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TICKERS: COG

Texas Oil & Gas Firm Increases Dividend by 17%
Research Report

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A Raymond James report reviewed this energy company's Q3/18 numbers and 2019 guidance.

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In an Oct. 26, 2018 research note, Raymond James analyst John Freeman reported that in Q3/18, Cabot Oil & Gas Corp. (COG:NYSE) returned to generating free cash flow and is returning cash to shareholders via a 17% dividend increase and greater share buybacks.

The company repurchased 7.2 million shares in Q3/18 and has instituted buybacks worth $64.8 million (2.8 million shares) in Q4/18. "Going forward, Cabot plans to "distribute more than half of its free cash flow to shareholders," Freeman indicated.

Also in Q3/18, Cabot executed well on earnings before interest, taxes, depreciation and amortization (EBITDA), cash flow per share (CFPS) and capex, beating Raymond James and the Street's forecasts. Adjusted EBITDA was $292 million, CFPS was $0.68 and capital expenditures were $268 million. Adjusted earnings per share at $0.25 was a slight miss. (The company had prereleased production and price figures earlier in October.)

Looking forward, Cabot is guiding to increase 2019 production by 2025%, which is 9% lower than consensus' expectation and about 11% lower than Raymond James' expectation. Planned capex is $800850 million, in line with Raymond James but about 6% lower than the Street. Operations in 2019 are projected to generate $650700 million of free cash flow.

Raymond James has an Underperform rating on Cabot, whose current share price is $24.35.

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Disclosures from Raymond James, Cabot Oil & Gas Corp., October 26, 2018

ANALYST INFORMATION

Analyst Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

RAYMOND JAMES RELATIONSHIP DISCLOSURES
Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.

Raymond James & Associates makes a market in shares of COG.




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