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Commitments and Contingencies
 12 Months Ended
Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Transportation, Processing and Gathering Agreements
Transportation, Processing and Gathering Commitments
The Company has entered into certain transportation and gathering agreements with various pipeline carriers. Under certain of these agreements, the Company is obligated to ship minimum daily quantities, or pay for any deficiencies at a specified rate. The Company's forecasted production to be shipped on these pipelines is expected to exceed minimum daily quantities provided in the agreements. The Company is also obligated under certain of these arrangements to pay a demand charge for firm capacity rights on pipeline systems regardless of the amount of pipeline capacity utilized by the Company. If the Company does not utilize the capacity, it can release it to others, thus reducing its potential liability.
As of December 31, 2021, the Company's future minimum obligations under transportation and gathering agreements are as follows:
(In millions)
2022$101 
2023138 
2024156 
2025159 
2026143 
Thereafter1,047 
$1,744 
Other Gathering and Processing Volume Commitments
The Company has entered into certain gas processing agreements. Under certain of these agreements, the Company is obligated to process minimum daily quantities, or pay for any deficiencies at a specified rate. The Company's forecasted production to be processed under most of these agreements is expected to exceed minimum daily quantities provided in the agreements.
As of December 31, 2021, the Company's future minimum obligations under gas processing agreements are as follows:
(In millions)
2022$88 
202393
202496
202595
202684
Thereafter231
$687 
As of December 31, 2021, the Company had accrued $9 million in other non-current liabilities associated with these commitments, representing the present value of estimated amounts payable due to insufficient forecasted delivery volumes.
The Company also has minimum volume delivery commitments associated with agreements to reimburse connection costs to various pipelines. Under certain of these agreements, the Company is obligated to deliver minimum daily quantities, or pay for any deficiencies at a specified rate. The Company's forecasted production to be delivered under most of these agreements is expected to exceed minimum daily quantities provided in the agreements.
As of December 31, 2021, the Company's future minimum obligations under these delivery commitments are as follows:
(In millions)
2022$3 
202313 
202412 
20257 
202614 
Thereafter15 
$64 
As of December 31, 2021, the Company had accrued $10 million in other non-current liabilities associated with these commitments, representing the present value of estimated amounts payable due to insufficient forecasted delivery volumes.
Water Delivery Commitments
The Company has minimum volume water delivery commitments associated with a water services agreement that expires in 2030. The Company is obligated to deliver minimum daily quantities, or pay for any deficiencies at a specified rate.
As of December 31, 2021, the Company's future minimum obligations under this water delivery commitment are as follows:
(In millions)
2022$7 
20237 
20247 
20256 
20266 
Thereafter25 
$58 
As of December 31, 2021, the Company had accrued $21 million in other non-current liabilities associated with this commitment, representing the present value of estimated amounts payable due to insufficient forecasted delivery volumes.
Lease Commitments
The Company has operating leases for office space, surface use agreements, compressor services and other leases. The leases have remaining terms ranging from one month to 24 years, including options to extend leases that the Company is
reasonably certain to exercise. During the year ended December 31, 2021, the Company recognized operating lease cost and variable lease cost of $23 million and $6 million, respectively. During the year ended December 31, 2020, the Company recognized operating lease cost and variable lease cost of $5 million and $1 million, respectively.
Short-term leases. The Company leases drilling rigs, fracturing and other equipment under lease terms ranging from 30 days to one year. Lease cost of $113 million and $26 million was recognized on short-term leases during the year ended December 31, 2021 and 2020, respectively. Certain lease costs are capitalized and included in Properties and equipment, net in the Consolidated Balance Sheet because they relate to drilling and completion activities, while other costs are expensed because they relate to production and administrative activities.
As of December 31, 2021, the Company’s future undiscounted minimum cash payment obligations for its operating lease liabilities are as follows:
(In millions)Year Ending December 31,
2022$75 
202375 
202472 
202558 
202614 
Thereafter50 
Total undiscounted future lease payments344 
Present value adjustment(27)
Net operating lease liabilities$317 
As of December 31, 2021, the Company’s future undiscounted minimum cash payment obligations for its financing lease liabilities are as follows:
(In millions)Year Ending December 31,
2022$6 
20236 
20246 
20254 
2026— 
Thereafter— 
Total undiscounted future lease payments22 
Present value adjustment(1)
Net financing lease liabilities$21 
Supplemental cash flow information related to leases was as follows:
Year Ended December 31,
(In millions)20212020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$23 $5 
Financing cash flows from financing leases$2 $— 
Information regarding the weighted-average remaining lease term and the weighted-average discount rate for operating leases is summarized below:
December 31,
20212020
Weighted-average remaining lease term (in years)
Operating leases5.711.1
Financing leases3.7— 
Weighted-average discount rate
Operating leases2.4 %5.0 %
Financing leases2.1 %— %
In May 2021, the Company entered in a lease for the use of an electric hydraulic fracturing fleet, pursuant to which the Company must use such hydraulic fracturing fleet and the personnel and other equipment required to use the fleet for a period of four years. The lessor is constructing the fleet and the lease will commence on the earlier of the commencement of field activity or June 30, 2022. Upon commencement of the lease, the Company expects to record a lease liability and right-of-use asset of between $150 million and $160 million.
Legal Matters
Pennsylvania Office of Attorney General Matter
In June 2020, the Office of Attorney General of the Commonwealth of Pennsylvania informed the Company that it will pursue certain misdemeanor and felony charges in a Susquehanna County Magisterial District Court against the Company related to alleged violations of the Pennsylvania Clean Streams Law, which prohibits discharge of industrial wastes. The Company is vigorously defending itself against such charges; however, the proceedings could result in fines or penalties against the Company. At this time, it is not possible to estimate the amount of any fines or penalties, or the range of such fines or penalties, that are reasonably possible in this case.
Securities Litigation
In 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 the Company, Dan O. Dinges, its then Chief Executive Officer, and Scott C. Schroeder, its Chief Financial Officer, alleging that the Company made misleading statements in its periodic filings with the SEC in violation of Section 10(b) and Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The plaintiffs allege misstatements in the Company’s public filings and disclosures over a number of years relating to its potential liability for alleged environmental violations in Pennsylvania. The plaintiffs allege that such misstatements caused a decline in the price of the Company’s common stock when it disclosed in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 two notices of violations from the Pennsylvania Department of Environmental Protection and an additional decline when it 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, the Company’s then Senior Vice President of Operations, as a defendant. The plaintiffs seek monetary damages, interest and attorney’s fees.
Also in October 2020, a stockholder derivative action styled Ezell v. Dinges, et. al. (U.S. District Court, Middle District of Pennsylvania), was filed against the Company, Messrs. Dinges and Schroeder and the Board of Directors of the Company serving at that time, 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. In January 2021, a third derivative case was filed with substantially similar allegations and it too was consolidated with the Ezell case in February 2021.
On February 25, 2021, the Company 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 its headquarters are located. On June 11, 2021, the Company 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, the 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 on July 12, 2021. Subsequently, an additional stockholder derivative action styled Treppel Family Trust U/A 08/18/18 Lawrence A. Treppel and Geri D. Treppel for the benefit of Geri D. Treppel and Larry A. Treppel v. Dinges, et al. (U.S. District Court, Southern District of Texas, Houston Division), asserting substantially similar Delaware common law claims as in the existing derivative cases, was filed in the Southern District of Texas and consolidated with the existing consolidated derivative cases. On January 12, 2022, the U.S. District Court for the Southern District of Texas granted the Company’s motion to dismiss the class action lawsuit but has allowed the plaintiffs to file an amended complaint. The class action plaintiffs filed their amended complaint on February 11, 2022. The Company anticipates filing a motion to dismiss the amended complaint. The motion to dismiss the derivative actions remain pending. The Company intends to vigorously defend the class action and derivative lawsuits.
In November 2020, the Company received a stockholder demand for inspection of books and records under Section 220 of the General Corporation 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 any Board of Directors conflicts of interest, dating back to January 1, 2015. The Company also received three other similar requests from other stockholders in February and June 2021. On May 17, 2021, the Company was served with a complaint filed in the Court 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. After making an agreed books and records production, the Section 220 complaint was voluntarily dismissed effective September 21, 2021. The Company also provided substantially the same books and records production in response to the other three Section 220 requests described above. It is possible that one or more additional stockholder suits could be filed pertaining to the subject matter of the Section 220 Demands and the class and derivative actions described above.
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 Consolidated Financial Statements. Future changes in facts and circumstances not currently foreseeable could result in the actual liability exceeding the estimated ranges of loss and amounts accrued.