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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM | 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission file number 1-10447

CABOT OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware |  | 04-3072771
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

Three Memorial City Plaza
840 Gessner Road, Suite 1400, Houston, Texas 77024
(Address of principal executive offices, including ZIP code)
(281) 589-4600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.10 per share | COG | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ | Accelerated filer | ☐
Non-accelerated filer | ☐ | Smaller reporting company | ☐
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 28, 2021, there were 399,419,748 shares of Common Stock, Par Value $0.10 Per Share, outstanding.

Table of Contents
CABOT OIL & GAS CORPORATION
INDEX TO FINANCIAL STATEMENTS

|  | Page
Part I. Financial Information |
Item 1. | Financial Statements |
Condensed Consolidated Balance Sheet (Unaudited) at March 31, 2021 and December 31, 2020 | 3
Condensed Consolidated Statement of Operations (Unaudited) for the Three Months Ended March 31, 2021 and 2020 | 4
Condensed Consolidated Statement of Cash Flows (Unaudited) for the Three Months Ended March 31, 2021 and 2020 | 5
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) for the Three Months Ended March 31, 2021 and 2020 | 6
Notes to the Condensed Consolidated Financial Statements | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 21
Item 4. | Controls and Procedures | 23
Part II. Other Information |
Item 1. | Legal Proceedings | 23
Item 1A. | Risk Factors | 23
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 23
Item 5. | Other Information | 24
Item 6. | Exhibits | 25
Signatures | 26

2

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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

(In thousands, except share amounts) |  | March 31, 2021 |  | December 31, 2020
ASSETS |  |  |  |
Current assets |  |  |  |
Cash and cash equivalents |  | $ | 173,659 |  |  | $ | 140,113 |
Restricted cash |  | 11,578 |  |  | 11,578 |
Accounts receivable, net |  | 197,843 |  |  | 214,724 |
Income taxes receivable |  | 2,559 |  |  | 6,171 |
Inventories |  | 15,870 |  |  | 15,270 |
Derivative instruments |  | 9,574 |  |  | 26,209 |
Other current assets |  | 832 |  |  | 1,650 |
Total current assets |  | 411,915 |  |  | 415,715 |
Properties and equipment, net (Successful efforts method) |  | 4,075,428 |  |  | 4,044,606 |
Other assets |  | 63,509 |  |  | 63,211 |
|  | $ | 4,550,852 |  |  | $ | 4,523,532 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |
Current liabilities |  |  |  |
Accounts payable |  | $ | 169,101 |  |  | $ | 162,081 |
Current portion of long-term debt |  | 100,000 |  |  | 188,000 |
Accrued liabilities |  | 21,240 |  |  | 22,374 |
Income taxes payable |  | 19,895 |  |  | — |
Interest payable |  | 4,856 |  |  | 17,771 |
Total current liabilities |  | 315,092 |  |  | 390,226 |
Long-term debt, net |  | 946,123 |  |  | 945,924 |
Deferred income taxes |  | 786,526 |  |  | 774,195 |
Asset retirement obligations |  | 87,410 |  |  | 85,489 |
Postretirement benefits |  | 31,203 |  |  | 30,713 |
Other liabilities |  | 78,528 |  |  | 81,278 |
Total liabilities |  | 2,244,882 |  |  | 2,307,825 |
Commitments and contingencies |  |  |  |
Stockholders' equity |  |  |  |
Common stock: |  |  |  |
Authorized — 960,000,000 shares of $0.10 par value in 2021 and 2020, respectively |  |  |  |
Issued — 478,377,066 shares and 477,828,813 shares in 2021 and 2020, respectively |  | 47,838 |  |  | 47,783 |
Additional paid-in capital |  | 1,808,232 |  |  | 1,804,354 |
Retained earnings |  | 2,270,819 |  |  | 2,184,352 |
Accumulated other comprehensive income |  | 2,282 |  |  | 2,419 |
Less treasury stock, at cost: |  |  |  |
78,957,318 shares and 78,957,318 shares in 2021 and 2020, respectively |  | (1,823,201) |  |  | (1,823,201) |
Total stockholders' equity |  | 2,305,970 |  |  | 2,215,707 |
|  | $ | 4,550,852 |  |  | $ | 4,523,532 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

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CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

|  |  |  | Three Months Ended March 31,
(In thousands, except per share amounts) |  |  |  |  |  | 2021 |  | 2020
OPERATING REVENUES |  |  |  |  |  |  |  |
Natural gas |  |  |  |  |  | $ | 472,859 |  |  | $ | 370,340 |
(Loss) gain on derivative instruments |  |  |  |  |  | (13,238) |  |  | 16,062 |
Other |  |  |  |  |  | 59 |  |  | 55 |
|  |  |  |  |  | 459,680 |  |  | 386,457 |
OPERATING EXPENSES |  |  |  |  |  |  |  |
Direct operations |  |  |  |  |  | 16,876 |  |  | 17,244 |
Transportation and gathering |  |  |  |  |  | 136,702 |  |  | 143,332 |
Taxes other than income |  |  |  |  |  | 4,805 |  |  | 3,738 |
Exploration |  |  |  |  |  | 2,627 |  |  | 2,190 |
Depreciation, depletion and amortization |  |  |  |  |  | 94,148 |  |  | 100,135 |
General and administrative |  |  |  |  |  | 29,155 |  |  | 33,429 |
|  |  |  |  |  | 284,313 |  |  | 300,068 |
Loss on equity method investments |  |  |  |  |  | — |  |  | (59) |
Gain on sale of assets |  |  |  |  |  | 71 |  |  | 71 |
INCOME FROM OPERATIONS |  |  |  |  |  | 175,438 |  |  | 86,401 |
Interest expense, net |  |  |  |  |  | 12,377 |  |  | 14,211 |
Other expense |  |  |  |  |  | 46 |  |  | 66 |
Income before income taxes |  |  |  |  |  | 163,015 |  |  | 72,124 |
Income tax expense |  |  |  |  |  | 36,661 |  |  | 18,214 |
NET INCOME |  |  |  |  |  | $ | 126,354 |  |  | $ | 53,910 |
Earnings per share |  |  |  |  |  |  |  |
Basic |  |  |  |  |  | $ | 0.32 |  |  | $ | 0.14 |
Diluted |  |  |  |  |  | $ | 0.31 |  |  | $ | 0.13 |
Weighted-average common shares outstanding |  |  |  |  |  |  |  |
Basic |  |  |  |  |  | 399,121 |  |  | 398,343 |
Diluted |  |  |  |  |  | 401,811 |  |  | 399,897 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

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CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

|  | Three Months Ended March 31,
(In thousands) |  | 2021 |  | 2020
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |  |
Net income |  | $ | 126,354 |  |  | $ | 53,910 |
Adjustments to reconcile net income to cash provided by operating activities: |  |  |  |
Depreciation, depletion and amortization |  | 94,148 |  |  | 100,135 |
Deferred income tax expense |  | 12,371 |  |  | 44,044 |
Gain on sale of assets |  | (71) |  |  | (71) |
Loss (gain) on derivative instruments |  | 13,238 |  |  | (16,062) |
Net cash received in settlement of derivative instruments |  | 3,397 |  |  | — |
Loss on equity method investments |  | — |  |  | 59 |
Amortization of debt issuance costs |  | 715 |  |  | 750 |
Stock-based compensation and other |  | 11,076 |  |  | 15,765 |
Changes in assets and liabilities: |  |  |  |
Accounts receivable, net |  | 16,881 |  |  | 73,327 |
Income taxes |  | 23,507 |  |  | (26,756) |
Inventories |  | (600) |  |  | (4,317) |
Other current assets |  | 818 |  |  | 916 |
Accounts payable and accrued liabilities |  | 3,425 |  |  | (23,711) |
Interest payable |  | (12,915) |  |  | (12,981) |
Other assets and liabilities |  | (1,817) |  |  | (111) |
Net cash provided by operating activities |  | 290,527 |  |  | 204,897 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |  |
Capital expenditures |  | (123,617) |  |  | (148,702) |
Proceeds from sale of assets |  | 92 |  |  | 48 |
Investment in equity method investments |  | — |  |  | (35) |
Proceeds from sale of equity method investments |  | — |  |  | (9,424) |
Net cash used in investing activities |  | (123,525) |  |  | (158,113) |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |  |
Repayments of debt |  | (88,000) |  |  | — |
Dividends paid |  | (39,887) |  |  | (39,817) |
Tax withholdings on vesting of stock awards |  | (5,569) |  |  | (6,313) |
Net cash used in financing activities |  | (133,456) |  |  | (46,130) |
Net increase in cash, cash equivalents and restricted cash |  | 33,546 |  |  | 654 |
Cash, cash equivalents and restricted cash, beginning of period |  | 151,691 |  |  | 213,783 |
Cash, cash equivalents and restricted cash, end of period |  | $ | 185,237 |  |  | $ | 214,437 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

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CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

(In thousands, except per share amounts) |  | Common Shares |  | Common Stock Par |  | Treasury Shares |  | Treasury Stock |  | Paid-In Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Retained Earnings |  | Total
Balance at December 31, 2020 |  | 477,829 |  |  | $ | 47,783 |  |  | 78,957 |  |  | $ | (1,823,201) |  |  | $ | 1,804,354 |  |  | $ | 2,419 |  |  | $ | 2,184,352 |  |  | $ | 2,215,707 |
Net income |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 126,354 |  |  | 126,354 |
Stock amortization and vesting |  | 548 |  |  | 55 |  |  | — |  |  | — |  |  | 3,878 |  |  | — |  |  | — |  |  | 3,933 |
Cash dividends at $0.10 per share |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (39,887) |  |  | (39,887) |
Other comprehensive loss |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (137) |  |  | — |  |  | (137) |
Balance at March 31, 2021 |  | 478,377 |  |  | $ | 47,838 |  |  | 78,957 |  |  | $ | (1,823,201) |  |  | $ | 1,808,232 |  |  | $ | 2,282 |  |  | $ | 2,270,819 |  |  | $ | 2,305,970 |

(In thousands, except per share amounts) |  | Common Shares |  | Common Stock Par |  | Treasury Shares |  | Treasury Stock |  | Paid-In Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Retained Earnings |  | Total
Balance at December 31, 2019 |  | 476,882 |  |  | $ | 47,688 |  |  | 78,957 |  |  | $ | (1,823,201) |  |  | $ | 1,782,427 |  |  | $ | 1,360 |  |  | $ | 2,143,213 |  |  | $ | 2,151,487 |
Net income |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 53,910 |  |  | 53,910 |
Stock amortization and vesting |  | 651 |  |  | 65 |  |  | — |  |  | — |  |  | 2,886 |  |  | — |  |  | — |  |  | 2,951 |
Cash dividends at $0.10 per share |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (39,817) |  |  | (39,817) |
Other comprehensive loss |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (136) |  |  | — |  |  | (136) |
Balance at March 31, 2020 |  | 477,533 |  |  | $ | 47,753 |  |  | 78,957 |  |  | $ | (1,823,201) |  |  | $ | 1,785,313 |  |  | $ | 1,224 |  |  | $ | 2,157,306 |  |  | $ | 2,168,395 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
6

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CABOT OIL & GAS CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Financial Statement Presentation
During interim periods, Cabot Oil & Gas Corporation (the Company) follows the same accounting policies disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 (Form 10-K) filed with the Securities and Exchange Commission (SEC), except for any new accounting pronouncements adopted during the period. The interim financial statements should be read in conjunction with the notes to the consolidated financial statements and information presented in the Form 10-K. In management’s opinion, the accompanying interim condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary for a fair statement. The results for any interim period are not necessarily indicative of the expected results for the entire year.
2. Properties and Equipment, Net
Properties and equipment, net are comprised of the following:

(In thousands) |  | March 31, 2021 |  | December 31, 2020
Proved oil and gas properties |  | $ | 7,196,548 |  |  | $ | 7,068,605 |
Unproved oil and gas properties |  | 43,060 |  |  | 49,829 |
Land, buildings and other equipment |  | 92,858 |  |  | 92,566 |
|  | 7,332,466 |  |  | 7,211,000 |
Accumulated depreciation, depletion and amortization |  | (3,257,038) |  |  | (3,166,394) |
|  | $ | 4,075,428 |  |  | $ | 4,044,606 |

At March 31, 2021, the Company did not have any projects that had exploratory well costs capitalized for a period of greater than one year after drilling.
3. Debt and Credit Agreements
The Company’s debt and credit agreements consisted of the following:

(In thousands) |  | March 31, 2021 |  | December 31, 2020
6.51% weighted-average senior notes |  | $ | 37,000 |  |  | $ | 37,000 |
5.58% weighted-average senior notes(1) |  | 87,000 |  |  | 175,000 |
3.65% weighted-average senior notes(2) |  | 925,000 |  |  | 925,000 |
Unamortized debt issuance costs |  | (2,877) |  |  | (3,076) |
|  | $ | 1,046,123 |  |  | $ | 1,133,924 |

_______________________________________________________________________________
(1)Includes $88.0 million of current portion of long-term debt at December 31, 2020, which the Company repaid in January 2021.
(2)Includes $100.0 million of current portion of long-term debt at March 31, 2021 and December 31, 2020 due in September 2021.
At March 31, 2021, the Company was in compliance with all financial and other covenants applicable to its revolving credit facility and senior notes.
Revolving Credit Agreement
The borrowing base under the terms of the Company's revolving credit facility is redetermined annually in April. In addition, either the Company or the banks may request an interim redetermination twice a year or in connection with certain acquisitions or divestitures of oil and gas properties. At March 31, 2021, the Company had no borrowings outstanding under its revolving credit facility and had unused commitments of $1.5 billion.
Effective April 21, 2021, the borrowing base and available commitments were reaffirmed at $3.2 billion and $1.5 billion, respectively.
7

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4. Derivative Instruments
As of March 31, 2021, the Company had the following outstanding financial commodity derivatives:

|  |  |  |  |  |  | Collars |  |  |  |
|  |  |  |  |  |  | Floor |  | Ceiling |  | Swaps |  |
Type of Contract |  | Volume (Mmbtu) |  |  | Contract Period |  | Range ($/Mmbtu) |  | Weighted-Average ($/Mmbtu) |  | Range ($/Mmbtu) |  | Weighted-Average ($/Mmbtu) |  | Weighted-Average ($/Mmbtu) |  |
Natural gas (NYMEX) |  | 13,750,000 |  |  | Apr. 2021-Dec. 2021 |  |  |  |  |  |  |  |  |  | $ | 2.74 |  |  |
Natural gas (NYMEX) |  | 123,750,000 |  |  | Apr. 2021-Dec. 2021 |  | $2.50 - $2.85 |  | $ | 2.68 |  |  | $2.83 - $3.80 |  | $ | 3.03 |  |  |  |  |
Natural gas (NYMEX) |  | 10,700,000 |  |  | Apr. 2021-Oct. 2021 |  | $— |  | $ | 2.50 |  |  | $— |  | $ | 2.80 |  |  |  |  |
Natural gas (NYMEX) |  | 21,400,000 |  |  | Apr. 2021-Oct. 2021 |  |  |  |  |  |  |  |  |  | $ | 2.78 |  |  |

Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet

|  |  |  | Derivative Assets |  | Derivative Liabilities
(In thousands) |  | Balance Sheet Location |  | March 31, 2021 |  | December 31, 2020 |  | March 31, 2021 |  | December 31, 2020
Commodity contracts |  | Derivative instruments (current) |  | $ | 9,574 |  |  | $ | 26,209 |  |  | $ | — |  |  | $ | — |

Offsetting of Derivative Assets and Liabilities in the Condensed Consolidated Balance Sheet

(In thousands) |  | March 31, 2021 |  | December 31, 2020
Derivative assets |  |  |  |
Gross amounts of recognized assets |  | $ | 10,575 |  |  | $ | 26,354 |
Gross amounts offset in the condensed consolidated balance sheet |  | (1,001) |  |  | (145) |
Net amounts of assets presented in the condensed consolidated balance sheet |  | 9,574 |  |  | 26,209 |
Gross amounts of financial instruments not offset in the condensed consolidated balance sheet |  | — |  |  | — |
Net amount |  | $ | 9,574 |  |  | $ | 26,209 |
Derivative liabilities |  |  |  |
Gross amounts of recognized liabilities |  | $ | 1,001 |  |  | $ | 145 |
Gross amounts offset in the condensed consolidated balance sheet |  | (1,001) |  |  | (145) |
Net amounts of liabilities presented in the condensed consolidated balance sheet |  | — |  |  | — |
Gross amounts of financial instruments not offset in the condensed consolidated balance sheet |  | — |  |  | — |
Net amount |  | $ | — |  |  | $ | — |

Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations

|  |  |  | Three Months Ended March 31,
(In thousands) |  |  |  |  |  | 2021 |  | 2020
Cash received (paid) on settlement of derivative instruments |  |  |  |  |  |  |  |
(Loss) gain on derivative instruments |  |  |  |  |  | $ | 3,397 |  |  | $ | — |
Non-cash gain (loss) on derivative instruments |  |  |  |  |  |  |  |
(Loss) gain on derivative instruments |  |  |  |  |  | (16,635) |  |  | 16,062 |
|  |  |  |  |  | $ | (13,238) |  |  | $ | 16,062 |

5. Fair Value Measurements
The Company follows the authoritative guidance for measuring fair value of assets and liabilities in its financial statements. For further information regarding the fair value hierarchy, refer to Note 1 of the Notes to the Consolidated Financial Statements in the Form 10-K.
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Financial Assets and Liabilities
The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:

(In thousands) |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Balance at March 31, 2021
Assets |  |  |  |  |  |  |  |
Deferred compensation plan |  | $ | 24,296 |  |  | $ | — |  |  | $ | — |  |  | $ | 24,296 |
Derivative instruments |  | — |  |  | 1,836 |  |  | 8,739 |  |  | 10,575 |
|  | $ | 24,296 |  |  | $ | 1,836 |  |  | $ | 8,739 |  |  | $ | 34,871 |
Liabilities |  |  |  |  |  |  |  |
Deferred compensation plan |  | $ | 33,607 |  |  | $ | — |  |  | $ | — |  |  | $ | 33,607 |
Derivative instruments |  | — |  |  | 7 |  |  | 994 |  |  | 1,001 |
|  | $ | 33,607 |  |  | $ | 7 |  |  | $ | 994 |  |  | $ | 34,608 |

(In thousands) |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Balance at December 31, 2020
Assets |  |  |  |  |  |  |  |
Deferred compensation plan |  | $ | 22,510 |  |  | $ | — |  |  | $ | — |  |  | $ | 22,510 |
Derivative instruments |  | — |  |  | 2,647 |  |  | 23,707 |  |  | 26,354 |
|  | $ | 22,510 |  |  | $ | 2,647 |  |  | $ | 23,707 |  |  | $ | 48,864 |
Liabilities |  |  |  |  |  |  |  |
Deferred compensation plan |  | $ | 30,581 |  |  | $ | — |  |  | $ | — |  |  | $ | 30,581 |
Derivative instruments |  | — |  |  | — |  |  | 145 |  |  | 145 |
|  | $ | 30,581 |  |  | $ | — |  |  | $ | 145 |  |  | $ | 30,726 |

The Company's investments associated with its deferred compensation plan consist of mutual funds and deferred shares of the Company's common stock that are publicly traded and for which market prices are readily available.
The derivative instruments were measured based on quotes from the Company's counterparties or internal models. Such quotes and models have been derived using an income approach that considers various inputs, including current market and contractual prices for the underlying instruments, quoted forward commodity prices, basis differentials, volatility factors and interest rates for a similar length of time as the derivative contract term as applicable. Estimates are derived from or verified using relevant NYMEX futures contracts and are compared to multiple quotes obtained from counterparties for reasonableness. The determination of the fair values presented above also incorporates a credit adjustment for non-performance risk. The Company measured the non-performance risk of its counterparties by reviewing credit default swap spreads for the various financial institutions with which it has derivative transactions while non-performance risk of the Company is evaluated using market credit spreads provided by several of the Company's banks. The Company has not incurred any losses related to non-performance risk of its counterparties and does not anticipate any material impact on its financial results due to non-performance by third parties.
The most significant unobservable inputs relative to the Company's Level 3 derivative contracts are volatility factors. An increase (decrease) in these unobservable inputs would result in an increase (decrease) in fair value, respectively. The Company does not have access to the specific assumptions used in its counterparties' valuation models. Consequently, additional disclosures regarding significant Level 3 unobservable inputs were not provided.
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The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy:

|  | Three Months Ended March 31,
(In thousands) |  | 2021 |  | 2020
Balance at beginning of period |  | $ | 23,562 |  |  | $ | (22) |
Total gain (loss) included in earnings |  | (12,639) |  |  | 7,215 |
Settlement (gain) loss |  | (3,178) |  |  | — |
Transfers in and/or out of Level 3 |  | — |  |  | — |
Balance at end of period |  | $ | 7,745 |  |  | $ | 7,193 |
Change in unrealized gains (losses) relating to assets and liabilities still held at the end of the period |  | $ | (6,350) |  |  | $ | 7,215 |

Non-Financial Assets and Liabilities
The Company discloses or recognizes its non-financial assets and liabilities, such as impairments or acquisitions, at fair value on a nonrecurring basis. As none of the Company’s other non-financial assets and liabilities were measured at fair value as of March 31, 2021, additional disclosures were not required.
The estimated fair value of the Company’s asset retirement obligations at inception is determined by utilizing the income approach by applying a credit-adjusted risk-free rate, which takes into account the Company’s credit risk, the time value of money, and the current economic state to the undiscounted expected abandonment cash flows. Given the unobservable nature of the inputs, the measurement of the asset retirement obligations was classified as Level 3 in the fair value hierarchy.
Fair Value of Other Financial Instruments
The estimated fair value of other financial instruments is the amount at which the instrument could be exchanged currently between willing parties. The carrying amounts reported in the Condensed Consolidated Balance Sheet for each of cash, cash equivalents and restricted cash approximate fair value, due to the short-term maturities of these instruments. Cash, cash equivalents and restricted cash are classified as Level 1 in the fair value hierarchy and the remaining financial instruments are classified as Level 2.
The Company uses available market data and valuation methodologies to estimate the fair value of debt. The fair value of debt is the estimated amount the Company would have to pay a third party to assume the debt, including a credit spread for the difference between the issue rate and the period end market rate. The credit spread is the Company’s default or repayment risk. The credit spread (premium or discount) is determined by comparing the Company’s outstanding debt to new issuances (secured and unsecured) and secondary trades of similar size and credit statistics for both public and private debt. The estimated fair value of the Company's outstanding debt is based on interest rates currently available to the Company. The Company’s debt is valued using an income approach and classified as Level 3 in the fair value hierarchy.
The carrying amount and estimated fair value of debt is as follows:

|  | March 31, 2021 |  | December 31, 2020
(In thousands) |  | Carrying Amount |  | Estimated Fair Value |  | Carrying Amount |  | Estimated Fair Value
Long-term debt |  | $ | 1,046,123 |  |  | $ | 1,121,176 |  |  | $ | 1,133,924 |  |  | $ | 1,213,811 |
Current maturities |  | (100,000) |  |  | (100,900) |  |  | (188,000) |  |  | (189,332) |
Long-term debt, excluding current maturities |  | $ | 946,123 |  |  | $ | 1,020,276 |  |  | $ | 945,924 |  |  | $ | 1,024,479 |

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6. Asset Retirement Obligations
Activity related to the Company’s asset retirement obligations is as follows:

(In thousands) |  | Three Months Ended March 31, 2021
Balance at beginning of period |  | $ | 85,989 |
Liabilities incurred |  | 796 |
Accretion expense |  | 1,125 |
Balance at end of period |  | 87,910 |
Less: current asset retirement obligations |  | (500) |
Noncurrent asset retirement obligations |  | $ | 87,410 |

7. Commitments and Contingencies
Contractual Obligations
The Company has various contractual obligations in the normal course of its operations. There have been no material changes to the Company’s contractual obligations described under “Transportation and Gathering Agreements” and "Lease Commitments" as disclosed in Note 9 of the Notes to Consolidated Financial Statements in the Form 10-K.
Legal Matters
Pennsylvania Office of Attorney General Matter
On June 16, 2020, the Office of Attorney General of the Commonwealth of Pennsylvania informed the Company that it will pursue certain misdemeanor and felony charges in a Susquehanna County Magisterial District Court against the Company related to alleged violations of the Pennsylvania Clean Streams Law, which prohibits discharge of industrial wastes. The Company is vigorously defending itself against such charges; however, the proceedings could result in fines or penalties against the Company. At this time, it is not possible to estimate the amount of any fines or penalties, or the range of such fines or penalties, that are reasonably possible in this case.
Other
The Company is a defendant in various other legal proceedings arising in the normal course of business. All known liabilities are accrued when management determines they are probable based on its best estimate of the potential loss. While the outcome and impact of these legal proceedings on the Company cannot be predicted with certainty, management believes that the resolution of these proceedings will not have a material effect on the Company's financial position, results of operations or cash flows.
Contingency Reserves
When deemed necessary, the Company establishes reserves for certain legal proceedings. The establishment of a reserve is based on an estimation process that includes the advice of legal counsel and subjective judgment of management. While management believes these reserves to be adequate, it is reasonably possible that the Company could incur additional losses with respect to those matters for which reserves have been established. The Company believes that any such amount above the amounts accrued would not be material to the Condensed Consolidated Financial Statements. Future changes in facts and circumstances not currently known or foreseeable could result in the actual liability exceeding the estimated ranges of loss and amounts accrued.
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8. Revenue Recognition
Disaggregation of Revenue
The following table presents revenues from contracts with customers disaggregated by product:

|  |  |  | Three Months Ended March 31,
(In thousands) |  |  |  |  |  | 2021 |  | 2020
Natural gas |  |  |  |  |  | $ | 472,859 |  |  | $ | 370,340 |
Other |  |  |  |  |  | 59 |  |  | 55 |
|  |  |  |  |  | $ | 472,918 |  |  | $ | 370,395 |

All of the Company’s revenues from contracts with customers represent products transferred at a point in time as control is transferred to the customer and generated in the United States of America.
Transaction Price Allocated to Remaining Performance Obligations
A significant number of the Company’s product sales contracts are short-term in nature, with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.
As of March 31, 2021, the Company has $8.2 billion of unsatisfied performance obligations related to natural gas sales that have a fixed pricing component and a contract term greater than one year. The Company expects to recognize these obligations over periods ranging from three to 18 years.
Contract Balances
Receivables from contracts with customers are recorded when the right to consideration becomes unconditional, which is generally when control of the product has been transferred to the customer. Receivables from contracts with customers were $198.6 million and $215.3 million as of March 31, 2021 and December 31, 2020, respectively, and are reported in accounts receivable, net on the Condensed Consolidated Balance Sheet. The Company currently has no assets or liabilities related to its revenue contracts, including no upfront payments or rights to deficiency payments.
9. Capital Stock
Dividends
In April 2021, the Board of Directors approved an increase in the quarterly dividend on the Company's common stock from $0.10 per share to $0.11 per share.
10. Stock-Based Compensation
General
The Company grants certain stock-based compensation awards, including restricted stock awards, restricted stock units and performance share awards. Stock-based compensation expense associated with these awards was $11.7 million and $16.3 million in the first quarter of 2021 and 2020, respectively. Stock-based compensation expense is included in general and administrative expense in the Condensed Consolidated Statement of Operations.
Refer to Note 14 of the Notes to the Consolidated Financial Statements in the Form 10-K for further description of the various types of stock-based compensation awards and the applicable award terms.
Restricted Stock Units
During the first three months of 2021, 101,991 restricted stock units were granted to non-employee directors of the Company, with a weighted-average grant date value of $18.59 per unit. The fair value of these units is measured based on the closing stock price on grant date and compensation expense is recorded immediately. These units immediately vest and are issued when the director ceases to be a director of the Company.
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Performance Share Awards
The performance period for the awards granted during the first three months of 2021 commenced on January 1, 2021 and ends on December 31, 2023. The Company used an annual forfeiture rate assumption ranging from zero percent to four percent for purposes of recognizing stock-based compensation expense for its performance share awards.
Performance Share Awards Based on Internal Performance Metrics
The fair value of performance share award grants based on internal performance metrics is based on the closing stock price on the grant date. Each performance share award represents the right to receive up to 100 percent of the award in shares of common stock. Based on the Company’s probability assessment at March 31, 2021, it is considered probable that the criteria for all performance awards based on internal metrics awards will be met.
Employee Performance Share Awards. During the first three months of 2021, 696,280 Employee Performance Share Awards were granted at a grant date value of $18.58 per share. The 2020 awards vest 100 percent on the third anniversary, provided that the Company averages $100 million or more of operating cash flow during the three-year performance period, as set by the compensation committee of the Company's board of directors. If the Company does not meet the performance metric for the applicable period, then the performance shares that would have been issued on the anniversary date will be forfeited.
Hybrid Performance Share Awards. During the first three months of 2021, 423,171 Hybrid Performance Share Awards were granted at a grant date value of $18.58 per share. The 2021 awards vest 25 percent on each of the first and second anniversary dates and 50 percent on the third anniversary, provided that the Company has $100 million or more of operating cash flow for the year preceding the vesting date, as set by the compensation committee of the Company's board of directors. If the Company does not meet the performance metric for the applicable period, then the portion of the performance shares that would have been issued on that anniversary date will be forfeited.
Performance Share Awards Based on Market Conditions
These awards have both an equity and liability component, with the right to receive up to the first 100 percent of the award in shares of common stock and the right to receive up to an additional 100 percent of the value of the award in excess of the equity component in cash. The equity portion of these awards is valued on the grant date and is not marked to market, while the liability portion of the awards is valued as of the end of each reporting period on a mark-to-market basis. The Company calculates the fair value of the equity and liability portions of the awards using a Monte Carlo simulation model.
TSR Performance Share Awards. During the first three months of 2021, 723,224 TSR Performance Share Awards were granted and are earned, or not earned, based on the comparative performance of the Company’s common stock measured against a predetermined group of companies in the Company’s peer group over a three-year performance period. The Company incorporated a new feature in the 2021 TSR awards that will reduce the potential cash component of the award if the actual performance is negative over the three-year period and the base calculation indicates an above-target payout.
The following assumptions were used to determine the grant date fair value of the equity component (February 17, 2021) and the period-end fair value of the liability component of the TSR Performance Share Awards:

|  | Grant Date |  | March 31, 2021
Fair value per performance share award |  | $ | 16.07 |  |  | $7.66 - $10.60
Assumptions: |  |  |  |
Stock price volatility |  | 39.8 | % |  | 38.1% - 45.8%
Risk free rate of return |  | 0.20 | % |  | 0.06% - 0.30%

11. Earnings per Common Share
Basic earnings per share (EPS) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS is similarly calculated except that the common shares outstanding for the period is increased using the treasury stock method to reflect the potential dilution that could occur if outstanding stock awards were vested at the end of the applicable period. Anti-dilutive shares represent potentially dilutive securities that are excluded from the computation of diluted income or loss per share as their impact would be anti-dilutive.
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The following is a calculation of basic and diluted weighted-average shares outstanding:

|  |  |  | Three Months Ended March 31,
(In thousands) |  |  |  |  |  | 2021 |  | 2020
Weighted-average shares - basic |  |  |  |  |  | 399,121 |  |  | 398,343 |
Dilution effect of stock awards at end of period |  |  |  |  |  | 2,690 |  |  | 1,554 |
Weighted-average shares - diluted |  |  |  |  |  | 401,811 |  |  | 399,897 |

The following table presents weighted-average shares excluded from diluted EPS due to the anti-dilutive effect:

|  |  |  | Three Months Ended March 31,
(In thousands) |  |  |  |  |  | 2021 |  | 2020
Weighted-average stock awards excluded from diluted EPS due to the anti-dilutive effect calculated using the treasury stock method |  |  |  |  |  | 928 |  |  | 1,068 |

12. Additional Balance Sheet Information
Certain balance sheet amounts are comprised of the following:

(In thousands) |  | March 31, 2021 |  | December 31, 2020
Accounts receivable, net |  |  |  |
Trade accounts |  | $ | 198,625 |  |  | $ | 215,301 |
Other accounts |  | 257 |  |  | 462 |
|  | 198,882 |  |  | 215,763 |
Allowance for doubtful accounts |  | (1,039) |  |  | (1,039) |
|  | $ | 197,843 |  |  | $ | 214,724 |
Other assets |  |  |  |
Deferred compensation plan |  | $ | 24,296 |  |  | $ | 22,510 |
Debt issuance costs |  | 6,360 |  |  | 6,875 |
Operating lease right-of-use assets |  | 32,725 |  |  | 33,741 |
Other accounts |  | 128 |  |  | 85 |
|  | $ | 63,509 |  |  | $ | 63,211 |
Accounts payable |  |  |  |
Trade accounts |  | $ | 17,230 |  |  | $ | 12,896 |
Royalty and other owners |  | 34,496 |  |  | 37,243 |
Accrued transportation |  | 51,530 |  |  | 52,238 |
Accrued capital costs |  | 38,280 |  |  | 37,872 |
Taxes other than income |  | 18,420 |  |  | 13,736 |
Other accounts |  | 9,145 |  |  | 8,096 |
|  | $ | 169,101 |  |  | $ | 162,081 |
Accrued liabilities |  |  |  |
Employee benefits |  | $ | 13,127 |  |  | $ | 14,270 |
Taxes other than income |  | 3,082 |  |  | 3,026 |
Operating lease liabilities |  | 3,910 |  |  | 3,991 |
Other accounts |  | 1,121 |  |  | 1,087 |
|  | $ | 21,240 |  |  | $ | 22,374 |
Other liabilities |  |  |  |
Deferred compensation plan |  | $ | 33,607 |  |  | $ | 30,581 |
Operating lease liabilities |  | 28,697 |  |  | 29,628 |
Other accounts |  | 16,224 |  |  | 21,069 |
|  | $ | 78,528 |  |  | $ | 81,278 |

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following review of operations for the three month periods ended March 31, 2021 and 2020 should be read in conjunction with our Condensed Consolidated Financial Statements and the Notes included in this Quarterly Report on Form 10-Q (Form 10-Q) and with the Consolidated Financial Statements, Notes and Management’s Discussion and Analysis included in the Cabot Oil & Gas Corporation Annual Report on Form 10-K for the year ended December 31, 2020 (Form 10-K).
OVERVIEW
Financial and Operating Overview
Financial and operating results for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 reflect the following:
•Natural gas production decreased 9.2 Bcf from 215.0 Bcf, or 2,363 Mmcf per day, in the 2020 period to 205.8 Bcf, or 2,287 Mmcf per day, in the 2021 period. The decrease was driven by reduced capital spending during 2020 related to our maintenance capital program and the timing of our drilling and completion activities in the Marcellus Shale in 2021.
•Average realized natural gas price was $2.31 per Mcf, 34 percent higher than the $1.72 per Mcf realized in the corresponding period of the prior year.
•Total capital expenditures were $124.0 million compared to $160.3 million in the corresponding period of the prior year.
•Drilled 28 gross wells (25.1 net) with a success rate of 100 percent compared to 22 gross wells (22.0 net) with a success rate of 100 percent for the corresponding period of the prior year. Wells drilled represents wells drilled to total depth during the period.
•Completed 14 gross wells (13.0 net) in 2021 compared to 13 gross wells (13.0 net) in the corresponding period of 2020. Wells completed includes wells completed during the period, regardless of when they were drilled.
•Average rig count during 2021 was approximately 3.0 rigs in the Marcellus Shale, compared to an average rig count of approximately 2.8 rigs during the corresponding period of 2020.
•Repaid $88.0 million of our 5.58% weighted-average senior notes, which matured in January 2021.
Market Conditions and Commodity Prices
Our financial results depend on many factors, particularly commodity prices and our ability to market our production on economically attractive terms. Commodity prices are affected by many factors outside of our control, including changes in market supply and demand, which are impacted by pipeline capacity constraints, inventory storage levels, basis differentials, weather conditions and other factors. Our realized prices are also further impacted by our hedging activities.
Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prevailing commodity prices, particularly natural gas prices. Since substantially all of our production and reserves are natural gas, significant declines in natural gas prices could have a material adverse effect on our operating results, financial condition, liquidity and ability to obtain financing. Lower natural gas prices also may reduce the amount of natural gas that we can produce economically. In addition, in periods of low natural gas prices, we may elect to curtail a portion of our production from time to time. Historically, natural gas prices have been volatile, with prices sometimes fluctuating widely, and they may remain volatile. As a result, we cannot accurately predict future commodity prices and, therefore, cannot determine with any degree of certainty what effect increases or decreases in these prices will have on our capital program, production volumes or revenues. In addition to commodity prices and production volumes, finding and developing sufficient amounts of natural gas reserves at economical costs are critical to our long-term success.
We account for our derivative instruments on a mark-to-market basis, with changes in fair value recognized in operating revenues in the Condensed Consolidated Statement of Operations. As a result of these mark-to-market adjustments associated with our derivative instruments, we will experience volatility in our earnings due to commodity price volatility. Refer to “Impact of Derivative Instruments on Operating Revenues” below and Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information.
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The ongoing COVID-19 outbreak, which the World Health Organization (WHO) declared as a pandemic on March 11, 2020, has reached more than 200 countries and territories and there continues to be considerable uncertainty regarding the extent to which COVID-19 and its variants will continue to spread, the widespread availability and efficacy of treatments and recently developed vaccines and the extent and duration of governmental and other measures implemented to try to slow the spread of the virus and alleviate strain on the healthcare system and the economic impacts of those actions. One of the impacts of the COVID-19 pandemic was a significant reduction in demand for crude oil, and to a lesser extent, natural gas. The supply/demand imbalance driven by the COVID-19 pandemic, as well as production disagreements among members of the Organization of Petroleum Exporting Countries and certain other oil exporting countries (OPEC+), led to significant global economic contraction generally in 2020 and has continued to have disruptive impacts on the oil and gas industry. Although the members of OPEC+ agreed in April 2020 to cut oil production and later extended such production cuts through early 2021, crude oil prices remained at depressed levels until the first quarter of 2021 as the oversupply and lack of demand in the market persisted. Natural gas prices increased in the first quarter of 2021 compared to the first quarter of 2020 but weakened toward the end of the first quarter of 2021, in part, due to lower seasonal demand during the shoulder season of 2021 and slightly increasing production levels.
Meanwhile, NYMEX natural gas futures prices have shown improvements since the implementation of pandemic-related restrictions and OPEC+ price disagreements. The improvements in natural gas futures prices are based on market expectations that declines in future natural gas supplies due to a substantial reduction of associated gas related to the curtailment of operations in oil basins throughout the United States will more than offset the lower demand recently experienced with the COVID-19 pandemic. While the current outlook on natural gas prices is generally favorable and our operations have not been significantly impacted in the short-term, in the event these disruptions continue for an extended period of time, our operations could be adversely impacted, commodity prices could decline and our costs may increase. Although we are unable to predict future commodity prices, at current natural gas price levels, we do not believe that an impairment of our oil and gas properties is reasonably likely to occur in the near future; however, in the event that commodity prices significantly decline from current levels, management would evaluate the recoverability of the carrying value of our oil and gas properties.
We have implemented preventative measures and developed response plans intended to minimize unnecessary risk of exposure and prevent infection among our employees and the communities in which we operate. We also have modified certain business practices (including those related to nonoperational employee work locations and the cancellation of physical participation in meetings, events and conferences) to conform to government restrictions and best practices encouraged by the Centers for Disease Control and Prevention, the WHO and other governmental and regulatory authorities. In addition, we implemented and provided training on a COVID-19 Safety Policy containing personal safety protocols; provided additional personal protective equipment to our workforce; implemented rigorous COVID-19 self-assessment, contract tracing and quarantine protocols; increased cleaning protocols at all of our employee work locations; and provided additional paid leave to employees with actual or presumed COVID-19 cases. We also collaborated, and continue to collaborate, with customers, suppliers and service providers to minimize potential impacts to or disruptions of our operations and to implement longer-term emergency response protocols. We intend to continue monitoring developments affecting our workforce, our customers, our suppliers, our service providers and the communities in which we operate, including any significant resurgence in COVID-19 transmission and infection, and we will take additional precautions as we believe are warranted.
Our efforts to respond to the challenges presented by the on-going pandemic, as well as certain operational decisions we previously implemented such as our maintenance capital program, have helped to minimize the impact, and any resulting disruptions, of the pandemic to our business and operations. We have not required any loans under any COVID-19-related federal or other governmental programs to support our operations, and we do not expect to have to utilize any such funding. As a result, we currently believe that we are well-positioned to manage the challenges presented by the ongoing low commodity pricing environment, and we believe we can endure the current downturn in the energy industry and continued volatility in current and future commodity prices by continuing to:
•Exercise discipline in our capital program with the expectation of funding our capital expenditures with cash on hand, operating cash flows, and if required, borrowings under our revolving credit facility;
•Manage our portfolio by strategically curtailing production in periods of weaker natural gas prices;
•Optimize our drilling, completion and operational efficiencies;
•Manage our balance sheet, which we believe provides sufficient availability under our revolving credit facility and existing cash balances to meet our capital requirements and maintain compliance with our debt covenants; and
•Manage price risk by strategically hedging our production.
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The impact that the COVID-19 pandemic will have on our business, cash flows, liquidity, financial condition and results of operations will depend on future developments, including, among others, the duration, ultimate geographic spread and severity of the virus and its variants, any resurgence in virus transmission and infection in affected regions after they have begun to experience an improvement, the consequences of governmental and other measures designed to mitigate the spread of the virus and alleviate strain on the healthcare system, the distribution and effectiveness of therapeutic treatments and recently developed vaccines, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and the timing and extent to which normal economic and operating conditions resume.
For information about the impact of realized commodity prices on our revenues, refer to “Results of Operations” below.
Outlook
We expect our 2021 capital program to be approximately $530.0 million to $540.0 million, which contemplates a maintenance capital program as a result of the weaker natural gas price environment. We expect to fund these capital expenditures with our operating cash flow and, if required, cash on hand.
In 2020, we drilled 74 gross wells (64.3 net) and completed 86 gross wells (77.3 net), of which 26 gross wells (26.0 net) were drilled but uncompleted in prior years. For the full year of 2021, our capital program will focus on the Marcellus Shale, where we expect to drill and complete 80 net wells. We allocate our planned program for capital expenditures based on market conditions, return on capital and free cash flow expectations and availability of services and human resources. We will continue to assess the natural gas price environment and may adjust our capital expenditures accordingly.
Financial Condition
Capital Resources and Liquidity
Our primary source of cash for the three months ended March 31, 2021 was from net cash flows related to the sale of natural gas production. These cash flows were used to fund our capital expenditures, principal and interest payments on debt and payment of dividends. See below for additional discussion and analysis of our cash flows.
The borrowing base under the terms of our revolving credit facility is redetermined annually in April. In addition, either we or the banks may request an interim redetermination twice a year or in connection with certain acquisitions or divestitures of oil and gas properties. At March 31, 2021 and during the three months then ended, we had no borrowings outstanding under our revolving credit facility and our unused commitments were $1.5 billion. Refer to Note 3 of the Notes to the Condensed Consolidated Financial Statements for more information.
Effective April 21, 2021, the borrowing base and available commitments were reaffirmed at $3.2 billion and $1.5 billion, respectively.
A decline in commodity prices could result in the future reduction of our borrowing base and related commitments under our revolving credit facility. Unless commodity prices decline significantly from current levels, we do not believe that any such reductions would have a significant impact on our ability to service our debt and fund our drilling program and related operations.
We strive to manage our debt at a level below the available credit line in order to maintain borrowing capacity. Our revolving credit facility includes a covenant limiting our total debt. We believe that, with operating cash flows, cash on hand and availability under our revolving credit facility, we have the capacity to fund our spending plans.
At March 31, 2021, we were in compliance with all financial and other covenants applicable to our revolving credit facility and senior notes. Refer to our Form 10-K for further discussion of our restrictive financial covenants.
Cash Flows
Our cash flows from operating activities, investing activities and financing activities are as follows:

|  | Three Months Ended March 31,
(In thousands) |  | 2021 |  | 2020
Cash flows provided by operating activities |  | $ | 290,527 |  |  | $ | 204,897 |
Cash flows used in investing activities |  | (123,525) |  |  | (158,113) |
Cash flows used in financing activities |  | (133,456) |  |  | (46,130) |
Net increase in cash, cash equivalents and restricted cash |  | $ | 33,546 |  |  | $ | 654 |

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Operating Activities. Fluctuations in our operating cash flow are substantially driven by commodity prices, changes in our production volumes and operating expenses. Commodity prices have historically been volatile, primarily as a result of supply and demand for natural gas, pipeline infrastructure constraints, basis differentials, inventory storage levels, seasonal influences and other factors. In addition, fluctuations in cash flow may result in an increase or decrease in our capital expenditures.
Our working capital is substantially influenced by the variables discussed above and fluctuates based on the timing and amount of borrowings and repayments under our revolving credit facility, repayments of debt, the timing of cash collections and payments on our trade accounts receivable and payable, respectively, payment of dividends, repurchases of our securities and changes in the fair value of our commodity derivative activity. From time to time, our working capital will reflect a deficit, while at other times it will reflect a surplus. This fluctuation is not unusual. At March 31, 2021 and December 31, 2020, we had a working capital surplus of $96.8 million and a surplus of $25.5 million, respectively. We believe that we have adequate liquidity and availability under our revolving credit facility to meet our working capital requirements over the next 12 months.
Net cash provided by operating activities in the first three months of 2021 increased by $85.6 million compared to the first three months of 2020. This increase was primarily due to higher natural gas revenues, higher cash received from derivative settlements, lower operating expenses and favorable changes in working capital compared to the prior year. The increase in natural gas revenues was primarily due to higher realized prices, partially offset by lower production. Average realized natural gas prices increased by 34 percent for the first three months of 2021 compared to the first three months of 2020. The decrease in natural gas production for the first three months of 2021 compared to the first three months of 2020 was driven by reduced capital spending during 2020 related to our maintenance capital program and the timing of our drilling and completion activities in the Marcellus Shale in 2021.
Refer to “Results of Operations” for additional information relative to commodity price, production and operating expense fluctuations. We are unable to predict future commodity prices and, as a result, cannot provide any assurance about future levels of net cash provided by operating activities.
Investing Activities. Cash flows used in investing activities decreased by $34.6 million for the first three months of 2021 compared to the first three months of 2020. The decrease was primarily due to $25.1 million of lower capital expenditures as a result of the continuation of our maintenance capital program in 2021 and a decrease in net cash outflows of $9.4 million related to the sale of equity method investments in 2020.
Financing Activities. Cash flows used in financing activities increased by $87.3 million for the first three months of 2021 compared to the first three months of 2020. This increase was primarily due to $88.0 million higher net repayments of debt in 2021 compared to 2020.
Capitalization
Information about our capitalization is as follows:

(In thousands) |  | March 31, 2021 |  | December 31, 2020
Debt (1) |  | $ | 1,046,123 |  |  | $ | 1,133,924 |
Stockholders' equity |  | 2,305,970 |  |  | 2,215,707 |
Total capitalization |  | $ | 3,352,093 |  |  | $ | 3,349,631 |
Debt to total capitalization |  | 31 | % |  | 34 | %
Cash and cash equivalents |  | $ | 173,659 |  |  | $ | 140,113 |

_______________________________________________________________________________
(1)Includes $100.0 million and $188.0 million of current portion of long-term debt at March 31, 2021 and December 31, 2020, respectively. There were no borrowings outstanding under our revolving credit facility as of March 31, 2021 and December 31, 2020.
We did not repurchase any shares of our common stock during the first three months of 2021 and 2020. During the first three months of 2021 and 2020, we paid dividends of $39.9 million ($0.10 per share) and $39.8 million ($0.10 per share), respectively, on our common stock.
In April 2021, our Board of Directors approved an increase in the quarterly dividend on our common stock from $0.10 per share to $0.11 per share.
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Capital and Exploration Expenditures
On an annual basis, we generally fund most of our capital expenditures, excluding any significant property acquisitions, with operating cash flows, cash on hand and, if required, borrowings under our revolving credit facility. We budget these expenditures based on our projected cash flows for the year.
The following table presents major components of our capital and exploration expenditures:

|  | Three Months Ended March 31,
(In thousands) |  | 2021 |  | 2020
Capital expenditures |  |  |  |
Drilling and facilities |  | $ | 122,972 |  |  | $ | 157,992 |
Leasehold acquisitions |  | 612 |  |  | 879 |
Other |  | 441 |  |  | 1,434 |
|  | 124,025 |  |  | 160,305 |
Exploration expenditures |  | 2,627 |  |  | 2,190 |
|  | $ | 126,652 |  |  | $ | 162,495 |

For the full year of 2021, we plan to allocate substantially all of our capital to the Marcellus Shale, where we expect to drill and complete 80 net wells. Our 2021 capital program is expected to be approximately $530.0 million to $540.0 million. Refer to “Outlook” for additional information regarding the current year drilling program. We will continue to assess the commodity price environment and may increase or decrease our capital expenditures accordingly.
Contractual Obligations
We have various contractual obligations in the normal course of our operations. There have been no material changes to our contractual obligations described under “Transportation and Gathering Agreements” and “Lease Commitments” as disclosed in Note 9 of the Notes to the Consolidated Financial Statements and the obligations described under “Contractual Obligations” in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Refer to our Form 10-K for further discussion of our critical accounting policies.
Results of Operations
First Three Months of 2021 and 2020 Compared
We reported net income in the first three months of 2021 of $126.4 million, or $0.32 per share, compared to net income of $53.9 million, or $0.14 per share, in the first three months of 2020. The increase in net income was primarily due to higher operating revenues and lower operating expenses, partially offset by higher income tax expense.
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Revenue, Price and Volume Variances
Our revenues vary from year to year as a result of changes in commodity prices and production volumes. Below is a discussion of revenue, price and volume variances.

|  | Three Months Ended March 31, |  | Variance
(In thousands) |  | 2021 |  | 2020 |  | Amount |  | Percent
Operating Revenues |  |  |  |  |  |  |  |
Natural gas |  | $ | 472,859 |  |  | $ | 370,340 |  |  | $ | 102,519 |  |  | 28 | %
(Loss) gain on derivative instruments |  | (13,238) |  |  | 16,062 |  |  | (29,300) |  |  | (182) | %
Other |  | 59 |  |  | 55 |  |  | 4 |  |  | 7 | %
|  | $ | 459,680 |  |  | $ | 386,457 |  |  | $ | 73,223 |  |  | 19 | %

Natural Gas Revenues

|  | Three Months Ended March 31, |  | Variance |  | Increase (Decrease) (In thousands)
|  | 2021 |  | 2020 |  | Amount |  | Percent |
Price variance ($/Mcf) |  | $ | 2.30 |  |  | $ | 1.72 |  |  | $ | 0.58 |  |  | 34 | % |  | $ | 118,343 |
Volume variance (Bcf) |  | 205.8 |  |  | 215.0 |  |  | (9.2) |  |  | (4) | % |  | (15,824) |
Total |  |  |  |  |  |  |  |  |  | $ | 102,519 |

The increase in natural gas revenues of $102.5 million was primarily due to higher natural gas prices, partially offset by lower production. The decrease in production was due to reduced capital spending during 2020 related to the maintenance capital program and the timing of our drilling and completion activities in the Marcellus Shale in 2021.
Impact of Derivative Instruments on Operating Revenues

|  | Three Months Ended March 31,
(In thousands) |  | 2021 |  | 2020
Cash received (paid) on settlement of derivative instruments |  |  |  |
(Loss) gain on derivative instruments |  | $ | 3,397 |  |  | $ | — |
Non-cash gain (loss) on derivative instruments |  |  |  |
(Loss) gain on derivative instruments |  | (16,635) |  |  | 16,062 |
|  | $ | (13,238) |  |  | $ | 16,062 |

Operating and Other Expenses

|  | Three Months Ended March 31, |  | Variance
(In thousands) |  | 2021 |  | 2020 |  | Amount |  | Percent
Operating and Other Expenses |  |  |  |  |  |  |  |
Direct operations |  | $ | 16,876 |  |  | $ | 17,244 |  |  | $ | (368) |  |  | (2) | %
Transportation and gathering |  | 136,702 |  |  | 143,332 |  |  | (6,630) |  |  | (5) | %
Taxes other than income |  | 4,805 |  |  | 3,738 |  |  | 1,067 |  |  | 29 | %
Exploration |  | 2,627 |  |  | 2,190 |  |  | 437 |  |  | 20 | %
Depreciation, depletion and amortization |  | 94,148 |  |  | 100,135 |  |  | (5,987) |  |  | (6) | %
General and administrative |  | 29,155 |  |  | 33,429 |  |  | (4,274) |  |  | (13) | %
|  | $ | 284,313 |  |  | $ | 300,068 |  |  | $ | (15,755) |  |  | (5) | %
Loss on equity method investments |  | $ | — |  |  | $ | (59) |  |  | $ | 59 |  |  | (100) | %
Gain on sale of assets |  | 71 |  |  | 71 |  |  | — |  |  | — | %
Interest expense, net |  | 12,377 |  |  | 14,211 |  |  | (1,834) |  |  | (13) | %
Other expense |  | 46 |  |  | 66 |  |  | (20) |  |  | (30) | %
Income tax expense |  | 36,661 |  |  | 18,214 |  |  | 18,447 |  |  | 101 | %

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Total costs and expenses from operations decreased by $15.8 million in the first three months of 2021 compared to the corresponding period of 2020. The primary reasons for this fluctuation are as follows:
•Direct operations decreased $0.4 million, due to a decrease in production.
•Transportation and gathering decreased $6.6 million, primarily due to lower production.
•Taxes other than income increased $1.1 million, primarily due to $1.1 million higher drilling impact fees driven by an increase in rates associated with higher natural gas prices.
•Depreciation, depletion and amortization (DD&A) decreased $6.0 million, primarily due to lower DD&A of $3.8 million and lower amortization of unproved properties of $2.3 million. The decrease in DD&A was due to lower production in 2021 compared to the corresponding period of 2020. The DD&A rate was flat at $0.44 per Mcfe for the first three months of 2021 and 2020, respectively. Amortization of unproved properties decreased due to lower amortization rates.
•General and administrative decreased $4.3 million, primarily due to lower stock-based compensation expense of $4.7 million associated with certain of our market-based performance awards, partially offset by $2.4 million of higher severance costs that were incurred in the first quarter of 2021. The remaining changes in general and administrative expenses were not individually significant.
Interest Expense, net
Interest expense, net decreased $1.8 million, primarily due to the repayment of $87.0 million of our 6.51% weighted-average senior notes, which matured in July 2020, and the repayment of $88.0 million of our 5.58% weighted-average senior notes, which matured in January 2021.
Income Tax Expense
Income tax expense increased $18.4 million due to higher pre-tax income, partially offset by a lower effective tax rate. The effective tax rates for the first three months of 2021 and 2020 were 22.5 percent and 25.3 percent, respectively. The effective tax rate was lower for the first three months of 2021 compared to the first three months of 2020 due to a decrease in tax expense related to book compensation expense exceeding the federal and state tax deductions for employee stock-based compensation awards that vested during the period, a decrease in non-deductible executive compensation, and the impact of non-recurring discrete items recorded in 2021.
Forward-Looking Information
The statements regarding future financial and operating performance and results, strategic pursuits and goals, market prices, future hedging and risk management activities, and other statements that are not historical facts contained in this report are forward-looking statements. The words "expect," "project," "estimate," "believe," "anticipate," "intend," "budget," "plan," "forecast," "target," "predict," "may," "should," "could" and similar expressions are also intended to identify forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, the continuing effects of the COVID-19 pandemic and the impact thereof on our business, financial condition and results of operations, the availability of cash on hand and other sources of liquidity to fund our capital expenditures, actions by, or disputes among or between, members of OPEC+, market factors, market prices (including geographic basis differentials) of natural gas, results of future drilling and marketing activity, future production and costs, legislative and regulatory initiatives, electronic, cyber or physical security breaches and other factors detailed herein and in our other Securities and Exchange Commission filings. Refer to “Risk Factors” in Item 1A of our Form 10-K for additional information about these risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Market Risk
Our primary market risk is exposure to natural gas prices. Realized prices are mainly driven by spot market prices for North American natural gas production, which can be volatile and unpredictable.
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Derivative Instruments and Risk Management Activities
Our risk management strategy is designed to reduce the risk of commodity price volatility for our production in the natural gas markets through the use of financial commodity derivatives. A committee that consists of members of senior management oversees our risk management activities. Our financial commodity derivatives generally cover a portion of our production and provide only partial price protection by limiting the benefit to us of increases in prices, while protecting us in the event of price declines. Further, if any of our counterparties defaulted, this protection might be limited as we might not receive the full benefit of our financial commodity derivatives. Please read the discussion below as well as Note 6 of the Notes to the Consolidated Financial Statements in our Form 10-K for a more detailed discussion of our derivative instruments.
Periodically, we enter into financial commodity derivatives including collar and swap agreements, to protect against exposure to commodity price declines related to our natural gas production. Our credit agreement restricts our ability to enter into financial commodity derivatives other than to hedge or mitigate risks to which we have actual or projected exposure or as permitted under our risk management policies and not subjecting us to material speculative risks. All of our financial derivatives are used for risk management purposes and are not held for trading purposes. Under the collar agreements, if the index price rises above the ceiling price, we pay the counterparty. If the index price falls below the floor price, the counterparty pays us. Under the swap agreements, we receive a fixed price on a notional quantity of natural gas in exchange for paying a variable price based on a market-based index, such as the NYMEX natural gas futures.
As of March 31, 2021, we had the following outstanding financial commodity derivatives:

|  |  |  |  |  |  | Collars |  |  |  |  |  | Estimated Fair Value Asset (Liability) (In thousands)
|  |  |  |  |  |  | Floor |  | Ceiling |  | Swaps |  |  |
Type of Contract |  | Volume (Mmbtu) |  |  | Contract Period |  | Range ($/Mmbtu) |  | Weighted-Average ($/Mmbtu) |  | Range ($/Mmbtu) |  | Weighted-Average ($/Mmbtu) |  | Weighted-Average ($/Mmbtu) |  |  |
Natural gas (NYMEX) |  | 13,750,000 |  |  | Apr. 2021-Dec. 2021 |  |  |  |  |  |  |  |  |  | $ | 2.74 |  |  |  |  | $ | 38 |
Natural gas (NYMEX) |  | 123,750,000 |  |  | Apr. 2021-Dec. 2021 |  | $2.50 - $2.85 |  | $ | 2.68 |  |  | $2.83 - $3.80 |  | $ | 3.03 |  |  |  |  |  |  | 8,202 |
Natural gas (NYMEX) |  | 10,700,000 |  |  | Apr. 2021-Oct. 2021 |  | $ | — |  |  | $ | 2.50 |  |  | $ | — |  |  | $ | 2.80 |  |  |  |  |  |  | (454) |
Natural gas (NYMEX) |  | 21,400,000 |  |  | Apr. 2021-Oct. 2021 |  |  |  |  |  |  |  |  |  | $ | 2.78 |  |  |  |  | 1,793 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 9,579 |

The amounts set forth in the table above represent our total unrealized derivative position at March 31, 2021 and exclude the impact of non-performance risk. Non-performance risk is considered in the fair value of our derivative instruments that are recorded in our Condensed Consolidated Financial Statements and is primarily evaluated by reviewing credit default swap spreads for the various financial institutions with which we have derivative contracts, while our non-performance risk is evaluated using a market credit spread provided by several of our banks.
A significant portion of our expected natural gas production for 2021 and beyond is currently unhedged and directly exposed to the volatility in natural gas prices, whether favorable or unfavorable.
During the first three months of 2021, natural gas collars with floor prices ranging from $2.50 to $2.85 per Mmbtu and ceiling prices ranging from $3.00 to $3.94 per Mmbtu covered 39.3 Bcf, or 19 percent of natural gas production at a weighted-average price of $2.77 per Mmbtu. Natural gas swaps covered 4.4 Bcf, or two percent of natural gas production at a weighted-average price of $2.74 per Mmbtu.
We are exposed to market risk on financial commodity derivative instruments to the extent of changes in market prices of natural gas. However, the market risk exposure on these derivative contracts is generally offset by the gain or loss recognized upon the ultimate sale of the commodity. Although notional contract amounts are used to express the volume of natural gas agreements, the amounts that can be subject to credit risk in the event of non-performance by third parties are substantially smaller. Our counterparties are primarily commercial banks and financial service institutions that our management believes present minimal credit risk and our derivative contracts are with multiple counterparties to minimize our exposure to any individual counterparty. We perform both quantitative and qualitative assessments of these counterparties based on their credit ratings and credit default swap rates where applicable. We have not incurred any losses related to non-performance risk of our counterparties and we do not anticipate any material impact on our financial results due to non-performance by third parties. However, we cannot be certain that we will not experience such losses in the future.
The preceding paragraphs contain forward-looking information concerning future production and projected gains and losses, which may be impacted by both production and changes in the future commodity prices. Refer to “Forward-Looking Information” for further details.
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Fair Value of Other Financial Instruments
The estimated fair value of other financial instruments is the amount at which the instrument could be exchanged currently between willing parties. The carrying amounts reported in the Condensed Consolidated Balance Sheet for cash, cash equivalents and restricted cash approximate fair value due to the short-term maturities of these instruments.
We use available market data and valuation methodologies to estimate the fair value of debt. The fair value of debt is the estimated amount we would have to pay a third party to assume the debt, including a credit spread for the difference between the issue rate and the period end market rate. The credit spread is our default or repayment risk. The credit spread (premium or discount) is determined by comparing our outstanding debt to new issuances (secured and unsecured) and secondary trades of similar size and credit statistics for both public and private debt. The estimated fair value of our outstanding debt is based on interest rates currently available to us.
The carrying amount and estimated fair value of debt is as follow:

|  | March 31, 2021 |  | December 31, 2020
(In thousands) |  | Carrying Amount |  | Estimated Fair Value |  | Carrying Amount |  | Estimated Fair Value
Long-term debt |  | $ | 1,046,123 |  |  | $ | 1,121,176 |  |  | $ | 1,133,924 |  |  | $ | 1,213,811 |
Current maturities |  | (100,000) |  |  | (100,900) |  |  | (188,000) |  |  | (189,332) |
Long-term debt, excluding current maturities |  | $ | 946,123 |  |  | $ | 1,020,276 |  |  | $ | 945,924 |  |  | $ | 1,024,479 |

ITEM 4. Controls and Procedures
As of March 31, 2021, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 (the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective, in all material respects, with respect to the recording, processing, summarizing and reporting, within the time periods specified in the Commission’s rules and forms, of information required to be disclosed by us in the reports that we file or submit under the Exchange Act.
There were no changes in internal control over financial reporting that occurred during the first quarter of 2021 that have materially affected, or are reasonably likely to have a material effect on, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Legal Matters
The information set forth under the heading “Legal Matters” in Note 7 of the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q is incorporated by reference in response to this item.
Environmental Matters
From time to time, we receive notices of violation from governmental and regulatory authorities in areas in which we operate relating to alleged violations of environmental statutes or the rules and regulations promulgated thereunder. Although we cannot predict with certainty whether these notices of violation will result in fines and/or penalties, if fines and/or penalties are imposed, they may result in monetary sanctions, individually or in the aggregate, in excess of $300,000.
ITEM 1A. Risk Factors
For additional information about the risk factors that affect us, see Item 1A of Part I of our Form 10-K for the fiscal year ended December 31, 2020.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Our Board of Directors has authorized a share repurchase program under which we may purchase shares of common stock in the open market or in negotiated transactions. There is no expiration date associated with the authorization. There were no
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repurchases during the quarter ended March 31, 2021. The maximum number of remaining shares that may be purchased under our share repurchase program as of March 31, 2021 was 11.0 million shares.
ITEM 5. Other Information
We regularly grant certain stock-based compensation awards, including performance share awards to our officers, under our shareholder-approved 2014 Incentive Plan. We grant performance share awards to our officers based on market conditions measured based on our performance relative to a predetermined peer group (TSR Performance Share Awards). The performance period for these awards commences on January 1 of the year in which the award is granted and extends over a three-year performance period.
In connection with the awards made during the first quarter of 2021, the compensation committee of our board of directors (the Committee) adopted a new form of award agreement under the 2014 Incentive Plan for the awards made to our officers.
Under the new form of award agreement, the Committee added a feature to the TSR Performance Share awards which will reduce the number of each award’s earned performance shares if: 1) our actual TSR performance is negative over the three-year performance period, and 2) the base calculation indicates an above-target pay outcome. The severity of the reduction increases with the severity of the negative performance and the reduction will occur regardless of our relative TSR rank. Even if our TSR performance ranks first in its peer group, negative absolute TSR will cause a reduction in the percentage of earned shares, but not below 100% of the award, as follows:

Three-year cumulative TSR (%) |  | Reduction of Performance Shares Earned
0% - (10)% |  | 10 percentage points
(11)% - (20)% |  | 25 percentage points
(21)% or lower |  | 50 percentage points

The foregoing descriptions of the new form of award agreement is a summary only and is qualified by reference to the complete form of the agreement, which is filed as an exhibit to this report and incorporated by reference into this Item 5.
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ITEM 6. Exhibits

Exhibit Number |  | Description
10.1* |  | 2021 Form of Performance Share Award Agreement (Officers).
31.1 |  | 302 Certification — Chairman, President and Chief Executive Officer.
31.2 |  | 302 Certification — Executive Vice President Executive Vice President and Chief Financial Officer. Chief Financial Officer.
32.1 |  | 906 Certification.
101.INS |  | Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document.
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_______________________________________________________________________________
*Compensatory plan, contract or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| CABOT OIL & GAS CORPORATION
| (Registrant)
April 30, 2021 | By: | /s/ DAN O. DINGES
|  | Dan O. Dinges
|  | Chairman, President and Chief Executive Officer
|  | (Principal Executive Officer)
April 30, 2021 | By: | /s/ SCOTT C. SCHROEDER
|  | Scott C. Schroeder
|  | Executive Vice President and Chief Financial Officer
|  | (Principal Financial Officer)
April 30, 2021 | By: | /s/ TODD M. ROEMER
|  | Todd M. Roemer
|  | Vice President and Chief Accounting Officer
|  | (Principal Accounting Officer)

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