0000858470-19-000038.txt : 20191025 0000858470-19-000038.hdr.sgml : 20191025 20191025113221 ACCESSION NUMBER: 0000858470-19-000038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 75 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191025 DATE AS OF CHANGE: 20191025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CABOT OIL & GAS CORP CENTRAL INDEX KEY: 0000858470 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 043072771 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10447 FILM NUMBER: 191168623 BUSINESS ADDRESS: STREET 1: 840 GESSNER ROAD, SUITE 1400 CITY: HOUSTON STATE: TX ZIP: 77024 BUSINESS PHONE: 2815894600 MAIL ADDRESS: STREET 1: 840 GESSNER ROAD, SUITE 1400 CITY: HOUSTON STATE: TX ZIP: 77024 10-Q 1 cog-09302019x10q.htm 10-Q Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM
10-Q
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2019
       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission file number 1-10447
 
CABOT OIL & GAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
04-3072771
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
Three Memorial City Plaza
840 Gessner Road, Suite 1400, Houston, Texas 77024
(Address of principal executive offices including ZIP code)
(281) 589-4600
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.10 per share
COG
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
 
 
 
 
Non-accelerated filer
Smaller reporting company
 
 
 
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of October 23, 2019, there were 407,924,673 shares of Common Stock, Par Value $0.10 Per Share, outstanding.



CABOT OIL & GAS CORPORATION
INDEX TO FINANCIAL STATEMENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


PART I. FINANCIAL INFORMATION
ITEM 1.    Financial Statements
CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
(In thousands, except share amounts)
 
September 30,
2019
 
December 31,
2018
ASSETS
 
 

 
 

Current assets
 
 

 
 

Cash and cash equivalents
 
$
82,316

 
$
2,287

Accounts receivable, net
 
159,239

 
362,403

Income taxes receivable
 
133,028

 
109,251

Inventories
 
18,195

 
11,076

Derivative instruments
 
25,700

 
57,665

Other current assets
 
3,201

 
1,863

Total current assets
 
421,679

 
544,545

Properties and equipment, net (Successful efforts method)
 
3,787,581

 
3,463,606

Equity method investments
 
169,086

 
163,181

Other assets
 
64,319

 
27,497

 
 
$
4,442,665

 
$
4,198,829

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

Current liabilities
 
 

 
 

Accounts payable
 
$
172,732

 
$
241,939

Current portion of long-term debt
 
87,000

 

Accrued liabilities
 
27,780

 
25,227

Interest payable
 
7,273

 
20,098

Total current liabilities
 
294,785

 
287,264

Long-term debt, net
 
1,132,790

 
1,226,104

Deferred income taxes
 
647,473

 
458,597

Asset retirement obligations
 
56,968

 
50,622

Postretirement benefits
 
29,427

 
27,912

Other liabilities
 
67,646

 
60,171

Total liabilities
 
2,229,089

 
2,110,670

Commitments and contingencies
 

 

Stockholders' equity
 
 

 
 

Common stock:
 
 

 
 

Authorized — 960,000,000 shares of $0.10 par value in 2019 and 2018, respectively
 
 

 
 

Issued — 476,881,612 shares and 476,094,551 shares in 2019 and 2018, respectively
 
47,688

 
47,610

Additional paid-in capital
 
1,775,579

 
1,763,142

Retained earnings
 
2,037,066

 
1,607,658

Accumulated other comprehensive income
 
4,027

 
4,437

Less treasury stock, at cost:
 
 

 
 

68,957,318 shares and 53,409,705 shares in 2019 and 2018, respectively
 
(1,650,784
)
 
(1,334,688
)
Total stockholders' equity
 
2,213,576

 
2,088,159

 
 
$
4,442,665

 
$
4,198,829


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

3


CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In thousands, except per share amounts)
 
2019
 
2018
 
2019
 
2018
OPERATING REVENUES
 
 

 
 

 
 

 
 

   Natural gas
 
$
418,133

 
$
440,835

 
$
1,521,789

 
$
1,217,603

   Crude oil and condensate
 

 

 

 
48,722

   Gain (loss) on derivative instruments
 
11,060

 
(3,537
)
 
82,966

 
(1,628
)
   Brokered natural gas
 

 
105,849

 

 
203,375

   Other
 
(82
)
 
2,026

 
154

 
3,775

 
 
429,111

 
545,173

 
1,604,909

 
1,471,847

OPERATING EXPENSES
 
 

 
 

 
 

 
 

   Direct operations
 
19,181

 
17,030

 
55,608

 
52,757

   Transportation and gathering
 
145,681

 
129,534

 
424,703

 
355,848

   Brokered natural gas
 

 
93,405

 

 
178,437

   Taxes other than income
 
4,607

 
2,852

 
14,094

 
15,434

   Exploration
 
4,481

 
10,049

 
15,029

 
68,166

   Depreciation, depletion and amortization
 
110,889

 
121,172

 
299,294

 
288,210

   General and administrative
 
18,391

 
20,724

 
72,370

 
66,013

 
 
303,230

 
394,766

 
881,098

 
1,024,865

Earnings (loss) on equity method investments
 
3,860

 
(11
)
 
11,194

 
(1,009
)
Gain (loss) on sale of assets
 
36

 
25,655

 
(1,464
)
 
(14,850
)
INCOME FROM OPERATIONS
 
129,777

 
176,051

 
733,541

 
431,123

Interest expense, net
 
13,554

 
14,191

 
40,302

 
57,577

Other expense
 
143

 
115

 
430

 
347

Income before income taxes
 
116,080

 
161,745

 
692,809

 
373,199

Income tax expense
 
25,722

 
39,408

 
158,679

 
91,201

NET INCOME
 
$
90,358

 
$
122,337

 
$
534,130

 
$
281,998

 
 
 
 
 
 
 
 
 
Earnings per share
 
 

 
 

 
 

 
 

Basic
 
$
0.22

 
$
0.28

 
$
1.27

 
$
0.63

Diluted
 
$
0.22

 
$
0.28

 
$
1.27

 
$
0.62

 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
 
 

 
 

 
 

 
 

Basic
 
412,456

 
440,772

 
419,199

 
450,445

Diluted
 
414,462

 
443,110

 
421,101

 
452,313

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

4


CABOT OIL & GAS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
 
 
Nine Months Ended 
 September 30,
(In thousands)
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES
 
 

 
 

  Net income
 
$
534,130

 
$
281,998

  Adjustments to reconcile net income to cash provided by operating activities:
 
 

 
 

Depreciation, depletion and amortization
 
299,294

 
288,210

Deferred income tax expense
 
188,997

 
131,799

Loss on sale of assets
 
1,464

 
14,850

Exploratory dry hole cost
 
16

 
56,425

(Gain) loss on derivative instruments
 
(82,966
)
 
1,628

Net cash received (paid) in settlement of derivative instruments
 
114,931

 
(20,354
)
(Earnings) loss on equity method investments
 
(11,194
)
 
1,009

Distribution of earnings from equity method investments
 
12,610

 

Amortization of debt issuance costs
 
3,219

 
3,521

Stock-based compensation and other
 
22,720

 
16,472

  Changes in assets and liabilities:
 
 

 
 

Accounts receivable, net
 
203,164

 
(7,345
)
Income taxes
 
(16,746
)
 
(14,447
)
Inventories
 
(7,119
)
 
(5,326
)
Other current assets
 
(1,338
)
 
104

Accounts payable and accrued liabilities
 
(43,413
)
 
32,192

Interest payable
 
(12,825
)
 
(18,474
)
Other assets and liabilities
 
(22,133
)
 
26,590

Net cash provided by operating activities
 
1,182,811

 
788,852

CASH FLOWS FROM INVESTING ACTIVITIES
 
 

 
 

Capital expenditures
 
(620,696
)
 
(647,503
)
Proceeds from sale of assets
 
2,401

 
675,525

Investment in equity method investments
 
(8,977
)
 
(72,866
)
Distribution of investment from equity method investments
 
1,656

 

Net cash used in investing activities
 
(625,616
)
 
(44,844
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 

 
 

Borrowings from debt
 
95,000

 

Repayments of debt
 
(102,000
)
 
(237,000
)
Treasury stock repurchases
 
(347,446
)
 
(581,725
)
Dividends paid
 
(104,722
)
 
(81,185
)
Tax withholdings on vesting of stock awards
 
(10,587
)
 
(8,068
)
Capitalized debt issuance costs
 
(7,411
)
 

Net cash used in financing activities
 
(477,166
)
 
(907,978
)
Net increase (decrease) in cash and cash equivalents
 
80,029

 
(163,970
)
Cash and cash equivalents, beginning of period
 
2,287

 
480,047

Cash and cash equivalents, end of period
 
$
82,316

 
$
316,077

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

5


CABOT OIL & GAS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
(In thousands, except per share  amounts)
 
Common Shares
 
Common Stock Par
 
Treasury Shares
 
Treasury Stock
 
Paid-In Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Retained Earnings
 
Total
Balance at December 31, 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

Net income
 

 

 

 

 

 

 
90,358

 
90,358

Stock amortization and vesting
 
3

 

 

 

 
6,384

 

 

 
6,384

Purchase of treasury stock
 

 

 
10,466

 
(190,808
)
 

 

 

 
(190,808
)
Cash dividends at $0.09 per share
 

 

 

 

 

 

 
(37,025
)
 
(37,025
)
Other comprehensive loss
 

 

 

 

 

 
(137
)
 

 
(137
)
Balance at September 30, 2019
 
476,882

 
$
47,688

 
68,957

 
$
(1,650,784
)
 
$
1,775,579

 
$
4,027

 
$
2,037,066

 
$
2,213,576

(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, 2017
 
475,547

 
$
47,555

 
14,936

 
$
(430,576
)
 
$
1,742,419

 
$
2,077

 
$
1,162,430

 
$
2,523,905

Net income
 

 

 

 

 

 

 
117,231

 
117,231

Stock amortization and vesting
 
534

 
53

 

 

 
249

 

 

 
302

Purchase of treasury stock
 

 

 
8,328

 
(207,135
)
 

 

 

 
(207,135
)
Cash dividends at $0.06 per share
 

 

 

 

 

 

 
(27,647
)
 
(27,647
)
Other comprehensive income
 

 

 

 

 

 
306

 

 
306

Cumulative impact from accounting change
 

 

 

 

 

 

 
(446
)
 
(446
)
Balance at March 31, 2018
 
476,081

 
$
47,608

 
23,264

 
$
(637,711
)
 
$
1,742,668

 
$
2,383

 
$
1,251,568

 
$
2,406,516

Net income
 
 

 

 

 

 

 
42,431

 
42,431

Exercise of stock appreciation rights
 
3

 
1

 

 

 

 

 

 
1

Stock amortization and vesting
 
2

 

 

 

 
6,769

 

 

 
6,769

Purchase of treasury stock
 

 

 
11,646

 
(274,337
)
 

 

 

 
(274,337
)
Cash dividends at $0.06 per share
 

 

 

 

 

 

 
(27,071
)
 
(27,071
)
Other comprehensive loss
 

 

 

 

 

 
(135
)
 

 
(135
)
Balance at June 30, 2018
 
476,086

 
$
47,609

 
34,910

 
$
(912,048
)
 
$
1,749,437

 
$
2,248

 
$
1,266,928

 
$
2,154,174

Net income
 

 

 

 

 

 

 
122,337

 
122,337

Exercise of stock appreciation rights
 
2

 

 

 

 

 

 

 

Stock amortization and vesting
 
1

 

 

 

 
6,900

 

 

 
6,900

Purchase of treasury stock
 

 

 
7,170

 
(162,660
)
 

 

 

 
(162,660
)
Cash dividends at $0.06 per share
 

 

 

 

 

 

 
(26,468
)
 
(26,468
)
Other comprehensive loss
 

 

 

 

 

 
(136
)
 

 
(136
)
Balance at September 30, 2018
 
476,089

 
$
47,609

 
42,080

 
$
(1,074,708
)
 
$
1,756,337

 
$
2,112

 
$
1,362,797

 
$
2,094,147


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

6



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, 2018 (Form 10-K) filed with the Securities and Exchange Commission (SEC), except for any new accounting pronouncements adopted during the period as discussed below. 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.
Recently Adopted Accounting Pronouncements
Leases. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The new lease guidance supersedes Topic 840. The core principle of the guidance is that entities should recognize the assets and liabilities that arise from leases. This ASU does not apply to leases to explore for or use minerals, oil, natural gas and similar nonregenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities with an optional transition method that permits an entity to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The guidance is effective for interim and annual periods beginning after December 15, 2018. This ASU was adopted using a modified retrospective approach. The Company adopted this guidance effective January 1, 2019 by applying the optional transition approach as of the beginning of the period of adoption. Comparative periods, including the disclosures related to those periods, were not restated.
On the adoption date, the Company elected the following practical expedients which are provided in the lease standard:
an election not to apply the recognition requirements in the lease standard to short-term leases (a lease that at commencement date has a lease term of 12 months or less and does not contain a purchase option that the Company is reasonably certain to exercise);
a package of practical expedients to not reassess whether a contract is or contains a lease, lease classification and initial direct costs;
a practical expedient to use hindsight when determining the lease term;
a practical expedient that permits combining lease and non-lease components in a contract and accounting for the combination as a lease (elected by asset class); and
a practical expedient to not reassess certain land easements in existence prior to January 1, 2019.
On January 1, 2019, the Company recognized a right of use asset for operating leases and an operating lease liability of $44.6 million, representing the present value of the future minimum lease payment obligations associated with office leases, drilling rig commitments, surface use agreements and other leases. The adoption of this guidance did not have an impact on the Company’s results of operations or cash flows.
Refer to Note 8 for more details regarding leases.

7


2. Properties and Equipment, Net
Properties and equipment, net are comprised of the following:
(In thousands)
 
September 30,
2019
 
December 31,
2018
Proved oil and gas properties
 
$
6,339,234

 
$
5,717,145

Unproved oil and gas properties
 
164,100

 
194,435

Land, buildings and other equipment
 
101,901

 
94,797

 
 
6,605,235

 
6,006,377

Accumulated depreciation, depletion and amortization
 
(2,817,654
)
 
(2,542,771
)
 
 
$
3,787,581

 
$
3,463,606


At September 30, 2019, the Company did not have any projects that had exploratory well costs capitalized for a period of greater than one year after drilling.
3. Equity Method Investments
The Company holds a 25 percent equity interest in Constitution Pipeline Company, LLC (Constitution) and a 20 percent equity interest in Meade Pipeline Co LLC (Meade). Activity related to these equity method investments is as follows:
 
 
Constitution
 
Meade
 
Total
 
 
Nine Months Ended September 30,
(In thousands)
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Balance at beginning of period
 
$

 
$
732

 
$
163,181

 
$
85,345

 
$
163,181

 
$
86,077

Contributions
 
500

 
250

 
8,477

 
72,616

 
8,977

 
72,866

Distributions
 

 

 
(14,266
)
 

 
(14,266
)
 

Earnings (loss) on equity method investments
 
(500
)
 
(982
)
 
11,694

 
(27
)
 
11,194

 
(1,009
)
Balance at end of period
 
$

 
$

 
$
169,086

 
$
157,934

 
$
169,086

 
$
157,934


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
In August 2019, the Federal Energy Regulatory Committee issued an order concluding the New York Department of Environmental Conservation has waived its authority under Section 401 of the Clean Water Act "to issue or deny a water quality certification" for the proposed Constitution pipeline. This decision removed one of the major remaining regulatory hurdles for the continuation of the project. In light of this decision, in September 2019, the Company, the other members of Constitution and Williams Partners L.P., the project sponsor, resumed discussions regarding the construction of the project, including evaluating the commercial feasibility of the project, the remaining legal and regulatory hurdles, projected costs and capital requirements and other aspects of the development and construction of the pipeline. The Company remains committed to continuing the process of evaluating the next steps for advancing the project. 
Meade Pipeline Co LLC
In September 2019, the Company entered into an agreement to sell its 20 percent ownership interest in Meade to a subsidiary of NextEra Energy Partners, LP for $256.0 million. This transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions and adjustments.

8


4. Debt and Credit Agreements
The Company’s debt and credit agreements consisted of the following:
(In thousands)
 
September 30,
2019
 
December 31,
2018
6.51% weighted-average senior notes(1)
 
$
124,000

 
$
124,000

5.58% weighted-average senior notes
 
175,000

 
175,000

3.65% weighted-average senior notes
 
925,000

 
925,000

Revolving credit facility
 

 
7,000

Unamortized debt issuance costs
 
(4,210
)
 
(4,896
)
 
 
$
1,219,790

 
$
1,226,104

_______________________________________________________________________________
(1)
Includes $87.0 million of current portion of long-term debt at September 30, 2019 due in July 2020.
At September 30, 2019, the Company was in compliance with all restrictive financial covenants for both its revolving credit facility and senior notes.
Revolving Credit Agreement
On April 22, 2019, the Company entered into a second amended and restated credit agreement (revolving credit facility). The Company's revolving credit facility is unsecured and the borrowing base is redetermined annually on April 1. 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. The Company’s borrowing base and available commitments under the revolving credit facility were $3.2 billion and $1.5 billion, respectively. The maximum revolving credit available to the Company is the lesser of the available commitments or the difference of the borrowing base less outstanding senior notes. The Company's revolving credit facility matures in April 2024 and can be extended by one year upon the agreement of the Company and lenders holding at least 50 percent of the commitments under the revolving credit facility.
Interest rates under the revolving credit facility are based on LIBOR or ABR indications, plus a margin which ranges from 150 to 225 basis points for LIBOR loans and from 50 to 125 basis points for ABR loans when not in an Investment Grade Period (as defined in the amended and restated credit agreement) and from 112.5 to 175 basis points for LIBOR loans and from 12.5 to 75 basis points for ABR loans during an Investment Grade Period. The revolving credit facility also provides for a commitment fee on the unused available balance and is calculated at annual rates ranging from 30 to 42.5 basis points when not in an Investment Grade Period and from 12.5 to 27.5 basis points during an Investment Grade Period. The Company is currently not in an Investment Grade Period.
The revolving credit facility contains various customary covenants, which include the following (with all calculations based on definitions contained in the amended and restated credit agreement):
Maintenance of a minimum asset coverage ratio of 1.75 to 1.0;
Maintenance of a minimum annual coverage ratio of consolidated cash flow to interest expense for the trailing four quarters of 2.8 to 1.0; and
Maintenance of a minimum current ratio of 1.0 to 1.0.
At September 30, 2019, the Company had no borrowings outstanding under its revolving credit facility and had unused commitments of $1.5 billion.
The Company incurred $7.4 million of debt issuance costs in connection with the amended and restated credit agreement, which were capitalized and will be amortized over the term of the amended and restated agreement. The remaining unamortized costs of $3.4 million will also be amortized over the term of the amended and restated agreement in accordance with ASC 470-50, Debt Modifications and Extinguishments.

9


5. Derivative Instruments
As of September 30, 2019, the Company had the following outstanding financial commodity derivatives:
 
 
 
 
 
 
Swaps
 
Basis Swaps
Type of Contract
 
Volume (Mmbtu)
 
Contract Period
 
Weighted-Average ($/Mmbtu)
 
Weighted-Average ($/Mmbtu)

Natural gas (IFERC TRANSCO Z6 non-NY)
 
2,760,000

 
Oct. 2019 - Dec. 2019
 
 
 
$
0.41

Natural gas (IFERC TRANSCO Z6 non-NY)
 
4,650,000

 
Oct. 2019
 
$
2.61

 
 
Natural gas (IFERC TRANSCO Leidy Line Receipts)
 
13,800,000

 
Oct. 2019 - Dec. 2019
 
 
 
$
(0.53
)
Natural gas (NYMEX)
 
10,850,000

 
Oct. 2019
 
$
2.85

 
 
Natural gas (NYMEX)
 
27,600,000

 
Oct. 2019 - Dec. 2019
 
$
2.86

 
 

Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet
 
 
 
 
Derivative Assets
 
Derivative Liabilities
(In thousands)
 
Balance Sheet Location
 
September 30,
2019
 
December 31,
2018
 
September 30,
2019
 
December 31,
2018
Commodity contracts
 
Derivative instruments (current)
 
$
25,700

 
$
57,665

 
$

 
$

 
 
 
 
$
25,700

 
$
57,665

 
$

 
$


Offsetting of Derivative Assets and Liabilities in the Condensed Consolidated Balance Sheet
(In thousands)
 
September 30,
2019
 
December 31,
2018
Derivative assets
 
 

 
 

Gross amounts of recognized assets
 
$
25,700

 
$
60,105

Gross amounts offset in the statement of financial position
 

 
(2,440
)
Net amounts of assets presented in the statement of financial position
 
25,700

 
57,665

Gross amounts of financial instruments not offset in the statement of financial position
 

 

Net amount
 
$
25,700

 
$
57,665

 
 
 
 
 
Derivative liabilities
 
 

 
 

Gross amounts of recognized liabilities
 
$

 
$
2,440

Gross amounts offset in the statement of financial position
 

 
(2,440
)
Net amounts of liabilities presented in the statement of financial position
 

 

Gross amounts of financial instruments not offset in the statement of financial position
 

 

Net amount
 
$

 
$


Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In thousands)
 
2019
 
2018
 
2019
 
2018
Cash received (paid) on settlement of derivative instruments
 
 

 
 

 
 

 
 

Gain (loss) on derivative instruments
 
$
46,555

 
$
(41
)
 
$
114,931

 
$
(20,354
)
Non-cash gain (loss) on derivative instruments
 
 

 
 

 
 

 
 

Gain (loss) on derivative instruments
 
(35,495
)
 
(3,496
)
 
(31,965
)
 
18,726

 
 
$
11,060

 
$
(3,537
)
 
$
82,966

 
$