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Investment Recommendation for Cabot Oil & Gas: Buy Ahead of Target Price

We recommend buying Cabot Oil & Gas Corporation (COG) based on its strong financial position and growth potential in the natural gas sector. With a target price of $78.00 and a current price of $43.15 as of 10/25/2012, COG presents an attractive investment opportunity. The company focuses on developing oil and gas properties primarily in the United States, particularly in Appalachia and Texas. Despite challenges like environmental concerns, COG's stable revenues and operational strategies indicate continued success and profitability in the evolving energy market.

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Investment Recommendation for Cabot Oil & Gas: Buy Ahead of Target Price

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

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

  3. Contents • Business outlook • Good financial position • Stable revenues • Potential growth

  4. Contents • Business outlook

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

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

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

  8. Contents • Business outlook • Good financial position

  9. Gross Profit, Total Revenue and Net Income

  10. 4 Year

  11. Contents • Business outlook • Good financial position • Stable revenues

  12. Business Strategy • COG strategy is to continuously improve.

  13. Long – term Solvency Annual Comparision for Debt to Capital Ratio

  14. Long – term Solvency Annual Comparision for Debt to Equity Ratio

  15. Low Financial Risk Annual Comparision for TL/TA ratio

  16. Stable Operating Cashflow Annual Cashflow break - down

  17. Potential Operating Cashflow Growth Compound Annual Growth Rate over 5 years

  18. Contents • Business outlook • Good financial position • Stable revenues • Potential growth

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

  20. Revenue Drivers

  21. Gross Margin

  22. Valuation

  23. Sources Used Cabot oil & gas corporation (cog.n). Reuters. Retrieved from http://www.reuters.com/finance/stocks/companyProfile?symbol=COG.N www.capitaliq.com Daris, M. (2012, October 4). 3 new reasons to buy cabot now. Seeking Alpha, Retrieved from http://seekingalpha.com/article/903581-3-new-reasons-to-buy-cabot-now?source=yahoo McFarland, J. (2012, October 2). [Web log message]. Retrieved from http://www.oilandgaslawyerblog.com/oil-and-gas-news/ Operator: Cabot oil and gas corporation. (n.d.). Retrieved from http://www.fracktrack.org/searchexp.php?p=op_name&val=OGO-10897

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