Cabot Oil & Gas beat earnings forecasts today–but is down all the same.
Bloomberg Deutsche Bank’s Stephen Richardson and Josh Silverstein explain what happened to Cabot:
The challenge for investors at [Cabot] has been to balance the intrinsic value of the highest return / lowest cost NG asset vs. the infrastructure challenges of delivering volumes to market. YE13 results saw a strong production trajectory and further confirmation of [Cabot's] asset quality (FY14 production unchanged on lower capex). The one offset relative to our expectations was indication that 1Q pricing is trending weaker, reducing [Cabot's] leverage to improving NYMEX prices. While we acknowledge the overhang of both regional pricing and infrastructure, we are on the side of intrinsic value and asset quality at [Cabot].
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In other words, Cabot has a ton of gas, it just can’t get market prices for it, which is kind of frightening considering the massive run gas prices have had. Still, Richardson and Silverstein rate Cabot Buy with a $45 price target.
Shares of Cabot Oil & Gas have plunged 9.3% to $35.61 at 2:48 p.m. today, while Anadarko Petroleum (APC) has declined 0.7% to $82.63, Range Resources (RRC) has dropped 0.2.1% to $85.66 and Pioneer Natural Resources (PXD) has fallen 1.5% to $186.84.
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