April 27, 2018 / 11:13 AM / a year ago

Cabot Oil and Gas tops profit view as cost-cuts kick in

(Reuters) - Cabot Oil and Gas Corp (COG.N) beat profit expectations for the first quarter on Friday as the company cut costs by selling its non-core assets in the Eagle Ford shale.

Shares of the oil and gas producer rose as much as 4.6 percent amid a drop in the broader energy index .SPNY after the company said its average unit cost per thousand cubit feet equivalent (Mcfe) fell by 21 percent to $1.58.

The Eagle Ford sale helped the company cuts its 2018 operating expenses forecast to 8 cents-10 cents per Mcfe from 9 cents-11 cents and focus on gas production from Marcellus Shale.

In the reporting quarter, the company said it has cut costs from Marcellus Shale operations by 4 percent compared with a year ago.

“We anticipate further improvements in our cost structure,” Chief Executive Officer Dan Dinges said on a conference call with analysts.

Rapid cost cuts have helped Cabot generate its free cash flow, which stood at $88.6 million in the quarter.

“The company is generating free cash flow with production growth, in a sector where very few do. We view Cabot as a rarity in the sector,” Williams Capital Group analyst Gabriele Sorbara said.

Total natural gas production rose to 164.6 billion cubic feet (Bcf) from 163.8 Bcf in the quarter.

Cabot said it expects second-quarter production to be in the range of 1,850 to 1,900 million cubic feet equivalent (MMcfe) and stuck to its 2018 daily production guidance growth of 10 to 15 percent.

Excluding items, Cabot posted a profit of 28 cents, beating the average analyst estimate 27 cents, according to Thomson Reuters I/B/E/S.

The company’s net income rose to $117.2 million, or 26 cents per share, for the quarter ended March 31, from $105.7 million, or 23 cents per share, a year earlier.

Shares of the company were up 1.5 percent at $23.81 in midday trading.

Reporting by Akshara P in Bengaluru; Editing by Shailesh Kuber

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