Cabot Oil & Gas Corporation declared third quarter net income of $32.3 million, or $0.31 per share, as compared to net income of $42.6 million, or $0.41 per share, in the third quarter of 2009, excluding the selected items in both periods, (which are detailed in the Selected Items Table and include the impact related to the sale of assets, stock compensation, impairments and pension termination related expenses, along with derivatives). The 2010 quarter's reported net income was $3.9 million, or $0.04 per share, as compared to $38.9 million, or $0.38 per share, for the third quarter of 2009.

Cash flow from operations for the 2010 third quarter totaled $124.2 million, while discretionary cash flow was $133.1 million. Comparatively, 2009 third quarter cash flow from operations was $116.7 million, and discretionary cash flow was $158.9 million.

Driving the results were lower natural gas realized prices offset by higher realized oil prices and higher equivalent production levels creating increased revenue for the quarter. "Our third quarter production level of 36.0 Bcfe established a new high for quarterly reported production and was approximately 41 percent higher than the volumes reported in last year's third quarter. Pennsylvania remains the focus of our capital program and is the key contributor to this production growth, as we wait for a backlog of Haynesville and Eagle Ford completions for both natural gas and oil," said Dan O. Dinges, Chairman, President and Chief Executive Officer. In terms of pricing, realized natural gas prices were $5.37 per Mcf in the 2010 third quarter versus $7.40 per Mcf in the 2009 third quarter. The 2009 quarter benefited from a significantly large hedge gain. Realized oil prices for the period increased 12 percent to $98.26 per barrel over last year's third quarter.

During the third quarter, Cabot finalized its decision to terminate its pension plan and replace this plan with an enhancement to its 401(k) Plan. The effective date of this termination was September 30, 2010; however, the regulatory process to liquidate the plan will take 12-18 months to complete. "We have been evaluating this decision for many years and in light of the regulatory environment, we found a more cost effective way to deliver a similar benefit," stated Dinges.

In terms of cost comparisons, the absolute levels rose with the largest increases occurring for an impairment and for DD&A; however, per unit levels for the recurring expenses improved significantly in this third quarter compared to last year. The impairment relates to two south Texas legacy fields that have seen limited activity.

Year-to-Date The 2010 nine-month net income figure, after removal of the selected items, was $82.7 million, or $0.80 per share, versus $123.9 million, or $1.20 per share, for the nine-month period ended September 30, 2009. In the nine months ended September 30, 2010, Cabot reported net income of $54.3 million, or $0.52 per share, compared to $112.0 million, or $1.08 per share, for the same period last year. The cash flow comparisons for the nine months ended September 30, 2010 and September 30, 2009, respectively, are cash flow from operations of $367.5 million versus $417.1 million and discretionary cash flow of $374.2 million versus $430.6 million.

"The same dynamic that drove the quarter results apply to the year-to-date periods - increased production and lower natural gas price realizations," stated Dinges. "Production was up approximately 21.5 percent for the nine-month comparable periods while natural gas prices fell 22 percent and oil prices increased 18 percent." Per unit expenses, other than DD&A, were down between the year-to-date nine-month comparable periods with overall unit costs declining as well.

As previously announced during the quarter, Cabot increased its credit facility and extended the maturity date, creating additional flexibility and capacity to handle its debt maturity schedule. "We remain committed to our plans for a cash flow neutral program in 2011 while at the same time meeting our 2010 obligations, particularly in east Texas," added Dinges. "As I have stated before, we do not want to lose the long-term benefit of this large resource potential." Also of note, in the third quarter is $75 million of private placement notes are now treated as current liabilities with a required payment in July 2011.

Operations Update

Cabot Oil & Gas Corporation announced its third successful Eagle Ford oil shale completion. The Arminius Energy Trust #2H was drilled to a measured depth of 13,175' with a 4,325' lateral. The well was completed with a 15-stage frac resulting in a 24-hour production rate of 547 barrels of oil equivalent (504 bbls + 256 Mcf) per day. "We completed this well with 15 stages versus 20 stages on our last well and the well continues to cleanup with only 10 percent flowback to date," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "The first well on this lease remains at 787 barrels of oil equivalent (579 bbls + 1,250 Mcf) per day after six weeks," Dinges added. "These wells confirm our thesis in the area supporting the idea to dedicate our 2011 south region capital to Eagle Ford oil. We plan to double our south region oil production in 2011 with 18 to 20 net wells in this Buckhorn area and the joint venture with EOG."

Marcellus The Company recently drilled and completed its first pad with three horizontal wells. The process was to drill each well and then to simultaneously complete the three wells using zipper frac technology. The completed wells have varying lateral lengths from 4,304' to 4,865'. Production from this pad site reached 47.4 Mmcf per day. "The result is impressive and highlights the prolific nature of the wells in our area of operations," commented Dinges. "We continue to expand our multi-well pad sites and are currently drilling the sixth well on our first six-well pad site."

Nevada Cabot recently drilled a rank wildcat in Nevada for the Chainman Shale. The Chainman was encountered shallower in the section than anticipated, and the well will be abandoned. "Our play in Nevada is made up of three distinct areas," stated Dinges. "We will take what we learned and shoot some additional seismic before we attempt the next well as there is no imminent lease expiration."

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