On Friday, October 25th, Cabot Oil & Gas (COG) shares soared 10% and were among the top 10 gainers in the S&P 500. On late Thursday, the company reported impressive results for the third quarter which led to the increase in share prices. For the quarter ended September 30th 2012, the company reported a substantial increase in production of 66.5 Bcfe, with 62.7 Bcf of natural gas production and 629,000 barrels of liquids production. These numbers represent a 31 percent increase in gas production and a 61 percent increase in liquids production compared to the same quarter of the previous year. As a result, net income was $36.6 million, or an EPS of $0.17 per share, for the quarter compared to $28.5 million, or an EPS of $0.14 per share on a year-on-year basis. Excluding the effect of certain items, net income was $43.1 million, or an EPS of $0.21 per share for the quarter compared to $35.3 million or an EPS of $0.17 per share for the same quarter in the previous year. Consensus estimates for EPS were around $.14 per share.
Higher production and higher crude oil price realizations drove the overall improvement though it was partially offset by lower than realized natural gas price realizations and the increased operating expenses associated with the higher the level of production. Cash flow from operations for the quarter was $164 million, compared to $154.7 million for the third quarter of the previous year. Discretionary cash flow for the third quarter of 2012 was $175.7 million, compared to $165.4 million for the third quarter of 2011. After taking into account the effect of hedges, natural gas price realizations were $3.68 per thousand cubic feet (MCF) for the third quarter of 2012, a decline of 20% compared to the third quarter
