Recommendation: Buy Duc Dam Sarah Dhaduk Maria Tabanian Nga Tran Cabot Oil & Gas.

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Presentation transcript:

Recommendation: Buy Duc Dam Sarah Dhaduk Maria Tabanian Nga Tran Cabot Oil & Gas

Overview Recommendation: Buy Target price: $78.00 Current price: $43.15 (10/25/2012) Investment Thesis Stable revenue Good financial position Potential development

Contents Business outlook Good financial position Stable revenues Potential growth

Contents Business outlook

Outlook Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company’s primary areas of operation include Appalachia, east and south Texas, and Oklahoma. (Rueters)

Primary and Secondary Markets/Products (Foreign and Domestic) The Company operates in one division, natural gas and oil development, exploitation and exploration, exclusively in the continental United States. Cabot Oil & Gas Company is only a domestic company and does not have any foreign affiliations. Approximately 96% of Cabot’s reserves and 95% of Cabot’s production is natural gas, that being its primary market. Cabot’s secondary market is petroleum. (Rueters)

Business risks/outstanding litigations Toxic hydro-fracking spills Pennsylvania Department of Environmental Protection

Contents Business outlook Good financial position

Gross Profit, Total Revenue and Net Income

4 Year

Contents Business outlook Good financial position Stable revenues

Business Strategy COG strategy is to continuously improve.

Long – term Solvency Annual Comparision for Debt to Capital Ratio

Long – term Solvency Annual Comparision for Debt to Equity Ratio

Low Financial Risk Annual Comparision for TL/TA ratio

Stable Operating Cashflow Annual Cashflow break - down

Potential Operating Cashflow Growth Compound Annual Growth Rate over 5 years

Contents Business outlook Good financial position Stable revenues Potential growth

SWOT Strength Marcellus Shale Constant Growth Opportunities Future natural gas’ price Threats Warmer winter Economic downturn Weakness Toxin during exploitation

Revenue Drivers Year Ended December Production Volumes Natural Gas (Bcf) Dimock Field Totals Crude Oil/Condensate/NGL (Mbbl) Dimock Field--- Total1, Equivalents (Bcfe) Dimock Field Total Natural Gas Average Sales Price ($/Mcf) Dimock Field Total Crude Oil Average Sales Price ($/Bbl) Dimock Field--- Total Average Production Costs ($/Mcfe) Dimock Field Total

Gross Margin

Valuation g4% Operating Income(EBIT) AddDepreciation Risk free rate2.50% LessCapital Expense Market return10% LessNetworking Capital Beta0.83 Cost of equity8.73% Free Cash Flow Cost of debt6.5000% Terminal Value Using Gordon Growthweight of debt0.323 Discount WACC weight of equity0.677 Present Value of cash flow Present Value of terminal value WACC7.27% FCF firm FCF Equity Price/Share $ 78.00

Sources Used Cabot oil & gas corporation (cog.n). Reuters. Retrieved from Daris, M. (2012, October 4). 3 new reasons to buy cabot now. Seeking Alpha, Retrieved from now?source=yahoohttp://seekingalpha.com/article/ new-reasons-to-buy-cabot- now?source=yahoo McFarland, J. (2012, October 2). [Web log message]. Retrieved from Operator: Cabot oil and gas corporation. (n.d.). Retrieved from