Cabot Oil & Gas shares rise on strong 3Q

NEW YORK -- Shares of Cabot Oil & Gas Corp. jumped to a new high Friday after the company reported better-than-expected third-quarter net income, helped by higher oil production and prices.

THE SPARK: Houston-based Cabot said its third-quarter profit jumped 29 percent to $36.6 million, or 17 cents per basic share, from $28.5 million, or 14 cents per basic share, in the same quarter last year. Excluding one-time items, the company said it posted an adjusted profit of 21 cents per share.

Revenue rose 13 percent to $296.9 million.

Analysts, on average, expected a profit of 14 cents per share on $296.8 million in revenue, according to a FactSet poll.

THE BIG PICTURE: Cabot attributed the better-than-expected profit to a 31 percent increase in gas production and a 61 percent increase in liquids production over year-ago levels.

At the same time, the company's average oil price rose 17 percent, while natural gas prices dropped 20 percent.

THE ANALYSIS: Stifel Nicolaus analyst Amir Arif called Cabot ones of his top picks in the sector and backed his "Buy" rating for the company.

Arif noted that the company has obtained about 90 percent of its gathering permits for 2012 and that 30 new wells will go into production in the Marcellus shale during the fourth quarter. That should result in significant growth both in that quarter and beyond, he said.

THE SHARES: Up $3.83, or 9 percent, to $46.98 in heavy midday trading, after peaking at earlier at $47.31, which FactSet records indicate is an all-time high.