items recorded directly to Stockholders’ Equity and classified as Accumulated Other Comprehensive Income/(Loss). The following tables illustrate the calculation of Comprehensive Income/(Loss) for the three and six months ended June 30, 2011 and 2010:


	Three Months Ended June 30,
(In thousands)	2011					2010
Net Income			$	54,677				$	21,682
Other Comprehensive Income / (Loss), net of taxes:
Reclassification Adjustment for Settled Contracts, net of taxes of $4,998 and $17,219, respectively				(8,155	)				(29,372	)
Changes in Fair Value of Hedge Positions, net of taxes of $(18,331) and $325, respectively				29,983					(1,746	)
Defined Benefit Pension and Postretirement Plans:
Amortization of Net Obligation at Transition, net of taxes of $(59) and $(61), respectively		99					97
Amortization of Prior Service Cost, net of taxes of $(117) and $(9), respectively		199					12
Amortization of Net Loss, net of taxes of $(1,194) and $(257), respectively		2,009		2,307			396		505

Foreign Currency Translation Adjustment, net of taxes of $3 and $41, respectively				(6	)				(107	)

Total Other Comprehensive Income / (Loss)				24,129					(30,720	)

Comprehensive Income / (Loss)			$	78,806				$	(9,038	)


	Six Months Ended June 30,
(In thousands)	2011					2010
Net Income			$	67,563				$	50,378
Other Comprehensive Income / (Loss), net of taxes:
Reclassification Adjustment for Settled Contracts, net of taxes of $10,006 and $29,537, respectively				(16,326	)				(50,078	)
Changes in Fair Value of Hedge Positions, net of taxes of $(23,109) and $(21,122), respectively				37,778					33,634
Defined Benefit Pension and Postretirement Plans:
Amortization of Net Obligation at Transition, net of taxes of $(118) and $(120), respectively		198					196
Amortization of Prior Service Cost, net of taxes of $(235) and $(15), respectively		398					27
Amortization of Net Loss, net of taxes of $(2,388) and $(570), respectively		4,018		4,614			928		1,151

Foreign Currency Translation Adjustment, net of taxes of $3 and $(41), respectively				(8	)				120

Total Other Comprehensive Income / (Loss)				26,058					(15,173	)

Comprehensive Income / (Loss)			$	93,621				$	35,205

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

Changes in the components of Accumulated Other Comprehensive Income/ (Loss), net of taxes, for the six months ended June 30, 2011 were as follows:


(In thousands)	Net Gains / (Losses) on Cash Flow Hedges		Defined Benefit Pension and Postretirement Plans			Foreign Currency Translation Adjustment			Total
Balance at December 31, 2010	$	10,494	$	(14,122	)	$	(55	)	$	(3,683	)
Net change in unrealized gain on cash flow hedges, net of taxes of ($13,103)		21,452		—			—			21,452
Net change in defined benefit pension and postretirement plans, net of taxes of ($2,741)		—		4,614			—			4,614
Change in foreign currency translation adjustment, net of taxes of $3		—		—			(8	)		(8	)

Balance at June 30, 2011	$	31,946	$	(9,508	)	$	(63	)	$	22,375

10. PENSION AND OTHER POSTRETIREMENT BENEFITS

The components of net periodic benefit costs for the three and six months ended June 30, 2011 and 2010 were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2011			2010			2011			2010
Qualified and Non-Qualified Pension Plans
Current Period Service Cost	$	—		$	896		$	—		$	1,794
Interest Cost		800			993			1,601			1,985
Expected Return on Plan Assets		(1,160	)		(1,039	)		(2,320	)		(2,080	)
Amortization of Prior Service Cost		316			21			633			42
Amortization of Net Loss		3,062			591			6,124			1,182

Net Periodic Pension Cost	$	3,018		$	1,462		$	6,038		$	2,923


Postretirement Benefits Other than Pension Plans
Current Period Service Cost	$	334		$	316		$	669		$	633
Interest Cost		468			424			935			847
Amortization of Net Loss		141			62			282			316
Amortization of Net Obligation at Transition		158			158			316			316

Total Postretirement Benefit Cost	$	1,101		$	960		$	2,202		$	2,112

Employer Contributions

The funding levels of the pension and postretirement benefit plans are in compliance with standards set by applicable law or regulation. The Company does not have any required minimum funding obligations for its qualified pension plan in 2011. The Company previously disclosed in its financial statements for the year ended December 31, 2010 that it had not determined if any additional discretionary funding would be made in 2011. During the six months ended June 30, 2011, the Company did not make any contributions to its qualified and non-qualified pension plans; discretionary contributions may, however, be made prior to December 31, 2011.

Termination and Amendment of Qualified and Non-Qualified Pension Plans

In July 2010, the Company notified its employees of its plan to terminate its qualified pension plan, with the plan and its related trust to be liquidated following appropriate filings with the Pension Benefit Guaranty Corporation and Internal Revenue Service, effective September 30, 2010. The Company then amended and restated the qualified pension plan to freeze benefit accruals, to provide for termination of the plan, to allow for an early retirement enhancement to be available to all active participants as of September 30, 2010 regardless of their age and years of service as of that date, and to make certain changes that were required or made desirable as a result of developments in the law. Because no further benefits will accrue under the qualified pension plan after September 30, 2010, the Company’s related non-qualified pension plan was effectively frozen and no additional benefits will be accrued under those arrangements after September 30, 2010. For further information regarding termination and amendment of qualified and non-qualified pension plans, refer to Note 6 of the Notes to the Consolidated Financial Statements in the Form 10-K.

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

11. STOCK-BASED COMPENSATION

Stock-based compensation expense (including the supplemental employee incentive plan) during the first six months of 2011 and 2010 was $19.3 million and $5.1 million, respectively, and is included in General and Administrative Expense in the Condensed Consolidated Statement of Operations. Stock-based compensation expense in the second quarter of 2011 and 2010 was $11.2 million and $1.9 million, respectively.

Restricted Stock Awards

During the first six months of 2011, 7,300 restricted stock awards were granted with a weighted-average grant date per share value of $43.62. The fair value of restricted stock grants is based on the average of the high and low stock price on the grant date. The Company used an annual forfeiture rate assumption of 7.0% for purposes of recognizing stock-based compensation expense for restricted stock awards.

Restricted Stock Units

During the first six months of 2011, 29,701 restricted stock units were granted to non-employee directors of the Company with a grant date per share value of $41.75. The fair value of these units is measured at the average of the high and low stock price on grant date and compensation expense is recorded immediately. These units immediately vest and will be issued when the director ceases to be a director of the Company.

Stock Appreciation Rights

During the first six months of 2011, 95,750 stock appreciation rights (SARs) were granted to employees. These awards allow the employee to receive common stock of the Company equal to the intrinsic value over the $40.74 strike price during the contractual term of seven years. The Company calculates the fair value using a Black-Scholes model. The assumptions used in the Black-Scholes fair value calculation on the date of grant for SARs are as follows:


Weighted-Average Value per Stock Appreciation Right Granted During the Period	$	18.94
Assumptions:
Stock Price Volatility		52.7	%
Risk Free Rate of Return		2.3	%
Expected Dividend Yield		0.3	%
Expected Term (in years)		5.0

Performance Share Awards

During the first six months of 2011, three types of performance share awards were granted to employees for a total of 394,757 performance shares, which included 92,696 performance share awards based on market conditions and 302,061 performance share awards based on performance conditions measured against the Company’s internal performance metrics. Of the 302,061 performance-based awards 92,696 of the shares have a three-year graded performance period. For these shares, one-third of the shares, are issued on each anniversary date following the date of grant, provided that the Company has $100 million or more of operating cash flow for the year preceding the vesting date. If the Company does not meet this metric for the applicable period, then the portion of the performance shares that would have been issued on that date will be forfeited. For the remaining 209,365 performance-based awards, the actual number of shares issued at the end of the performance period will be determined based on the Company’s performance against three performance criteria set by the Company’s Compensation Committee. Refer to Note 12 of the Notes to the Consolidated Financial Statements in the Form 10-K for further description of the various types of performance share awards.

The performance period for the awards based on internal performance metrics commenced on January 1, 2011 and ends on December 31, 2013 and the grant date per share value for these awards was $40.74, which is based on the average of the high and low stock price on the grant date. The actual number of shares issued on each anniversary date following the grant date or at the end of the performance period, as applicable, will be determined based on the Company’s performance against the performance criteria set by the Company’s Compensation Committee. Based on the Company’s probability assessment at June 30, 2011, it is considered probable that the criteria for the performance-based awards will be met. The Company used an annual forfeiture rate assumption ranging from 0% to 7% for purposes of recognizing stock-based compensation expense for all performance-based share awards.

CABOT OIL & GAS CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

The following assumptions were used for the performance shares based on market conditions using a Monte Carlo model to value the liability and equity components of the awards. The equity portion of the 2011 awards was valued on the grant date (February 17, 2011) and was not marked to market. The liability portion of the awards was valued as of June 30, 2011 on a mark-to-market basis.


	Grant Date			June 30, 2011
Value per Share	$	31.23		$	16.04 - $48.63
Assumptions:
Stock Price Volatility		62.0	%		37.08% - 47.38%
Risk Free Rate of Return		1.3	%		0.10% - 0.63%
Expected Dividend Yield		0.2	%		0.2%

12. ASSET RETIREMENT OBLIGATION

The following table provides a rollforward of the asset retirement obligation. Liabilities settled include settlement payments for obligations as well as obligations that were assumed by the purchasers of divested properties. Liabilities incurred include additions to obligations as well as obligations that were assumed by the Company related to acquired properties. Activity related to the Company’s asset retirement obligation is as follows:


(In thousands)
Carrying amount of asset retirement obligations at December 31, 2010	$	72,311
Liabilities added during the current period		617
Liabilities settled and divested during the current period		(610	)
Current period accretion expense		1,730

Carrying amount of asset retirement obligations at June 30, 2011	$	74,048

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Cabot Oil & Gas Corporation:

We have reviewed the accompanying condensed consolidated balance sheet of Cabot Oil & Gas Corporation and its subsidiaries (the “Company”) as of June 30, 2011, and the related condensed consolidated statements of operations for the three month and six month periods ended June 30, 2011 and 2010, and the condensed consolidated statement of cash flows for the six month periods ended June 30, 2011 and 2010. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2010, and the related consolidated statements of operations, stockholders’ equity, comprehensive income and of cash flows for the year then ended (not presented herein), and in our report dated February 28, 2011, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet information as of December 31, 2010, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

July 29, 2011

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following review of operations for the three and six month periods ended June 30, 2011 and 2010 should be read in conjunction with our Condensed Consolidated Financial Statements and the Notes included in this Form 10-Q and with the Consolidated Financial Statements, Notes and Management’s Discussion and Analysis included in the Cabot Oil & Gas Corporation Annual Report on Form 10-K for the year ended December 31, 2010 (Form 10-K).

As a result of our production growth and the commencement of various transportation and gathering agreements in 2011, we began separately reporting our transportation and gathering costs as a component of operating expenses in the Condensed Consolidated Statement of Operations. Previously reported transportation and gathering costs were reflected as a component of Natural Gas Revenues and have been reclassified to conform to current year presentation. Accordingly, previously reported operating revenues and operating expenses have increased with no impact on previously reported net income.

Overview

On an equivalent basis, our production for the six months ended June 30, 2011 increased by 45% compared to the six months ended June 30, 2010. For the six months ended June 30, 2011, we produced 82.7 Bcfe compared to 57.1 Bcfe for the six months ended June 30, 2010. Natural gas production was 79.5 Bcf and crude oil/condensate/NGL production was 529 Mbbls for the first half of 2011. Natural gas production increased by 46% when compared to the first half of 2010, which had production of 54.4 Bcf. This increase was primarily a result of increased production in the North region associated with the drilling program and upgrades to the Lathrop compressor station, which included the commissioning of new compression during the first six months of 2011 in Susquehanna County, Pennsylvania. Partially offsetting the production increase in the North region were decreases in production in the South region due to normal production declines and a shift from gas to oil projects. Crude oil/condensate/NGL production increased by 14%, to 529 Mbbls, when compared to the first half of 2010, which had production of 465 Mbbls. This increase was primarily the result of increased production in the South region associated with the drilling program in the Eagle Ford Shale in South Texas, partially offset by a slight decrease in production in the North.

Our average realized natural gas price for the first half of 2011 was $4.67 per Mcf, 24% lower than the $6.15 per Mcf price realized in the first half of 2010. Our average realized crude oil price for the first half of 2011 was $91.80 per Bbl, 5% lower than the $97.04 per Bbl price realized in the first half of 2010. These realized prices include realized gains and losses resulting from commodity derivatives. For information about the impact of these derivatives on realized prices, refer to “Results of Operations” below. Commodity prices are determined by many factors that are outside of our control. Historically, commodity prices have been volatile, and we expect them to remain volatile. Commodity prices are affected by changes in market supply and demand, which are impacted by overall economic activity, weather, pipeline capacity constraints, inventory storage levels, basis differentials and other factors. As a result, we cannot accurately predict future natural gas, NGL and crude oil prices and, therefore, we cannot determine with any degree of certainty what effect increases or decreases will have on our future revenues, capital program or production volumes.

Operating revenues for the six months ended June 30, 2011 increased by $33.1 million, or 8%, from the six months ended June 30, 2010. Natural gas revenues, excluding unrealized gains/losses from the change in fair value of our basis swaps, increased by $37.3 million, or 11%, for the six months ended June 30, 2011 as compared to the six months ended June 30, 2010 as the increase in natural gas production more than offset the lower realized natural gas prices. Crude oil and condensate revenues increased by $5.4 million, or 13%, for the first six months of 2011 as compared to the first six months of 2010, due to increased crude oil production partially offset by lower realized crude oil prices. Brokered natural gas revenues decreased by $8.7 million, or 23%, due to a decreased sales price and decreased brokered volumes.

In addition to production volumes and commodity prices, finding and developing sufficient amounts of crude oil and natural gas reserves at economical costs are critical to our long-term success. For 2011, we expect to spend approximately $600 million in capital and exploration expenditures, net of proceeds from the sale of assets that may be used to fund incremental capital and exploration expenditures. We believe our cash on hand, operating cash flow in 2011, proceeds from asset sales and borrowings from our credit facility will be sufficient to fund our remaining budgeted capital and exploration spending in 2011. We will continue to assess the natural gas and crude oil price environment and our liquidity position and may increase or decrease our capital and exploration expenditures accordingly. For the six months ended June 30, 2011, we invested approximately $397.4 million in our exploration and development efforts.

During the first six months of 2011, we drilled 52 gross wells (45 development, four exploratory and three extension wells) with a success rate of 100% compared to 45 gross wells (41 development, two exploratory and two extension wells) with a success rate of 98% for the comparable period of the prior year. For the full year of 2011, we plan to drill approximately 150 gross (98.7 net) wells.

While we consider acquisitions from time to time, we continue to remain focused on our strategies of pursuing lower risk drilling opportunities that provide more predictable results on our accumulated acreage position. Additionally, we intend to maintain spending discipline and manage our balance sheet in an effort to ensure sufficient liquidity, including cash resources and available credit. We believe these strategies are appropriate for our portfolio of projects and the current industry environment and will continue to add shareholder value over the long-term.

The preceding paragraphs, discussing our strategic pursuits and goals, contain forward-looking information. Please read “Forward-Looking Information” for further details.

Financial Condition

Capital Resources and Liquidity

Our primary sources of cash for the six months ended June 30, 2011 were funds generated from the sale of natural gas and crude oil production (including hedge realizations), borrowings under our credit facility and the sales of properties and other assets. These cash flows were primarily used to fund our development and exploration expenditures, in addition to payment of dividends and repayment of debt. See below for additional discussion and analysis of cash flow.

We generate cash from the sale of natural gas and crude oil. Operating cash flow fluctuations are substantially driven by commodity prices and changes in our production volumes. Prices for crude oil and natural gas have historically been volatile, including seasonal influences characterized by peak demand and higher prices in the winter heating season; however, the impact of other risks and uncertainties, as described in our Form 10-K and other filings with the Securities and Exchange Commission, have also influenced prices throughout the recent years. Commodity prices continue to experience increased volatility. In addition, fluctuations in cash flow may result in an increase or decrease in our capital and exploration expenditures. See “Results of Operations” for a review of the impact of prices and volumes on revenues.

Our working capital is also substantially influenced by variables discussed above. From time to time, our working capital will reflect a surplus, while at other times it will reflect a deficit. This fluctuation is not unusual. We believe we have adequate availability under our credit facility and liquidity available to meet our working capital requirements.


	Six Months Ended June 30,
(In thousands)	2011			2010
Cash Flows Provided by Operating Activities	$	220,701		$	243,178
Cash Flows Used in Investing Activities		(349,878	)		(437,401	)
Cash Flows Provided by Financing Activities		112,542			201,750

Net (Decrease) / Increase in Cash and Cash Equivalents	$	(16,635	)	$	7,527

Operating Activities . Key components impacting net operating cash flows are commodity prices, production volumes and operating expenses. Net cash provided by operating activities in the first six months of 2011 decreased by $22.5 million over the first six months of 2010. This decrease was primarily due to changes in working capital partially offset by increased operating income in 2011 as a result of higher operating revenues and an increase in the gain on sale of assets that outpaced the increase in operating expenses. The increase in operating revenues was primarily due to an increase in equivalent production partially offset by lower realized natural gas and crude oil prices. Equivalent production volumes increased by 45% for the six months ended June 30, 2011 compared to the six months ended June 30, 2010 as a result of higher natural gas and crude oil production. Average realized natural gas prices decreased by 24% for the first six months of 2011 compared to the first six months of 2010. Average realized crude oil prices decreased by 5% compared to the same period. See “Results of Operations” for additional information relative to commodity price, production and operating expense movements. We are unable to predict future commodity prices and, as a result, cannot provide any assurance about future levels of net cash provided by operating activities. Realized prices may decline in future periods.

Investing Activities . The primary use of cash in investing activities was capital spending. We established our 2011 capital budget based on our current estimate of future commodity prices and cash flows. Due to the volatility of commodity prices and new opportunities which may arise, our capital expenditures may be periodically adjusted. Cash flows used in investing activities decreased by $87.5 million for the first six months of 2011 compared to the first six months of 2010. The decrease was primarily due to a decrease of $49.9 million in capital and exploration expenditures and higher proceeds from sale of assets of $37.6 million.

Financing Activities . Cash flows provided by financing activities decreased by $89.2 million from the first six months of 2010 to the first six months of 2011. This was primarily due to an increase in repayments of debt partially offset by higher borrowings in the first six months of 2011 compared to the first six months of 2010.

At June 30, 2011, we had $333.0 million of borrowings outstanding under our unsecured credit facility at a weighted-average interest rate of 4.3%. The credit facility provides for an available credit line of $900 million and contains an accordion feature allowing us to increase the available credit line to $1.0 billion, if any one or more of the existing banks or new banks agree to provide such increased commitment amount. Effective April 1, 2011, the lenders under our credit facility approved an increase in the borrowing base under the facility from $1.5 billion to $1.7 billion as part of the annual redetermination under the terms of the credit facility. As of June 30, 2011, our available credit under our credit facility was $566.8 million.

We are in compliance in all material respects with our debt covenants as of June 30, 2011.

We strive to manage our debt at a level below the available credit line in order to maintain borrowing capacity. Our revolving credit facility includes a covenant limiting our total debt. Management believes that, with operating cash flow, existing cash on hand, availability under our revolving credit facility and proceeds from the sale of assets, we have the capacity to finance our spending plans, service our debt obligations as they become due and maintain our strong financial position.

Capitalization

Information about our capitalization is as follows:


(Dollars in millions)	June 30, 2011			December 31, 2010

Debt ⁽¹⁾	$	1,095.0		$	975.0

Stockholders’ Equity		1,966.2			1,872.7

Total Capitalization	$	3,061.2		$	2,847.7


Debt to Capitalization		35.8	%		34.2	%

Cash and Cash Equivalents	$	39.3		$	55.9

⁽¹⁾	Includes $333.0 million and $213.0 million of borrowings outstanding under our revolving credit facility at June 30, 2011 and December 31, 2010, respectively.

During the six months ended June 30, 2011, we paid dividends of $6.3 million ($0.06 per share) on our common stock. A regular dividend has been declared for each quarter since we became a public company in 1990.

Capital and Exploration Expenditures

On an annual basis, we generally fund most of our capital and exploration activities, excluding any significant oil and gas property acquisitions, with cash generated from operations and, when necessary, borrowings under our revolving credit facility. We budget these capital expenditures based on our projected cash flows for the year.

The following table presents major components of capital and exploration expenditures:


	Six Months Ended June 30,
(In millions)	2011		2010
Capital Expenditures

Drilling and Facilities	$	345.8	$	261.6
Leasehold Acquisitions		30.0		90.3
Acquisitions		—		0.8
Pipeline and Gathering		5.7		18.1
Other		5.0		4.5

		386.5		375.3
Exploration Expense		10.9		18.7

Total	$	397.4	$	394.0

For the full year of 2011, we plan to drill approximately 150 gross (98.7 net) wells. This 2011 drilling program includes approximately $600 million in total capital and exploration expenditures, net of proceeds from the sale of assets that may be used to fund incremental capital and exploration expenditures. See “Overview” for additional information regarding the current year drilling program. We will continue to assess the natural gas and crude oil price environment and our liquidity position and may increase or decrease the capital and exploration expenditures accordingly.

Contractual Obligations

We have various contractual obligations in the normal course of our operations. For further information, please refer to “Transportation Agreements” under Note 6 in the Notes to the Condensed Consolidated Financial Statements and Note 8 in the Notes to Consolidated Financial Statements included in our 10-K.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted and adopted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. See our Form 10-K for further discussion of our critical accounting policies.

Recently Issued Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The amendments in ASU No. 2011-04 generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. ASU No. 2011-04 results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRSs. The amendments in ASU No. 2011-04 are to be applied prospectively. For public entities, the amendments are effective for interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. We do not expect this guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income,” requiring most entities to present items of net income and other comprehensive income either in one continuous statement—referred to as the statement of comprehensive income—or in two separate, but consecutive, statements of net income and other comprehensive income. The new requirements are effective for public entities for fiscal years (including interim periods) beginning after December 15, 2011. We do not expect this guidance to have a significant impact on our consolidated financial position, results of operations or cash flows.

Results of Operations

Second Quarter of 2011 and 2010 Compared

We reported net income in the second quarter of 2011 of $54.7 million, or $0.53 per share, compared to net income in the second quarter of 2010 of $21.7 million, or $0.21 per share. Net income increased in the second quarter of 2011 by $33.0 million, primarily due to an increase in operating revenues and gain on sale of assets partially offset by increases in operating expenses, interest expense and income tax expense.

Operating revenues increased by $40.5 million due to increased natural gas and crude oil and condensate revenues partially offset by decreased brokered natural gas revenues. Operating expenses increased by $15.6 million between periods primarily due to increases in general and administrative expenses, transportation and gathering expenses and depreciation, depletion, and amortization, partially offset by lower taxes other than income, exploration expense, brokered natural gas cost and direct operating expenses. In addition, net income was impacted during the second quarter by increased gain on sale of assets, partially offset by higher income tax and interest expense.

Revenue, Price and Volume Variances

Below is a discussion of revenue, price and volume variances.


	Three Months Ended June 30,				Variance
Revenue Variances (In thousands)	2011		2010		Amount			Percent
Natural Gas ⁽¹⁾	$	201,260	$	163,586	$	37,674			23	%
Brokered Natural Gas		11,072		13,348		(2,276	)		(17	%)
Crude Oil and Condensate		28,042		21,211		6,831			32	%
Other		1,225		1,154		71			6	%

⁽¹⁾

Natural Gas Revenues exclude the unrealized loss of $0.9 and the unrealized gain of $0.9 million from the change in fair value of our basis swaps in 2011 and 2010, respectively.


	Three Months Ended June 30,				Variance						Increase (Decrease) (In thousands)
	2011		2010		Amount			Percent			Increase (Decrease) (In thousands)
Price Variances
Natural Gas ⁽¹⁾	$	4.67	$	5.65	$	(0.98	)		(17	%)	$	(42,414	)
Crude Oil and Condensate ⁽²⁾	$	95.17	$	96.70	$	(1.53	)		(2	%)		(451	)

Total											$	(42,865	)

Volume Variances
Natural Gas (Mmcf)		43,128		28,961		14,167			49	%	$	80,088
Crude Oil and Condensate (Mbbl)		295		219		76			35	%		7,282

Total											$	87,370

⁽¹⁾

These prices include the realized impact of derivative instrument settlements, which increased the price by $0.32 per Mcf in 2011 and by $1.44 per Mcf in 2010.

⁽²⁾

These prices include the realized impact of derivative instrument settlements, which decreased the price by $1.74 per Bbl in 2011 and increased the price by $21.82 per Bbl in 2010.

Natural Gas Revenues

The increase in natural gas revenues of $37.7 million, excluding the impact of unrealized gains and losses discussed above, is primarily due to increased production during the second quarter of 2011 in Susquehanna County, Pennsylvania, partially offset by lower realized natural gas prices. The increased production is primarily due to increased production in the North region associated with the drilling program and the start up of additional compressors at the Lathrop compressor station in Susquehanna County, partially offset by decreases in production in the South region due to normal production declines and a shift from gas to oil projects.

Crude Oil and Condensate Revenues

The increase in crude oil and condensate revenues of $6.8 million is primarily due to increased production in the South region associated with the drilling program in the Eagle Ford Shale in South Texas, partially offset by lower realized oil prices.

Brokered Natural Gas Revenue and Cost


	Three Months Ended June 30,				Variances						Price and Volume Variance (In thousands)
	2011		2010		Amount			Percent			Price and Volume Variance (In thousands)
Brokered Natural Gas Sales
Sales Price ($/Mcf)	$	5.10	$	5.04	$	0.06			1	%	$	130
Volume Brokered (Mmcf)	x	2,173	x	2,649		(476	)		-18	%		(2,406	)

Brokered Natural Gas Revenues (In thousands)	$	11,072	$	13,348							$	(2,276	)

Brokered Natural Gas Purchases
Purchase Price ($/Mcf)	$	4.51	$	4.45	$	0.06			1	%	$	(126	)
Volume Brokered (Mmcf)	x	2,173	x	2,649		(476	)		-18	%		2,123

Brokered Natural Gas Cost (In thousands)	$	9,796	$	11,793							$	1,997

Brokered Natural Gas Margin (In thousands)	$	1,276	$	1,555							$	(279	)

The decreased brokered natural gas margin of $0.3 million is a result of primarily a decrease in brokered volumes.

Impact of Derivative Instruments on Operating Revenues

The following table reflects the realized impact of cash settlements and the net unrealized change in fair value of derivative instruments:


	Three Months Ended June 30,
	2011						2010
(In thousands)	Realized			Unrealized			Realized		Unrealized
Operating Revenues—Increase / (Decrease) to Revenue
Cash Flow Hedges
Natural Gas	$	13,667		$	—		$	41,812	$	—
Crude Oil		(514	)		—			4,779		—

Total Cash Flow Hedges		13,153			—			46,591		—

Other Derivative Financial Instruments
Natural Gas Basis Swaps		—			(903	)		—		942

Total Other Derivative Financial Instruments		—			(903	)		—		942

Total Cash Flow Hedges and Other Derivative Financial Instruments	$	13,153		$	(903	)	$	46,591	$	942

We are exposed to market risk on derivative instruments to the extent of changes in market prices of natural gas and crude oil. However, the market risk exposure on these derivative contracts is generally offset by the gain or loss recognized upon the ultimate sale of the commodity. Although notional contract amounts are used to express the volume of natural gas price agreements, the amounts that can be subject to credit risk in the event of non-performance by third parties are substantially smaller. We do not anticipate any material impact on our financial results due to non-performance by third parties. Our primary derivative contract counterparties are Bank of Montreal, BNP Paribas, JPMorgan Chase, Goldman Sachs and Bank of America.

Operating and Other Expenses


	Three Months Ended June 30,				Variance
(In thousands)	2011		2010		Amount			Percent
Operating and Other Expenses
Brokered Natural Gas Cost	$	9,796	$	11,793	$	(1,997	)		(17	%)
Direct Operations		22,579		24,347		(1,768	)		(7	%)
Transportation and Gathering		16,074		4,767		11,307			237	%
Taxes Other Than Income		5,877		11,841		(5,964	)		(50	%)
Exploration		4,592		10,233		(5,641	)		(55	%)
Depreciation, Depletion and Amortization		83,225		76,726		6,499			8	%
General and Administrative		26,006		12,853		13,153			102	%

Total Operating Expense	$	168,149	$	152,560	$	15,589			10	%
Gain / (Loss) on Sale of Assets	$	34,071	$	4,387	$	29,684			677	%
Interest Expense and Other		18,044		15,769		2,275			14	%
Income Tax Expense		33,897		14,617		19,280			132	%

Total costs and expenses from operations increased by $15.6 million, or 10%, in the second quarter of 2011 compared to the same period of 2010. The primary reasons for this fluctuation are as follows:

•

General and Administrative increased by $13.2 million primarily due to $9.3 million higher stock-based compensation expense primarily associated with the mark to market of the liability portion of our performance shares as a result of our higher stock price of $66.31 as of June 30, 2011 compared to $31.22 as of June 30, 2010. Higher incentive compensation expense and professional service costs also contributed to the increase.

•

Transportation and Gathering increased by $11.3 million primarily due to the commencement of various firm transportation and gathering arrangements in the first half of 2011 in the North region.

•

Depreciation, Depletion and Amortization increased by $6.5 million, of which $6.6 million was due to increased depreciation and depletion from increased capital spending and higher equivalent production volumes offset by a lower DD&A rate of $1.63 per Mcfe for three months ended June 30, 2011 compared to $2.21 per Mcfe for three months ended June 30, 2010. The increase in depletion and depreciation was offset by a decrease in amortization of unproved properties of $0.1 million.

•

Taxes Other Than Income decreased $6.0 million primarily due to lower production taxes due to tax credits and related refunds received in 2011 on qualifying wells and lower ad valorem tax expense partially offset by higher franchise taxes expense.

•

Exploration Expense decreased $5.6 million primarily due to lower geophysical and geological costs in the North region primarily due to a reduction in activity.

•

Brokered Natural Gas Costs decreased $2.0 million. See the preceding table titled “ Brokered Natural Gas Revenue and Cost “ for further analysis.

•

Direct Operations decreased $1.8 million largely due to lower compressor expenses in both the North and South regions primarily due to the sale of our gathering system in the North region in the fourth quarter of 2010, increased use of centralized compression and a shift in our drilling program, and decreased lease maintenance expense in both the North and South regions. Partially offsetting these decreases were increases in operating costs primarily driven by increased production. Higher workover and contract labor expense and increased plugging and abandonment expense as the result of increased regulatory requirements also contributed to higher operating costs.

Gain / (Loss) on Sale of Assets

An aggregate gain of $34.1 million was recognized in the second quarter of 2011 primarily due to the sale of oil and gas properties in East Texas. During the second quarter of 2010, a gain of $10.3 million was recognized on the sale of the Woodford shale prospect, offset by an impairment charge of $5.8 million on assets held for sale.

Income Tax Expense

Income tax expense increased by $19.3 million in the second quarter of 2011 compared to the second quarter of 2010 primarily due to increased pretax income partially offset by a lower effective tax rate. The effective tax rate for the second quarter of 2011 and 2010 was 38.3% and 40.3%, respectively.

Interest Expense and Other

Interest expense and other increased by $2.3 million in the second quarter of 2011 compared to the second quarter of 2010 primarily due to an increase in weighted-average borrowings under our credit facility based on daily balances of approximately $342.0 million during the second quarter of 2011 compared to approximately $317.4 million during the second quarter of 2010. In addition, the weighted-average effective interest rate on the credit facility increased to approximately 3.8% during the second quarter of 2011 compared to approximately 3.68% during the second quarter of 2010. Furthermore, in December 2010 we also issued $175 million aggregate principal amount of 5.58% weighted-average fixed rate notes, which increased interest expense recognized in the second quarter of 2011.

Six Months of 2011 and 2010 Compared

We reported net income in the first six months of 2011 of $67.5 million, or $0.65 per share, compared to net income in the first six months of 2010 of $50.4 million, or $0.49 per share. Net income increased in the first six months of 2011 by $17.2 million, primarily due to an increase in operating revenues and gain on sale of assets, partially offset by increases in operating expenses, interest expense and income tax expense.

Operating revenues increased by $33.1 million, largely due to increased natural gas, crude oil and condensate and other revenues, partially offset by decreased brokered natural gas revenues. Operating expenses increased by $30.2 million between periods primarily due to increases in general and administrative expenses, transportation and gathering expenses, depreciation, depletion and amortization and direct operations partially offset by lower taxes other than income, brokered natural gas cost and exploration expense. In addition, net income was impacted during the first six months by increased gain on sale of assets partially offset by higher interest expense and income tax expense.

Revenue, Price and Volume Variances

Below is a discussion of revenue, price and volume variances.


	Six Months Ended June 30,				Variance
Revenue Variances (In thousands)	2011		2010		Amount			Percent
Natural Gas ⁽¹⁾	$	371,341	$	334,044	$	37,297			11	%
Brokered Natural Gas		29,480		38,221		(8,741	)		(23	%)
Crude Oil and Condensate		46,634		41,193		5,441			13	%
Other		3,153		2,774		379			14	%

⁽¹⁾

Natural Gas Revenues exclude the unrealized loss of $0.9 million and the unrealized gain of $0.4 million from the change in fair value of our basis swaps in 2011 and 2010, respectively.


	Six Months Ended June 30,				Variance						Increase (Decrease) (In thousands)
	2011		2010		Amount			Percent			Increase (Decrease) (In thousands)
Price Variances
Natural Gas ⁽¹⁾	$	4.67	$	6.15	$	(1.48	)		(24	%)	$	(117,578	)
Crude Oil and Condensate ⁽²⁾	$	91.80	$	97.04	$	(5.24	)		(5	%)		(2,661	)

Total											$	(120,239	)

Volume Variances
Natural Gas (Mmcf)		79,499		54,353		25,146			46	%	$	154,875
Crude Oil and Condensate (Mbbl)		508		425		83			20	%		8,102

Total											$	162,977

⁽¹⁾

These prices include the realized impact of derivative instrument settlements, which increased the price by $0.34 per Mcf in 2011 and by $1.29 per Mcf in 2010.

⁽²⁾

These prices include the realized impact of derivative instrument settlements, which decreased the price by $1.61 per Bbl in 2011 and increased the price by $22.08 per Bbl in 2010.

Natural Gas Revenues

The increase in Natural Gas Revenues of $37.3 million is primarily due to increased production during the first half of 2011, partially offset by lower realized natural gas prices. The increased production is primarily due to increased production in the North region associated with the drilling program and the start up of additional compressors at the Lathrop compressor station during the first half of the year in Susquehanna County, partially offset by decreases in production in the South region due to normal production declines and a shift from gas to oil projects.

Crude Oil and Condensate Revenues

The increase in Crude Oil and Condensate Revenues of $5.4 million is primarily due to increased production in the South region associated with the drilling program in the Eagle Ford Shale in South Texas, partially offset by lower realized oil prices.

Brokered Natural Gas Revenue and Cost


	Six Months Ended June 30,				Variance						Price and Volume Variances (In thousands)
	2011		2010		Amount			Percent			Price and Volume Variances (In thousands)
Brokered Natural Gas Sales
Sales Price ($/Mcf)	$	5.21	$	5.75	$	(0.54	)		(9	%)	$	(3,073	)
Volume Brokered (Mmcf)	x	5,661	x	6,644		(983	)		(15	%)		(5,668	)

Brokered Natural Gas Revenues (In thousands)	$	29,480	$	38,221							$	(8,741	)

Brokered Natural Gas Purchases
Purchase Price ($/Mcf)	$	4.44	$	4.98	$	(0.54	)		(11	%)	$	3,021
Volume Brokered (Mmcf)	x	5,661	x	6,644		(983	)		(15	%)		4,882

Brokered Natural Gas Cost (In thousands)	$	25,158	$	33,061							$	7,903

Brokered Natural Gas Margin (In thousands)	$	4,322	$	5,160							$	(838	)

The decreased brokered natural gas margin of $0.8 million is primarily a result of a decrease in brokered volumes coupled with a decrease in purchase price that outpaced the sales price.

Impact of Derivative Instruments on Operating Revenues

The following table reflects the realized impact of cash settlements and the net unrealized change in fair value of derivative instruments:


	Six Months Ended June 30,
	2011						2010
(In thousands)	Realized			Unrealized			Realized		Unrealized
Operating Revenues—Increase / (Decrease) to Revenue
Cash Flow Hedges
Natural Gas	$	27,148		$	—		$	70,253	$	—
Crude Oil		(816	)		—			9,362		—

Total Cash Flow Hedges		26,332			—			79,615		—

Other Derivative Financial Instruments
Natural Gas Basis Swaps		—			(886	)		—		355

Total Other Derivative Financial Instruments		—			(886	)		—		355

Total Cash Flow Hedges and Other Derivative Financial Instruments	$	26,332		$	(886	)	$	79,615	$	355

Operating and Other Expenses


	Six Months Ended June 30,				Variance
(In thousands)	2011		2010		Amount			Percent
Operating and Other Expenses
Brokered Natural Gas Cost	$	25,158	$	33,061	$	(7,903	)		(24	%)
Direct Operations		49,586		47,330		2,256			5	%
Transportation and Gathering		28,942		8,557		20,385			238	%
Taxes Other Than Income		14,028		22,646		(8,618	)		(38	%)
Exploration		10,900		18,659		(7,759	)		(42	%)
Depreciation, Depletion and Amortization		160,349		150,224		10,125			7	%
General and Administrative		50,305		28,599		21,706			76	%

Total Operating Expense	$	339,268	$	309,076	$	30,192			10	%
Gain / (Loss) on Sale of Assets	$	32,554	$	5,146	$	27,408			533	%
Interest Expense and Other		35,411		30,681		4,730			15	%
Income Tax Expense		40,034		31,598		8,436			27	%

Total costs and expenses from operations increased by $30.2 million, or 10%, in the first six months of 2011 compared to the same period of 2010. The primary reasons for this fluctuation are as follows:

•

General and Administrative increased by $21.7 million primarily due to $14.2 million higher stock-based compensation expense primarily associated with the mark to market of the liability portion of our performance shares as a result of our higher stock price of $66.31 as of June 30, 2011 compared to $31.22 as of June 30, 2010. Higher incentive compensation expense and professional service costs also contributed to the increase.

•

Transportation and Gathering increased by $20.4 million primarily due to the commencement of various firm transportation and gathering arrangements in the first half of 2011 primarily in the North region.

•

Depreciation, Depletion and Amortization increased by $10.1 million, of which $16.4 million was due to increased depreciation and depletion from increased capital spending and higher equivalent production volumes offset by a lower DD&A rate of $1.70 per Mcfe for six months ended June 30,2011 compared to $2.19 per Mcfe for six months ended June 30, 2010. The increase in depletion and depreciation was offset by a decrease in amortization of unproved properties of $6.2 million primarily due to a decrease in amortization rates due to a shift in our drilling and development activities.

•

Taxes Other Than Income decreased $8.6 million due to decreased production taxes due to tax refunds and credits received in 2011 on qualifying wells and lower ad valorem taxes partially offset by an increase in franchise taxes expense.

•

Brokered Natural Gas Costs decreased $7.9 million. See the preceding table titled “ Brokered Natural Gas Revenue and Cost ” for further analysis.

•

Exploration Expense decreased $7.8 million primarily due to lower geophysical and geological costs in the North region primarily due to a reduction in activity.

•

Direct Operations increased $2.3 million largely due to increased operating costs primarily driven by increased production. Contributing to the increase are higher workover and environmental and regulatory costs in both the North and South regions and higher plugging and abandonment expense. Plugging and abandonment expense has increased in the South region due to increased plugging and abandonment activity as a result of an increase in regulatory requirements. Offsetting these increases were lower compression expenses in both the North and South regions primarily due to the sale of our gathering system in the North region in the fourth quarter of 2010, increased use of centralized compression and a shift in our drilling program.

Gain / (Loss) on Sale of Assets

An aggregate gain of $32.6 million was recognized in the first half of 2011 on the sale of oil and gas properties in the East Texas and the sale of non-core assets as part of our ongoing asset portfolio management program. In the first half of 2010, a gain of $10.3 million was recognized on the sale of the Woodford shale prospect, offset by an impairment charges of $5.8 million on assets held for sales.

Income Tax Expense

Income tax expense increased by $8.4 million in the first six months of 2011 compared to the first six months of 2010 primarily due to increased pretax income partially offset by a lower effective tax rate. The effective tax rate for the first six months of 2011 and 2010 was 37.2% and 38.5%, respectively. The effective tax rate was lower due to a reduction in estimated state tax liabilities.

Interest Expense and Other

Interest expense and other increased by $4.7 million in the first six months of 2011 compared to the first six months of 2010 primarily due to an increase in weighted-average borrowings under our credit facility based on daily balances of approximately $305.9 million during the first six months of 2011 compared to approximately $259.0 million during the first six months of 2010. The weighted-average effective interest rate on the credit facility increased to approximately 4.3% during the first six months of 2011 compared to approximately 3.7% during the first six months of 2010. In addition, in December 2010, we also issued $175 million aggregate principal amount of 5.58% weighted-average fixed rate notes, which increased interest expense recognized in the first six months of 2011.

Forward-Looking Information

The statements regarding future financial and operating performance and results, market prices, future hedging 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,” “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, market factors, market prices (including regional basis differentials) of natural gas and crude oil, results for future drilling and marketing activity, future production and costs and other factors detailed herein and in our other Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

Market Risk

Our primary market risk is exposure to crude oil and natural gas prices. Realized prices are mainly driven by worldwide prices for crude oil and spot market prices for North American natural gas production. Commodity prices are volatile and unpredictable.

Derivative Instruments and Hedging Activity

Our hedging strategy is designed to reduce the risk of price volatility for our production in the natural gas and crude oil markets. A hedging committee that consists of members of senior management oversees our hedging activity. Our hedging arrangements apply to only a portion of our production and provide only partial price protection. These hedging arrangements limit the benefit to us in periods of increasing prices, but offer protection in the event of price declines. Further, if our counterparties defaulted, this protection might be limited as we might not receive the benefits of the hedges. Please read the discussion below as well as Note 7 of the Notes to the Condensed Consolidated Financial Statements for a more detailed discussion of our hedging arrangements.

As of June 30, 2011, we had 42 derivative contracts open: 27 natural gas price swap arrangements, five natural gas collar arrangements, six natural gas basis swaps, one crude oil price collar arrangement and three crude oil price swap arrangements. During the first six months of 2011, we entered into 31 new derivative contracts covering anticipated crude oil and natural gas production for 2011, 2012, and 2013.

As of June 30, 2011, we had the following outstanding commodity derivatives:

Commodity and Derivative Type

Weighted-Average Contract Price

Volume

Contract Period

Net
Unrealized
Gain / (Loss)
(In thousands)

Derivatives Designated as
Hedging Instruments

Natural Gas Swaps

$6.24 per Mcf

6,508 Mmcf

Jul. 2011 - Dec. 2011

$9,372

Natural Gas Swaps

$5.18 per Mcf

118,049 Mmcf

Jul. 2011 - Dec. 2012

32,008

Natural Gas Swaps

$5.28 per Mcf

17,854 Mmcf

Jan. 2012 - Dec. 2012

4,342

Natural Gas Collars

$6.17 Ceiling / $5.13 Floor per Mcf

17,805 Mmcf

Jan. 2013 - Dec. 2013

3,456

Crude Oil Collars

$93.25 Ceiling / $80.00 Floor per Bbl

184 Mbbl

Jul. 2011 - Dec. 2011

(1,167

)

Crude Oil Swaps

$106.20 per Bbl

184 Mbbl

Jul. 2011 - Dec. 2011

1,710

Crude Oil Swaps

$105.00 per Bbl

366 Mbbl

Jan. 2012 - Dec. 2012

1,807

$51,528

Derivatives Not Designated as Hedging Instruments

Natural Gas Basis Swaps

$(0.27) per Mcf

16,123 Mmcf

Jan. 2012 - Dec. 2012

(3,057

)

$48,471

The amounts set forth under the net unrealized gain/(loss) column in the table above represent our total unrealized gain position at June 30, 2011 and excludes the impact of non-performance risk of $0.1 million. Non-performance risk was primarily evaluated by reviewing credit default swap spreads for the various financial institutions in which we have derivative transactions, while non-performance risk of the Company is evaluated using a market credit spread provided by the Company’s bank.

From time to time, we enter into natural gas and crude oil swap and collar agreements with counterparties to hedge price risk associated with a portion of our production. These agreements are not held for trading purposes. Under the price swaps, we receive a fixed price on a notional quantity of natural gas or crude oil in exchange for paying a variable price based on a market-based index, such as the NYMEX gas and crude oil futures. Under the collar agreements, if the index price rises above the ceiling price, we pay the counterparty. If the index price falls below the floor price, the counterparty pays us.

We had natural gas price swaps covering 28.9 Bcf, or 36%, of our first six months of 2011 natural gas production at an average price of $5.39 per Mcf.

We had one crude oil swap covering 91 Mbbl, or 18%, of our first six months of 2011 crude oil production, at an average price of $106.20 per Bbl.

During the first six months of 2011, crude oil collars covered 181 Mbbl, or 36% of total crude oil production, with a weighted-average floor price of $80.00 per Bbl and a weighted-average ceiling price of $93.25 per Bbl.

We are exposed to market risk on these open contracts, to the extent of changes in market prices of natural gas and crude oil. However, the market risk exposure on these hedged contracts is generally offset by the gain or loss recognized upon the ultimate sale of the commodity that is hedged.

The preceding paragraphs contain forward-looking information concerning future production and projected gains and losses, which may be impacted both by production and by changes in the future market prices of energy commodities. See “Forward-Looking Information” for further details.

Fair Market Value of Financial Instruments

The estimated fair value of financial instruments is the amount at which the instrument could be exchanged currently between willing parties. The carrying amounts reported in the Condensed Consolidated Balance Sheet for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term maturities of these instruments.

The fair value of long-term debt is the estimated cost to acquire the debt, including a credit spread for the difference between the issue rate and the period end market rate. The credit spread is our default or repayment risk. The credit spread (premium or discount) is determined by comparing our fixed-rate notes and credit facility to new issues (secured and unsecured) and secondary trades of similar size and credit statistics for both public and private debt. The fair value of all of the fixed-rate notes and credit facility is based on interest rates currently available to us.

We use available marketing data and valuation methodologies to estimate the fair value of debt.

June 30, 2011

December 31, 2010

(In thousands)

Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value

Long-Term Debt

1,095,000

1,231,089

975,000

1,100,830

ITEM 4.

Controls and Procedures

As of the end of the current reported period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective at a reasonable assurance level with respect to the recording, processing, summarizing and reporting, within the time periods specified in the Commission’s rules and forms, of information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

There were no changes in the Company’s internal control over financial reporting that occurred during the second quarter of 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.

Legal Proceedings

The information set forth under the heading “Environmental Matters” in Note 6 of the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this quarterly report is incorporated by reference in response to this item.

We have received a number of Notices of Violation from the Pennsylvania Department of Environmental Protection (PaDEP) relating to alleged violations, primarily with respect to the Pennsylvania Clean Streams Law, the Pennsylvania Oil and Gas Act and the Pennsylvania Solid Waste Management Act and the rules and regulations promulgated thereunder. We have responded to these Notices of Violation, have remediated the areas in question and are actively cooperating with the PaDEP. While we cannot predict with certainty whether these Notices of Violation will result in fines and/or penalties, if fines and/or penalties are imposed, the aggregate of these fines and/or penalties could result in monetary sanctions in excess of $100,000.

ITEM 1A.

Risk Factors

For additional information about the risk factors facing the Company, see Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The Board of Directors has authorized a share repurchase program under which the Company may purchase shares of common stock in the open market or in negotiated transactions. There is no expiration date associated with the authorization. During the six months ended June 30, 2011, the Company did not repurchase any shares of common stock. All purchases executed to date have been through open market transactions. The maximum number of shares that may yet be purchased under the plan as of June 30, 2011 was 4,795,300.

ITEM 5.

Other Information

Effective January 1, 2011, the Company amended and restated the Deferred Compensation Plan to incorporate prior plan amendments and to provide for Company contributions that may not be made to the Company’s tax-qualified Savings Investment Plan as a result of limitations imposed by the Internal Revenue Code.

ITEM 6.

Exhibits


Exhibit Number		Description
*10.1		Deferred Compensation Plan of the Company, as Amended and Restated, Effective January 1, 2011

15.1		Awareness letter of PricewaterhouseCoopers LLP

31.1		302 Certification - Chairman, President and Chief Executive Officer

31.2		302 Certification - Vice President, Chief Financial Officer and Treasurer

32.1		906 Certification

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Compensatory plan, contract or agreement.

SIGNATURES

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 thereunto duly authorized.


	CABOT OIL & GAS CORPORATION
		(Registrant)

July 29, 2011	By:	/ S / D AN O. D INGES
		Dan O. Dinges
		Chairman, President and
		Chief Executive Officer
		(Principal Executive Officer)

July 29, 2011	By:	/ S / S COTT C. S CHROEDER
		Scott C. Schroeder
		Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)

July 29, 2011	By:	/ S / T ODD M. R OEMER
		Todd M. Roemer
		Controller
		(Principal Accounting Officer)

Exhibit 10.1

CABOT OIL & GAS CORPORATION

DEFERRED COMPENSATION PLAN

(As Amended and Restated Effective January 1, 2011)

TABLE OF CONTENTS


ARTICLE I TITLE AND DEFINITIONS		1
1.1	Title.	1
1.2	Definitions.	1

ARTICLE II PARTICIPATION		6

ARTICLE III DEFERRAL ELECTIONS		7
3.1	Amount of Deferrals.	7
3.2	Procedure for Elections.	7
3.3	Investment Elections.	8
3.4	Forms and Procedures.	9

ARTICLE IV DEFERRAL ACCOUNTS AND TRUST FUNDING		10
4.1	Deferral Accounts.	10
4.2	Company Discretionary Contribution Account.	10
4.3	Trust Funding.	11

ARTICLE V VESTING		12

ARTICLE VI DISTRIBUTIONS		13
6.1	Distribution of Deferred Compensation and Discretionary Company Contributions.	13
6.2	Unforeseeable Emergency Distribution.	15
6.3	Forfeiture of Unvested Amounts.	16
6.4	Inability to Locate Participant.	16
6.5	Installment Payments Deemed to be Separate Payments.	16
6.6	Earnings.	16

ARTICLE VII ADMINISTRATION		17
7.1	Committee.	17
7.2	Committee Action.	17
7.3	Powers and Duties of the Committee.	17
7.4	Construction and Interpretation.	18
7.5	Information.	18
7.6	Compensation, Expenses and Indemnity.	18
7.7	Quarterly Statements.	18
7.8	Claims and Review Procedures.	19

ARTICLE VIII MISCELLANEOUS		21
8.1	Unsecured General Creditor.	21
8.2	Restriction Against Assignment.	21
8.3	Withholding.	21
8.4	Amendment, Modification, Suspension or Termination.	21
8.5	Governing Law.	22
8.6	Receipt or Release.	22
8.7	Payments on Behalf of Persons Under Incapacity.	22
8.8	Limitation of Rights and Employment Relationship.	22
8.9	Headings.	22
8.10	Section 409 A.	22

CABOT OIL & GAS CORPORATION

DEFERRED COMPENSATION PLAN

WHEREAS, effective as of June 1, 1998, Cabot Oil & Gas Corporation (the “Company”) established the Cabot Oil & Gas Corporation Deferred Compensation Plan (the “Plan”) to provide supplemental retirement income benefits for a select group of management and highly compensated employees of the Company and certain of its subsidiary or related companies through deferrals of salary, bonus, performance share awards, Company contributions of certain amounts which cannot be made to the Company 401 (k) Plan due to Internal Revenue Code limitations, amounts payable under any Supplemental Executive Retirement Plan (“SERP”) Agreements to which a participant in this Plan is a party and certain Company discretionary contributions; and

WHEREAS, the Company subsequently amended, and then amended and restated the Plan effective January 1, 2009, to allow participants to defer the receipt of certain benefits in order to provide a regular stream of income during retirement in a manner that complies with Section 409A of the Internal Revenue Code of 1986, as amended, and to make certain other changes deemed necessary or appropriate, including prohibiting the deferral of performance shares;

WHEREAS, the Company subsequently amended the Plan via the First and Second Amendments, and desired to amend and restate the Plan to incorporate such amendments and to clarify certain provisions of the Plan.

NOW, THEREFORE, effective as of January 1, 2011, the Plan is hereby amended and restated, as follows:

ARTICLE I

TITLE AND DEFINITIONS

1.1

Title .

This Plan shall be known as Cabot Oil & Gas Corporation Deferred Compensation Plan.

1.2	Definitions .

Whenever the following words and phrases are used in this Plan, with the first letter capitalized, they shall have the meanings specified below.

(a) “Account” or “Accounts” shall mean a Participant’s Deferral Account and Company Contribution Account.

(b) “Base Salary” shall mean a Participant’s annual base salary, excluding bonus, incentive and all other remuneration for services rendered to the Company and prior to reduction for any salary contributions to a plan established pursuant to Section 125 of the Code or qualified pursuant to Section 401(k) of the Code.

(c) “Beneficiary” or “Beneficiaries” shall mean the person or persons, including a trustee, personal representative or other fiduciary, last designated in writing by a Participant in accordance with procedures established by the Committee to receive the benefits specified hereunder in the event of the Participant’s death. No beneficiary designation shall become effective until it is filed with the Committee. Any designation shall be revocable at any time through a written instrument filed by the Participant with the Committee with or without the consent of the previous Beneficiary. If there is no such designation or if there is no surviving designated Beneficiary, then the Beneficiary shall be the Participant’s surviving spouse, if any, or, if there is no surviving spouse, the Participant’s estate. Payment by the Company to the Beneficiary identified pursuant to the terms of this Section 1.2(c) if no such designation exists, of all benefits owed hereunder shall terminate any and all liability of the Company.

(d) “Board of Directors” or “Board” shall mean the Board of Directors of Cabot Oil & Gas Corporation.

(e) “Bonus” shall mean the bonus earned as of the last day of the Plan Year, provided a Participant is in the employ of the Company on the date on which such bonus is paid.

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(g) “Committee” shall mean the Committee appointed by the Board to administer the Plan in accordance with Article VII.

(h) “Company” shall mean Cabot Oil & Gas Corporation and any successor corporations. “Company” shall include each corporation which is a member of a controlled group of corporations (within the meaning of Section 414(b) of the Code) of which Cabot Oil & Gas Corporation is a component member, if the Board provides that such corporation shall participate in the Plan.

(i) “Company Contribution Account” shall mean the bookkeeping account maintained by the Company for each Participant that, pursuant to Section 4.2, is credited with an amount equal to the applicable of the following: the Company Discretionary Contribution Amount, Matching Contributions, the Company DB SERP Contribution Amount, the Company DC Restoration Amount and earnings and losses.

(j) “Company DC Restoration Amount” shall mean, if contributed by the Company for each Participant for a Plan Year, an additional discretionary amount allocated to a Participant under this Plan to reflect Company nonelective contributions which could not be made to the Company’s 401(k) Plan due to limitations imposed by the Code.

(k) “Company Discretionary Contribution Amount” shall mean, if contributed by the Company for each Participant for a Plan Year, an additional discretionary amount allocated to a Participant under this Plan as determined by the Company. Such amount may differ from Participant to Participant both in amount, including no contribution, and as a percentage of Compensation.

(l) “Company DB SERP Contribution Amount” shall mean the amount of the benefit provided to the Participant under the terms of the supplemental employee retirement plan (“DB SERP”) agreement between the Company and the Participant; provided, however, that in no event shall a spousal death benefit payable under the terms of such DB SERP agreement be deemed to be a Company DB SERP Contribution Amount for purposes of this Plan.

(m) “Compensation” shall mean the amount of the Base Salary and Bonus that the Participant is entitled to receive for services rendered to the Company.

(n) “Deferral Account” shall mean the bookkeeping account maintained by the Committee for each Participant that, pursuant to Section 4.1, is credited with amounts equal to (i) the portion of Compensation that the Participant has elected to defer, (ii) the portion of any Performance Share Award that was credited to the Deferral Account prior to January 1, 2009 and (iii) earnings and losses.

(o) “Deferral Election” shall mean a written, electronic or other form of election permitted by the Committee pursuant to which a Participant may elect to defer a portion of his Compensation under the Plan.

(p) “Distributable Amount” shall mean the vested balance in the Participant’s Deferral Account and Company Contribution Account.

(q) “Effective Date” shall mean January 1, 2011.

(r) “Eligible Employee” shall mean members of the Company’s management group who are designated by the Company as eligible to participate in this Plan.

(s) “401 (k) Plan” shall mean the retirement plan maintained by the Company on the Effective Date that is intended to qualify under Sections 401(a) and 401(k) of the Code and any successor or replacement plan.

(t) “Fund” or “Funds” shall mean one or more of the investment funds selected by the Committee pursuant to Section 3.3(b).

(u) “Future Date Withdrawal” shall mean the distribution date elected by the Participant for the withdrawal of all amounts of Compensation, vested Matching Contributions and vested Company Discretionary Contribution Amounts deferred in a given Plan Year, and earnings and losses attributable thereto, as set forth on the election form for such Plan Year.

(v) “Interest” shall mean, for each Fund, an amount equal to the net rate of gain or loss on the assets of such Fund, as calculated on a daily basis.

(w) “Investment Fund Subaccount” means one of the separate subaccounts into which a Participant’s Deferral Account is divided pursuant to a Participant’s election under Section 3.3(a).

(x) “Matching Contribution” means, for a given Plan Year, 6% of Compensation minus the actual amount of matching contributions made to the Company’s 401(k) Plan by the Company provided, however, that in no event shall the Matching Contribution exceed the excess of the dollar limit imposed by Code Section 402(g) over the actual amount of matching contribution made to the 401 (k) Plan by the Company.

(y) “Participant” shall mean any Eligible Employee who becomes a Participant in this Plan in accordance with Article II.

(z) “Payment Date” shall mean

(i) except as provided in Section 1.2(y)(ii), the 15th business day following the earlier of (A) the date of Participant’s termination of employment or (B) the Participant’s death; and

(ii) in the case of a Participant who is a Specified Employee on the Payment Date otherwise applicable in Section 1.2(y)(i), the 15th business day following the earlier of (A) the expiration of six months following the date such Specified Employee separates from service or (B) the date of the Specified Employee’s death.

(aa) “Performance Share Award” shall mean the amount payable to a Participant pursuant to the Performance Share Award Agreement between the Company and such Participant. Effective as of January 1, 2009, Performance Share Awards may not be deferred under the terms of this Plan.

(bb) “Plan” shall mean Cabot Oil & Gas Corporation Deferred Compensation Plan set forth herein, now in effect, or as amended from time to time.

(cc) “Plan Year” shall mean the period of twelve consecutive months beginning on each January 1 and ending on December 31.

(dd) “Retirement” shall mean the termination of employment by the Participant on or after

(i) with respect to an individual who is an Eligible Employee or Participant as of January 1, 2009, the date of his attainment of age 55 with 10 years of active service with the Company; and

(ii) with respect to all other individuals, the date designated by the Committee at the time he is notified of his status as an Eligible Employee, which shall be either (A) the date of his attainment of age 55 with 10 years of active service with the Company or (B) the date of his attainment of age 65 with 5 years of active service with the Company.

(ee) “Section 409A” shall mean Section 409A of the Code and all related regulations and notices in effect thereunder.

(ff) “Specified Employee” shall mean a Participant who, on the date of his termination of employment with the Company, is treated as a Specified Employee by the Company in accordance with the requirements of Section 409A.

(gg) “Trust” shall mean Cabot Oil & Gas Corporation Deferred Compensation Plan Trust.

(hh) “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant resulting from:

(i) a sudden and unexpected illness or accident of the Participant or of his spouse, beneficiary or dependent (as defined in Section 152 of the Code without regard to Section 152(b)(1), Section 152(b)(2) and Section 152(d)(1)(B));

(ii) loss of a Participant’s property due to casualty and not otherwise covered by insurance; or

(iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant’s control.

Except as otherwise provided herein, “Unforeseeable Emergency” shall not include the purchase of a home or the payment of college tuition.

The Committee shall have the sole authority and discretion to determine whether a Participant has experienced an Unforeseeable Emergency and may require the Participant to submit such documentary evidence as the Committee, in its sole discretion, deems necessary to establish the existence or non-existence of an Unforeseeable Emergency and/or the amount of such distribution. The Committee shall have the sole discretion and authority to establish the time period within which Participant must provide any such documentary evidence.

ARTICLE II

PARTICIPATION

An Eligible Employee shall become a Participant when designated as such by the Committee. The Committee, in its sole discretion and on a Participant-by-Participant basis, may direct that a Participant shall not be permitted to make a Deferral Election under Article III of the Plan.

ARTICLE III

DEFERRAL ELECTIONS

3.1	Amount of Deferrals .

The amount specified by any Deferral Election applicable to a Participant’s Base Salary and/or Bonus shall be stated as a percentage that shall not exceed 100% of the sum of Base Salary and Bonus of the Participant. The Committee, in its sole and absolute discretion, may limit the total amount deferred by a Participant in order to satisfy Social Security tax (including Medicare), income tax and employee benefit plan withholding requirements. The minimum contribution that may be made in any Plan Year by an Eligible Employee is $2,500, provided that such minimum contribution can be satisfied from Base Salary and/or Bonus.

3.2	Procedure for Elections .

Subject to any modifications, additions or exceptions that the Committee, in its sole discretion, deems necessary or appropriate, the following terms shall apply to any Deferral Election:

(a) Timing of Election .

(i) Initial Deferral Election.

(A) Base Salary . An Eligible Employee who wishes to defer the receipt of all or a portion of his Base Salary must submit a Deferral Election to the Committee before December 15 of the Plan Year immediately preceding the Plan Year to which the Deferral Election applies. Notwithstanding the previous sentence, an Eligible Employee may elect to defer the receipt of all or a portion of his Base Salary by submitting a Deferral Election to the Committee within 30 days of the date on which he first becomes eligible to participate in the Plan. Each Deferral Election shall only be effective with respect to Compensation earned after the date of its submission to the Committee. If an Eligible Employee fails to submit a Deferral Election in a timely manner, he shall be deemed by the Committee to have elected not to defer any portion of his Base Salary under the Plan for the applicable Plan Year.

(B) Bonus . An Eligible Employee who wishes to defer the receipt of any portion of a Bonus that is contingent upon his attainment of written performance criteria applicable to a performance period of at least 12 consecutive months must submit a Deferral Election to the Committee on a date established by the Committee that occurs no less than six months before the close of the performance period applicable to such Bonus; provided, however, that (1) on the date of such Deferral Election, the Eligible Employee is employed by the Company and has been continuously employed by the Company since the later of (x) the beginning of such performance period or (y) the date that the performance criteria applicable to such Bonus are established in writing (which shall

occur within 90 days of the beginning of such performance period), and (2) in no event shall any such Deferral Election be made after the time when the Eligible Employee’s entitlement to the Bonus is readily ascertainable.

(C) Matching Contribution . Notwithstanding the foregoing, the Company may, in its discretion, direct that Matching Contributions shall be credited to Participant’s Account without regard to the status of his Deferral Election.

(ii) Subsequent Deferral Election . An Eligible Employee who had not elected to participate in the Plan at the time when he was initially eligible to do so may make a subsequent Deferral Election with respect to his Compensation for a subsequent Plan Year. Such Deferral Election must be made on or before December 15 of the Plan Year immediately preceding the Plan Year for which he desires to participate and shall apply only to Compensation in respect of services performed in the Plan Year following the Plan Year in which the Deferral Election is made.

(b) Term . Each Participant’s Deferral Election shall remain in effect for Compensation paid during the current and all future Plan Years until the earliest of (i) the date the Participant separates from service, (ii) the first day of the next succeeding Plan Year following the date the Participant revokes such Deferral Election or makes a subsequent Deferral Election but only with respect to Compensation for services performed in the future Plan Years or (iii) the first day of the next succeeding Plan Year after which the Committee determines that such Participant’s Deferral Contributions shall cease. The deferral of a DB SERP amount shall be separate from and independent of any other Deferral Election under this Plan as to time and form of payment.

(c) DB SERP Deferral . An Eligible Employee who becomes entitled to a Company DB SERP Contribution Amount shall be deemed to have deferred 100% of such amount under the terms of this Plan.

(d) Cessation and Recommencement of Deferral Elections . A Participant who has previously terminated a Deferral Election may only elect to recommence the deferral of his Compensation under this Plan, by filing a new Deferral Election with respect to the deferral of Compensation during the next Plan Year. Such Deferral Election must be made on a form provided by the Committee and shall be subject to the terms and provisions of Section 3.1.

3.3	Investment Elections .

(a) At the time a Participant makes a Deferral Election, the Participant shall designate the types of Funds the Participant’s Account will be deemed to be invested in for purposes of determining the amount of Interest to be credited to that Account. In making the designation pursuant to this Section 3.3, the Participant may specify that all or any multiple of his Account in whole percentage increments (equal to or greater than 1%)

be deemed to be invested in one or more of the types of Funds provided under the Plan as communicated from time to time by the Committee. A Participant may change the designation made under this Section 3.3 effective as of the next following business day, by following the procedures set forth by the Committee; provided, however, that the portion of Participant’s Account that is subject to such change shall be at least $250. If a Participant fails to designate a type of fund under this Section 3.3, his Account shall be invested in a fund designated by the Committee.

(b) Although the Participant may designate the type of investments, the Committee shall not be bound by such designation. The Committee, from time to time, in its sole discretion, may designate commercially available investments of each of the types communicated by the Committee to the Participant pursuant to Section 3.3(a) above to be the Funds. The interest rate of each such commercially available Fund shall be used to determine the amount of earnings or losses to be credited to Participant’s Account under Article IV.

3.4	Forms and Procedures .

The Administrative Committee, in its sole discretion, shall determine the forms and procedures regulating all Deferral Elections.

ARTICLE IV

DEFERRAL ACCOUNTS AND TRUST FUNDING

4.1	Deferral Accounts .

The Committee shall establish and maintain a Deferral Account for each Participant under the Plan. Each Participant’s Deferral Account shall be further divided into separate Investment Fund Subaccounts, each of which corresponds to a Fund elected by the Participant pursuant to Section 3.3(a). A Participant’s Deferral Account shall be credited as follows:

(a) As of each payroll date during each Plan Year, the Committee shall credit the Investment Fund Subaccounts of the Participant’s Deferral Account with an amount equal to the Compensation deferred by the Participant during such pay period in accordance with the Participant’s designation under Section 3.3(a); that is, the portion of the Participant’s deferred Compensation that the Participant has elected to be deemed to be invested in a certain type of Fund shall be credited to the Investment Fund Subaccount corresponding to that Fund;

(b) As of each payroll date during each Plan Year, each Investment Fund Subaccount of a Participant’s Deferral Account shall be credited with Interest in an amount equal to that determined by multiplying the balance credited to such Investment Fund Subaccount immediately following the preceding payroll date by the Interest Rate for the corresponding Fund selected by the Company pursuant to Section 3.3(b); and

(c) In the event that a Participant elects for a given Plan Year’s deferral of Compensation to have a Future Date Withdrawal, all amounts attributed to the deferral of Compensation for such Plan Year shall be accounted for in a manner which allows separate accounting for the deferral of Compensation and investment gains and loses associated with such Plan Year’s deferral of Compensation.

4.2	Company Discretionary Contribution Account .

The Committee shall establish and maintain a Company Contribution Account for each Participant under the Plan. Each Participant’s Company Contribution Account shall be further divided into separate Investment Fund Subaccounts corresponding to the Fund elected by the Participant pursuant to Section 3.3(a). A Participant’s Company Contribution Account shall be credited as follows:

(a) As of each payroll date during each Plan Year, the Committee shall credit the Investment Fund Subaccounts of the Participant’s Company Contribution Account with an amount equal to the Matching Contribution Amount, if any, applicable to that Participant in accordance with the designation made by such Participant pursuant to Section 3.3(a);

(b) As of each payroll date during which a Company Discretionary Contribution Amount, if any, is made, the Committee shall credit the Investment Fund Subaccounts of the Participant’s Company Contribution Account with an amount equal to

the Company Discretionary Contribution Amount applicable to that Participant in accordance with the designation made by such Participant pursuant to Section 3.3(a);

(c) Effective as of the earlier of (i) the date of a Participant’s termination of employment with the Company or (ii) the Liquidation Date designated by the Committee in accordance with Section 6.1(e), the Committee shall credit to the Participant’s Company Contribution Account an amount equal to the actuarial present value of the Company DB SERP Contribution Amount to which such Participant would have been entitled under the terms of the supplemental employee retirement plan agreement in effect between the Company and the Participant as of September 29, 2010, if the Participant had terminated employment on September 30, 2010 (the “SERP Termination Date”), and shall allocate such credited amount among the Investment Subaccounts in accordance with the designation made by such Participant pursuant to Section 3.3(a); provided that, for purposes of this Section 4.2(c), “actuarial present value” shall be determined in accordance with the then-applicable interest rate and mortality table (x) in effect under the Pension Plan or (y) if the Pension Plan is no longer in existence, last in effect under the Pension Plan; and

(d) Each Investment Fund Subaccount of a Participant’s Company Contribution Account shall be credited on a daily basis with Interest in an amount equal to that determined by multiplying the balance credited to such Investment Fund Subaccount as of the last day of the preceding month plus contributions during the current month commencing on the date such contributions are credited to the Investment Fund Subaccount by the interest rate for the Corresponding Fund selected by the Company pursuant to Section 3.3(b).

4.3	Trust Funding .

The Company has created a Trust with respect to which Fidelity Management Trust Company serves as Trustee. The Company may contribute to the Trust an amount equal to the amount deferred by each Participant for the Plan Year. The Company may also contribute such additional amounts as it shall deem necessary or appropriate.

Although the principal of the Trust and any earnings thereon shall be held separate and apart from other funds of Company and, except as provided below, shall be used exclusively for the uses and purposes of Plan Participants and Beneficiaries as set forth therein, neither the Participants nor their Beneficiaries shall have any preferred claim on, or any beneficial ownership in, any assets of the Trust prior to the time such assets are paid to the Participants or Beneficiaries as benefits and all rights created under this Plan shall be unsecured contractual rights of Plan Participants and Beneficiaries against the Company. Any assets held in the Trust will be subject to the claims of Company’s general creditors under federal and state law in the event of insolvency defined in the Trust.

Except as provided above, assets of the Plan and Trust shall never inure to the benefit of the Company and the same shall be held for the exclusive purpose of providing benefits to Participants and their Beneficiaries and deferring reasonable expenses of administering the Plan and Trust.

ARTICLE V

VESTING

A Participant’s Deferral Account and the Company DB SERP Contribution allocated to a Participant’s Company Contribution Account shall be 100% vested at all times. The Matching Contributions and Company DC Restoration Amounts allocated to a Participant’s Company Contribution Account shall be vested in accordance with the vesting schedule contained in the Company’s 401(k) Plan without regard to prior service credits. The Company shall determine the vesting schedule for Company Discretionary Contribution Amounts at the time each such contribution is made by the Company.

ARTICLE VI

DISTRIBUTIONS

6.1	Distribution of Deferred Compensation and Discretionary Company Contributions .

(a) Distribution Without Future Date Withdrawal .

(i) Except as provided in Section 6.1(a)(iv) below, if a Participant terminates employment with the Company due to Retirement, the Distributable Amount (other than amounts attributable to Company DB SERP Contributions or Company DC Restoration Amount) shall be paid to the Participant in the form of benefit elected by the Participant at the time of his initial Deferral Election, in accordance with procedures established by Company, from among the following:

(A) A lump sum distribution on the Participant’s Payment Date.

(B) Substantially equal quarterly installments over five years beginning on the Participant’s Payment Date.

(D) Substantially equal quarterly installments over 20 years beginning on the Participant’s Payment Date.

The amount of each installment payment shall be calculated by multiplying the Account Balance on the date of such installment by a fraction, the numerator of which is 1 and the denominator of which is the number of the remaining installments including the current installment.

A Participant may modify the form of benefit that he or she has previously elected, pursuant to this Section 6.1(a)(i); provided, however, that (A) such modification occurs at least one year before the date the amount would otherwise be distributable, (B) the modification may not accelerate the time of payment, and (C) the delayed distributions shall not be made until at least five years following the date on which the distribution would have been made absent the modification.

(ii) Except as provided in Section 6.1(a)(iv) below, the portion of such Distributable Amount that is attributable to Company DB SERP Contributions (“the DB SERP Distributable Amount”) shall be distributed in 20 substantially equal quarterly installments, beginning on the Participant’s Payment Date. The amount of each installment payment shall be calculated by multiplying the Account Balance on the date of such installment by a fraction, the numerator of which is 1 and the denominator of which is the number of the remaining installments including the current installment. Notwithstanding the foregoing, the DB SERP Distributable Amount of a Participant who terminates employment for

any reason other than Retirement shall be paid to him (or, in the case of his death, to his Beneficiary) in a lump sum on his Payment Date.

(iii) In the case of a Participant who terminates employment for any reason other than Retirement, the Distributable Amount (other than amounts attributable to Company DB SERP Contributions) shall be paid to the Participant in a lump sum on the Participant’s Payment Date.

(iv) In the case of a Participant who terminates employment with the Company for any reason and has an Account balance of $50,000 or less, the Distributable Amount (including amounts attributable to Company DB SERP Contributions) shall be paid in a lump sum distribution on the Participant’s Payment Date.

(b) Distribution With Future Date Withdrawal . If a Participant elects a Future Date Withdrawal for a given Plan Year’s contributions and the Future Date Withdrawal could occur while the Participant is still in the employ of the Company, such Participant shall receive his Distributable Amount in accordance with such election; provided, however, that, the Distributable Amount shall consist solely of the deferrals of Compensation, vested Matching Contributions and vested Company Discretionary Contributions and related earnings that were designated by the Participant (in accordance with Section 1.2(t)) as the subject of such Future Date Withdrawal. A Participant’s Future Date Withdrawal with respect to amounts of Compensation, Matching Contributions and Company Discretionary Contribution Amounts deferred in a given Plan Year shall be no earlier than two years from the last day of such Plan Year. A Participant may extend the Future Date Withdrawal for contributions in any Plan Year, provided such extension occurs at least one year before the then-applicable Future Date Withdrawal for such contributions and is for a period of not less than five years from such date. The Participant shall have the right to twice modify any Future Date Withdrawal. In the event that a Participant terminates employment with the Company prior to a scheduled Future Date Withdrawal for any reason other than death, the portion of the Participant’s Account associated with such Future Date Withdrawal which has not occurred prior to such termination shall be distributed in a lump sum on his Payment Date.

(c) Death Prior to Benefit Commencement . If a Participant dies while he is employed by the Company and prior to the commencement of any distributions under this Plan, his Beneficiary shall receive a lump-sum payment equal to the amount of the Participant’s vested Account Balance. Such lump-sum payment shall be made on the Participant’s Payment Date.

(d) Death After Benefit Commencement . If a Participant dies after his termination of employment with the Company and, as of the date of his death, the Participant’s vested Account Balance has not been fully distributed, the remaining amount of Participant’s vested Account Balance shall continue to be distributed to the Participant’s Beneficiary, in accordance with the applicable of the provisions of Section 6.1(a)(i)(B), (C) or (D).

(e) Termination and Distribution of the Company DB SERP Account .

(i) No Company DB SERP Contributions attributable to services rendered by or compensation payable to a Participant after the SERP Termination Date shall be credited to a Participant’s Company DB SERP Contribution Account.

(ii) In accordance with the provisions set forth in Section 1.409A-3(j)(4)(ix)(C) of the Treasury Regulations with respect to the termination and liquidation of a deferred compensation plan, the Committee, in its sole discretion, shall designate a date (the ‘Liquidation Date’) between twelve and twenty-four months following the SERP Termination Date for the distribution of all Participants’ Company DB SERP Contribution Account.

(iii) A Participant shall receive a single lump-sum payment on the Liquidation Date in an amount equal to the balance, if any, of his or her Company DB SERP Contribution Account, determined as of the Liquidation Date.

(iv) Notwithstanding the foregoing, the terms of a Participant’s Deferral Election shall remain in effect with respect to (i) any amounts that would otherwise be distributed prior to the Liquidation Date, and (ii) any Company DB SERP Contribution Accounts that are eligible for grandfathered status in accordance with Section 409A

(f) Distribution of Company DC Restoration Amounts; Default Distribution . Notwithstanding any provision to the contrary, (i) the Company DC Restoration Amount and (ii) any other amount for which a payment election is not made by a Participant or for which the timing of a distribution is not expressly provided elsewhere herein shall be paid to the Participant in a lump sum on the Participant’s Payment Date.

6.2	Unforeseeable Emergency Distribution .

A Participant may apply to the Committee for the distribution of some or all of his Account due to the occurrence of an Unforeseeable Emergency. The Committee shall have the sole authority and discretion to determine the amount of any distribution that is made on account of such Unforeseeable Emergency. The amount of any such distribution shall not exceed the amount reasonably necessary to satisfy the Participant’s needs as a result of the Unforeseeable Emergency; provided, however, that the amount of such distribution

(a) may include amounts necessary to pay any federal, state, local or foreign income taxes or penalties reasonably anticipated to result from the distribution;

(b) must exclude any amounts that may otherwise be relieved through reimbursement or compensation by insurance or otherwise, liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under this Plan; and

(c) may exclude any additional but unpaid compensation to which Participant may be entitled under the terms of another nonqualified deferred compensation plan as a result of the Unforeseeable Emergency.

The Committee shall cancel Participant’s Deferral Election prior to the distribution of any portion of Participant’s account payable under this Schedule 6.2. The payment of any Unforeseeable Emergency Distribution shall occur on the 15th business day following the Committee’s approval of such distribution and shall take the form of a single lump-sum payment.

6.3	Forfeiture of Unvested Amounts .

Notwithstanding any provision of this Plan to the contrary, upon the termination of Participant’s employment for any reason, the unvested portion of the Matching Contribution Amount that has been credited to his Account shall be forfeited and, to the extent that such Amounts have been funded through contributions to the Trust Fund, shall be credited and restored to the Company.

6.4	Inability to Locate Participant .

In the event that the Committee is unable to locate a Participant or Beneficiary within two years following the required Payment Date, the amount allocated to the Participant’s Deferral Account shall be forfeited and, to the extent that such Amounts have been funded through contributions to the Trust Fund, shall be credited and restored to the Company.

6.5	Installment Payments Deemed to be Separate Payments .

Each installment payment in a series of installments shall be deemed to be a separate and independent distribution for purposes of this Agreement.

6.6	Earnings .

Except as otherwise provided in Section 6.4, the Participant’s Account shall continue to be credited with earnings pursuant to Section 4.1 of the Plan until all amounts credited to Account under the Plan have been distributed.

ARTICLE VII

ADMINISTRATION

7.1	Committee .

A Committee shall be appointed by, and serve at the pleasure of, the Board of Directors. The number of members comprising the Committee shall be determined by the Board which may from time to time vary the number of members. A member of the Committee may resign by delivering a written notice of resignation to the Board. The Board may remove any member by delivering a certified copy of its resolution of removal to such member. Vacancies in the membership of the Committee shall be filled promptly by the Board.

7.2	Committee Action .

The Committee shall act at meetings by affirmative vote of a majority of the members of the Committee. Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a written consent to the action is signed by all members of the Committee and such written consent is filed with the minutes of the proceedings of the Committee. A member of the Committee shall not vote or act upon any matter which relates solely to himself as a Participant. The Chairman or any other member or members of the Committee designated by the Chairman may execute any certificate or other written direction on behalf of the Committee.

7.3	Powers and Duties of the Committee .

(a) The Committee, on behalf of the Participants and their Beneficiaries, shall enforce the Plan in accordance with its terms, shall be charged with the general administration of the Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

(i) To select the Funds in accordance with Section 3.3(b) hereof;

(ii) To construe and interpret the terms and provisions of this Plan;

(iii) To compute and certify to the amount and kind of benefits payable to Participants and their Beneficiaries;

(iv) To maintain all records that may be necessary for the administration of the Plan;

(v) To provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as shall be required by law;

(vi) To make and publish such rules for the regulation of the Plan and procedures for the administration of the Plan as are not inconsistent with the terms hereof;

(vii) To appoint a plan administrator or any other agent, and to delegate to them such powers and duties in connection with the administration of the Plan as the Committee may from time to time prescribe; and

(viii) To take all actions necessary for the administration of the Plan, including determining whether to hold or discontinue the Policies.

7.4	Construction and Interpretation .

The Committee shall have full discretion to construe and interpret the terms and provisions of this Plan, which interpretations or construction shall be final and binding on all parties, including, but not limited to, the Company and any Participant or Beneficiary. The Committee shall administer such terms and provisions in a uniform and nondiscriminatory manner and in full accordance with any and all laws applicable to the Plan.

7.5	Information .

To enable the Committee to perform its functions, the Company shall supply full and timely information to the Committee on all matters relating to the Compensation of all Participants, their death or other events which cause termination of their participation in this Plan, and such other pertinent facts as the Committee may require.

7.6	Compensation, Expenses and Indemnity .

(a) The members of the Committee shall serve without compensation for their services hereunder.

(b) The Committee is authorized, at the expense of the Company, to employ such legal counsel as it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in connection with the administration shall be paid by the Company.

(c) To the extent permitted by applicable state law, the Company shall indemnify and hold harmless the Committee and each member thereof, the Board of Directors and any delegate of the Committee who is an employee of the Company against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims arising out of their discharge in good faith of responsibilities under or incident to the Plan, other than expenses and liabilities arising out of willful misconduct. This indemnity shall not preclude such further indemnities as may be available under insurance purchased by the Company or provided by the Company under any bylaw, agreement or otherwise, as such indemnities are permitted under state law.

7.7	Quarterly Statements .

Under procedures established by the Committee, a Participant shall receive a statement with respect to such Participant’s Accounts on a quarterly basis as of each March 31, June 30, September 30 and December 31.

7.8	Claims and Review Procedures .

(a) Claims Procedure . If any person believes he is entitled to any rights or benefits under the Plan, such person may file a claim in writing with the Chief Executive Officer of the Company (“CEO”). If any such claim is wholly or partially denied, the CEO will notify such person of his decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review, the time limits applicable to such procedures, and a statement of the person’s rights following an adverse benefit determination on review, including a statement of his right to file a lawsuit under the Employee Retirement Income Security Act of 1974 (“ERISA”) if the claim is denied on appeal. Such notification will be given within 90 days after the claim is received by the CEO (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period).

(b) Claim Review Procedure . Within 60 days after the date on which a person receives a notice of denial, such person or his duly authorized representative (“Applicant”) may (i) file a written request with the CEO for a review of his denied claim; (ii) review pertinent documents; and (iii) submit issues and comments in writing. The Applicant may submit written comments, documents, records and other information relating to the claim for benefits under this Plan. The Applicant may request a formal hearing before the CEO, which the CEO may grant in his discretion. The CEO shall notify the Applicant of his decision with regard to Applicant’s claim not later than 60 days of the receipt of Applicant’s request; provided, however, that CEO may determine that an extension of up to 60 days from the termination date of the initial 60-day review period is required and shall advise the Applicant in writing of the special circumstances requiring any such extension and the date by which the expects to render a decision. Such special circumstances that require an extension of time for rendering a decision include, but are not limited to, the need to hold a hearing. The decision on review shall be in written or electronic notice of the final determination. If the claim is denied in whole or part, such notice, which shall be in a manner calculated to be understood by the person receiving such notice, shall include (A) the specific reasons for the decision, (B) the specific references to the pertinent Plan provisions on which the decision is based, (C) that the Applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits, and (D) a statement of the Applicant’s right to file a lawsuit under ERISA.

Benefits under this Plan will only be paid if the CEO decides, in his discretion, that an Applicant is entitled to them. The decision of the CEO on review of the claim denial shall be binding on all parties when the Participant has exhausted the claims procedure under this Section 7.8. Moreover, no action at law or in equity shall be brought to recover benefits under this Plan prior to the date the Applicant has exhausted the administrative remedies under this Section 7.8.

(c) In the event that the CEO makes a claim on his own behalf, the Board shall perform the functions otherwise performed by the CEO pursuant to Sections 7.8(a) and 7.8(b).

ARTICLE VIII

MISCELLANEOUS

8.1	Unsecured General Creditor .

Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interest in any specific property or assets of the Company. No assets of the Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan. Any and all of the Company’s assets shall be, and remain, the general unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely unfunded and unsecured promise of the Company to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors. It is the intention of the Company that this Plan be unfunded for purposes of the Code and for purposes of Title 1 of ERISA.

8.2	Restriction Against Assignment .

The Company shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not to any other person or corporation. No part of a Participant’s Accounts shall be liable for the debts, contracts, or engagements of any Participant, his Beneficiary, or successors in interest, nor shall a Participant’s Accounts be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, commute, assign, pledge, encumber or charge any distribution or payment from the Plan, voluntarily or involuntarily, the Committee, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Committee shall direct.

8.3	Withholding .

There shall be deducted from each payment made under the Plan or any other Compensation payable to the Participant (or Beneficiary) all taxes which are required to be withheld by the Company in respect to such payment or this Plan. The Company shall have the right to reduce any payment (or compensation) by the amount of cash sufficient to provide the amount of said taxes.

8.4	Amendment, Modification, Suspension or Termination .

The Committee may amend, modify, suspend or terminate the Plan in whole or in part, except that no amendment, modification, suspension or termination shall have any retroactive effect to reduce any amounts allocated to a Participant’s Accounts. In the event that this Plan is terminated, the amounts allocated to a Participant’s Accounts shall be distributed to the Participant or, in the event of his death, his Beneficiary in a lump sum on the fifteenth business day following the date of termination.

8.5	Governing Law .

This Plan shall be construed, governed and administered in accordance with the laws of the State of Delaware.

8.6	Receipt or Release .

Any payment to a Participant or the Participant’s Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims under the Plan against the Committee and the Company. The Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect; provided, however, that the terms and conditions applicable to such release shall not cause this Plan or the payment of any amounts under this Plan to fail to comply with Section 409A.

8.7	Payments on Behalf of Persons Under Incapacity .

In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefore, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgment, to have assumed the care of such person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Committee and the Company.

8.8	Limitation of Rights and Employment Relationship .

Neither the establishment of the Plan and Trust nor any modification thereof, nor the creating of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant or other person any legal or equitable right against the Company or the trustee of the Trust except as provided in the Plan and Trust; and in no event shall the terms of employment of any Employee or Participant be modified or in any way be affected by the provisions of the Plan and Trust.

8.9	Headings .

Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

8.10	Section 409A .

The following provisions shall apply to this Plan, notwithstanding any provision to the contrary:

(a) This Plan is intended to comply with Section 409A of the Code and ambiguous provisions, if any, shall be construed in a manner that is compliant with or exempt from the application of Section 409A.

(b) This Plan shall not be amended or terminated in a manner that would cause the Plan or any amounts payable under the Plan to fail to comply with the requirements of Section 409A, to the extent applicable, and, further, the provisions of any

purported amendment that may reasonably be expected to result in such non-compliance shall be of no force or effect with respect to the Agreement.

(c) The Plan shall neither cause nor permit any payment, benefit or consideration to be substituted for a benefit that is payable under this Plan if such action would result in the failure of any amount that is subject to Section 409A to comply with the applicable requirements of Section 409A.

(d) Notwithstanding any provision of this Plan to the contrary, if the Participant is a Specified Employee as of the date of the termination of Participant’s employment, then any amounts or benefits which are payable under this Agreement upon the Participant’s “separation from service” within the meaning of Section 409A which are subject to the provisions of Section 409A and are not otherwise excluded under Section 409A and would otherwise be payable during the first six-month period following such separation from service shall be paid on the first business day next following the earlier of (i) the date that is six months and one day following the date of the termination of Participant’s employment or (ii) the date of Participant’s death.

(e) For purposes of Section 409A, each payment under this Plan shall be deemed to be a separate payment.

IN WITNESS WHEREOF, the Company has caused this document to be executed by its duly authorized officer on this 29th day of July, 2011.


By		/s/ Abraham Garza

Exhibit 15.1

July 29, 2011

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Commissioners:

We are aware that our report dated July 29, 2011 on our review of interim financial information of Cabot Oil & Gas Corporation (the “Company”) for the three and six month periods ended June 30, 2011 and 2010 and included in the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2011 is incorporated by reference in its Registration Statements on Form S-3 (File Nos. 333-68350 and 333-83819) and Form S-8 (File Nos. 333-37632, 33-53723, 33-35476, 333-92264, 333-123166 and 333-135365).

Very truly yours,

/s/ PricewaterhouseCoopers LLP


CERTIFICATIONS		EXHIBIT 31.1

I, Dan O. Dinges, certify that:

1. I have reviewed this interim report on Form 10-Q of Cabot Oil & Gas Corporation;

2. Based on my knowledge, this interim report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this interim report;

3. Based on my knowledge, the financial statements, and other financial information included in this interim report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this interim report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this interim report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2011

/s/ Dan O. Dinges

Dan O. Dinges

Chairman, President and

Chief Executive Officer

EXHIBIT 31.2

I, Scott C. Schroeder, certify that:

1. I have reviewed this interim report on Form 10-Q of Cabot Oil & Gas Corporation;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2011

/s/ Scott C. Schroeder

Scott C. Schroeder

Vice President, Chief Financial Officer and Treasurer

EXHIBIT 32.1

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) (the “Act”), each of the undersigned, Dan O. Dinges, Chief Executive Officer of Cabot Oil & Gas Corporation, a Delaware corporation (the “Company”), and Scott C. Schroeder, Chief Financial Officer of the Company, hereby certify that, to his knowledge:

(1)

the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 29, 2011

/s/ Dan O. Dinges

Dan O. Dinges

Chief Executive Officer

/s/ Scott C. Schroeder

Scott C. Schroeder

Chief Financial Officer

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Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents