Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM10-Q
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 20202021
       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)
Delaware04-3072771
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification Number)
Three Memorial City Plaza
840 Gessner Road,Suite 1400,Houston,Texas77024
(Address of principal executive offices, including ZIP code)
(281) (281) 589-4600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.10 per shareCOGNew 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. (Check one):
Large accelerated filerAccelerated filer
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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 July 29, 2020,28, 2021, there were 398,579,881399,664,181 shares of Common Stock, Par Value $0.10 Per Share, outstanding.



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CABOT OIL & GAS CORPORATION
INDEX TO FINANCIAL STATEMENTS
Page

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Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1.Financial Statements
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands, except share amounts) June 30,
2020
 December 31,
2019
(In thousands, except share amounts)June 30,
2021
December 31,
2020
ASSETS  
  
ASSETS  
Current assets  
  
Current assets  
Cash and cash equivalents $117,164
 $200,227
Cash and cash equivalents$158,147 $140,113 
Restricted cash 11,578
 13,556
Restricted cash10,767 11,578 
Accounts receivable, net 117,918
 209,023
Accounts receivable, net182,700 214,724 
Income taxes receivable 155,343
 129,795
Income taxes receivable22,424 6,171 
Inventories 17,948
 13,932
Inventories17,395 15,270 
Derivative instruments 40,636
 31
Derivative instruments26,209 
Other current assets 3,347
 1,684
Other current assets4,633 1,650 
Total current assets 463,934
 568,248
Total current assets396,066 415,715 
Properties and equipment, net (Successful efforts method) 4,002,492
 3,855,706
Properties and equipment, net (Successful efforts method)4,150,791 4,044,606 
Other assets 61,444
 63,291
Other assets63,710 63,211 
$4,610,567 $4,523,532 
 $4,527,870
 $4,487,245
LIABILITIES AND STOCKHOLDERS' EQUITY  
  
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities  
  
Current liabilities  
Accounts payable $161,657
 $189,811
Accounts payable$166,256 $162,081 
Current portion of long-term debt 175,000
 87,000
Current portion of long-term debt100,000 188,000 
Accrued liabilities 24,895
 31,290
Accrued liabilities20,080 22,374 
Interest payable 19,836
 19,933
Interest payable15,149 17,771 
Derivative instrumentsDerivative instruments77,199 
Total current liabilities 381,388
 328,034
Total current liabilities378,684 390,226 
Long-term debt, net 1,045,495
 1,133,025
Long-term debt, net946,316 945,924 
Deferred income taxes 754,108
 702,104
Deferred income taxes788,811 774,195 
Asset retirement obligations 79,351
 71,598
Asset retirement obligations89,307 85,489 
Postretirement benefits 33,506
 32,713
Postretirement benefits31,633 30,713 
Other liabilities 68,043
 68,284
Other liabilities75,921 81,278 
Total liabilities 2,361,891
 2,335,758
Total liabilities2,310,672 2,307,825 
    
Commitments and contingencies 

 

Commitments and contingencies00
    
Stockholders' equity  
  
Stockholders' equity  
Common stock:  
  
Common stock:  
Authorized — 960,000,000 shares of $0.10 par value in 2020 and 2019, respectively  
  
Issued — 477,535,499 shares and 476,881,991 shares in 2020 and 2019, respectively 47,754
 47,688
Authorized — 960,000,000 shares of $0.10 par value in 2021 and 2020, respectivelyAuthorized — 960,000,000 shares of $0.10 par value in 2021 and 2020, respectively  
Issued — 478,621,499 shares and 477,828,813 shares in 2021 and 2020, respectivelyIssued — 478,621,499 shares and 477,828,813 shares in 2021 and 2020, respectively47,862 47,783 
Additional paid-in capital 1,792,531
 1,782,427
Additional paid-in capital1,815,770 1,804,354 
Retained earnings 2,147,822
 2,143,213
Retained earnings2,257,320 2,184,352 
Accumulated other comprehensive income 1,073
 1,360
Accumulated other comprehensive income2,144 2,419 
Less treasury stock, at cost:  
  
Less treasury stock, at cost:  
78,957,318 shares and 78,957,318 shares in 2020 and 2019, respectively (1,823,201) (1,823,201)
78,957,318 shares and 78,957,318 shares in 2021 and 2020, respectively78,957,318 shares and 78,957,318 shares in 2021 and 2020, respectively(1,823,201)(1,823,201)
Total stockholders' equity 2,165,979
 2,151,487
Total stockholders' equity2,299,895 2,215,707 
 $4,527,870
 $4,487,245
$4,610,567 $4,523,532 

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

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Table of Contents
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 Three Months Ended 
 June 30,
 Six Months Ended 
 June 30,
Three Months Ended 
June 30,
Six Months Ended 
June 30,
(In thousands, except per share amounts) 2020 2019 2020 2019(In thousands, except per share amounts)2021202020212020
OPERATING REVENUES  
  
  
  
OPERATING REVENUES    
Natural gas $288,286
 $470,482
 $658,626
 $1,103,656
Natural gas$411,718 $288,286 $884,577 $658,626 
Gain on derivative instruments 43,974
 63,649
 60,036
 71,906
(Loss) gain on derivative instruments (Loss) gain on derivative instruments(87,121)43,974 (100,358)60,036 
Other 88
 (14) 143
 236
Other70 88 129 143 
 332,348
 534,117
 718,805
 1,175,798
324,667 332,348 784,348 718,805 
OPERATING EXPENSES  
  
  
  
OPERATING EXPENSES    
Direct operations 17,423
 18,093
 34,667
 36,427
Direct operations16,154 17,423 33,030 34,667 
Transportation and gathering 135,249
 141,689
 278,581
 279,022
Transportation and gathering133,488 135,249 270,190 278,581 
Taxes other than income 3,352
 3,640
 7,090
 9,487
Taxes other than income4,183 3,352 8,988 7,090 
Exploration 4,579
 4,504
 6,769
 10,548
Exploration2,368 4,579 4,995 6,769 
Depreciation, depletion and amortization 94,622
 96,147
 194,757
 188,405
Depreciation, depletion and amortization91,549 94,622 185,697 194,757 
General and administrative 23,166
 22,889
 56,595
 53,979
General and administrative23,037 23,166 52,193 56,595 
 278,391
 286,962
 578,459
 577,868
270,779 278,391 555,093 578,459 
Earnings (loss) on equity method investments 
 3,650
 (59) 7,334
Loss on sale of assets (241) 
 (170) (1,500)
Loss on equity method investmentsLoss on equity method investments(59)
Gain (loss) on sale of assetsGain (loss) on sale of assets20 (241)91 (170)
INCOME FROM OPERATIONS 53,716
 250,805
 140,117
 603,764
INCOME FROM OPERATIONS53,908 53,716 229,346 140,117 
Interest expense, net 14,543
 14,567
 28,754
 26,748
Interest expense, net12,558 14,543 24,935 28,754 
Other expense 48
 143
 114
 287
Other expense46 48 92 114 
Income before income taxes 39,125
 236,095
 111,249
 576,729
Income before income taxes41,304 39,125 204,319 111,249 
Income tax expense 8,751
 55,086
 26,965
 132,957
Income tax expense10,840 8,751 47,501 26,965 
NET INCOME $30,374
 $181,009
 $84,284
 $443,772
NET INCOME$30,464 $30,374 $156,818 $84,284 
        
Earnings per share  
  
  
  
Earnings per share    
Basic $0.08
 $0.43
 $0.21
 $1.05
Basic$0.08 $0.08 $0.39 $0.21 
Diluted $0.08
 $0.43
 $0.21
 $1.05
Diluted$0.08 $0.08 $0.39 $0.21 
        
Weighted-average common shares outstanding  
  
  
  
Weighted-average common shares outstanding    
Basic 398,576
 422,141
 398,460
 422,626
Basic399,586 398,576 399,355 398,460 
Diluted 401,279
 424,349
 400,219
 424,550
Diluted402,206 401,279 401,740 400,219 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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Table of Contents
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
 Six Months Ended 
 June 30,
Six Months Ended 
June 30,
(In thousands) 2020 2019(In thousands)20212020
CASH FLOWS FROM OPERATING ACTIVITIES  
  
CASH FLOWS FROM OPERATING ACTIVITIES  
Net income $84,284
 $443,772
Net income$156,818 $84,284 
Adjustments to reconcile net income to cash provided by operating activities:  
  
Adjustments to reconcile net income to cash provided by operating activities:  
Depreciation, depletion and amortization 194,757
 188,405
Depreciation, depletion and amortization185,697 194,757 
Deferred income tax expense 52,089
 152,647
Deferred income tax expense14,695 52,089 
Loss on sale of assets 170
 1,500
(Gain) loss on sale of assets(Gain) loss on sale of assets(91)170 
Exploratory dry hole cost 2,011
 16
Exploratory dry hole cost2,011 
Gain on derivative instruments (60,036) (71,906)
Loss (gain) on derivative instrumentsLoss (gain) on derivative instruments100,358 (60,036)
Net cash received in settlement of derivative instruments 19,423
 68,377
Net cash received in settlement of derivative instruments3,050 19,423 
Loss (earnings) on equity method investments 59
 (7,334)
Distribution of earnings from equity method investments 
 8,750
Loss on equity method investmentsLoss on equity method investments59 
Amortization of debt issuance costs 1,501
 2,464
Amortization of debt issuance costs1,424 1,501 
Stock-based compensation and other 23,463
 21,058
Stock-based compensation and other14,702 23,463 
Changes in assets and liabilities:  
  
Changes in assets and liabilities:  
Accounts receivable, net 91,106
 179,027
Accounts receivable, net32,024 91,106 
Income taxes (25,547) (5,577)Income taxes(16,253)(25,547)
Inventories (4,452) (8,305)Inventories(2,125)(4,452)
Other current assets (1,663) (2,263)Other current assets(2,983)(1,663)
Accounts payable and accrued liabilities (36,453) (35,867)Accounts payable and accrued liabilities(11,872)(36,453)
Interest payable (97) (216)Interest payable(2,622)(97)
Other assets and liabilities 718
 (22,611)Other assets and liabilities(3,353)718 
Net cash provided by operating activities 341,333
 911,937
Net cash provided by operating activities469,469 341,333 
CASH FLOWS FROM INVESTING ACTIVITIES  
  
CASH FLOWS FROM INVESTING ACTIVITIES  
Capital expenditures (331,183) (421,500)Capital expenditures(274,939)(331,183)
Proceeds from sale of assets 275
 2,346
Proceeds from sale of assets112 275 
Investment in equity method investments (35) (5,131)Investment in equity method investments(35)
Distribution of investment from equity method investments 
 758
Proceeds from sale of equity method investments (9,424) 
Proceeds from sale of equity method investments(9,424)
Net cash used in investing activities (340,367) (423,527)Net cash used in investing activities(274,827)(340,367)
CASH FLOWS FROM FINANCING ACTIVITIES  
  
CASH FLOWS FROM FINANCING ACTIVITIES  
Borrowings from debt 
 95,000
Repayments of debt 
 (102,000)Repayments of debt(88,000)
Treasury stock repurchases 
 (156,638)
Dividends paid (79,675) (67,697)Dividends paid(83,850)(79,675)
Tax withholdings on vesting of stock awards (6,332) (10,557)Tax withholdings on vesting of stock awards(5,569)(6,332)
Capitalized debt issuance costs 
 (7,411)
Net cash used in financing activities (86,007) (249,303)Net cash used in financing activities(177,419)(86,007)
Net (decrease) increase in cash, cash equivalents and restricted cash (85,041) 239,107
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash17,223 (85,041)
Cash, cash equivalents and restricted cash, beginning of period 213,783
 2,287
Cash, cash equivalents and restricted cash, beginning of period151,691 213,783 
Cash, cash equivalents and restricted cash, end of period $128,742
 $241,394
Cash, cash equivalents and restricted cash, end of period$168,914 $128,742 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
(In thousands, except per share amounts)(In thousands, except per share amounts)Common SharesCommon Stock ParTreasury SharesTreasury StockPaid-In CapitalAccumulated Other Comprehensive IncomeRetained EarningsTotal
Balance at December 31, 2020Balance at December 31, 2020477,829 $47,783 78,957 $(1,823,201)$1,804,354 $2,419 $2,184,352 $2,215,707 
Net incomeNet income— — — — — — 126,354 126,354 
Stock amortization and vestingStock amortization and vesting548 55 — — 3,878 — — 3,933 
(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
Cash dividends at $0.10 per shareCash dividends at $0.10 per share— — — — — — (39,887)(39,887)
Other comprehensive lossOther comprehensive loss— — — — — (137)— (137)
Balance at March 31, 2021Balance at March 31, 2021478,377 $47,838 78,957 $(1,823,201)$1,808,232 $2,282 $2,270,819 $2,305,970 
Net income 
 
 
 
 
 
 53,910
 53,910
Net income— — — — — — 30,464 30,464 
Stock amortization and vesting 651
 65
 
 
 2,886
 
 
 2,951
Stock amortization and vesting244 24 — — 7,538 — — 7,562 
Cash dividends at $0.10 per share 
 
 
 
 
 
 (39,817) (39,817)
Cash dividends at $0.11 per shareCash dividends at $0.11 per share— — — — — — (43,963)(43,963)
Other comprehensive loss 
 
 
 
 
 (136) 
 (136)Other comprehensive loss— — — — — (138)— (138)
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
Net income 
 
 
 
 
 
 30,374
 30,374
Stock amortization and vesting 2
 1
 
 
 7,218
 
 
 7,219
Cash dividends at $0.10 per share 
 
 
 
 
 
 (39,858) (39,858)
Other comprehensive loss 
 
 
 
 
 (151) 
 (151)
Balance at June 30, 2020 477,535
 $47,754
 78,957
 $(1,823,201) $1,792,531
 $1,073
 $2,147,822
 $2,165,979
Balance at June 30, 2021Balance at June 30, 2021478,621 $47,862 78,957 $(1,823,201)$1,815,770 $2,144 $2,257,320 $2,299,895 
(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, 2018 476,095
 $47,610
 53,410
 $(1,334,688) $1,763,142
 $4,437
 $1,607,658
 $2,088,159
Net income 
 
 
 
 
 
 262,763
 262,763
Stock amortization and vesting 682
 68
 
 
 (281) 
 
 (213)
Purchase of treasury stock 
 
 
 (28) 
 
 
 (28)
Cash dividends at $0.07 per share 
 
 
 
 
 
 (29,605) (29,605)
Other comprehensive loss 
 
 
 
 
 (137) 
 (137)
Balance at March 31, 2019 476,777
 $47,678
 53,410
 $(1,334,716) $1,762,861
 $4,300
 $1,840,816
 $2,320,939
Net income  
 
 
 
 
 181,009
 181,009
Stock amortization and vesting 102
 10
 
 
 6,334
 
 
 6,344
Purchase of treasury stock 
 
 5,081
 (125,260) 
 
 
 (125,260)
Cash dividends at $0.09 per share 
 
 
 
 
 
 (38,092) (38,092)
Other comprehensive loss 
 
 
 
 
 (136) 
 (136)
Balance at June 30, 2019 476,879
 $47,688
 58,491
 $(1,459,976) $1,769,195
 $4,164
 $1,983,733
 $2,344,804

(In thousands, except per share amounts)Common SharesCommon Stock ParTreasury SharesTreasury StockPaid-In CapitalAccumulated Other Comprehensive IncomeRetained EarningsTotal
Balance at December 31, 2019476,882 $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 vesting651 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, 2020477,533 $47,753 78,957 $(1,823,201)$1,785,313 $1,224 $2,157,306 $2,168,395 
Net income— — — — — — 30,374 30,374 
Stock amortization and vesting— — 7,218 — — 7,219 
Cash dividends at $0.10 per share— — — — — — (39,858)(39,858)
Other comprehensive loss— — — — — (151)— (151)
Balance at June 30, 2020477,535 $47,754 78,957 $(1,823,201)$1,792,531 $1,073 $2,147,822 $2,165,979 

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

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Table of Contents

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, 20192020 (Form 10-K) filed with the Securities and Exchange Commission (SEC), except for any new accounting pronouncements adopted during the period as discussed below.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.
Certain reclassifications have been made to prior year statements to conform with the current year presentation. These reclassifications have no impact on previously reported stockholders' equity, net income (loss) or cash flows.
2. Acquisitions
Pending Merger
Recently Adopted Accounting Pronouncements
Financial Instruments: Credit Losses. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments: Credit Losses, which replaces the incurred loss impairment methodology used for certain financial instruments with a methodology that reflects current expected credit losses (CECL). ASU No. 2016-13, along with subsequently issued codification improvements, was effective forOn May 23, 2021, the Company entered into an Agreement and Plan of Merger (Merger Agreement) with Cimarex Energy Co. (Cimarex) to combine via an all-stock merger transaction (Merger). Cimarex is an independent oil and gas exploration and production company with operations located primarily in Texas, New Mexico and Oklahoma. Under terms of the Merger Agreement, each share of Cimarex common stock will be converted automatically into the right to receive 4.0146 shares of common stock of the Company at closing. No fractional shares of common stock of the Company will be issued in the Merger, and holders of shares of Cimarex common stock will instead receive cash in lieu of fractional shares of common stock of the Company, if any. The respective Boards of Directors of the Company and Cimarex unanimously approved the Merger, which is still subject to the approval of the stockholders of each of the Company and Cimarex. The Merger Agreement includes certain restrictions on January 1, 2020,the conduct of the business of the Company until the closing, such as a requirement to operate in the ordinary course of business and was applied usinglimitations on, among other things, dividends, stock repurchases and debt repurchases.If the Merger does not occur, and under certain circumstances, the Company or Cimarex may be required to pay the other party a modified retrospective approach. termination fee of $250.0 million or an expense reimbursement of $40.0 million. Until the approval by stockholders and subsequent closing, the Company must continue to operate as a stand-alone company.
The Company's historical credit losses have not been material, and future expected credit losses under the CECL model are notMerger is expected to be material. The adoptionclose in the fourth quarter of ASU No. 2016-13 did not have a material effect on the Company's financial position, results of operations or cash flows; however, it modified certain disclosure requirements which were not material.2021, subject to stockholder approvals and other customary closing conditions.
Fair Value Measurements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements by adding, removing and modifying certain required disclosures for fair value measurements for assets and liabilities disclosed within the fair value hierarchy. The Company adopted ASU No. 2018-13 effective January 1, 2020. The adoption of ASU No. 2018-13 did not have any effect on the Company's financial position, results of operations or cash flows; however, it modified certain disclosure requirements which were not material.
2.3. Properties and Equipment, Net
Properties and equipment, net are comprised of the following:
(In thousands) June 30,
2020
 December 31,
2019
Proved oil and gas properties $6,850,435
 $6,508,443
Unproved oil and gas properties 62,732
 133,475
Land, buildings and other equipment 107,108
 104,700
  7,020,275
 6,746,618
Accumulated depreciation, depletion and amortization (3,017,783) (2,890,912)
  $4,002,492
 $3,855,706

(In thousands)June 30,
2021
December 31,
2020
Proved oil and gas properties$7,359,138 $7,068,605 
Unproved oil and gas properties45,667 49,829 
Land, buildings and other equipment94,353 92,566 
 7,499,158 7,211,000 
Accumulated depreciation, depletion and amortization(3,348,367)(3,166,394)
 $4,150,791 $4,044,606 
At June 30, 2020,2021, the Company did not have any projects that hadwith exploratory well costs capitalized for a period of greater than one year after drilling.

7
3. Equity Method Investments
Activity related to the Company's equity method investments is as follows:

  Constitution Meade Total
  Six Months Ended June 30,
(In thousands) 2020 2019 2020 2019 2020 2019
Balance at beginning of period $
 $
 $
 $163,181
 $
 $163,181
Contributions 35
 500
 
 4,631
 35
 5,131
Distributions 
 
 
 (9,508) 
 (9,508)
Earnings (loss) on equity method investments (35) (500) (24) 7,834
 (59) 7,334
Sale of investment 
 
 24
 
 24
 
Balance at end of period $
 $
 $
 $166,138
 $
 $166,138

Table of Contents
For further information regarding the Company’s equity method investments, refer to Note 4 of the Notes to the Consolidated Financial Statements in the Form 10-K.
Constitution Pipeline Company, LLC
On February 10, 2020, the Company sold its 25 percent equity interest in Constitution Pipeline Company, LLC (Constitution) to Williams Partners Operating LLC (Williams). The Company did not receive any proceeds and paid Williams $9.4 million that was previously accrued. Upon closing of the sale, the Company has no further obligations with respect to the project.
4. Debt and Credit Agreements
The Company’s debt and credit agreements consisted of the following:
(In thousands)June 30,
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(2,684)(3,076)
$1,046,316 $1,133,924 

(In thousands) June 30,
2020
 December 31,
2019
6.51% weighted-average senior notes(1)
 $124,000
 $124,000
5.58% weighted-average senior notes(2)
 175,000
 175,000
3.65% weighted-average senior notes 925,000
 925,000
Revolving credit facility 
 
Unamortized debt issuance costs (3,505) (3,975)
  $1,220,495
 $1,220,025
_______________________________________________________________________________(1)
(1)Includes $87.0 million of current portion of long-term debt at June 30, 2020 and December 31, 2019, respectively, due in July 2020.
(2)
Includes $88.0 million of current portion of long-term debt at June 30, 2020 dueIncludes $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 June 30, 2021 and December 31, 2020 due in September 2021.
At June 30, 2020,2021, the Company was in compliance with all restrictive financial and other covenants for bothapplicable to its revolving credit facility and senior notes.
Subsequent Event. In July 2020, the Company repaid $87.0 million of maturities associated with its 6.51% weighted-average 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. Effective April 23, 2020,21, 2021, the borrowing base and available commitments were reaffirmed at $3.2 billion and $1.5 billion, respectively.
On June 17, 2021, the Company entered into an amendment to the credit agreement relating to its revolving credit facility to, among other things, remove the requirement that certain of the Company’s restricted subsidiaries become guarantors under the credit agreement, expand the permissible indebtedness that may be held or incurred by a restricted subsidiary and make certain other changes to permit the Company and Cimarex to complete the Merger. The effectiveness of the credit agreement amendment is conditioned upon, among other things, the completion of the Merger.
At June 30, 2020,2021, the Company had 0 borrowings outstanding under its revolving credit facility and had unused commitments of $1.5 billion.

5. Derivative Instruments
As of June 30, 2020,2021, the Company had the following outstanding financial commodity derivatives:
Collars
   FloorCeilingSwaps
Type of ContractVolume (Mmbtu)Contract PeriodRange
($/Mmbtu)
Weighted-Average
($/Mmbtu)
Range
($/Mmbtu)
Weighted-Average
($/Mmbtu)
Weighted-Average
($/Mmbtu)
Natural gas (NYMEX)9,200,000Jul. 2021-Dec. 2021$2.74 
Natural gas (NYMEX)82,800,000Jul. 2021-Dec. 2021$2.50 - $2.85$2.68 $2.88 - $3.80$3.05 
Natural gas (NYMEX)6,150,000Jul. 2021-Oct. 2021$$2.50 $$2.80 0
Natural gas (NYMEX)12,300,000Jul. 2021-Oct. 20210$2.78 
      Collars  
      Floor Ceiling Swaps
Type of Contract Volume (Mmbtu) Contract Period 
Range
($/Mmbtu)
 
Weighted-Average
($/Mmbtu)

 
Range
($/Mmbtu)
 
Weighted-Average
($/Mmbtu)

 Weighted-Average ($/Mmbtu)
Natural gas (NYMEX) 36,900,000 Jul. 2020 - Oct. 2020         $2.25
Natural gas (NYMEX) 61,500,000 Jul. 2020 - Oct. 2020 $1.90 - $2.15 $2.05
 $2.10 - $2.38 $2.24
 

In July 2021, the Company entered into the following financial commodity derivatives:
   Swaps
Type of ContractVolume (Mmbtu)Contract PeriodWeighted-Average
($/Mmbtu)
Natural gas (NYMEX)9,200,000Oct. 2021-Dec. 2021$4.01 
Natural gas (NYMEX)9,150,000Nov. 2021-Dec. 2021$4.02 
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Table of Contents
Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet
 Derivative AssetsDerivative Liabilities
(In thousands)(In thousands)Balance Sheet LocationJune 30,
2021
December 31,
2020
June 30,
2021
December 31,
2020
Commodity contractsCommodity contractsDerivative instruments (current)$$26,209 $77,199 $
   Derivative Assets Derivative Liabilities
(In thousands) Balance Sheet Location June 30,
2020
 December 31,
2019
 June 30,
2020
 December 31,
2019
Commodity contracts Derivative instruments (current) $40,636
 $31
 $
 $
Commodity contracts Accrued liabilities (current) 
 
 
 9
 $40,636
 $31
 $
 $9

Offsetting of Derivative Assets and Liabilities in the Condensed Consolidated Balance Sheet
(In thousands) June 30,
2020
 December 31,
2019
(In thousands)June 30,
2021
December 31,
2020
Derivative assets  
  
Derivative assets  
Gross amounts of recognized assets $40,636
 $47
Gross amounts of recognized assets$$26,354 
Gross amounts offset in the condensed consolidated balance sheet 
 (16)Gross amounts offset in the condensed consolidated balance sheet(145)
Net amounts of assets presented in the condensed consolidated balance sheet 40,636
 31
Net amounts of assets presented in the condensed consolidated balance sheet26,209 
Gross amounts of financial instruments not offset in the condensed consolidated balance sheet 
 
Gross amounts of financial instruments not offset in the condensed consolidated balance sheet
Net amount $40,636
 $31
Net amount$$26,209 
    
Derivative liabilities  
  
Derivative liabilities  
Gross amounts of recognized liabilities $
 $25
Gross amounts of recognized liabilities$77,199 $145 
Gross amounts offset in the condensed consolidated balance sheet 
 (16)Gross amounts offset in the condensed consolidated balance sheet(145)
Net amounts of liabilities presented in the condensed consolidated balance sheet 
 9
Net amounts of liabilities presented in the condensed consolidated balance sheet77,199 
Gross amounts of financial instruments not offset in the condensed consolidated balance sheet 
 
Gross amounts of financial instruments not offset in the condensed consolidated balance sheet
Net amount $
 $9
Net amount$77,199 $

Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
 Three Months Ended 
 June 30,
 Six Months Ended 
 June 30,
Three Months Ended 
June 30,
Six Months Ended 
June 30,
(In thousands) 2020 2019 2020 2019(In thousands)2021202020212020
Cash received (paid) on settlement of derivative instruments  
  
  
  
Cash received (paid) on settlement of derivative instruments    
Gain (loss) on derivative instruments $19,423
 $15,397
 $19,423
 $68,377
(Loss) gain on derivative instruments(Loss) gain on derivative instruments$(347)$19,423 $3,050 $19,423 
Non-cash gain (loss) on derivative instruments  
  
  
  
Non-cash gain (loss) on derivative instruments    
Gain (loss) on derivative instruments 24,551
 48,252
 40,613
 3,529
(Loss) gain on derivative instruments(Loss) gain on derivative instruments(86,774)24,551 (103,408)40,613 
 $43,974
 $63,649
 $60,036
 $71,906
$(87,121)$43,974 $(100,358)$60,036 

6. 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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Table of Contents
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  
June 30, 2021
Assets    
Deferred compensation plan$25,820 $$$25,820 
Derivative instruments
$25,820 $$$25,820 
Liabilities   
Deferred compensation plan$34,477 $$$34,477 
Derivative instruments18,825 58,374 77,199 
$34,477 $18,825 $58,374 $111,676 
(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  
 June 30, 2020
Assets  
  
  
  
Deferred compensation plan $18,537
 $
 $
 $18,537
Derivative instruments 
 19,251
 21,385
 40,636
  $18,537
 $19,251
 $21,385
 $59,173
Liabilities    
  
  
Deferred compensation plan $27,055
 $
 $
 $27,055
Derivative instruments 
 
 
 
  $27,055
 $
 $
 $27,055
(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, 2019
Assets  
  
  
  
Deferred compensation plan $18,381
 $
 $
 $18,381
Derivative instruments 
 44
 3
 47
  $18,381
 $44
 $3
 $18,428
Liabilities    
  
  
Deferred compensation plan $27,012
 $
 $
 $27,012
Derivative instruments 
 
 25
 25
  $27,012
 $
 $25
 $27,037

(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 $$$22,510 
Derivative instruments2,647 23,707 26,354 
$22,510 $2,647 $23,707 $48,864 
Liabilities   
Deferred compensation plan$30,581 $$$30,581 
Derivative instruments145 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 a market credit spreadspreads provided by several of the Company's bank.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:
  Six Months Ended 
 June 30,
(In thousands) 2020
2019
Balance at beginning of period $(22) $21,976
Total gain (loss) included in earnings 31,721
 17,080
Settlement (gain) loss (10,314) (26,433)
Transfers in and/or out of Level 3 
 
Balance at end of period $21,385
 $12,623
     
Change in unrealized gains (losses) relating to assets and liabilities still held at the end of the period $21,647
 $7,252

Six Months Ended 
June 30,
(In thousands)20212020
Balance at beginning of period$23,562 $(22)
Total gain (loss) included in earnings(78,164)31,721 
Settlement (gain) loss(3,772)(10,314)
Transfers in and/or out of Level 3
Balance at end of period$(58,374)$21,385 
Change in unrealized gains (losses) relating to assets and liabilities still held at the end of the period$(63,794)$21,647 
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 NaN of the Company’s other non-financial assets and liabilities were measured at fair value as of June 30, 2020,2021, 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 cash and cash equivalents and restricted cash approximate fair value, due to the short-term maturities of these instruments. Cash and 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 senior notes and revolving credit facilityoutstanding 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 all senior notes and the revolving credit facilityCompany'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:
 June 30, 2020 December 31, 2019 June 30, 2021December 31, 2020
(In thousands) 
Carrying
Amount
 
Estimated Fair
Value
 
Carrying
Amount
 
Estimated Fair
Value
(In thousands)Carrying
Amount
Estimated Fair
Value
Carrying
Amount
Estimated Fair
Value
Long-term debt $1,220,495
 $1,230,456
 $1,220,025
 $1,260,259
Long-term debt$1,046,316 $1,118,321 $1,133,924 $1,213,811 
Current maturities (175,000) (176,058) (87,000) (88,704)Current maturities(100,000)(100,444)(188,000)(189,332)
Long-term debt, excluding current maturities $1,045,495
 $1,054,398
 $1,133,025
 $1,171,555
Long-term debt, excluding current maturities$946,316 $1,017,877 $945,924 $1,024,479 


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7. Asset Retirement Obligations
Activity related to the Company’s asset retirement obligations is as follows:
(In thousands) Six Months Ended 
 June 30, 2020
Balance at beginning of period $72,098
Liabilities incurred 5,725
Accretion expense 2,028
Balance at end of period 79,851
Less: current asset retirement obligations (500)
Noncurrent asset retirement obligations $79,351
(In thousands)Six Months Ended 
June 30, 2021
Balance at beginning of period$85,989 
Liabilities incurred1,544 
Accretion expense2,274 
Balance at end of period89,807 
Less: current asset retirement obligations(500)
Noncurrent asset retirement obligations$89,307 
8. 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” as disclosed in Note 9 of the Notes to Consolidated Financial Statements in the Form 10-K.
Lease Commitments
There have been no material changes to the Company’s operating lease obligations described under “Lease Commitments”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
InOn 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 intends to defendis 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.

12

Table of Contents
9. Revenue Recognition
Disaggregation of Revenue
The following table presents revenues from contracts with customers disaggregated by product:
  Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2020 2019 2020 2019
OPERATING REVENUES        
   Natural gas $288,286
 $470,482
 $658,626
 $1,103,656
   Other 88
 (14) 143
 236
Total revenue from contracts with customers $288,374
 $470,468
 $658,769
 $1,103,892

Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2021202020212020
Natural gas$411,718 $288,286 $884,577 $658,626 
Other70 88 129 143 
$411,788 $288,374 $884,706 $658,769 
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 June 30, 2020,2021, the Company has $9.2$8.0 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 fourtwo to 1817 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 $118.0$183.2 million and $209.2$215.3 million as of June 30, 20202021 and December 31, 2019,2020, 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.
10. 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.
11. 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 $8.3$4.3 million and $6.7$8.3 million in the second quarter of 2021 and 2020, respectively, and 2019, respectively,$16.0 million and $24.6 million and $21.9 million duringin the first six months of 20202021 and 2019,2020, 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 six months of 2020, 124,0122021, the Company granted 105,335 restricted stock units, were granted to non-employee directors of the Company with a weighted-average grant date value of $15.75$18.54 per unit.unit, to the Company's non-employee directors. 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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Table of Contents
Also during the first six months of 2021, the Company issued 244,433 shares of common stock in connection with the vesting of restricted stock units with a weighted-average grant date value of $14.08 upon the retirement of one of the Company's non-employee directors in the second quarter of 2021.
Performance Share Awards
The performance period for the awards granted during the first six months of 20202021 commenced on January 1, 20202021 and ends on December 31, 2022.2023. The Company used an annual forfeiture rate assumption ranging from 0 percent to 54 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 June 30, 2020,2021, 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 six months of 2020, 722,5002021, the Company granted 696,280 Employee Performance Share Awards were granted at a grant date value of $15.60$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 Company’s compensation committee.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 six months of 2020, 506,4122021, the Company granted 423,171 Hybrid Performance Share Awards were granted at a grant date value of $15.60$18.58 per share. The 20202021 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 Company’s compensation committee.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 six months of 2020, 862,1802021, the Company granted 723,224 TSR Performance Share Awards were granted andwhich 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 19, 2020)on February 17, 2021 and the period-end fair value of the liability component of the TSR Performance Share Awards:
Grant DateJune 30,
2021
Fair value per performance share award$16.07 $1.45 - $6.94
Assumptions:
     Stock price volatility39.8 %36.1% - 47.5%
     Risk free rate of return0.20 %0.06% - 0.35%
  Grant Date June 30, 2020
Fair value per performance share award $13.79
 $12.66- $15.28
Assumptions:  
  
     Stock price volatility 29.5% 39.2% - 63.5%
     Risk free rate of return 1.39% 0.16% - 0.18%

11.12. 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 
 June 30,
 Six Months Ended 
 June 30,
(In thousands) 2020 2019 2020 2019
Weighted-average shares - basic 398,576
 422,141
 398,460
 422,626
Dilution effect of stock awards at end of period 2,703
 2,208
 1,759
 1,924
Weighted-average shares - diluted 401,279
 424,349
 400,219
 424,550


Three Months Ended 
June 30,
Six Months Ended 
June 30,
(In thousands)2021202020212020
Weighted-average shares - basic399,586 398,576 399,355 398,460 
Dilution effect of stock awards at end of period2,620 2,703 2,385 1,759 
Weighted-average shares - diluted402,206 401,279 401,740 400,219 
The following is a calculation oftable presents weighted-average shares excluded from diluted EPS due to the anti-dilutive effect:
  Three Months Ended 
 June 30,
 Six Months Ended 
 June 30,
(In thousands) 2020 2019 2020 2019
Weighted-average stock awards excluded from diluted EPS due to the anti-dilutive effect calculated using the treasury stock method 
 14
 942
 948

Three Months Ended 
June 30,
Six Months Ended 
June 30,
(In thousands)2021202020212020
Weighted-average stock awards excluded from diluted EPS due to the anti-dilutive effect calculated using the treasury stock method1,358 942 
12.13. Additional Balance Sheet Information
Certain balance sheet amounts are comprised of the following:
(In thousands) June 30,
2020
 December 31,
2019
(In thousands)June 30,
2021
December 31,
2020
Accounts receivable, net  
  
Accounts receivable, net  
Trade accounts $117,971
 $209,200
Trade accounts$183,174 $215,301 
Other accounts 993
 1,007
Other accounts565 462 
 118,964
 210,207
183,739 215,763 
Allowance for doubtful accounts (1,046) (1,184)Allowance for doubtful accounts(1,039)(1,039)
 $117,918
 $209,023
$182,700 $214,724 
Other assets  
  
Other assets  
Deferred compensation plan $18,537
 $18,381
Deferred compensation plan$25,820 $22,510 
Debt issuance costs 7,907
 8,938
Debt issuance costs5,844 6,875 
Operating lease right-of-use assets 34,948
 35,916
Operating lease right-of-use assets32,002 33,741 
Other accounts 52
 56
Other accounts44 85 
 $61,444
 $63,291
$63,710 $63,211 
Accounts payable  
  
Accounts payable  
Trade accounts $28,373
 $21,663
Trade accounts$18,595 $12,896 
Royalty and other owners 23,442
 36,191
Royalty and other owners28,206 37,243 
Accrued transportation 48,115
 55,586
Accrued transportation47,898 52,238 
Accrued capital costs 46,734
 40,337
Accrued capital costs52,994 37,872 
Taxes other than income 6,828
 16,971
Taxes other than income8,805 13,736 
Other accounts 8,165
 19,063
Other accounts9,758 8,096 
$166,256 $162,081 
 $161,657
 $189,811
Accrued liabilities  
  
Accrued liabilities  
Employee benefits $16,455
 $22,727
Employee benefits$11,882 $14,270 
Taxes other than income 3,255
 3,850
Taxes other than income2,965 3,026 
Operating lease liabilitiesOperating lease liabilities3,951 3,991 
Other accountsOther accounts1,282 1,087 
$20,080 $22,374 
Other liabilitiesOther liabilities  
Deferred compensation planDeferred compensation plan$34,477 $30,581 
Operating lease liabilities 3,665
 3,124
Operating lease liabilities27,935 29,628 
Other accounts 1,520
 1,589
Other accounts13,509 21,069 
 $24,895
 $31,290
$75,921 $81,278 
Other liabilities  
  
Deferred compensation plan $27,055
 $27,012
Operating lease liabilities 31,182
 32,677
Other accounts 9,806
 8,595
 $68,043
 $68,284
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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 and six month periods ended June 30, 20202021 and 20192020 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, 20192020 (Form 10-K).
OVERVIEW
Announced Merger Involving Cimarex
On May 23, 2021, we entered into an Agreement and Plan of Merger (Merger Agreement) with Cimarex Energy Co. (Cimarex) to combine via an all-stock merger transaction (Merger). Cimarex is an independent oil and gas exploration and production company with operations located primarily in Texas, New Mexico and Oklahoma. Under terms of the Merger Agreement, each share of Cimarex common stock will be converted automatically into the right to receive 4.0146 shares of our common stock at closing. No fractional shares of our common stock will be issued in the Merger, and holders of shares of Cimarex common stock will instead receive cash in lieu of fractional shares of our common stock, if any. The respective Boards of Directors of Cabot and Cimarex unanimously approved the Merger, which is still subject to the approval of the stockholders of each of Cabot and Cimarex. The Merger Agreement includes certain restrictions on the conduct of Cabot's business until the closing, such as a requirement to operate in the ordinary course of business and limitations on, among other things, dividends, stock repurchases and debt repurchases. If the Merger does not occur, and under certain circumstances, Cabot or Cimarex may be required to pay the other party a termination fee of $250.0 million or an expense reimbursement of $40.0 million. Until the approval by stockholders and subsequent closing, we must continue to operate as a stand-alone company.
The Merger is expected to close in the fourth quarter of 2021, subject to stockholder approvals and other customary closing conditions.
Merger-related Lawsuits
In June and July 2021, four putative stockholders of Cimarex filed separate lawsuits related to the Merger against Cimarex and its Board of Directors. Three of the lawsuits were filed in the United States District Court for the Southern District of New York and are captioned Wang v. Cimarex, et al., Case No. 1:21-cv-05672, Graff v. Cimarex, et al., Case No. 1:21-cv-05804, and Elliot v. Cimarex, et. al., Case No. 1:21-cv-06315. The other lawsuit was filed in the United States District Court for the District of Colorado and is captioned Woodyard v. Cimarex, et al., Case No. 1:21-cv-01850. Each of the actions is asserted only on behalf of the named plaintiff.
OVERVIEWAll four actions allege violations of Section 14(a) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act) and Rule 14a-9 promulgated thereunder based on various alleged omissions of material information from the registration statement on Form S-4 filed in connection with the Merger. One of the actions (Elliot) also asserts claims that the members of the Cimarex Board of Directors breached fiduciary duties in connection with the Merger and that Cimarex aided and abetted those alleged breaches. Each action names as defendants Cimarex and each of its directors, and seeks, among other things, to enjoin the Merger (or, in the alternative, rescission or an award for rescissory damages in the event the Merger is completed), an award of costs and attorneys’ and experts’ fees, and such other and further relief as the court may deem just and proper. We believe that the actions are without merit.
Financial and Operating Overview
Financial and operating results for the six months ended June 30, 20202021 compared to the six months ended June 30, 2019 are as follows:2020 reflect the following:
Natural gas production decreased 0.811.4 Bcf or less than 1 percent, from 418.6 Bcf, or 2,313 Mmcf per day, in 2019 to 417.8 Bcf, or 2,296 Mmcf per day, in the 2020 as a result ofperiod to 406.4 Bcf, or 2,245 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 2020.2021.
Average realized natural gas price was $1.62$2.18 per Mcf, 4235 percent lowerhigher than the $2.80$1.62 per Mcf realized in the comparablecorresponding period of the prior year.
Total capital expenditures were $335.6$290.1 million compared to $424.7$335.6 million in the comparablecorresponding period of the prior year.
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Drilled 56 gross wells (53.1 net) with a success rate of 100 percent compared to 41 gross wells (36.2 net) with a success rate of 100 percent compared to 49 gross wells (49.0 net) with a success rate of 100 percent for the comparablecorresponding period of the prior year. Wells drilled represents wells drilled to total depth during the period.
Completed 41 gross wells (37.1 net) in 2021 compared to 49 gross wells (44.2 net) in 2020 compared to 42 grossthe corresponding period of 2020. Wells completed includes wells (42.0 net) in 2019.completed during the period, regardless of when they were drilled.
Average rig count during 20202021 was approximately 2.43.1 rigs in the Marcellus Shale, compared to an average rig count of approximately 3.22.4 rigs during 2019.the corresponding period of 2020.
Repaid $88.0 million of our 5.58% weighted-average senior notes, which matured in January 2021.
Impact of the COVID-19 Pandemic
The ongoing coronavirus (COVID-19) outbreak, which the World Health Organization (WHO) declared as a pandemic in March 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 global availability and efficacy of treatments and recently deployed 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.
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. Beginning in March 2020, we 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. Although we returned to full in-person working in our Houston headquarters and other offices in July 2021 (due to the widespread availability of vaccines in the United States), we intend to continue to monitor 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, should the need arise, we will take such precautions as we believe are warranted.
Our efforts to respond to the challenges presented by the ongoing 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.
The eventual 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 significant resurgence in virus transmission and infection in regions that have experienced improvements, 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 deployed vaccines and other actions by governmental authorities, customers, suppliers and other third parties.
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
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they are likely to continue to bemay 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 “Results of Operations — Impact of Derivative Instruments on Operating RevenuesRevenues” below and Note 5 of the Notes to the Condensed Consolidated Financial Statements for more information.
Natural gas prices have continued to remain low and have declined compared to 2019. The ongoing coronavirus (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 will continue to spread 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, such as quarantines, shelter-in-place orders and business and government shutdowns and the economic impact of such actions. One of the impacts of the COVID-19 pandemic has beenwas 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 asand production disagreements in March 2020 among members of the Organization of Petroleum Exporting Countries and certain other produceroil exporting countries (OPEC+), has led to a significant global economic contraction generally in 2020 and is continuinghas continued to have disruptive impacts on the oil and gas industry. Subsequent negotiations betweenAlthough the members of OPEC+ led to an agreement to reduce production volumes in an effort to stabilize crude oil prices. While crude oil prices have recovered from the lows experiencedagreed in April 2020 they remain at depressedto cut oil production and have subsequently taken actions that generally have supported commodity prices, and U.S. production has declined, oil prices and natural gas prices remained low, relative to pre-pandemic levels, through the first quarter of 2021, as the oversupply and lack of demand in the market persist. persisted. Natural gas prices increased in the second quarter of 2021 compared to the second quarter of 2020 and have further strengthened after the end of the second quarter of 2021, in part due to greater demand during the early summer heating season and slightly decreasing production levels.
Meanwhile, NYMEX natural gas futures prices have shown improvements since the implementationreduction of pandemic-related restrictions and recent 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 thesefurther disruptions occur and continue for an extended period of time, our operations could be adversely impacted, commodity prices could continue to decline further and our costs may increase. WhileAlthough 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, our management would evaluate the recoverability of the carrying value of itsour 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 non-operational 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 are continuing to work with our customers and service providers to understand the potential impacts to our operations, including to mitigate any disruptions and to plan for longer-term emergency response protocols. We will continue to monitor developments affecting our workforce, our customers, our service providers and the communities in which we operate, including any resurgence in COVID-19 transmission and infection after the loosening of shelter in place orders, and 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 funding under any 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 in a lowerby the ongoing low existing commodity pricing environment, and we believe we can endure the current cyclical downturn in the energy industry and continued volatility in current and future commodity prices by continuing to:
by:
Continuing to exerciseExercise 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.facility;
Continuing to optimizeManage our portfolio by strategically curtailing production in periods of weaker natural gas prices;
Optimize our drilling, completion and operational efficiencies, resulting in lower operating costs per unit of production.efficiencies;
Continuing to manageManage 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.covenants; and
Continuing to manageManage price risk by strategically hedging our production.
The impact that COVID-19 will have on our business, cash flows, liquidity, financial condition and results of operations will depend on future developments, including, among others, the ultimate geographic spread and severity of the virus, any resurgence in COVID-19 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 development of effective treatments, the duration of the outbreak, 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“Results of OperationsOperations” below.
Outlook
Our 2020We expect our 2021 capital program is expected to be approximately $575.0$530.0 million, to $540.0 million, which contemplates a 27 percent reduction from our 2019 capital program of $783.3 million. At the beginning of 2020, we reduced our plannedmaintenance capital program as a result of the lowerweak natural

gas price environment.environment experienced in recent periods. We expect to fund these capital expenditures with our cash on hand, operating cash flow and, if required, borrowings under our revolving credit facility.cash on hand.
In 2019,2020, we drilled 9674 gross wells (94.0(64.3 net) and completed 9986 gross wells (97.0(77.3 net), of which 2926 gross wells (29.0(26.0 net) were drilled but uncompleted in prior years. For the full year of 2020,2021, our capital program will focus on the Marcellus Shale, where we expect to drill and complete and place on production 60 to 7080 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 increase or decreaseadjust our capital expenditures accordingly.
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Financial Condition
Capital Resources and Liquidity
Our primary source of cash for the six months ended June 30, 20202021 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 flow.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. Effective April 23, 2020,21, 2021, the borrowing base and available commitments were reaffirmed at $3.2 billion and $1.5 billion, respectively. There were
On June 17, 2021, we entered into an amendment to the credit agreement relating to our revolving credit facility to, among other things, remove the requirement that certain of our restricted subsidiaries become guarantors under the credit agreement, expand the permissible indebtedness that may be held or incurred by a restricted subsidiary and make certain other changes to permit us to complete the Merger. The effectiveness of the credit agreement amendment is conditioned upon, among other things, the completion of the Merger.
At June 30, 2021 and during the six months then ended, we had no borrowings outstanding under our revolving credit facility as of June 30, 2020 and our unused commitments were $1.5 billion. Refer to Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information.
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 flow,flows, cash on hand and availability under our revolving credit facility, we have the capacity to fund our spending plans.
At June 30, 2020,2021, we were in compliance with all restrictive financial and other covenants for both theapplicable to our revolving credit facility and senior notes. Refer to our Form 10-K for further discussion of our restrictive financial covenants.
In July 2020, we repaid $87.0 million of maturities associated with our 6.51% weighted-average senior notes.
Cash Flows
Our cash flows from operating activities, investing activities and financing activities are as follows:
 Six Months Ended 
 June 30,
Six Months Ended 
June 30,
(In thousands) 2020 2019(In thousands)20212020
Cash flows provided by operating activities $341,333
 $911,937
Cash flows provided by operating activities$469,469 $341,333 
Cash flows used in investing activities (340,367) (423,527)Cash flows used in investing activities(274,827)(340,367)
Cash flows used in financing activities (86,007) (249,303)Cash flows used in financing activities(177,419)(86,007)
Net (decrease) increase in cash, cash equivalents and restricted cash $(85,041) $239,107
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash$17,223 $(85,041)
Operating Activities. OperatingFluctuations in our operating cash flow fluctuationsflows 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 flowflows 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 June 30, 20202021 and December 31, 2019,2020, we had a working capital surplus of $82.5$17.4 million and $240.2a 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 twelve12 months.

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Net cash provided by operating activities in the first six months of 2020 decreased2021 increased by $570.6$128.1 million compared to the first six months of 2019.2020. This decreaseincrease was primarily due to lowerhigher natural gas revenues, partially offset by lower cash received from derivative settlement gainssettlements and unfavorable changesnet cash outflows related to certain other current asset and liability balances reflected in working capital compared to the corresponding period of the prior year. The decreaseincrease in natural gas revenues was primarily due to lowerhigher realized natural gas prices, and marginallypartially offset by slightly lower equivalent production. Average realized natural gas prices decreasedincreased by 4235 percent for the first six months of 20202021 compared to the first six months of 2019. Equivalent2020. The slight decrease in natural gas productiondecreased by less than 1 percent for the first six months of 20202021 compared to the first six months of 2019 as a result of2020 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 2020.2021.
Refer to “Results of Operations” below 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 $83.2$65.5 million for the first six months of 20202021 compared to the first six months of 2019.2020. The decrease was primarily due to $90.3$56.2 million of lower capital expenditures as a result of the implementationcontinuation of our maintenance capital program in 2020. This decrease was partially offset by2021 and a decrease in contributions and proceedsnet cash outflows of $4.3$9.4 million related to the sale of our equity method investments and a decrease in proceeds from the sale of assets of $2.1 million.2020.
Financing Activities. Cash flows used in financing activities decreasedincreased by $163.3$91.4 million for the first six months of 20202021 compared to the first six months of 2019.2020. This decreaseincrease was primarily due to $156.6$88.0 million of lower repurchases of our common stock in 2020 compared to 2019, $7.0 million of lower nethigher repayments of debt $7.4 million of lower debt issuance costs associated with the amendment of our revolving credit facility in 20192021 compared to 2020 and $4.2 million of lower tax withholdings on vesting of stock awards. These decreases were partially offset by higher dividend paymentsdividends paid as a result of $12.0 million related to an increase in our quarterly dividend rate from $0.16$0.10 per share to $0.11 per share in the first six months of 2019 to $0.20 per share in the first six months of 2020. Share repurchases in 2019 include $31.4 million of share repurchases that were accrued in 2018 and paid in 2019.April 2021.
Capitalization
Information about our capitalization is as follows:
(In thousands)June 30,
2021
December 31,
2020
Debt (1)
$1,046,316 $1,133,924 
Stockholders' equity2,299,895 2,215,707 
Total capitalization$3,346,211 $3,349,631 
Debt to total capitalization31 %34 %
Cash and cash equivalents$158,147 $140,113 

(In thousands) June 30,
2020
 December 31,
2019
Debt (1)
 $1,220,495
 $1,220,025
Stockholders' equity 2,165,979
 2,151,487
Total capitalization $3,386,474
 $3,371,512
Debt to total capitalization 36% 36%
Cash and cash equivalents $117,164
 $200,227
_______________________________________________________________________________(1)Includes $100.0 million and $188.0 million of current portion of long-term debt at June 30, 2021 and December 31, 2020, respectively. There were no borrowings outstanding under our revolving credit facility as of June 30, 2021 and December 31, 2020.
(1)Includes $175.0 million and $87.0 million of current portion of long-term debt at June 30, 2020 and December 31, 2019, respectively. There were no borrowings outstanding under our revolving credit facility as of June 30, 2020 and December 31, 2019.
We did not repurchase any shares of our common stock during the first six months of 2021 and 2020. During the first six months of 2019, we repurchased 5.1 million shares of our common stock for $125.3 million. During the first six months of2021 and 2020, and 2019, we paid dividends of $83.9 million ($0.21 per share) and $79.7 million ($0.20 per share) and $67.7 million ($0.16 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.
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 cash generated from operations, and, if required, borrowings under our revolving credit facility. We budget these expenditures based on our projected cash flows for the year.

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The following table presents major components of our capital and exploration expenditures:
Six Months Ended 
June 30,
(In thousands)20212020
Capital expenditures:  
Drilling and facilities$284,198 $329,843 
Leasehold acquisitions2,434 1,331 
Other3,429 4,395 
 290,061 335,569 
Exploration expenditures(1)
4,995 6,769 
$295,056 $342,338 

  Six Months Ended 
 June 30,
(In thousands) 2020 2019
Capital expenditures  
  
Drilling and facilities $329,843
 $415,431
Leasehold acquisitions 1,331
 3,246
Other 4,395
 5,975
  335,569
 424,652
Exploration expenditures(1)
 6,769
 10,548
  $342,338
 $435,200
(1)There were no exploratory dry hole costs for the first six months of 2021. Exploration expenditures include $2.0 million of exploratory dry hole costs for the first six months of 2020.

(1)Exploration expenditures include $2.0 million of exploratory dry hole cost for the first six months of 2020. Exploratory dry hole cost for the first six months of 2019 was not significant.
For the full year of 2020,2021, we plan to allocate substantially all of our capital to the Marcellus Shale, where we expect to drill and complete and place on production 60 to 7080 net wells.wells. Our 20202021 capital program is expected to be approximately $575.0$530.0 million to $540.0 million. Refer to Outlook“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 uponon 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.
Recently Adopted Accounting Pronouncements
Refer to Note 1 of the Notes to the Condensed Consolidated Financial Statements, “Financial Statement Presentation,” for a discussion of new accounting pronouncements that affect us.
Results of Operations
Second Quarters of 20202021 and 20192020 Compared
We reported net income in the second quarter of 20202021 of $30.4$30.5 million, or $0.08 per share, compared to net income of $181.0$30.4 million, or $0.43$0.08 per share, in the second quarter of 2019. The decrease in2020. Although net income was primarily due toflat over the periods, net income in the second quarter of 2021 was impacted by lower operating revenues,expenses and interest expense, partially offset by lower operating expensesrevenues and higher income tax expense.

Revenue, Price and Volume VariancesRevenues
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 June 30,Variance
(In thousands)20212020AmountPercent
Operating Revenues
   Natural gas$411,718 $288,286 $123,432 43 %
   (Loss) gain on derivative instruments(87,121)43,974 (131,095)(298)%
   Other70 88 (18)(20)%
 $324,667 $332,348 $(7,681)(2)%
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  Three Months Ended June 30, Variance
(In thousands) 2020 2019 Amount Percent
Operating Revenues        
   Natural gas $288,286
 $470,482
 $(182,196) (39)%
   Gain on derivative instruments 43,974
 63,649
 (19,675) (31)%
   Other 88
 (14) 102
 729 %
  $332,348
 $534,117
 $(201,769) (38)%
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Natural Gas RevenuesRevenue Price and Volume Variances
 Three Months Ended June 30,VarianceIncrease
(Decrease)
(In thousands)
20212020AmountPercent
Average price ($/Mcf)$2.05 $1.42 $0.63 44 %$126,378 
Volume (Bcf)200.6 202.9 (2.3)(1)%(2,946)
Total    $123,432 
  Three Months Ended June 30, Variance 
Increase
(Decrease)
(In thousands)
  2020 2019 Amount Percent 
Price variance (Mcf) $1.42
 $2.20
 $(0.78) (35)% $(158,262)
Volume variance (Bcf) 202.9
 213.8
 (10.9) (5)% (23,934)
Total  
  
  
  
 $(182,196)
The decreaseincrease in natural gas revenues of $182.2$123.4 million was primarily due to lowerhigher natural gas prices, and lower production. Thepartially offset by a slight decrease in production was a result ofproduction. Production decreased due to 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 2020.2021.
Impact of Derivative Instruments on Operating Revenues
 Three Months Ended 
 June 30,
Three Months Ended 
June 30,
(In thousands) 2020 2019(In thousands)20212020
Cash received (paid) on settlement of derivative instruments  
  
Cash received (paid) on settlement of derivative instruments  
Gain (loss) on derivative instruments $19,423
 $15,397
(Loss) gain on derivative instruments(Loss) gain on derivative instruments$(347)$19,423 
Non-cash gain (loss) on derivative instruments  
  
Non-cash gain (loss) on derivative instruments  
Gain (loss) on derivative instruments 24,551
 48,252
(Loss) gain on derivative instruments(Loss) gain on derivative instruments(86,774)24,551 
 $43,974
 $63,649
$(87,121)$43,974 

Operating and Other Expenses
 Three Months Ended June 30, Variance Three Months Ended June 30,Variance
(In thousands) 2020 2019 Amount Percent(In thousands)20212020AmountPercent
Operating and Other Expenses  
  
  
  
Operating ExpensesOperating Expenses    
Direct operations $17,423
 $18,093
 $(670) (4)% Direct operations$16,154 $17,423 $(1,269)(7)%
Transportation and gathering 135,249
 141,689
 (6,440) (5)% Transportation and gathering133,488 135,249 (1,761)(1)%
Taxes other than income 3,352
 3,640
 (288) (8)% Taxes other than income4,183 3,352 831 25 %
Exploration 4,579
 4,504
 75
 2 % Exploration2,368 4,579 (2,211)(48)%
Depreciation, depletion and amortization 94,622
 96,147
 (1,525) (2)% Depreciation, depletion and amortization91,549 94,622 (3,073)(3)%
General and administrative 23,166
 22,889
 277
 1 % General and administrative23,037 23,166 (129)(1)%
 $278,391
 $286,962
 $(8,571) (3)%$270,779 $278,391 $(7,612)(3)%
        
Earnings on equity method investments $
 $3,650
 $(3,650) (100)%
Loss on sale of assets (241) 
 241
 100 %
Gain (loss) on sale of assetsGain (loss) on sale of assets$20 $(241)$261 (108)%
Interest expense, net 14,543
 14,567
 (24)  %Interest expense, net12,558 14,543 (1,985)(14)%
Other expense 48
 143
 (95) (66)%Other expense46 48 (2)(4)%
Income tax expense 8,751
 55,086
 (46,335) (84)%Income tax expense10,840 8,751 2,089 24 %
Total costs and expenses from operations decreased by $8.6$7.6 million in the second quarter of 20202021 compared to the samecorresponding period of 2019.2020. The primary reasons for this fluctuation are as follows:
Direct operations decreased $0.7$1.3 million, primarily driven by lower Marcellus Shaledue to a decrease in production.
Transportation and gathering decreased $6.4$1.8 million, primarily due to lower Marcellus Shalegathering charges as a result of lower production.
Depreciation, depletion and amortization decreased $1.5 million primarily due to lower amortization of unproved properties of $2.1 million, partially offset by higher DD&A of $0.2 million in the second quarter of 2020 compared to 2019. The increase in DD&A was primarily due to an increase of $4.8 million due to a higher DD&A rate of $0.44 per Mcfe in the second quarter of 2020 compared to $0.42 per Mcfe for the second quarter of 2019, partially offset by $4.6 million related to lower production volumes in the Marcellus Shale. The higher DD&A rate was due to higher cost reserve additions.
General and administrative increased $0.3 million primarily due to $1.6 million higher stock-based compensation expense associated with certain of our market-based performance awards and a $1.1 million increase in hardware and software costs. These increases were partially offset by $2.1 million of severance costs incurred in the second quarter of 2019. The remaining changes in other general and administrative expenses were not individually significant.
Earnings on Equity Method Investments
Earnings on equity method investmentsTaxes other than income increased $0.8 million, primarily due to $0.9 million higher drilling impact fees driven by an increase in rates associated with higher natural gas prices.
Exploration decreased $3.7$2.2 million, primarily due to $2.1 million of dry hole expense recognized in the second quarter of 2020.
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Depreciation, depletion and amortization (DD&A) decreased $3.1 million, primarily due to lower amortization of unproved properties of $2.1 million and lower DD&A of $1.1 million in the second quarter of 2021 compared to the second quarter of 2020. Amortization of unproved properties decreased due to lower amortization rates. The decrease in DD&A was primarily due to lower equivalent production. The DD&A rate was flat at $0.44 per Mcfe for the second quarter of 2021 and 2020, respectively.
General and administrative decreased $0.1 million, primarily due to lower stock-based compensation expense of $3.9 million associated with certain of our market-based performance awards and a $2.8 million decrease in previously accrued fines and penalties related to compliance matters with the Office of Natural Resource Revenue (ONRR), partially offset by $6.2 million of transaction-related costs associated with the pending Merger. The remaining changes in general and administrative expenses were not individually significant.
Interest Expense, net
Interest expense, net decreased $2.0 million, primarily due to the salerepayment of $87.0 million of our investments6.51% weighted-average senior notes, which matured in Meade Pipeline Co LLC (Meade)July 2020, and the repayment of $88.0 million of our 5.58% weighted-average senior notes, which matured in November 2019 and Constitution Pipeline Company, LLC (Constitution) in February 2020.January 2021.
Income Tax Expense
Income tax expense decreased $46.3increased $2.1 million due to lowerhigher pre-tax income and a lowerhigher effective tax rate. The effective tax rates for the second quarter of 2021 and 2020 and 2019 were 22.426.2 percent and 23.322.4 percent, respectively. The effective tax rate was lowerhigher for the second quarter of 20202021 compared to the second quarter of 20192020, primarily due to an increase in the reimbursementblended state statutory tax rate as a result of sequestration charges on AMT credits refundedenacted tax rate increases in prior years that wasthe states in which we operate, partially offset by non-recurring discrete items recorded induring the second quarter of 2021 versus the second quarter of 2020.
First Six Months of 20202021 and 20192020 Compared
We reported net income in the first six months of 20202021 of $84.3$156.8 million, or $0.21$0.39 per share, compared to net income of $443.8$84.3 million, or $1.05$0.21 per share, in the first six months of 2019.2020. The decreaseincrease in net income was primarily due to lowerhigher operating revenues and earnings on equity method investments,lower operating expenses, partially offset by lowerhigher income tax expense.

Revenue, Price and Volume VariancesRevenues
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.
 Six Months Ended June 30,Variance
(In thousands)20212020AmountPercent
Operating Revenues
   Natural gas$884,577 $658,626 $225,951 34 %
(Loss) gain on derivative instruments(100,358)60,036 (160,394)(267)%
   Other129 143 (14)(10)%
 $784,348 $718,805 $65,543 %
  Six Months Ended June 30, Variance
(In thousands) 2020 2019 Amount Percent
Operating Revenues        
   Natural gas $658,626
 $1,103,656
 $(445,030) (40)%
   Gain on derivative instruments 60,036
 71,906
 (11,870) (17)%
   Other 143
 236
 (93) (39)%
  $718,805
 $1,175,798
 $(456,993) (39)%
Natural Gas Revenues
Revenue Price and Volume Variances
  Six Months Ended June 30, Variance 
Increase
(Decrease)
(In thousands)
  2020 2019 Amount Percent 
Price variance (Mcf) $1.58
 $2.64
 $(1.06) (40)% $(443,115)
Volume variance (Bcf) 417.8
 418.6
 (0.8)  % (1,915)
Total  
  
  
  
 $(445,030)
 Six Months Ended June 30,VarianceIncrease
(Decrease)
(In thousands)
 20212020AmountPercent
Average price ($/Mcf)$2.18 $1.58 $0.60 38 %$243,927 
Volume (Bcf)406.4 417.8 (11.4)(3)%(17,976)
Total    $225,951 
The decreaseincrease in natural gas revenues of $445.0$226.0 million was primarily due to lowerhigher natural gas prices, coupled with a decrease inpartially offset by lower production. The decrease in production was a result ofdue to 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.
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Impact of Derivative Instruments on Operating Revenues
 Six Months Ended 
 June 30,
Six Months Ended 
June 30,
(In thousands) 2020 2019(In thousands)20212020
Cash received (paid) on settlement of derivative instruments  
  
Cash received (paid) on settlement of derivative instruments  
Gain (loss) on derivative instruments $19,423
 $68,377
(Loss) gain on derivative instruments(Loss) gain on derivative instruments$3,050 $19,423 
Non-cash gain (loss) on derivative instruments    Non-cash gain (loss) on derivative instruments
Gain (loss) on derivative instruments 40,613
 3,529
(Loss) gain on derivative instruments(Loss) gain on derivative instruments(103,408)40,613 
 $60,036
 $71,906
$(100,358)$60,036 
Operating and Other Expenses
 Six Months Ended June 30, Variance Six Months Ended June 30,Variance
(In thousands) 2020 2019 Amount Percent(In thousands)20212020AmountPercent
Operating and Other Expenses  
  
  
  
Operating ExpensesOperating Expenses    
Direct operations $34,667
 $36,427
 $(1,760) (5)% Direct operations$33,030 $34,667 $(1,637)(5)%
Transportation and gathering 278,581
 279,022
 (441)  % Transportation and gathering270,190 278,581 (8,391)(3)%
Taxes other than income 7,090
 9,487
 (2,397) (25)% Taxes other than income8,988 7,090 1,898 27 %
Exploration 6,769
 10,548
 (3,779) (36)% Exploration4,995 6,769 (1,774)(26)%
Depreciation, depletion and amortization 194,757
 188,405
 6,352
 3 % Depreciation, depletion and amortization185,697 194,757 (9,060)(5)%
General and administrative 56,595
 53,979
 2,616
 5 % General and administrative52,193 56,595 (4,402)(8)%
 $578,459
 $577,868
 $591
  %$555,093 $578,459 $(23,366)(4)%
        
(Loss) earnings on equity method investments $(59) $7,334
 $(7,393) (101)%
Loss on sale of assets (170) (1,500) (1,330) (89)%
Loss on equity method investmentsLoss on equity method investments$— $(59)$59 (100)%
Gain (loss) on sale of assetsGain (loss) on sale of assets91 (170)(261)(154)%
Interest expense, net 28,754
 26,748
 2,006
 7 %Interest expense, net24,935 28,754 (3,819)(13)%
Other expense 114
 287
 (173) (60)%Other expense92 114 (22)(19)%
Income tax expense 26,965
 132,957
 (105,992) (80)%Income tax expense47,501 26,965 20,536 76 %
Total costs and expenses from operations increaseddecreased by $0.6$23.4 million in the first six months of 20202021 compared to the samecorresponding period of 2019.2020. The primary reasons for this fluctuation are as follows:
Direct operations decreased $1.8$1.6 million, primarily due to a decrease in production and continued efficiencies in our operations in the Marcellus Shale.production.
Transportation and gathering decreased $0.4$8.4 million, primarily due to lower Marcellus Shalegathering charges as a result of lower production.
Taxes other than income increased $1.9 million, primarily due to $2.0 million higher drilling impact fees driven by an increase in rates associated with higher natural gas prices.
Exploration expense decreased $1.8 million, primarily due to $2.1 million of dry hole expense recognized in the second quarter of 2020.
than income decreased $2.4 million due to $2.2 million lower drilling impact fees driven by a decrease in rates associated with lower natural gas prices.
Exploration decreased $3.8 million due to a $3.1 million decrease in geological and geophysical expenses and a $1.4 million decrease in employee costs, partially offset by an increase in exploratory dry hole costs of $2.0 million.
Depreciation, depletion and amortization increased $6.4decreased $9.1 million, primarily due to higherlower DD&A of $8.8$4.9 million partially offset byand lower amortization of unproved properties of $3.0$4.4 million. The increasedecrease in DD&A was due to an increaselower production in 2021 compared to the corresponding period of $9.1 million due to a higher2020. The DD&A rate ofwas flat at $0.44 per Mcfe for the first six months of 2021 and 2020, compared to $0.42 per Mcfe for the first six months of 2019. The higher DD&A rate was due to higher cost reserve additions.respectively. Amortization of unproved properties decreased due to lower amortization rates.
General and administrative increased $2.6
General and administrative decreased $4.4 million, primarily due to higher stock-based compensation expense of $2.7 million associated with certain of our market-based performance awards, a $1.9 million increase in legal expenses and a $1.1 million increase in hardware and software costs. These increases were partially offset by $2.1 million of severance costs incurred in the second quarter of 2019 and a $1.4 million decrease in employee-related expenses. The remaining changes in other general and administrative expenses were not individually significant.
(Loss) Earnings on Equity Method Investments
Earnings on equity method investments decreased $7.4 million primarily due to the salelower stock-based compensation expense of $8.6 million associated with certain of our investmentsmarket-based performance awards and a $2.8 million decrease in Meade previously accrued fines and penalties related to compliance matters with the ONRR. These decreases were partially offset by $6.2 million of transaction-related costs incurred in November 2019the second quarter of 2021 related to the pending Merger and Constitution$2.4 million of higher severance costs incurred in February 2020.the first quarter of 2021 related to our early retirement program. The remaining changes in general and administrative expenses were not individually significant.
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Interest Expense, net
Interest expense, net increased $2.0decreased $3.8 million, primarily due to the reversalrepayment of interest expense$87.0 million of our 6.51% weighted-average senior notes, which matured in 2019 related to certain income tax reserves recordedJuly 2020, and the repayment of $88.0 million of our 5.58% weighted-average senior notes, which matured in prior periods.January 2021.
Income Tax Expense
Income tax expense decreased $106.0increased $20.5 million due to lowerhigher pre-tax income, partially offset by a higherlower effective tax rate. The effective tax rates for the first six months of 2021 and 2020 were 23.2 percent and 2019 were 24.2 percent, and 23.1 percent, respectively. The effective tax rate was higherlower for the first six months of 20202021 compared to the first six months of 20192020 due to an increasea decrease in tax expense as a result ofrelated to book compensation expense exceeding the federal and state tax deductions for employee stock-based compensation awards that vested during the period.period and a decrease in non-deductible executive compensation, partially offset by an increase in deferred tax expense during the first six months of 2021 from the increase in the blended state statutory tax rate as a result of enacted tax rate increases in the states in which we operate.
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, the anticipated benefits of the proposed merger transaction involving us and Cimarex, the anticipated impact of the proposed merger transaction on the combined business and future financial and operating results, the expected amount and the timing of synergies from the proposed merger transaction, the anticipated timing of the closing of the proposed merger transaction 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," "will""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, the ability to obtain the requisite Cabot and Cimarex stockholder approvals, the risk that an event, change or other circumstances could give rise to the termination of the Merger Agreement, the risk that a condition to closing of the Merger may not be satisfied on a timely basis or at all, the length of time necessary to close the proposed merger transaction, the risk that the businesses will not be integrated successfully, the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected, the risk of litigation related to the proposed merger transaction, legislative and regulatory initiatives, electronic, cyber or physical security breaches and other factors detailed herein and in our other Securities and Exchange Commission (SEC) filings. Refer to “Risk Factors” in Item 1A of thePart I of our Form 10-K in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in Item 1A of Part II of this Quarterly Report on Form 10-Q 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.
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 swap and basis 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
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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 June 30, 2020,2021, we had the following outstanding financial commodity derivatives:
 Collars 
Estimated 
Fair Value 
Asset (Liability)
(In thousands)
CollarsEstimated Fair Value Asset (Liability)
(In thousands)
     Floor Ceiling Swaps    FloorCeilingSwaps
Type of Contract Volume (Mmbtu) Contract Period 
Range
($/Mmbtu)
 
Weighted-Average
($/Mmbtu)

 
Range
($/Mmbtu)
 
Weighted-Average
($/Mmbtu)

 Weighted-Average ($/Mmbtu) Type of ContractVolume (Mmbtu)Contract PeriodRange
($/Mmbtu)
Weighted-Average
($/Mmbtu)
Range
($/Mmbtu)
Weighted-Average
($/Mmbtu)
Weighted-Average
($/Mmbtu)
Natural gas (NYMEX) 36,900,000 Jul. 2020 - Oct. 2020     $2.25 $19,259
Natural gas (NYMEX)9,200,000Jul. 2021-Dec. 2021$2.74 $(8,389)
Natural gas (NYMEX) 61,500,000 Jul. 2020 - Oct. 2020 $1.90 - $2.15 $2.05
 $2.10 - $2.38 $2.24
 21,395
Natural gas (NYMEX)82,800,000Jul. 2021-Dec. 2021$2.50 - $2.85$2.68 $2.88 - $3.80$3.05 (53,364)
Natural gas (NYMEX)Natural gas (NYMEX)6,150,000Jul. 2021-Oct. 2021$— $2.50 $— $2.80 (5,141)
Natural gas (NYMEX)Natural gas (NYMEX)12,300,000Jul. 2021-Oct. 2021$2.78 (10,478)
     $40,654
$(77,372)
The amounts set forth in the table above represent our total unrealized derivative position at June 30, 20202021 and exclude the impact of non-performance risk. Non-performance risk is considered in the fair value of our derivative instruments that are recorded in our Condensed Consolidated Financial Statements and is primarily evaluated by reviewing credit default swap spreads for the various financial institutions with which we have derivative contracts, while our non-performance risk is evaluated using a market credit spread provided by oneseveral of our banks.
In July 2021, we entered into the following financial commodity derivatives:
   Swaps
Type of ContractVolume (Mmbtu)Contract PeriodWeighted-Average
($/Mmbtu)
Natural gas (NYMEX)9,200,000Oct. 2021-Dec. 2021$4.01 
Natural gas (NYMEX)9,150,000Nov. 2021-Dec. 2021$4.02 
A significant portion of our expected natural gas production for 20202021 and beyond is currently unhedged and directly exposed to the volatility in natural gas prices, whether favorable or unfavorable.
During the first six months of 2020,2021, natural gas collars with floor prices ranging from $1.90$2.50 to $2.15$2.85 per Mmbtu and ceiling prices ranging from $2.10$2.80 to $2.38$3.94 per Mmbtu covered 32.583.5 Bcf, or eight21 percent of natural gas production at a weighted-average price of $2.06$2.81 per Mmbtu. Natural gas swaps covered 17.717.6 Bcf, or four percent of natural gas production at a weighted-average price of $2.23$2.71 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 by production and by changes in the future commodity prices. Refer to “Forward-Looking Information” for further details.
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 amountamounts reported in the Condensed Consolidated Balance Sheet for cash, cash equivalents and restricted cash approximatesapproximate fair value due to the short-term maturities of these instruments.
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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 senior notes and revolving credit facilityoutstanding 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 all senior notes and the revolving credit facilityour outstanding debt is based on interest rates currently available to us.
The carrying amount and estimated fair value of debt is as follow:
 June 30, 2021December 31, 2020
(In thousands)Carrying
Amount
Estimated Fair
Value
Carrying
Amount
Estimated Fair
Value
Long-term debt$1,046,316 $1,118,321 $1,133,924 $1,213,811 
Current maturities(100,000)(100,444)(188,000)(189,332)
Long-term debt, excluding current maturities$946,316 $1,017,877 $945,924 $1,024,479 

  June 30, 2020 December 31, 2019
(In thousands) 
Carrying
Amount
 
Estimated Fair
Value
 
Carrying
Amount
 
Estimated Fair
Value
Long-term debt $1,220,495
 $1,230,456
 $1,220,025
 $1,260,259
Current maturities (175,000) (176,058) (87,000) (88,704)
Long-term debt, excluding current maturities $1,045,495
 $1,054,398
 $1,133,025
 $1,171,555
ITEM 4. Controls and Procedures
As of June 30, 2020, the Company2021, we carried out an evaluation, under the supervision and with the participation of the Company'sour management, including the Company'sour Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company'sour 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, theour Chief Executive Officer and Chief Financial Officer concluded that the Company'sour 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 the Companyus in the reports that it fileswe file or submitssubmit under the Exchange Act.
There were no changes in internal control over financial reporting that occurred during the second quarter of 20202021 that have materially affected, or are reasonably likely to have a material effect on, the Company'sour internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Legal Matters
The information set forth under the heading “Legal Matters” in Note 8 of the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q and under the heading “Overview—Announced Merger Involving Cimarex” in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this Form 10-Q is incorporated by reference in response to this item.

EnvironmentalOther Legal Matters
OnIn October 2020, a class action lawsuit styled Delaware County Emp. Ret. Sys. v. Cabot Oil and Gas Corp., et. al., (U.S. District Court, Middle District of Pennsylvania), was filed against Cabot, Dan O. Dinges, its Chief Executive Officer, and Scott C. Schroeder, its Chief Financial Officer, alleging that we made misleading statements in our periodic filings with the SEC under the Exchange Act in violation of Section 10(b) and Section 20 of the Exchange Act. The plaintiffs allege misstatements in our public filings and disclosures over a number of years relating to our potential liability for alleged environmental violations in Pennsylvania. The plaintiffs allege that such misstatements caused a decline in the price of our common stock when we disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended June 17,30, 2019 we received two proposed Consent Order and Agreements (CO&A)notices of violations from the Pennsylvania Department of Environmental Protection (PaDEP)and an additional decline when we disclosed on June 15, 2020 the criminal charges brought by the Office of the Attorney General of the Commonwealth of Pennsylvania related to alleged violations of the Pennsylvania Clean Streams Law, which prohibits discharge of industrial wastes. The court appointed Delaware County Employees Retirement System to represent the purported class on February 3, 2021. In April 2021, the complaint was amended to include Phillip L. Stalnaker, our Senior Vice President of Operations, as a defendant. The plaintiffs seek monetary damages, interest and attorney’s fees.
Also in October 2020, a shareholder derivative action styled Ezell v. Dinges (U.S. District Court, Middle District of Pennsylvania), was filed against Cabot, Messrs. Dinges and Schroeder and our Board of Directors, for alleged securities violations under Section 10(b) and Section 21D of the Exchange Act arising from the same alleged misleading statements that form the basis of the class action lawsuit described above. In addition to the Exchange Act claims, the derivative actions also allege claims based on breaches of fiduciary duty and statutory contribution theories. On December 9, 2020, the Ezell case was consolidated with a second derivative case with similar allegations.
On February 25, 2021, we filed a motion to transfer the class action lawsuit to the U.S. District Court for the Southern District of Texas, in Houston, Texas, where our headquarters is located. On June 11, 2021, we filed a motion to dismiss the class action lawsuit on the basis that the plaintiffs’ allegations do not meet the requirements for pleading a claim under Section 10(b) or Section 20 of the Exchange Act. On June 22, 2021, our motion to transfer the class action lawsuit to the Southern District of Texas was granted. Pursuant to the prior agreement of the parties, the consolidated derivative case discussed in the preceding paragraph was also transferred to the Southern District of Texas. The motion to dismiss the class action lawsuit is pending. We intend to vigorously defend the class action and derivative lawsuits.
In November 2020, we received a stockholder demand for inspection of books and records under Section 220 of the General Corporations Law of the State of Delaware (Section 220 Demand). The Section 220 Demand seeks broad categories of documents reviewed by the Board of Directors and minutes of meetings of the Board of Directors pertaining to alleged environmental violations in Pennsylvania, as well as documents relating to gas migration allegationsany board of directors conflicts of interest, dating from January 1, 2015 to the present. We also received three other similar requests from other stockholders in areas surrounding several wells ownedFebruary and operated by us in Susquehanna County, Pennsylvania. The allegations relating to these wellsJune 2021. On May 17, 2021, we were initially raised by residentsserved with a complaint filed in the areaCourt of Chancery of the State of Delaware by the stockholder making the February 2021 Section 220 Demand to compel the production of books and records requested. We are responding to each of the Section 220 Demands in Marchturn and June 2017, respectively,are attempting to resolve the Delaware Chancery Court complaint through an agreed production, but there can be no assurance that the Section 220 demands and Delaware Chancery Court suit will be resolved in the form of complaints about their drinking water supply. Since then, we have been engaged with the PaDEP in investigating the incidents and have performed appropriate remediation efforts, including the provision of alternative sources of drinking watera manner that is satisfactory to us. It is possible that one or more additional stockholder suits could be filed pertaining to the affected residents.  We received Noticessubject matter of Violation (NOV) from the PaDEP in JuneSection 220 Demands and November, 2017, respectively, for failure to prevent the migration of gas into fresh groundwater sources in the area surrounding these wells.  With regard to the June 2017 NOV, we believe these water quality complaints have been resolved,class and we are working with the PaDEP to reach agreement on the disposition of this matter. The proposed CO&A is the culmination of this effort and, if finalized, would result in the payment of a civil monetary penalty in an amount likely to exceed $100,000, up to approximately $215,000. We will continue to work with the PaDEP to finalize the CO&A, and to bring this matter to a close. With regard to the November 2017 NOV, the proposed CO&A, if finalized as drafted, would require Cabot to submit a detailed written remediation plan, continue water sampling and other investigative measures and restore or replace affected water supplies and would result in the payment of a civil monetary penalty in an amount likely to exceed $100,000, up to approximately $355,000. We will continue to work with the PaDEP to finalize the CO&A, and to complete the ongoing investigation and remediation.derivative actions described above.
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. WhileAlthough 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 $100,000.$300,000.
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ITEM 1A. Risk Factors
The following is a discussion of risk factors below should be read in conjunction withrelating to the Merger. For additional information about risk factors previously discussed inthat affect us, refer to Item 1A of Part I of our Form 10-K10-K.
The Merger may not to be completed and the Merger Agreement may be terminated in accordance with its terms.
On May 23, 2021, we entered into the Merger Agreement with Cimarex to combine via an all-stock merger transaction. The Merger is subject to a number of conditions to closing, as specified in the Merger Agreement. These closing conditions include, among others, (1) the receipt of the required approvals from Cabot stockholders and Cimarex stockholders and (2) the absence of any governmental order or law that makes consummation of the Merger illegal or otherwise prohibited. We can provide no assurance that the required stockholder approvals will be obtained or that the required conditions to closing will be satisfied. These conditions to the completion of the Merger, some of which are beyond our control, may not be satisfied or waived in a timely manner or at all, and, accordingly, the Merger may be delayed or may not be completed at all. Any delay in completing the Merger could cause the combined business not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve if the Merger is successfully completed within its expected time frame. In addition, if the Merger is not completed by January 23, 2022, either Cabot or Cimarex may choose not to proceed with the Merger by terminating the Merger Agreement, and the parties can mutually decide to terminate the Merger Agreement at any time, before or after stockholder approval. In addition, Cabot and Cimarex may elect to terminate the Merger Agreement in certain other circumstances.
The termination of the Merger Agreement could negatively impact our business or result in our having to pay a termination fee.
If the Merger is not completed for any reason, including as a result of a failure to obtain the fiscal year ended December 31, 2019required approvals from our stockholders or Cimarex’s stockholders, our ongoing business may be adversely affected and, without realizing any of the expected benefits of having completed the Merger, we would be subject to a number of risks, including the following:
we may experience negative reactions from the financial markets, including negative impacts on our stock price;
we may experience negative reactions from our customers, distributors, suppliers, vendors, landlords, joint venture participants and other third parties with whom we do business, as well as our employees; and
we will be required to pay our costs relating to the Merger, including financial advisory, legal and accounting fees and expenses, regardless of whether the Merger is completed.
Additionally, if the Merger Agreement is terminated under certain circumstances, we may be required to pay Cimarex a termination fee of $250.0 million, including if the Merger Agreement is terminated because our Board of Directors has changed its recommendation in Item 1Arespect of Part IIthe stockholder proposal relating to the issuance of shares of our Quarterly Reportcommon stock in connection with the Merger (the issuance proposal). In addition, we may be required to reimburse Cimarex for its expenses in an amount equal to $40.0 million if the Merger Agreement is terminated because of a failure of our stockholders to approve the issuance proposal.
The business relationships of Cabot and Cimarex may be subject to disruption due to uncertainty associated with the Merger, which could have a material adverse effect on Form 10-Q for the quarter ended March 31, 2020, which risk factors could also be affected bybusiness, financial condition, cash flows and results of operations of Cabot or Cimarex pending and following the potential effectsMerger.
Regardless of whether the Merger is completed, the announcement and pendency of the outbreak of COVID-19 discussed below. Additional risks and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial,Merger could alsocause disruptions in our business, which could have an adverse effect on our business and financial results, including as follows:
our and Cimarex’s current and prospective employees may experience uncertainty about their future roles with the combined business or the operations of the combined business following the Merger, which might adversely affect the two companies’ abilities to retain key management and other personnel;
uncertainty regarding the completion of the Merger may cause parties with which we or Cimarex do business, including customers, distributors, suppliers, vendors, landlords, joint venture participants and other third parties, to delay or defer certain business decisions or to decide to seek to terminate, change or renegotiate their relationships with us or Cimarex; and
the Merger Agreement restricts us and our subsidiaries from taking specified actions during the pendency of the Merger without Cimarex’s consent, which may prevent us from making appropriate changes to our business or
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organizational structure or prevent us from pursuing attractive business opportunities or strategic transactions that may arise prior to the completion of the Merger.
These disruptions could have a material and adverse effect on the business, financial condition, cash flows and results of operations, of Cabot or Cimarex, regardless of whether the Merger is completed, as well as a material and adverse effect on our ability to realize the expected cost savings and other benefits of the Merger. The risk, and adverse effects, of any disruption could be exacerbated by a delay in completion of the Merger or termination of the Merger Agreement.
In addition, we have and will continue to divert significant management resources in an effort to complete the Merger. If the Merger is not completed, we will have incurred significant costs, including the diversion of management resources, for which we will have received little or no benefit.
The Merger Agreement subjects us to restrictions on our business activities prior to the effective time of the Merger, limits our ability to pursue alternatives to the Merger and may discourage other companies from making a favorable alternative transaction proposal.
The Merger Agreement restricts Cabot and Cimarex from entering into certain corporate transactions and taking other specified actions without the consent of the other party, and generally requires each party to continue its operations in the ordinary course, until completion of the Merger. These restrictions could be in place for an extended period of time if completion of the Merger is delayed and could prevent us from pursuing attractive business opportunities that may arise prior to the completion of the Merger.
The Merger Agreement also contains provisions that may discourage a third party from submitting a competing proposal that might result in greater value to our stockholders than the Merger, or may result in a potential acquirer of Cabot, or a potential competing acquirer of Cimarex, proposing to pay a lower per share price to acquire Cabot than it might otherwise have proposed to pay. These provisions include a general prohibition on us from soliciting or, subject to certain exceptions relating to the exercise of fiduciary duties by our Board of Directors, entering into discussions with any third party regarding any competing proposal or offer for a competing transaction. Further, even if our Board of Directors withholds, withdraws, qualifies or modifies its recommendation with respect to the Merger-related proposals to be voted on by our stockholders, unless the Merger Agreement has been terminated in accordance with its terms, we will still be required to submit the such proposals to a vote of our stockholders. As noted above, the Merger Agreement further provides that under specified circumstances, including after a change of recommendation by our Board of Directors and a subsequent termination of the Merger Agreement by Cimarex in accordance with its terms, we may be required to pay Cimarex a cash termination fee of $250.0 million.
The failure to integrate the businesses and operations of Cabot and Cimarex successfully in the expected time frame may adversely affect the combined business’ future results.
The Merger involves the combination of two companies which currently operate, and until the completion of the Merger will continue to operate, as independent public companies. We can provide no assurances that our business and Cimarex’s business can be integrated successfully. It is possible that the integration process could result in the loss of key Cabot employees or key Cimarex employees, the loss of customers, service providers, vendors or other business counterparties, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, potential unknown liabilities and unforeseen expenses or delays associated with and following completion of the Merger or higher-than-expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.
Furthermore, our Board of Directors and executive leadership immediately following the Merger will consist of former directors from each of Cabot and Cimarex and former executive officers from each of Cabot and Cimarex, respectively. Combining the boards of directors and management teams of each company into a single board and a single management team could require the reconciliation of differing priorities and philosophies.
The combined business may fail to realize all of the anticipated benefits of the Merger.
The success of the Merger will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining our business with and Cimarex’s business and operational synergies. The anticipated benefits and cost savings of the Merger may not be realized fully or at all, may take longer to realize than expected, may not be realized or could have other adverse effects that we do not currently foresee. Some of the assumptions that we have made, such as the achievement of the anticipated benefits related to the geographic, commodity and asset diversification and the expected size, scale, inventory and financial strength of the combined business, may not be realized. The integration process may result in the loss of key employees, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies. In addition,
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there could be potential unknown liabilities and unforeseen expenses associated with the Merger that could adversely impact the combined business.
The market price of our common stock may decline if large amounts of our common stock are sold following the Cimarex acquisition.
The market price of our common stock may fluctuate significantly following completion of the Merger and holders of our common stock could lose some or all of the value of their investment. If the Merger is consummated, we will issue shares of our common stock to former Cimarex stockholders. The Merger Agreement contains no restrictions on the ability of former Cimarex stockholders to sell or otherwise dispose of such shares following completion of the Merger. Former Cimarex stockholders may decide not to hold the shares of our common stock that they receive in the Merger, and our historic stockholders may decide to reduce their investment in Cabot as a result of the changes to our investment profile as a result of the Merger. These sales of our common stock (or the perception that these sales may occur) could have the effect of depressing the market price for our common stock. In addition, our financial position after completion of the Merger may differ from our financial position before the completion of the Merger, and the results of our operations and/or cash flows after the completion of the Merger may be affected by factors different from those currently affecting our financial position or results of operations and/or cash flows, all of which could adversely affect the market price of our common stock. Furthermore, the stock market has experienced significant price and volume fluctuations in recent times which, if they continue to occur, could have a material adverse effect on the market for, or liquidity of, the Cabot common stock, regardless of Cabot’s actual operating performance.
Lawsuits have been filed against Cimarex and its directors in connection with the Merger and additional lawsuits relating to the Merger may be filed against Cimarex and its directors or against Cabot and its directors in the future. An adverse ruling in any such lawsuit could result in an injunction preventing the completion of the Merger and/or substantial costs to Cabot and Cimarex.
Securities and fiduciary lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements like the Merger Agreement. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Cabot’s and Cimarex’s respective liquidity and financial condition.
In June and July 2021, four putative stockholders of Cimarex filed separate lawsuits relating to the Merger. Each of the actions is asserted only on behalf of the named plaintiff. All four actions allege violations of Section 14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder based on various alleged omissions of material information from the registration statement on Form S-4 filed in connection with the Merger. One of the actions (Elliot) also asserts claims that the members of the Cimarex Board of Directors breached fiduciary duties in connection with the Merger and that Cimarex aided and abetted those alleged breaches. Each action names as defendants Cimarex and each of its directors, and each action seeks, among other things, to enjoin the Merger (or, in the alternative, rescission or an award for rescissory damages in the event the Merger is completed), an award of costs and attorneys’ and experts’ fees, and such other and further relief as the court may deem just and proper. We believe that the actions are without merit.
One of the conditions to the closing of the Merger is that no injunction by any governmental entity having jurisdiction over Cabot or Cimarex has been entered and continues to be in effect and no law has been adopted, in either case, that prohibits the closing of the Merger. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, that injunction may delay or prevent the Merger from being completed within the expected timeframe or at all, which may adversely affect Cabot’s and Cimarex’s respective businesses, financial condition, cash flows and results of operations. In addition, either Cabot or Cimarex may terminate the Merger Agreement if any governmental entity having jurisdiction over any party has issued any order, decree, ruling or injunction permanently prohibiting the closing of the Merger that has become final and nonappealable or if any law has been adopted that permanently prohibits the closing of the Merger, so long as the terminating party has not breached any material covenant or agreement under the Merger Agreement that has caused, materially contributed to or resulted in such order, decree, ruling or injunction or other action.
We can provide no assurance that any of the defendants would be successful in the outcome of the lawsuits that have been filed thus far or any potential future lawsuits. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is completed may adversely affect Cabot’s or Cimarex’s business, financial condition, cash flows and results of operations.
Business disruptions from unexpected events, including pandemics, health crisesThe indebtedness of the combined business may limit its financial flexibility.
Cabot and natural disasters,Cimarex are reviewing the treatment of Cabot’s existing indebtedness and Cimarex’s existing indebtedness and Cabot and/or Cimarex may increase our costseek to repay, refinance, repurchase, redeem, exchange or otherwise terminate Cabot’s existing indebtedness and/or Cimarex’s existing indebtedness prior to, in connection with or following the completion of doing business the Merger.
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Specifically, we and Cimarex expect Cimarex’s credit facility to be terminated in connection with completion of the Merger and, with respect to Cimarex’s senior notes, we expect that we may provide a parent guaranty and/or disrupt our operations.
The occurrence ofconduct one or more unexpected events,exchange offers, offers to purchase and/or consent solicitations. We and Cimarex expect that our revolving credit facility and our senior notes will remain outstanding following completion of the Merger. If we and Cimarex do seek to refinance our existing indebtedness and/or Cimarex’s existing indebtedness, we can provide no assurance that we and/or Cimarex would be able to execute the refinancing on favorable terms or at all. Any increase in the indebtedness of the combined business could have adverse effects on its financial condition, cash flows and results of operations, including by:
imposing additional cash requirements on the combined business in order to support interest payments, which would reduce the amount available to fund its operations and other business activities;
increasing the risk of default on debt obligations of the combined business;
increasing the vulnerability of the combined business to adverse changes in general economic and industry conditions, economic downturns and adverse developments in its business;
limiting the ability of the combined business to sell assets, engage in strategic transactions or obtain additional financing for working capital, capital expenditures, general corporate and other purposes;
limiting the flexibility of the combined business in planning for or reacting to changes in its business and the industry in which it operates; and
increasing the exposure of the combined business to a public health crisis, pandemicrise in interest rates, which would generate greater interest expense to the extent the combined business does not have applicable interest rate fluctuation hedges.
In connection with any debt refinancing related to the Merger, it is anticipated that we and epidemic, warCimarex would seek ratings of the indebtedness of the combined business from one or civil unrest,more nationally recognized credit rating agencies. Such credit ratings would reflect each rating organization’s opinion of the combined business’ financial strength, operating performance and ability to meet its debt obligations. Such credit ratings will affect the cost and availability of future borrowings and, accordingly, the combined business’ cost of capital. We can provide no assurance that the combined business will achieve a weatherparticular rating or maintain a particular rating in the future.
In the event Cimarex’s senior notes remain outstanding following the Merger and the ratings of such senior notes are reduced below specified thresholds within specified time periods prior to or following the completion of the Merger, Cimarex could, subject to certain exceptions set forth in the indentures governing such senior notes, be required to offer to repurchase such senior notes at 101 percent of the aggregate principal amount of such senior notes outstanding plus any accrued and unpaid interest through the repurchase date. If Cimarex becomes obligated to make such an earthquakeoffer to repurchase, then following the completion of the Merger, an event of default may arise under the agreements governing our senior notes and our revolving credit facility, which could give rise to a need to negotiate amendments to those agreements or other catastropherefinance the indebtedness represented by our senior notes and/or replace our revolving credit facility, the failure of which could adversely affect ourhave a material adverse effect on the business, financial condition, cash flows and results of operations. For example, the ongoing COVID-19 outbreak, which the WHO declared as a pandemic on March 11, 2020, has reached more than 200 countries and territories and has continued to be a rapidly evolving economic and public health situation. The pandemic has resulted in widespread adverse impacts on the global economy, and there is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of governmental and other measures implemented to try to slow the spreadoperations of the virus and alleviate strain oncombined business.
Following the healthcare system, such as quarantines, shelter-in-place orders and business and government shutdowns (whether through a continuationcompletion of existing measures or the re-imposition of prior measures). We have taken precautionary measures intended to help minimize the risk to our employees,Merger, we may incorporate Cimarex’s hedging activities into our business, and we may be exposed to additional commodity price risks arising from such hedges.
To mitigate a portion of its exposure to changes in commodity prices, Cimarex hedges oil and natural gas prices from time to time, primarily through the communitiesuse of certain derivative instruments. If we assume existing Cimarex hedges or hedges that Cimarex enters into prior to the completion of the Merger, we will bear the economic impact of all of Cimarex’s hedges following the completion of the Merger. Actual crude oil and natural gas prices may differ from the combined business’ expectations and, as a result, such hedges may or may not have a negative impact on Cabot’s business.
The declaration, payment and amounts of dividends, if any, distributed to our stockholders following competition of the Merger will be uncertain.
Although each of Cabot and Cimarex has paid cash dividends on its respective shares of common stock in the past, our Board of Directors may determine not to declare dividends in the future or may reduce the amount of dividends paid in the future. Decisions on whether, when and in which we operate,amounts to declare and we are actively assessing and planning for various operational contingenciespay any future dividends will remain in the event onediscretion of the full Board of Directors (as reconstituted following the Merger). Any dividend payment amounts will be determined by the Board of Directors on a quarterly basis, and it is possible that the Board of Directors may increase or moredecrease the amount of our operational employees experiencesdividends paid in the future, or determine not to declare dividends in the future, at any symptoms consistent with COVID-19. However, if a significant portiontime and for any reason. We expect that any such decisions will depend on the combined business’s financial condition, results of our employees or contractors were unableoperations, cash balances, cash
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requirements, future prospects, the outlook for commodity prices and other considerations that the Board of Directors deems relevant, including, but not limited to:
whether we have enough cash to workpay such dividends due to illnessits cash requirements, capital spending plans, cash flows or if financial position;
our field operations were suspendeddesire to maintain or temporarily restricted dueimprove the credit ratings on our debt; and
applicable restrictions under Delaware law.
Stockholders should be aware that they have no contractual or other legal right to control measures designed to contain the outbreak,dividends that have not been declared.
The combined business may record goodwill and other intangible assets that could adversely affect ourbecome impaired and result in material non-cash charges to the results of operations of the combined business in the future.
In accordance with Accounting Standards Codification Topic 805, Business Combinations, the Merger will be accounted for as an acquisition by Cabot pursuant to the acquisition method of accounting for business combinations. Under the acquisition method of accounting, we will record the net tangible and identifiable intangible assets and liabilities of Cimarex and its subsidiaries as of the consummation of the Merger, at their respective fair values. The reported financial condition and results of operations and we cannot guarantee that any precautionary actions taken by usof Cabot for periods after consummation of the Merger will be effective in preventing disruptions to our business.
We regularly monitor the creditworthiness of our customers and derivative contract counterparties. Although we have not received notices from our customers or counterparties regarding non-performance issues or delays resulting from the COVID-19 pandemic, to the extent we or any of our material suppliers or customers are unable to operate due to government restrictions or otherwise, we may have to temporarily shut down or reduce production, which could result in significant downtime and have significant adverse consequences for our business, financial conditionreflect Cimarex balances and results of operations. In addition, most of our non-operational employees are now working remotely, which could increase the risk of security breaches or other cyber-incidents or attacks, loss of data, fraud and other disruptions.

Furthermore, the impactafter consummation of the pandemic, including a resulting reduction in demand for oil and natural gas, coupled withMerger but will not be restated retroactively to reflect the sharp decline in commodity prices following the announcement of price reductions and production increases in March 2020 by members of OPEC+ has led to significant global economic contraction generally and in our industry in particular. While an agreement to cut production has since been announced by OPEC+ and its allies, the situation, coupled with the impact of COVID-19, has continued to result in a significant downturn in the oil and gas industry. We cannot predict the full impact that COVID-19historical financial position or the significant disruption and volatility currently being experienced in the oil and natural gas markets will have on our business, financial condition and results of operations of Cimarex and its subsidiaries for periods prior to the Merger.
Under the acquisition method of accounting, the total purchase price will be allocated to Cimarex’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the Merger, with any excess purchase price allocated to goodwill. To the extent the value of goodwill or intangibles, if any, becomes impaired in the future, the combined business may be required to recognize material non-cash charges relating to such impairment. The combined business’ operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.
Our ability to utilize Cimarex’s historic net operating loss carryforwards may be limited.
As of December 31, 2020, Cimarex had U.S. federal net operating loss carryforwards (NOLs) of approximately $2.0 billion, $1.8 billion of which is subject to expiration in years 2032 through 2037 and $224.4 million of which is not subject to expiration. Our ability to utilize these NOLs and other tax attributes to reduce future taxable income following the completion of the Merger depends on many factors, including future income, which cannot be assured. Section 382 of the Internal Revenue Code of 1986, as amended (Section 382) generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone an “ownership change” (as determined under Section 382). An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at thisleast 5 percent of such corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. In the event that an ownership change occurs, utilization of Cimarex’s NOLs would be subject to an annual limitation under Section 382, generally determined by multiplying (1) the fair market value of its stock at the time due to numerous uncertainties. For example, althoughof the negative effects on crude oil pricing have been more significant than effects on natural gas to date,ownership change by (2) the operations of our midstream service providers, on whom we relylong-term tax exempt rate published by the Internal Revenue Service for the transmission, gathering and processing of a significant portion of our produced natural gasmonth in which the ownership change occurs, subject to certain adjustments. Any unused annual limitation may be disrupted or suspendedcarried over to later years.
It is presently anticipated that Cimarex would undergo an ownership change under Section 382 as a result of the Merger, which would trigger a limitation (calculated as described above) on Cabot’s ability to utilize Cimarex’s historic NOLs and could cause some of those NOLs to expire unutilized. In addition, the NOLs Cimarex acquired in response to containing the outbreak, and/or the economic challenges may lead2019 as part of its acquisition of Resolute Energy Corporation are already subject to a reduction in capacity or closing of the facilities and infrastructure of our midstream service providers, which may result in substantial discounts in the prices we receive for our produced natural gas or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties. The ultimate impacts will depend on future developments, including, among others, the ultimate geographic spread and severity of the virus, any resurgence in COVID-19 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 development of effective treatments, the duration of the outbreak, further actions taken by members of OPEC+, 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.Section 382 limitation.
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 repurchases during the quarter ended June 30, 2020. 2021. The maximum number of remaining shares that may be purchased under our share repurchase program as of June 30, 20202021 was 11.0 million shares.

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ITEM 6. Exhibits
Index to Exhibits
Exhibit
Number
Description
Exhibit
Number2.1
Description
101.INS
Inline XBRL Instance Document. TheThe instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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Exhibit
Number
Description
101.SCH
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Cabot hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.
*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)
July 31, 202030, 2021By:/s/ DAN O. DINGES
Dan O. Dinges
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
July 31, 202030, 2021By:/s/ SCOTT C. SCHROEDER
Scott C. Schroeder
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
July 31, 202030, 2021By:/s/ TODD M. ROEMER
Todd M. Roemer
Vice President and Chief Accounting Officer
(Principal Accounting Officer)

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