PowerPoint PresentationCABOT OIL & GAS CORPORATION
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This presentation includes forwardlooking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
The statements regarding future financial and operating performance
and results, returns to shareholders, strategic pursuits and goals,
market prices, future hedging and risk management activities, and
other statements that are not historical facts contained in this
report are forward-looking statements. The words "expect",
"project", "estimate", "believe", "anticipate", "intend", "budget",
"plan", "forecast", “outlook”, "predict", "may", "should", "could",
"will" and similar expressions are also intended to identify
forward-looking statements. Such statements involve risks and
uncertainties, including, but not limited to, the continuing
effects of the COVID-19 pandemic and the impact thereof on the
Company’s business, financial condition and results of operations,
the availability of cash on hand and other sources of liquidity to
fund our capital expenditures, the repayment of our debt maturities
and our dividends, actions by, or disputes among or between, the
Organization of Petroleum Exporting Countries and other producer
countries, market factors, market prices (including geographic
basis differentials) of natural gas and crude oil, results of
future drilling and marketing activity, future production and
costs, pipeline projects, legislative and regulatory initiatives,
electronic, cyber or physical security breaches and other factors
detailed herein and in our other Securities and Exchange Commission
(SEC) filings. In addition, the declaration and payment of any
future dividends, whether regular quarterly base dividends or
annual supplemental dividends, will depend on the Company’s
financial results, cash requirements, future prospects and other
factors deemed relevant by the Board. See "Risk Factors" in Item 1A
of the Company's most recent Annual Report on Form 10-K and
subsequent Quarterly Reports on Form 10-Q for additional
information about these risks and uncertainties. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially
from those indicated. Any forward-looking statement speaks only as
of the date on which such statement is made, and the Company does
not undertake any obligation to correct or update any
forward-looking statement, whether as the result of new
information, future events or otherwise, except as required by
applicable law.
This presentation may contain certain terms, such as resource
potential, risked or unrisked resources, potential locations,
risked or unrisked locations, EUR (estimated ultimate recovery) and
other similar terms that describe estimates of potentially
recoverable hydrocarbons that the SEC rules prohibit from being
included in filings with the SEC. These estimates are by their
nature more speculative than estimates of proved, probable and
possible reserves and may not constitute “reserves” within the
meaning of SEC rules and accordingly, are subject to substantially
greater risk of being actually realized. These estimates are based
on the Company’s existing models and internal estimates. Actual
locations drilled and quantities that may be ultimately recovered
from the Company’s interests could differ substantially. Factors
affecting ultimate recovery include the scope of the Company’s
ongoing drilling program, which will be directly affected by the
availability of capital, drilling and production costs, availably
of drilling services and equipment, drilling results, lease
expirations, transportation constraints, regulatory approvals,
actual drilling results, including geological and mechanical
factors affecting recovery rates, and other factors. These
estimates may change significantly as development of the Company’s
assets provide additional data. Investors are urged to consider
carefully the disclosures and risk factors about Cabot’s reserves
in the Form 10K and other reports on file with the SEC.
This presentation also refers to Discretionary Cash Flow, EBITDAX,
Free Cash Flow, Adjusted Net Income (Loss), Return on Capital
Employed (ROCE), Net Debt calculations and ratios and Finding and
Development Costs. These non-GAAP financial measures are not
alternatives to GAAP measures, and should not be considered in
isolation or as an alternative for analysis of the Company’s
results as reported under GAAP. For additional disclosure regarding
such non-GAAP measures, including definitions of these terms and
reconciliations to the most directly comparable GAAP measures,
please refer to Cabot’s most recent earnings release at
www.cabotog.com and the Company’s related 8-K on file with the
SEC.
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Fourth Quarter 2020 • Adjusted net income (non-GAAP) of $104.7
million, or $0.26
per share
• Free cash flow (non-GAAP) of $122.9 million
• Daily production of 2,375 Mmcfe per day, exceeding the high-end
of the Company’s guidance range
• Operating expenses per unit improved 3% year-over-year
Full-Year 2020 • Adjusted net income (non-GAAP) of $214.0 million,
or $0.54
per share
• Fifth consecutive year of positive free cash flow
generation
• Returned $159.4 million of capital to shareholders (146% of free
cash flow)
• Repaid $87 million of debt maturities
– Subsequent to year-end, repaid an additional $88 million of debt
that matured in January 2021
• Increased proved reserves by 6% to 13.7 Tcfe at an all- sources
F&D cost of $0.35 per Mcfe
• Reduced GHG emissions intensity by 58 percent and methane
emissions intensity by 70 percent
Note: See supplemental tables at the end of the presentation for a
reconciliation of non-GAAP measures 1 Includes direct operations,
transportation and gathering, taxes other than income, exploration,
DD&A, general and administrative, and interest expense
Q4 2020
Q4 2019
FY 2020
FY 2019
Realized Gas Price (Incl. Hedges) ($/Mcf) $1.90 $2.15 $1.68
$2.45
Realized Gas Price (Excl. Hedges) ($/Mcf) $1.89 $2.05 $1.64
$2.29
Net Income ($mm) $131.2 $146.9 $200.5 $681.1
Adjusted Net Income (non-GAAP) ($mm) $104.7 $120.8 $214.0
$698.8
Discretionary Cash Flow (non-GAAP) ($mm) $220.3 $277.5 $685.0
$1,360.8
Free Cash Flow (non-GAAP) ($mm) $122.9 $109.5 $109.1 $563.1
EBITDAX (non-GAAP) ($mm) $229.8 $300.3 $719.3 $1,408.6
Operating Expenses1 ($/Mcfe) $1.39 $1.43 $1.43 $1.44
Net Debt / EBITDAX (non-GAAP) 1.4x 0.7x 1.4x 0.7x
ROCE (non-GAAP) 7.6% 22.2% 7.6% 22.2%
CABOT OIL & GAS CORPORATION
Cabot Oil & Gas Strategy
Return Capital to Shareholders
Focus on Safe, Responsible and Sustainable Operations
• Generate financial returns that exceed our cost of capital by
focusing on disciplined capital investment and maintaining a low
cost structure
• 2020 ROCE of 7.6% despite the lowest natural gas price
realizations in the Company's 31-year history as a public
company
• Low cost structure provides a competitive advantage, especially
in a low natural gas price environment
• Full-year 2020 operating expenses per unit (including interest
expense and G&A) of $1.43 per Mcfe
• Net debt / LTM EBITDAX of 1.4x as of 12/31/2020
• Subsequent to year-end 2020, repaid $88 million of debt that
matured in January 2021 and plan to repay the $100 million of
September 2021 debt maturities with a portion of excess free cash
flow
• 2020 program generated positive free cash flow for the fifth
consecutive year with a significant expansion of positive free cash
flow expected in 2021
• Initiated a “base plus supplemental” dividend strategy to achieve
a minimum capital return target of at least 50% of annual free cash
flow
• Excess free cash flow to be used for balance sheet enhancement,
additional supplemental dividends, or opportunistic share
repurchases
• Reduced GHG emissions intensity in 2020 by 58% to 1.31 metric
tons of CO2e per thousand barrels of oil equivalent (Mboe) and
methane emissions intensity by 70% to 0.025%
Note: See supplemental tables at the end of the presentation for a
reconciliation of non-GAAP measures
Increase Our Proved Reserve Base • Increased proved reserves by 6%
in 2020 to 13.7 Tcfe at an all-sources F&D cost of $0.35 per
Mcfe
• Over two decades of remaining Marcellus drilling locations across
~175,000 net acres in the core of the dry gas window in Northeast
Pennsylvania
CABOT OIL & GAS CORPORATION
2021 Capital Program & Outlook
• For 2021, Cabot’s production guidance of 2,350 Mmcfe per day is
based on a capital program of $530 - $540 million, representing a
6% reduction in capital spending year-over-year at the midpoint of
the range
• 2021 capital is 32% lower than 2019 levels despite production
levels being relatively flat from 2019 to 2021
• Disciplined capital allocation framework is focused on
maintaining production flat in 2021 while enhancing capital returns
to shareholders and repaying current debt maturities
• Any future improvement in natural gas prices for 2021 will not
impact this capital allocation framework
• The Company’s 2021 program is expected to deliver a significant
expansion of free cash flow, net income, and return on capital
employed, while deleveraging the balance sheet below the target
leverage ratio of 1.0x
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$783
Capital Return to Shareholders ($mm)
6Note: See supplemental tables at the end of the presentation for a
reconciliation of non-GAAP measures 1 As of February 22, 2021
• Minimum annual capital return target of at least 50% of free cash
flow comprised of a sustainable base dividend and an annual
supplemental dividend
• Current quarterly base dividend of $0.10 per share that is
positioned to grow over time (current annualized yield1 of
2.2%)
• Any supplemental dividend is expected to be declared and paid
annually, with the first payment expected to occur in the fourth
quarter of 2021
• The supplemental component of this dividend approach allows for
sustainable capital return that is appropriately tailored for where
we are in the natural gas price cycle
• Any excess free cash flow above the minimum capital return target
of 50% of annual free cash flow will be utilized for balance sheet
enhancement, additional supplemental dividends, or opportunistic
share repurchases, depending on market conditions
• In 2021, Cabot plans to retire its $188 million of current debt
maturities (including the $88 million tranche that was repaid in
January) with a portion of excess free cash flow
$79 $111 $146 $159 $124
$873
$520
CABOT OIL & GAS CORPORATION
Free Cash Flow ($mm)
2017 2018 2019 2020
• Delivered positive free cash flow for the fifth consecutive year
in 2020, despite the lowest average NYMEX price since 1995
• Anticipate a significant expansion of free cash flow in 2021,
driven by higher price realizations and reduced capital
spending
$2.31 $2.54 $2.45 $1.68
Note: See supplemental tables at the end of the presentation for a
reconciliation of non-GAAP measures 1 Including impact of
derivatives
Realized Natural Gas Price ($/Mcf)1
CABOT OIL & GAS CORPORATION
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7.3%
15.9%
22.2%
7.6%
2017 2018 2019 2020
• Focused on generating financial returns that exceed our cost of
capital through the natural gas price cycle
• Generated ~8% ROCE in 2020 despite the lowest natural gas price
realizations in the Company's 31-year history as a public
company
• Targeting a significant expansion of ROCE in 2021 resulting from
higher anticipated price realizations
$2.31 $2.54 $2.45 $1.68
Note: See supplemental tables at the end of the presentation for a
reconciliation of non-GAAP measures 1 Including impact of
derivatives
Realized Natural Gas Price ($/Mcf)1
CABOT OIL & GAS CORPORATION
Adjusted Earnings per Share
Realized Natural Gas Price ($/Mcf)1 $2.31 $2.54 $2.45 $1.68
Note: See supplemental tables at the end of the presentation for a
reconciliation of non-GAAP measures 1 Including impact of
derivatives
• Low cost structure allows for profitability through the natural
gas price cycle
CABOT OIL & GAS CORPORATION
2017 2018 2019 2020
• Target leverage ratio of 1.0x through the natural gas price
cycle
• Anticipate a significant reduction in the leverage ratio in 2021,
resulting from higher anticipated realized prices and lower
absolute debt levels
$2.31 $2.54 $2.45 $1.68
Note: See supplemental tables at the end of the presentation for a
reconciliation of non-GAAP measures 1 Including impact of
derivatives
Realized Natural Gas Price ($/Mcf)1
CABOT OIL & GAS CORPORATION
• Industry-leading cost structure supports profitability and
financial returns even in the trough of the natural gas price
cycle
1 Excludes DD&A, stock-based compensation, non-cash interest
expense associated with income tax reserves, amortization of
deferred financing cost and dry hole cost
CABOT OIL & GAS CORPORATION
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Climate Change / GHG Emissions • Net Production: 100% onshore U.S
natural gas
• 2020 GHG emissions intensity: 1.31 metric tons CO2e per thousand
barrels of oil equivalent, a 58% reduction compared to 2019
• Zero flared hydrocarbons
Environmental, Health and Safety Management • 100% of water
recovered in drilling, completions
and production operations recycled
• Zero freshwater consumed from regions with high or extremely high
baseline water stress
• 100% hydraulically fractured wells for which there is public
disclosure of all fracturing fluid chemicals used
• Zero hydrocarbon spills
• December 2020 36-month OSHA Total Recordable Incidence Rate
(TRIR) of 0.26
• Management comprised of 22% female and 18% ethnically diverse
team members
• Contributed funds to educational assistance programs in
Susquehanna County, Pennsylvania, to provide pre-K tuition
assistance and equipment for schools such as laptops, tablets,
internet access and 3-D printers
• Donated funds to various community programs in Susquehanna
County, Pennsylvania to address food insecurity in the area
• Majority voting • Annual director elections • One share one vote
• No supermajority provisions • No poison pill • 3/3/20/20 proxy
access • Right to act by written consent • Good board
composition
• Steadily refreshed board • 22% women from the oil and gas
sector • Two board committees overseeing
ESG performance and disclosures • Strong pay for performance
alignment
• Rigorous stock ownership guidelines • Consistent, strong
say-on-pay
support • Long-term and short-term incentives
are 100% performance-based
Environmental Social Governance
Inaugural Sustainability Accounting Standards Board (SASB) Report
can be found at www.cabotog.com/corporate-responsibility
CABOT OIL & GAS CORPORATION 13
Appendix
2021 Guidance
(1) Based on $2.75 NYMEX and basis forward curves as of February 3,
2021 (2) Excluding exploratory dry hole costs; includes exploration
administration expense and geophysical expenses (3) Excluding
stock-based compensation
• 2021E production guidance: 2,350 Mmcfe per day
Q1 2021E production guidance: 2,250 – 2,300 Mmcfe per day
• 2021E capital guidance: $530 - $540 million
• 2021E weighted-average natural gas price differential1: ($0.50)
to ($0.55) per Mcf
• 2021E wells drilled and completed: ~80 net wells
• 2021E income tax rate guidance: 23%
• 2021E deferred tax rate guidance1: 30% - 35%
2021E Natural Gas Price Exposure By Index Index Q1 2021 FY 2021
NYMEX (Q1: less $0.50 / FY: less $0.45) 27% 25% Fixed Price (Q1:
~$2.85 / FY: ~$2.65) 19% 23% Transco Z6 NNY (less $0.65) 19% 17%
TGP Z4 –300 Leg 9% 9% Power Pricing 9% 9% Leidy Line 8% 8% Dominion
6% 5% Millennium 2% 4% Algonquin (less $0.80) 1% 0%
Note: Fixed price percentages above include volumes associated with
sales agreements that have floor prices. An additional deduct of
~$0.05 per Mcf should be applied to account for fuel use.
FY 2021E Cost Assumptions ($/Mcfe, unless otherwise noted) Direct
operations $0.08 - $0.09 Transportation and gathering $0.66 - $0.68
Taxes other than income $0.02 - $0.03 Exploration2 $0.01 - $0.02
Depreciation, depletion and amortization $0.45 - $0.47 Interest
expense $0.05 - $0.06 General and administrative ($mm)3 $62 -
$66
2021 Guidance
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As of 12/31/2020 $bn
Debt $1.1
Debt Maturity Schedule ($mm) as of 12/31/2020
Capitalization / Liquidity
CABOT OIL & GAS CORPORATION
Swaps Collars
Ceiling Price Duration Q1 2021
LDS NYMEX 40,500,000 $2.68 $3.26 Jan-21 Dec-21 LDS NYMEX 4,500,000
$2.74 Jan-21 Dec-21
Q2 2021 LDS NYMEX 40,950,000 $2.68 $3.00 Jan-21 Dec-21 LDS NYMEX
4,550,000 $2.50 $2.80 Apr-21 Oct-21 LDS NYMEX 4,550,000 $2.74
Jan-21 Dec-21 LDS NYMEX 9,100,000 $2.78 Apr-21 Oct-21
Q3 2021 LDS NYMEX 41,400,000 $2.68 $3.00 Jan-21 Dec-21 LDS NYMEX
4,600,000 $2.50 $2.80 Apr-21 Oct-21 LDS NYMEX 4,600,000 $2.74
Jan-21 Dec-21 LDS NYMEX 9,200,000 $2.78 Apr-21 Oct-21
Q4 2021 LDS NYMEX 41,400,000 $2.68 $3.10 Jan-21 Dec-21 LDS NYMEX
1,550,000 $2.50 $2.80 Apr-21 Oct-21 LDS NYMEX 4,600,000 $2.74
Jan-21 Dec-21 LDS NYMEX 3,100,000 $2.78 Apr-21 Oct-21
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CABOT OIL & GAS CORPORATION
Reconciliation of Net Income to Adjusted Net Income and Adjusted
Earnings Per Share
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Discretionary Cash Flow and Free Cash Flow Calculation and
Reconciliation
20
21
22
CABOT OIL & GAS CORPORATION 23
We believe natural gas provides opportunity for a bright future,
one filled with innovation and prosperity.
Slide Number 1
Fourth Quarter and Full-Year 2020 Highlights
Cabot Oil & Gas Strategy
2021 Capital Program & Outlook
Free Cash Flow ($mm)
Adjusted Earnings per Share
2021 Hedge Summary
Reconciliation of Net Income to Adjusted Net Income and Adjusted
Earnings Per Share
EBITDAX Calculation and Reconciliation
Discretionary Cash Flow and Free Cash Flow Calculation and
Reconciliation
Return on Capital Employed Calculation
Finding and Development Costs Calculations
Slide Number 23