CABOT OIL & GAS CORP, DEF 14A, 1999-03-29

CABOT OIL & GAS CORP
DEF 14A, 1999-03-29
CRUDE PETROLEUM & NATURAL GAS

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

Cabot Oil & Gas Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2
March 31, 1999

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders
of Cabot Oil & Gas Corporation to be held on Tuesday, May 11, 1999 at 10:00
a.m., local time, at The Luxury Collection Hotel, 1919 Briar Oaks Lane, Houston,
Texas.

The attached Notice of Annual Meeting and Proxy Statement cover the
formal business of the meeting. To better acquaint you with the directors, the
Proxy Statement contains biographical information of each nominee and each
director continuing in office.

A report on the operations of the Company and its future plans will be
presented at the meeting. In addition, directors and officers of the Company
will be present to respond to your questions.

Whether or not you plan to attend the Annual Meeting, it is important
that your shares be represented. Please complete, sign, date and return the
enclosed proxy card in the postage-paid envelope provided.

Sincerely,

/s/ CHARLES P. SIESS, JR.

CHARLES P. SIESS, JR.
Chairman of the Board

<PAGE> 3

CABOT OIL & GAS CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 1999

The Annual Meeting of Stockholders of Cabot Oil & Gas Corporation (the
"Company"), a Delaware corporation, will be held in The Colonnade Room at The
Luxury Collection Hotel, 1919 Briar Oaks Lane, Houston, Texas 77027, on Tuesday,
May 11, 1999 at 10:00 a.m., for the following purposes:

I. To elect three persons to the Board of Directors of the
Company.

II. To ratify the appointment of the firm of
PricewaterhouseCoopers LLP, independent certified public
accountants, as auditors of the Company for its 1999 fiscal
year.

III. To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.

Only holders of record of the Class A Common Stock and the 6%
Convertible Redeemable Preferred Stock at the close of business on March 17,
1999 are entitled to receive notice of and to vote at the Annual Meeting.
The transfer books of the Company will not be closed.

Stockholders who do not expect to be present at the Annual Meeting
are urged to complete, date, sign and return the accompanying proxy in the
enclosed, self-addressed envelope requiring no postage if mailed in the United
States. You may still vote in person if you decide to attend the Annual Meeting.

It is important that your shares be voted at the Annual Meeting.
Please exercise your right to vote and return a completed form of proxy at your
earliest convenience.

BY ORDER OF THE BOARD OF DIRECTORS,

/s/ LISA A. MACHESNEY

LISA A. MACHESNEY
Corporate Secretary

Houston, Texas
March 31, 1999

<PAGE> 4

CABOT OIL & GAS CORPORATION
15375 Memorial Drive
Houston, Texas 77079

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 1999

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Cabot Oil & Gas Corporation (the "Company") of
proxies for use at its 1999 Annual Meeting of Stockholders, to be held at The
Luxury Collection Hotel, Houston, Texas, on Tuesday, May 11, 1999, at 10:00
a.m., or any adjournment or postponement thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
You may revoke your proxy at any time prior to its use by a written
communication to Ms. Lisa A. Machesney, Corporate Secretary of the Company, or
by a duly executed proxy bearing a later date.

Stockholders attending the Annual Meeting may vote their shares in
person even though they have already executed a proxy. Properly executed proxies
not revoked will be voted in accordance with the specifications thereon at the
Annual Meeting and at any adjournment thereof. Proxies on which no voting
instructions are indicated will be voted for the election of the nominees for
directors, for ratification of the appointment of PricewaterhouseCoopers LLP,
independent certified public accountants, as auditors of the Company for its
1999 fiscal year and in the best judgment of the proxy holders on any other
matter that may properly come before the Annual Meeting.

Only holders of record of the Company's Class A Common Stock, par value
$.10 per share ("Common Stock"), and the Company's 6% Convertible Redeemable
Preferred Stock ("6% Preferred Stock") as of the close of business on March 17,
1999, are entitled to vote at the Annual Meeting. As of that date, the Company
had outstanding and entitled to vote 24,994,914 shares of Common Stock and
1,134,000 shares of 6% Preferred Stock. Each share of Common Stock is entitled
to one vote per share, and each share of the 6% Preferred Stock is entitled to
1.739 votes per share. There is no provision for cumulative voting. A quorum for
the consideration of business at the Annual Meeting consists of a majority of
all outstanding shares of stock entitled to vote at the Annual Meeting. The
Proxy Statement and form of Proxy are being first sent or given to security
holders on or about March 31, 1999.

In accordance with Delaware law, a stockholder entitled to vote for the
election of directors can withhold authority to vote for all nominees for
director or can withhold authority to vote for certain nominees for director.
Abstentions from proposals are treated as votes against the particular proposal.
Broker non-votes on proposals are treated as shares as to which voting power has
been withheld by the beneficial holders of those shares and, therefore, as
shares not entitled to vote on the proposal.

PROPOSAL I.
ELECTION OF DIRECTORS

The Board of Directors is divided into three classes of directors
serving staggered three-year terms. Samuel W. Bodman, Ray R. Seegmiller and
William P. Vititoe have been nominated for election at the Annual Meeting for
terms of three years, each to hold office until the expiration of his term in
2002 and until his successor shall have been elected and shall have qualified.
Each nominee is currently a director of the Company.

<PAGE> 5

It is the intention of the persons named in the enclosed form of proxy
to vote such proxies for the election of Messrs. Bodman, Seegmiller and Vititoe
for terms of three years. If any one of the nominees is not so available at the
time of the Annual Meeting to serve, proxies received will be voted for
substitute nominees to be designated by the Board of Directors or, in the event
no such designation is made by the Board, proxies will be voted for a lesser
number of nominees. In no event will the proxies be voted for more than the
number of nominees set forth below.

CERTAIN INFORMATION REGARDING NOMINEES AND DIRECTORS

Set forth below, as of March 1, 1999, for each director that will
continue to serve after the Annual Meeting and for each nominee for election as
a director of the Company, is information regarding his age, position(s) with
the Company, membership on committees of the Board of Directors, the period
during which he has served as a director and term of office, his business
experience during at least the past five years, and other directorships
currently held by him.

ROBERT F. BAILEY
Age: 66
Committee Membership: Audit, Safety and Environmental Affairs
Director Since: 1994
Term of Office Expires: 2001
Business Experience:
TransRepublic Resources, Inc.
President and Chief Executive Officer - 1992 to present
Alta Energy Corporation
President and Chief Executive Officer - prior to 1992
Other Directorships:
Chase Bank Texas - Midland - Advisory Director

SAMUEL W. BODMAN
Age: 60
Committee Membership: Nominations, Compensation (Chairman)
Director Since: 1989
Term of Office Expires: 1999 (Nominee for Director)
Business Experience:
Cabot Corporation:
Chairman of the Board - October 1988 to present
Chief Executive Officer - February 1988 to present
President - February 1991 to February 1995 and January 1987 to
October 1988
Other Directorships:
Cabot Corporation
John Hancock Mutual Life Insurance Company
Westvaco Corporation
Security Capital Group Incorporated

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<PAGE> 6

HENRY O. BOSWELL
Age: 69
Committee Membership: Compensation, Audit (Chairman)
Director Since: 1991
Term of Office Expires: 2000
Business Experience:
Retired October 1987
Amoco Production Company
President - 1983 to October 1987
Amoco Corporation
Director - 1983 to October 1987
Amoco Canada Petroleum Ltd.
Chairman of the Board - 1983 to October 1987
Other Directorships:
The ServiceMaster Co.
Rowan Companies, Inc.

JOHN G.L. CABOT
Age: 64
Committee Memberships: Safety and Environmental Affairs, Nominations
(Chairman)
Director Since: 1989
Term of Office Expires: 2001
Business Experience:
Retired September 1995
Cabot Corporation
Chief Financial Officer - October 1992 to September 1995
Vice Chairman of the Board - October 1988 to September 1995
Other Directorships:
Cabot Corporation
Eaton Vance Corp.

WILLIAM R. ESLER
Age: 73
Committee Membership: Audit, Safety and Environmental Affairs
Director Since: 1992
Term of Office Expires: 2000
Business Experience:
Retired February 1991
Southwestern Public Service Company
Chairman of the Board and Chief Executive Officer - July 1989
to February 1991
President and Chief Executive Officer - January 1989 to
July 1989
President and Chief Operating Officer - 1985 to July 1989
Director - 1985 to 1992

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<PAGE> 7

WILLIAM H. KNOELL
Age: 74
Committee Membership: Audit, Safety and Environmental Affairs
(Chairman)
Director Since: 1990
Term of Office Expires: 2001
Business Experience:
Retired September 1989
Cyclops Industries, Inc.
Chairman,
President and Chief Executive Officer - 1987 to
September 1989
Director until April 1992
Other Directorships:
DQE Corporation
Duquesne Light Company
Carnegie Mellon University, Life Trustee

C. WAYNE NANCE
Age: 67
Committee Memberships: Compensation, Nominations
Director Since: 1992
Term of Office Expires: 2001
Business Experience:
C. Wayne Nance & Associates, Inc. (petroleum consulting and
investments)
President - July 1989 to present
The Mitchell Group
Senior Vice President - July 1989 to present
Other Directorships:
Matador Petroleum Corporation

P. DEXTER PEACOCK
Age: 57
Committee Memberships: Audit, Safety and Environmental Affairs
Director Since: 1998 (elected by the Board of Directors in July 1998)
Term of Office Expires: 2000
Business Experience:
Andrews & Kurth L.L.P.
Of Counsel - January 1998 to present
Partner - February 1975 to December 1997
Other Directorships:
Director Suplente of YPF Sociedad Anonima
Chase Bank of Houston, N.A.

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<PAGE> 8

RAY R. SEEGMILLER
Age: 63
Position: President and Chief Executive Officer
Director Since: 1997
Term of Office Expires: 1999 (Nominee for Director)
Business Experience:
Cabot Oil & Gas Corporation
President and Chief Executive Officer - May 1998 to present
President and Chief Operating Officer - September 1997 to May
1998
Executive Vice President and Chief Operating Officer -
March 1997 to September 1997
Vice President, Chief Financial Officer and Treasurer -
August 1995 to March 1997
RCS Enterprises, Inc.
President and Chief Executive Officer - May 1993 to June 1995
Terry Petroleum Company
President and Chief Executive Officer - May 1988 to April 1993

CHARLES P. SIESS, JR.
Age: 72
Director Since: 1989
Term of Office Expires: 2000
Business Experience:
Cabot Oil & Gas Corporation
Chairman of the Board - May 1998 to present
Chairman of the Board and Chief Executive Officer - September
1997 to May 1998
Chairman of the Board, Chief Executive Officer and President
- May 1995 to September 1997 and December 1989 to December
1992
Bridas S.A.P.I.C. Oil Exploration
Consultant and Acting General Manager - January 1993 to
January 1994
Other Directorships:
Cabot Corporation
Rowan Companies, Inc.

WILLIAM P. VITITOE
Age: 60
Director Since: 1994
Committee Memberships: Compensation, Nominations
Term of Office Expires: 1999 (Nominee for Director)
Business Experience:
Retired May 1998
Consultant to Puget Sound Energy, Inc. - February 1997 to May 1998
Washington Energy Company
Chairman of the Board, Chief Executive Officer and President-
January 1994 to February 1997
ANR Pipeline Company
President and Chief Executive Officer - October 1990 to
December 1993 Other Directorships:
Comerica Bank
Michigan Mutual/Amerisure
Midwest Independent System Operator, Inc.

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<PAGE> 9

INFORMATION ON THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors held seven meetings during the year ended
December 31, 1998. The Board of Directors has four standing committees: the
Audit Committee, the Compensation Committee, the Nominations Committee and the
Safety and Environmental Affairs Committee. Membership on each committee is
listed above. All standing committees are composed entirely of nonemployee
directors.

The Audit Committee annually recommends the independent public
accountants to be appointed by the Board of Directors as auditor of the Company
and its subsidiaries; the committee also reviews the arrangements for and the
results of the auditor's examination of the Company's books and records,
internal accounting control procedures, and the internal audit activities and
recommendations. It reports to the Board of Directors on Audit Committee
activities and makes such investigations as it deems appropriate. The Audit
Committee held three meetings during 1998.

The Compensation Committee determines the salaries, bonuses and other
remuneration of the Company's officers who are also directors, reviews and
approves the salaries, bonuses and other remuneration of all other executive
officers, and determines the aggregate amount of bonuses and other incentives to
be paid pursuant to the Company's incentive compensation program. It administers
the Company's Annual Target Cash Incentive Plan, Amended and Restated 1994
Long-Term Incentive Plan, Incentive Stock Option Plan and supplemental
retirement plans, including the adoption of the rules and regulations therefore
and the determination of awards. It also makes recommendations to the Board of
Directors with respect to the Company's compensation policy. The Compensation
Committee held three meetings during 1998.

The Nominations Committee considers and proposes nominees for
membership on the Board of Directors, including nominations made by
stockholders, reviews the composition of the Board of Directors and makes
recommendations to the Board of Directors concerning corporate governance. Any
stockholder desiring to make a nomination to the Board of Directors should
submit such nomination for consideration by the Nominations Committee, including
such nominee's qualifications, to Ms. Lisa A. Machesney, Corporate Secretary,
Cabot Oil & Gas Corporation, 15375 Memorial Drive, Houston, Texas 77079. The
Nominations Committee held two meetings during 1998.

The Safety and Environmental Affairs Committee reviews the Company's
safety and environmental management programs and evaluates major hazard
analyses. From time to time, it also reviews the nature of and extent of Company
spending for safety and environmental compliance. It further consults with
outside and internal advisors of the Company regarding the management of the
Company's safety and environmental programs. The Safety and Environmental
Affairs Committee held two meetings during 1998.

All directors attended 75% or more of the meetings of the Board of
Directors and of the committees held while they were members during 1998.

DIRECTOR COMPENSATION

Directors who are not employees of the Company were compensated during
1998 by the payment of a quarterly cash fee of $6,000, plus $1,000 for
attendance by them at each Board meeting and $1,000 for attendance at each
meeting of a committee of which they are a member. Committee chairmen received
an additional fee of $500 per quarter. Directors are further compensated $500
for attendance at business meetings when so requested by the Chairman of the
Board of Directors. In lieu of the above stated fees, Mr. Siess, Chairman of the
Board, receives for the period June 1, 1998 to June 1, 1999 a fee of $225,000,
payable monthly in arrears in twelve installments of $18,750 per month.

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<PAGE> 10

Nonemployee directors also received nondiscretionary automatic grants of
nonqualified options to purchase 10,000 shares of the Common Stock at a price
equal to 100% of the fair market value on the date first elected to the Board of
Directors under either the 1990 Nonemployee Director Stock Option Plan or the
Amended and Restated 1994 Nonemployee Director Stock Option Plan. In addition,
nonemployee directors also receive a nondiscretionary automatic grant of a
nonqualified option to purchase an additional 5,000 shares of Common Stock at
each annual meeting of stockholders under the Amended and Restated 1994
Nonemployee Director Stock Option Plan. Directors who are employees of the
Company receive no additional compensation for their duties as directors. All
directors were reimbursed for travel expenses incurred for attending all Board
and committee meetings.

PROPOSAL II.
APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors, upon recommendation by the Audit Committee, has
approved and recommended the appointment of PricewaterhouseCoopers LLP,
independent public accountants, as auditors to examine the Company's financial
statements for 1999. Neither such firm nor any of its associates has any
relationship with the Company except in their capacity as auditors. The persons
named in the accompanying proxy will vote in accordance with the choice
specified thereon, or, if no choice is properly indicated, in favor of the
designation of PricewaterhouseCoopers LLP as auditors of the Company.

A representative of PricewaterhouseCoopers LLP is expected to attend
the Annual Meeting and to be available to respond to appropriate questions
raised during the Annual Meeting. The representative will also have an
opportunity to make a statement during the meeting if the representative so
desires.

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<PAGE> 11

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes annual and long-term compensation paid
to the Company's Chief Executive Officers and the Company's four other most
highly compensated executive officers who were serving as of December 31, 1998
for all services rendered to the Company and its subsidiaries during each of the
last three fiscal years.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

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Annual Compensation Long-Term Compensation

------------------------------------- ----------------------------------

Awards Payouts
----------------------------------

Name and Year Salary ($) Bonus Other Annual Restricted Securities LTIP All Other
Principal Position ($) Compensation Stock Underlying Payouts Compensation
($) (3) Awards ($) Options ($) (14) ($) (15)
(5) (6) (7) (#)

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<S> <C> <C> <C> <C> <C> <C> <C> <C>
R.R. Seegmiller 1998 339,042 99,000 20,246 0 (8) 62,000 0 10,000
President and 1997 319,111 200,000 13,950 187,000 10,000 0 9,029
Chief Executive Officer 1996 186,667 100,000 8,388 42,188 20,000 0 7,467

J.M. Trimble 1998 210,833 37,800 9,328 0 (9) 12,000 28,008 10,000
Senior Vice President 1997 182,083 125,000 9,230 102,000 5,000 0 9,017
1996 158,750 80,000 7,450 30,375 15,000 0 6,350

H.B. Whitehead 1998 198,333 34,400 9,696 0 (10) 10,000 44,813 10,000
Senior Vice President 1997 183,750 120,000 7,294 102,000 5,000 0 8,142
1996 170,834 95,000 5,822 40,500 15,000 0 6,250

G.F. Reiger (1) 1998 174,083 34,400 2,025 0 (11) 9,000 39,211 10,000
Vice President - 1997 163,750 90,000 1,946 102,000 5,000 0 8,950
Regional Manager 1996 148,750 70,000 823 21,938 12,000 0 5,950

M. B. Walen 1998 150,417 24,000 13,490 (4) 0 (12) 10,000 0 8,097
Vice President - 1997 127,611 52,000 7,128 51,000 0 0 5,892
Regional Manager 1996 120,708 39,493 233 9,281 4,500 0 4,828

C.P. Siess, Jr. (2) 1998 187,500 0 35,822 0 (13) 10,000 108,924 10,000
Chairman of the Board 1997 418,750 450,000 73,523 425,000 20,000 0 9,500
1996 375,000 300,000 24,892 168,750 25,000 0 9,500
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</TABLE>

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<PAGE> 12

1/ Mr. Reiger resigned from the Company on February 19, 1999.

2/ Mr. Siess was Chief Executive Officer of the Company from January 1, 1998
to May 30, 1998. For information concerning Mr. Siess' compensation as a
director of the Company after May 30, 1998, see "Proposal I.
Election of Directors - Director Compensation" above.

3/ The amount in this column represents premiums paid on and a tax gross-up
for imputed income on executive term life insurance and a tax gross-up on
club dues. 1998 premiums paid on and a tax gross-up for imputed income on
executive term life insurance represents $16,286, $4,035, $2,325, $2,025,
$1,813 and $29,178 for Messrs. Seegmiller, Trimble, Whitehead, Reiger,
Walen and Siess, respectively. The tax gross-up on club dues represents
$3,960, $5,293, $7,371, $0, $1,803 and $6,644 for Messrs. Seegmiller,
Trimble, Whitehead, Reiger, Walen and Siess, respectively.

4/ Also includes a $9,874 tax gross up for imputed income on relocation
expenses.

5/ The amount in this column for 1997 and 1996 represents the value of
restricted stock grants made to the named executive on May 5, 1997 and
February 20, 1997 based on closing market prices on such dates of $17.00
and $16.875, respectively, as reported on the New York Stock Exchange, Inc.
Composite Transactions Reporting System.

6/ Messrs. Seegmiller, Trimble, Whitehead, Reiger, Walen and Siess were
granted 11,000, 6,000, 6,000, 6,000, 3,000 and 25,000 shares of restricted
stock, respectively, on May 5, 1997. With the exception of the shares
granted to Mr. Siess, the restrictions on these shares lapse in full in
three years from the date of grant. The restrictions on Mr. Siess' shares
lapsed May 12, 1998. These grants are reported with respect to 1997.

7/ Messrs. Seegmiller, Trimble, Whitehead, Reiger, Walen and Siess were
granted 2,500, 1,800, 2,400, 1,300, 550 and 10,000 shares of restricted
stock, respectively, on February 20, 1997. With the exception of the shares
granted to Mr. Siess, the restrictions on these shares lapse in full in two
years from the date of grant. The restrictions on Mr. Siess' shares lapsed
May 12, 1998. These grants are reported with respect to 1996 as they were a
part of the bonus paid for 1996 performance.

8/ Mr. Seegmiller holds a total of 13,500 shares of restricted stock as of
December 31, 1998. The market value of the 13,500 shares at December 31,
1998 was $202,500. No dividends are paid on the restricted stock held.

9/ Mr. Trimble holds a total of 7,800 shares of restricted stock as of
December 31, 1998. The market value of the 7,800 shares at December 31,
1998 was $117,000. No dividends are paid on restricted stock held.

10/ Mr. Whitehead holds a total of 8,400 shares of restricted stock as of
December 31, 1998. The market value of the 8,400 shares at December 31,
1998 was $126,000. No dividends are paid on the restricted stock held.

11/ Mr. Reiger holds a total of 7,300 shares of restricted stock as of December
31, 1998. The market value of the 7,300 shares at December 31, 1998 was
$109,500. No dividends are paid on the restricted stock held.

12/ Mr. Walen holds a total of 3,550 shares of restricted stock as of December
31, 1998. The market value of the 3,550 shares at December 31,1998 was
$53,250. No dividends are paid on the restricted stock held.

13/ Mr. Siess holds no restricted stock as of December 31, 1998.

14/ The amount in this column represents the value of a performance share
payout of 1,875, 3,000, 2,625 and 7,292 shares of Common Stock to Messrs.
Trimble, Whitehead, Reiger and Siess, respectively, for the performance
period July 1, 1995 through June 30, 1998, based upon the average of the
high and low trading prices on the date the shares were issued of $14.9375,
as reported on the New York Stock Exchange, Inc.
Composite Transactions reporting system.

15/ The amount in this column represents the Company's contributions to the
401(k) Plan and the associated nonqualified agreement or the associated
nonqualified Deferred Compensation Plan on behalf of the named executive.

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<PAGE> 13

OPTION GRANTS IN LAST FISCAL YEAR

Set forth below is certain information relating to the Company's grants
of options during 1998 to the executive officers named in the preceding Summary
Compensation Table, including the relative size of each grant, and each grant's
exercise price and expiration date. Also included is information relating to the
potential realizable value of the options granted, based upon assumed annualized
stock value appreciation rates. Neither the option values reflected in the table
nor the assumptions utilized in arriving at the values should be considered
indicative of future stock performance.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------

Potential Realizable
Individual Grants Value at Assumed Annual Rates
of Stock Price Appreciation
for Option Term
- ---------------------------------------------------------------------------------- ------------------------------------------

Number of Percent of
Securities Total
Underlying Options
Options Granted to Exercise
Granted Employees in Price Expiration
Name (#) (2) (3) Fiscal Year ($/Sh) (4) Date (5) 5% ($) (6) 10% ($) (7)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R.R. Seegmiller 62,000 21% $22.53125 May 12, 2003 $386,260 $853,120
J.M. Trimble 12,000 4.1% $22.53125 May 12, 2003 $74,760 $165,120
H.B. Whitehead 10,000 3.4% $22.53125 May 12, 2003 $62,300 $137,600
G.F. Reiger 9,000 3.1% $22.53125 May 12, 2003 $56,070 $123,840
M.B. Walen 10,000 3.4% $22.53125 May 12, 2003 $62,300 $137,600
C.P. Siess, Jr.(1) n/a n/a n/a n/a n/a n/a

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</TABLE>

1/ Mr. Siess did not receive an option grant during 1998 as an employee of the
Company. Upon Mr. Siess' retirement as an executive officer of the Company
and becoming a nonemployee director, Mr. Siess received an automatic grant
of an option to purchase 10,000 shares of the Company's Common Stock
pursuant to the Amended and Restated 1994 Non-employee Director Stock
Option Plan. (See Proposal I. Election of Directors - Director Compensation
above.)

2/ There were no adjustments or amendments during 1998 to the exercise price
of stock options previously awarded to any of the named executive officers.

3/ For Messrs. Seegmiller, Trimble, Whitehead, Reiger and Walen, 33 1/3% of
each option becomes exercisable on the first anniversary of the date of
grant (May 12, 1999) and the remainder of such option becomes exercisable
in 33 1/3% increments on each of the next two anniversaries of such date.

4/ Equal to the average of the high and low trading price per share of the
Company's Common Stock on the date of grant, as reported on The New York
Stock Exchange, Inc. Composite Transactions Reporting System.

5/ The options permit the exercise price to be paid in cash or by tendering
shares of Common Stock. The options permit the withholding of shares to
satisfy tax obligations.

- 10 -
<PAGE> 14

6/ The stock price required to produce this value is $28.76 and would produce
a corresponding $155,550,983 increase in total stockholder value based upon
24,968,055 shares of Common Stock outstanding on March 1, 1999.

7/ The stock price required to produce this value is $36.29 and would produce
a corresponding $343,560,437 increase in total stockholder value based upon
24,968,055 shares of Common Stock outstanding on March 1, 1999.

AGGREGATED FY-END OPTION VALUES

Set forth below is supplemental information relating to the number and
intrinsic value of stock options held at December 31, 1998 ("FY-End"), by the
executive officers named in the preceding Summary Compensation Table. Year-end
values are based on the Company's stock price at December 31, 1998, do not
reflect the actual amounts, if any, which may be realized upon the future
exercise of remaining stock options, and should not be considered indicative of
future stock performance. No options were exercised by the individuals named in
the Summary Compensation Table during 1998.

AGGREGATED FY-END OPTION VALUES

- -----------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at FY-End (#) Options at FY-End ($)
- -----------------------------------------------------------------------------------------------------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable (1)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
R.R. Seegmiller 36,668/75,332 $32,400/0
J.M. Trimble 62,067/20,333 $23,450/0
H.B. Whitehead 66,067/18,333 $23,450/0
G.F. Reiger 24,167/16,333 $0/0
M.B. Walen 16,500/11,500 $5,250/0
C.P. Siess, Jr. 461,000/10,000 $359,376/0
- -----------------------------------------------------------------------------------------------------------
</TABLE>

1/ A stock option is considered to be "in-the-money" if the price of the
related stock is higher than the exercise price of the option. The closing
market price of the Common Stock was $15.00 per share as reported on the
New York Stock Exchange, Inc. Composite Transactions Reporting System for
December 31, 1998.

LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR

There were no additional long-term incentive awards made in 1998 to the
executive officers named in the Summary Compensation Table.

PENSION PLAN TABLE

Company employees are covered by the Company's Pension Plan (the
"Pension Plan"), a noncontributory defined benefit plan that provides benefits
based generally upon the employee's compensation levels during the last years of
employment. In addition, the Company has entered into agreements to supplement
the benefits payable to certain officers to the extent benefits under the
Pension Plan are limited by provisions of the Internal Revenue Code of 1986, as
amended (the

- 11 -
<PAGE> 15

"Code"), or the Employee Retirement Income Security Act of 1974, as amended. The
following table sets forth estimated annual benefits payable for eligible
employees (including executive officers) who retire at age 65 under the Pension
Plan (and, where applicable, such supplemental agreements) for specified
earnings and years of service classification. Amounts shown are for employees
(including all persons listed in the Summary Compensation Table) who were not
"grandfathered" under the Pension Plan (based on years of service and age) as of
September 30, 1988.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------

REMUNERATION YEARS OF SERVICE
- ---------------------------------------------------------------------------------------------------------------------

5 10 15 20 25 30 35
- ---------------------------------------------------------------------------------------------------------------------

Compensation under the Pension Plan generally consists of taxable
income and 401(k) deferred amounts. The Pension Plan provides for full vesting
after five years of service. Benefits are payable for the life of the employee
on a single-life annuity basis and are not subject to any deductions for Social
Security or other offset amounts. Covered compensation under the Pension Plan in
1998 for the executive officers named in the Summary Compensation Table is the
amounts under the "Salary" and "Bonus" columns set forth in such table. The
Company provides Mr. Seegmiller supplemental pension benefits by granting one
month's additional service credit for each month of actual service. For purposes
of the Pension Plan, including Mr. Seegmiller's supplemental pension benefits,
Messrs. Seegmiller, Trimble, Whitehead, Reiger and Walen had 7.00, 15.67, 18.25,
4.58 and 11.67 years of credited service, respectively, as of December 31, 1998.
Mr. Siess, who retired on May 31, 1998, receives benefits under the Pension Plan
based upon 5.92 years of credited service. For a description of Mr. Siess'
supplemental executive retirement plan benefits, see "Compensation Committee
Report on Executive Compensation - Mr. Siess' Retirement" below.

- 12 -
<PAGE> 16

COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

INTRODUCTION

The Compensation Committee of the Company's Board of Directors (the
"Committee") is comprised of four non-employee directors. The Committee has
responsibility for determining the salaries, incentive compensation and other
remuneration of the officers of the Company who are also directors and for
reviewing and approving the salaries, incentive compensation and other
remuneration of all other officers of the Company. The Committee also approves
the design of the Company's compensation and benefit plans.

The objectives of the executive compensation program are to align
compensation with business strategy, to create value for the stockholders, to
attract, retain, motivate and reward highly qualified executives and to support
a performance-based culture throughout the Company.

The Committee also believes that executive compensation should be
subject to objective scrutiny. Consequently, the Committee retains the services
of an independent consultant, who on a regular basis evaluates the compensation
programs and practices for the Company's executive officers against an industry
peer group.

COMPONENTS OF COMPENSATION

The Committee relates total compensation levels for the Company's
senior executives to the compensation paid to executives of a peer group of
companies. This peer group consists of companies that are in the same industry
and are considered by the Committee to be competitors for investment dollars in
the energy sector of the market. The Committee reviews and approves the
selection of the peer companies used for compensation comparison purposes.
Currently, the peer group is made up of eleven companies: Anadarko Petroleum
Corporation, Apache Corporation, Barrett Resources Corporation, Burlington
Resources, Inc., Devon Energy Corporation, Enron Oil & Gas Company, Noble
Affiliates, Inc., Oryx Energy Company, Pioneer Natural Resources, Santa Fe
Energy Resources, Inc. and Seagull Energy Corporation (the "Peer Group").

The companies chosen for the Peer Group generally are not the same
companies which comprise the Dow Jones Secondary Oils Index, shown in the
Performance Graph included in this proxy statement. The Committee believes that
the Company's competitors for executive talents are not necessarily all of the
companies included in the Dow Jones Secondary Oils Index used for comparing
stockholder returns.

The components of the Company's executive compensation program are base
salary, annual incentive bonus and long-term incentives. These components are
described below. In determining each component of compensation, the Compensation
Committee considers competitive data from the Peer Group and the overall value
of the total compensation package. The Committee believes that the total
compensation package should be competitive and targeted at the median level of
compensation for the Peer Group and that superior performance should produce a
corresponding increase in value for annual and long-term incentives.

BASE SALARIES

The Compensation Committee reviews each executive's base salary
annually. Base salaries are targeted at market levels and are adjusted by the
Committee to recognize varying levels of responsibility, prior experience,
breadth of knowledge, internal equity issues and external pay practices. Base
salaries in 1998 for the executive officers named in the Summary Compensation
Table as a group were at, or near, the 50th percentile of the predicted
competitive market base salary for similar positions in the Peer Group.
Increases to base salaries are driven primarily by individual performance.

Mr. Seegmiller's base salary of $375,000 is somewhat below the 50th
percentile of the competitive market for his position. This salary reflects his
recent promotion to the position of President and Chief Executive Officer on May
12, 1998.

Mr. Siess retired from the management of the Company on May 31, 1998.
Mr. Siess' base salary for the period January 1, 1998 through May 31, 1998 was
maintained at the 1997 annualized level of $450,000.

- 13 -
<PAGE> 17

ANNUAL INCENTIVE BONUS

The Annual Target Cash Incentive Plan promotes the Company's
pay-for-performance philosophy by providing executives with direct financial
incentives in the form of annual bonuses to achieve corporate business goals and
individual performance goals. Annual bonus opportunities allow the Company to
communicate specific goals that are of primary importance during the coming year
and motivate executives to achieve these goals.

The current measurement criteria used in the Annual Target Cash
Incentive Plan are designed to recognize that certain factors which impact
performance are controllable, while others are not controllable, and to reward
executives for superior performance against those factors which are deemed
controllable.

A bonus pool is generated under the Annual Target Cash Incentive Plan
based on achievement of all of the following threshold tests: (i) annual cash
flow for the Company must equal or exceed two times debt service, with debt
service including interest and dividend payments, but excluding originally
scheduled principal payments unless the Company's total borrowing capacity is
diminished at the time of the principal repayment; (ii) the Company must achieve
75% or greater performance against its target for annual discretionary cash
flow; and (iii) the Company must achieve an 85% or greater replacement ratio for
annual reserves. These thresholds are approved annually by the Compensation
Committee in conjunction with its approval of each bonus plan participant's
incentive target percentage.

If the threshold tests are met, a bonus pool is generated. The size of
the bonus pool is determined by measuring each business unit's performance and
the total Company performance against the budgeted discretionary cash flow
targets adjusted for non-controllable items, such as commodity prices, interest
rates and non-recurring items. The Committee then has the discretion to adjust
the final overall bonus pool for any business unit and the final bonus payment
for any participant to reflect its assessment of the unit's and the
participant's performance. If a bonus pool is generated based upon achievement
of the established Company goals, executives earn bonuses to the extent of the
performance of their primary business unit, the Company's overall performance
and achievement of individual performance goals. Individual incentive target
percentages are set at market levels which are considered by the Compensation
Committee to be appropriate.

In 1998, the bonus plan funded as the three threshold tests were met.
Based upon this performance, and the performance of each business unit, the
formula in the bonus plan produced bonuses ranging from 14% to 74% of
pre-established bonus targets for the executive officers of the Company,
including the executives named in the above tables. The Committee then applied
its discretion to recognize that while the Company was able to maintain
profitable operations in a soft commodity price environment, make significant
progress in its exploration activity and replace 146% of production through
drilling (253% including acquisitions), the Company provided only a slight gain
of 1% in production. As a result, the Committee reduced the formula generated
bonuses for the executive officers, including the executives named in the above
tables, by 25% in recognition that the Company's performance for 1998 did not
meet its production growth target. Mr. Seegmiller received a cash bonus of
$99,000. This represents 44% of Mr. Seegmiller's target and recognizes the same
factors in the Company's 1998 performance that were applied to the entire group
of executive officers.

LONG TERM INCENTIVES

In 1998, the Company used stock options to provide long-term incentives
to the Company's executives. The Company did not grant restricted stock or
performance shares during 1998. However, the performance shares granted in 1995
under the performance share provisions of the 1994 Long-Term Incentive Plan paid
out in 1998 in shares of the Company's Common Stock.

Each grant of performance shares has a three-year performance period.
For the 1995 grant of performance shares the performance period was July 1, 1995
to June 30, 1998. Each performance share represents the right to receive, after
the end of the performance period, from 0 to 150% of a share of Common Stock,
based upon the relative total shareholder return on the Company's Common Stock
as compared to the total shareholder return on the common equity of each company
in the Peer Group. For this purpose, total shareholder return is expressed as a
percentage equal to common stock price appreciation as averaged for the first
and last month of the performance period plus dividends (on a cumulative
reinvested basis). For the 1995 performance shares, the Company ranked seventh
in the Peer Group entitling the executive officers of the Company, including
certain of the executives named in the above tables, to receive 75% of their
respective performance shares in shares of the Company's Common Stock. Mr.
Seegmiller did not receive performance shares in 1995 because he was not
employed by the Company at the time of grant. Mr. Siess received 7,292 shares of
Common Stock.

- 14 -
<PAGE> 18

Stock options are granted under the Amended and Restated 1994 Long-Term
Incentive Plan at an option price not less than the fair market value of the
Common Stock on the date of grant. Accordingly, stock options have value only if
the stock price appreciates from the date the options are granted. This design
focuses executives on the creation of stockholder value over the long term and
encourages equity ownership in the Company.

The size of a stock option grant is based primarily on competitive
practice and is generally targeted to be at the 50th percentile of values
granted by the Peer Group. During 1998 the value of the stock option grant was
targeted at slightly above the 50th% percentile of the competitive market due to
the Committee's desire to focus more on long-term incentive pay. The Committee
does not typically consider the amount of options previously granted and
outstanding when determining the size of stock option grants to executive
officers. The Committee's objective is to deliver a competitive award
opportunity based on the dollar value of the award granted. As a result, the
number of shares underlying stock option awards is dependent on the stock price
on the date of grant.

In 1998 Mr. Seegmiller was granted an option to purchase 62,000 shares
of Common Stock with an exercise price of $22.53125. In addition to the
competitive market data, the Committee also considered Mr. Seegmiller's recent
promotion to President and Chief Executive Officer in making the 1998 grant.

The Company's stock options and performance shares are intended to
constitute "qualified performance based compensation" as defined under Section
162(m) of the Code, with the effect that the deduction disallowance of Section
162(m) of the Code should not be applicable to compensation paid to covered
employees under the stock options and performance share provisions. It is the
Committee's intent that the majority of long term incentive awards will qualify
under Section 162(m) of the Internal Revenue Code. To date the Company has
experienced no loss of tax deduction as a result of 162(m).

MR. SIESS' RETIREMENT

Until May 12, 1998, Mr. Siess held the position of Chairman of the
Board and Chief Executive Officer. On May 12, 1998, Mr. Siess was elected
non-executive Chairman of the Board. On May 31, 1998, Mr. Siess retired from the
management of the Company. In association with Mr. Siess' retirement, the
Compensation Committee accelerated to May 12, 1998, the lapsing of restrictions
on the restricted stock granted to Mr. Siess on February 20, 1997 and May 5,
1997. On February 20, 1997 and May 5, 1997, Mr. Siess was granted 10,000 and
25,000 shares of restricted stock, respectively, the restrictions on which would
have lapsed February 20, 1999 and May 5, 2000, respectively. The Compensation
Committee also accelerated the vesting of all unvested stock options granted to
Mr. Siess under the 1994 Long-Term Incentive Plan. Further, Mr. Siess was
entitled to receive $637,193 under a supplemental executive retirement plan,
which Mr. Siess elected to defer under the Deferred Compensation Plan. Mr. Siess
also received under a special life insurance policy, life insurance coverage in
a face amount of $600,000 from June 1, 1998 to June 1, 1999 and $300,000 from
June 1, 1999 to June 1, 2000. Thereafter, Mr. Siess' life insurance will be in
accordance with the Company's standard retiree life insurance program.

CONCLUSION

The Committee believes these executive compensation policies and
programs serve the interests of stockholders and the Company effectively. The
various pay vehicles offered are appropriately balanced to provide increased
motivation for executives to contribute to the Company's overall future
successes, thereby enhancing the value of the Company for the stockholders'
benefit. We will continue to monitor the effectiveness of the Company's total
compensation program to meet the current needs of the Company.

Compensation Committee

Samuel W. Bodman, Chairman
Henry O. Boswell
C. Wayne Nance
William P. Vititoe

- 15 -
<PAGE> 19

COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION

No member of the Compensation Committee was, during 1998, an officer or
employee of the Company or any of its subsidiaries, or formerly an officer of
the Company or any of its subsidiaries. During 1998, Mr. Charles P. Siess, Jr.
who served as Chairman and Chief Executive Officer of the Company from January
1, 1998 until May 12, 1998, served as a director of Cabot Corporation. Mr.
Samuel W. Bodman, Chairman and Chief Executive Officer of Cabot Corporation
served as Chairman of the Compensation Committee of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE

Messrs. Paul F. Boling, Vice President, Finance; Jeffrey W. Hutton,
Vice President, Marketing; Ray R. Seegmiller, President and Chief Executive
Officer and Mr. H. Baird Whitehead, Senior Vice President each failed to timely
report to the Securities and Exchange Commission ("Commission") the disposition
of 72, 296, 1,818 and 666 shares of Common Stock, respectively, used to pay
taxes in association with the payout of restricted stock awards. Corrective
reports have been filed.

Mr. Henry C. Smyth was elected Controller of the Company on September
17, 1998. Mr. Smyth's Form 3, reporting his initial beneficial ownership of the
Company's Common Stock, was due for filing at the Commission by October 10,
1998. It was not filed until December 28, 1998.

Mr. P. Dexter Peacock, a Director of the Company, purchased 1,000
shares of Common Stock on August 17, 1998. Mr. Peacock's Form 4, reporting this
transaction, was filed with the Commission one day past the reporting deadline
of September 10, 1998.

Mr. James M. Trimble, Senior Vice President, purchased 1,000 shares of
Common Stock on August 5, 1998. Mr. Trimble's Form 4, reporting this
transaction, was filed with the Commission one day past the reporting deadline
of September 10, 1998.

EMPLOYMENT AGREEMENTS
AND CHANGE IN CONTROL ARRANGEMENTS

The Company has entered into Change in Control Agreements (the
"Agreements") with the current executive officers named in the Summary
Compensation Table other than Mr. Siess, and with eight other officers of the
Company. The Agreements are intended to encourage such employees to remain in
the employ of and to carry out their duties with the Company. The term of the
Agreements was initially three years from November 3, 1995, subject to automatic
one-year extensions on the second and each subsequent anniversary thereof unless
prior to such anniversary the Company gives written notice that the term shall
not be so extended. The Agreements provide that in the event of a change in
control, such individuals will receive certain benefits in the event of a
termination of their employment within two years of such change in control. A
"change in control" is generally defined as occurring if (i) any "person"
becomes the "beneficial owner", directly or indirectly, of securities of the
Company representing 35% or more of the combined voting power of the Company's
then outstanding securities, (ii) during any 12-month period, individuals who at
the beginning of such period constitute the Board of Directors cease for any
reason to constitute a majority thereof unless the election, or the nomination
for election by the Company's stockholders, of each new director was approved by
the vote of at least a majority of the directors then still in office who were
directors at the beginning of the period or (iii) the Company sells or otherwise
disposes of, in one transaction or a series of transactions, in a single
12-month period, assets or properties of the Company representing 50% or more of
the total proved reserves (on a volumetric basis) of the Company as of the
beginning of such 12-month period. Benefits are provided under the Agreements
unless such termination of employment is (i) for cause (as defined in the
Agreements), (ii) voluntary by the executive and does not constitute a
constructive termination without cause (as defined in the Agreements), or (iii)
because of the death or disability of the executive.

- 16 -
<PAGE> 20

Generally, benefits payable under the terms of the Agreements include
(i) a lump-sum cash payment equal to three times the sum of (a) base salary in
effect immediately prior to the change in control or, if greater, immediately
prior to the executive's termination and (b) the greater of (1) 80% of the
executive's target bonus with respect to the fiscal year during which the change
in control occurred or, if greater, the fiscal year during which the executive's
termination occurred or (2) the executive's actual bonus paid in the fiscal year
immediately preceding the change in control, (ii) payment with respect to any
performance shares granted to the executive, such payment to be prorated based
on actual service completed at the time of the executive's termination, and
valued according to the percentage of goal attainment on the date of
termination, (iii) immediate vesting and exercisability of all of the
executive's options to purchase securities of the Company, (iv) immediate
vesting and lapse of restrictions on any restricted stock grants outstanding at
the time of the executive's termination, (v) subject to the payment of the
applicable premiums, continued medical, dental and life insurance coverage for
three years following the date of the executive's termination, (vi) effective
crediting of an additional three years of service in the Company's retirement
plans in which the executive is participating at the time of the change in
control and (vii) outplacement assistance in an amount not to exceed 15% of the
executive's base salary in effect on the date of a change in control (the
"Termination Benefits"). In the event the excise tax relating to Section 280G of
the Code applies to payments by the Company, the Company will make an additional
payment to the executive in an amount such that after payment of income taxes
(but not the excise tax) on such additional payment, the executive retains an
amount equal to the excise tax originally imposed. No payments have been made
under the Agreements.

The Company has entered into both an employment agreement and a Change
in Control Agreement with Mr. Ray R. Seegmiller, President and Chief Operating
Officer of the Company. The employment agreement provides that if Mr. Seegmiller
terminates his employment for good reason (as defined in the agreement) or the
Company terminates his employment for any reason other than cause (as defined in
the agreement), Mr. Seegmiller shall receive 12 months of base salary, as well
as continuation of all applicable benefit programs. Under the terms of Mr.
Seegmiller's Change in Control Agreement, in the event of a termination, Mr.
Seegmiller will be required to elect between receiving the Termination Benefits
or the amounts payable to Mr. Seegmiller under his employment agreement.

- 17 -
<PAGE> 21

SHAREHOLDER RETURN PERFORMANCE PRESENTATION

The following graph compares the Common Stock ("COG") performance with
the performance of the Standard & Poor's 500 Stock Index and the Dow Jones
Secondary Oils-US Index for the period December 1993 through December 1998. The
graph assumes that the value of the investment in the Company's Common Stock and
in each index was $100 on December 31, 1993 and that all dividends were
reinvested.

[CHART]

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Feb-98
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 100 98.5 132.0 158.8 208.0 263.5
---------------------------------------------------------------------------------------------------------
COG 100 69.2 70.6 83.4 95.5 74.3
---------------------------------------------------------------------------------------------------------
DJ Secondary Oils-US 100 94.4 106.7 129.1 135.1 96.7
---------------------------------------------------------------------------------------------------------
</TABLE>

- 18 -
<PAGE> 22

BENEFICIAL OWNERSHIP OF OVER FIVE PERCENT OF COMMON STOCK

The following table reports beneficial ownership of Common Stock by
holders of more than five percent of any class of the Company's voting
securities. Unless otherwise noted, all ownership information is based upon
filings made by such persons with the Commission.

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER OWNED CLASS
--------------------------- ---------------- ------------

<S> <C> <C>
NewSouth Capital Management, Inc. ................... 1,827,655(1) 6.8%
1000 Ridgeway Loop Road, Suite 233
Memphis, TN 38120

Puget Sound Energy, Inc.............................. 4,105,174 (2) 15.2% (2)
411 108th Avenue, N.E.
Bellevue, WA 98009-5515

The Prudential Insurance Company..................... 1,554,600 (3) 5.8%
of America
751 Broad Street
Newark, NJ 07102

Vanguard Windsor Fund-Windsor Fund................... 2,467,800 (4) 9.2%
Post Office Box 2600
Valley Forge, PA 19482

Wellington Management Company, LLP................... 2,469,200 (5) 9.2% (5)
75 State Street
Boston, MA 02109
</TABLE>

- -------------

(1) According to Amendment No. 4 to a Schedule 13G, dated February 8, 1999,
filed with the Commission by NewSouth Capital Management, Inc., it has
shared voting power over 20,000 of these shares and sole dispositive power
over all of these shares.

(2) Consists of 2,133,000 shares of Common Stock currently owned and 1,972,174
shares of Common Stock issuable upon conversion of 1,134,000 shares of 6%
Preferred Stock (100% of the series) currently owned. On May 2, 1994, the
Company and Washington Energy Company ("WECO") completed the transaction to
merge a subsidiary of the Company and Washington Energy Resources Company
("WERCO"), a subsidiary of WECO. The Company issued to WECO 2,133,000
shares of Common Stock and 1,134,000 shares of 6% Preferred Stock in
exchange for the capital stock of WERCO. The 6% Preferred Stock is entitled
to 1.739 votes for each share and votes together with the Common Stock on
all matters to be voted on by the holders of the Common Stock, with certain
exceptions when voting as a class is required. On February 10, 1997, WECO
merged with Puget Sound Power & Light Company to form Puget Sound Energy,
Inc.

(3) According to Amendment No. 6 to a Schedule 13G, dated January 26, 1999,
filed with the Commission by The Prudential Insurance Company of America,
it has shared voting and dispositive power over 526,300 of these shares.

(4) According to Amendment No. 7 to a Schedule 13G, dated February 10, 1999,
filed with the Commission by Vanguard Windsor Funds - Windsor Fund, it has
sole voting power and shared dispositive power over these shares.
Wellington Management Company shares beneficial ownership over all of these
shares with, and is the investment advisor to, Vanguard Windsor Funds -
Windsor Fund. See Note (5) below.

(5) According to Amendment No. 10 to a Schedule 13G, dated December 31, 1998,
filed with the Commission by Wellington Management Company, LLP, it has
shared voting power over 1,400 of these shares, no voting power over the
remainder and shared dispositive power over all of these shares. This
amount includes the 2,467,800 shares beneficially owned by the Vanguard
Windsor Funds - Windsor Fund. See Note (4) above.

- 19 -
<PAGE> 23
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table reports, as of February 15, 1999, beneficial
ownership of Common Stock by each current director of the Company, by each
current executive officer listed in the Summary Compensation Table and by all
directors and executive officers as a group. Unless otherwise indicated, the
persons below have sole voting and investment power with respect to the shares
of Common Stock shown as beneficially owned by them.

<TABLE>
<CAPTION>
Number of Shares
of Common Percent
Name of Beneficial Owner Stock Owned Class
--------------------------------------------- --------------------- ----------
<S> <C> <C> <C>
Robert F. Bailey............................ 15,500 1/ *

Samuel W. Bodman............................ 149,019 2/ *

Henry O. Boswell............................ 20,667 3/ *

John G.L. Cabot............................. 113,224 4/ *

William R. Esler............................ 17,667 5/ *

William H. Knoell........................... 16,000 6/ *

C. Wayne Nance.............................. 15,000 7/ *

P. Dexter Peacock........................... 1,000 *

Charles P. Siess, Jr........................ 516,759 8/ 2.0%

William P. Vititoe.......................... 15,949 9/ *

Ray R. Seegmiller........................... 57,935 10/15/ 16/ *

H. Baird Whitehead.......................... 82,983 11/15/ 16/ *

James M. Trimble............................ 90,054 12/15/ 16/ *

Gerald F. Reiger ........................... 33,092 13/15/ 16/ *

Michael B. Walen............................ 21,241 14/15/ 16/ *

All directors and executive officers as a group
(18 individuals)....................... 1,222,225 17/ 4.9%

</TABLE>

* Represents less than 1% of the outstanding Common Stock.

1/ Includes 15,000 shares purchasable upon the exercise of options within 60
days. -

2/ Includes 3,334 shares purchasable upon the exercise of options within 60
days.

3/ Includes 16,667 shares purchasable upon the exercise of options within 60
days.

4/ Includes 1,782 shares held by Mr. Cabot's spouse and 6,837 shares held by
various trusts of which Mr. Cabot serves as co-trustee, as to all of which
Mr. Cabot shares voting and/or investment power; Mr. Cabot disclaims
beneficial ownership of such shares. Also includes 5,000 shares purchasable
upon the exercise of options within 60 days.

5/ Includes 13,667 shares purchasable upon the exercise of options within 60
days.

6/ Includes 15,000 shares purchasable upon the exercise of options within 60
days.

7/ Includes 15,000 shares purchasable upon the exercise of options within 60
days.

8/ Includes 461,000 shares purchasable upon the exercise of options within 60
days.

9/ Includes 13,334 shares purchasable upon the exercise of options within 60
days.

10/ Includes 36,668 shares purchasable upon the exercise of options within 60
days.

11/ Includes 1,309 shares held in the Company's Savings Investment Plan as to
which Mr. Whitehead shares voting and investment power and 66,067 shares
purchasable upon the exercise of options within 60 days.

- 20 -
<PAGE> 24

12/ Includes 1,812 shares held in the Company's Savings Investment Plan as to
which Mr. Trimble shares voting and investment power and 62,067 shares
purchasable upon the exercise of options within 60 days.

13/ Includes 20,167 shares purchasable upon the exercise of options within 60
days.

14/ Includes 645 shares held in the Company's Savings Investment Plan as to
which Mr. Walen shares voting and investment power and 16,500 shares
purchasable upon the exercise of options within 60 days.

15/ Includes 2,500, 2,400, 1,800, 1,300 and 550 shares of restricted stock
granted to Messrs. Seegmiller, Whitehead, Trimble, Reiger and Walen
respectively, on February 20, 1997, the restrictions on which lapse on
February 20, 1999. Messrs. Seegmiller, Whitehead, Trimble, Reiger and Walen
have no voting or investment power with respect to these shares during the
restriction period.

16/ Includes 11,000, 6,000, 6,000, 6,000 and 3,000 shares of restricted stock
granted to Messrs. Seegmiller, Whitehead, Trimble, Reiger and Walen,
respectively on May 5, 1997, the restrictions on which lapse May 5, 2000.
Messrs. Seegmiller, Whitehead, Trimble, Reiger and Walen have no voting or
investment power with respect to these shares during the restrictive
period.

17/ Includes 5,643 shares held in the Company's Savings Investment Plan as to
which the executive officers share voting and investment power and 800,423
shares purchasable by the executive officers and directors upon the
exercise of options within sixty days. Also includes 51,350 shares of
restricted stock granted to the executive officers. See also Notes 1-16
above.

FUTURE STOCKHOLDER PROPOSALS

Any stockholder proposal intended for inclusion in the proxy statement
for the 2000 Annual Meeting of Stockholders of the Company, and otherwise
eligible, should be sent to Ms. Lisa A. Machesney, Secretary, Cabot Oil & Gas
Corporation, 15375 Memorial Drive, Houston, Texas 77079 and must be received by
November 26, 1999.

The Bylaws of the Company require timely advance written notice of
stockholder nominations of director candidates and of any other business to be
presented by a stockholder at an annual meeting of stockholders. To be timely,
the Bylaws require advance written notice be delivered to the Company's
Secretary at the principal executive offices of the Company not later than the
close of business on the 60th day, nor earlier than the close of business on the
90th day, prior to the anniversary of the preceding year's annual meeting (with
certain exceptions if the date of the annual meeting is different by more than
specified amounts from the anniversary date). The deadline for submission for
the 2000 Annual Meeting of Stockholders is currently March 12, 2000. To be
valid, a notice must set forth certain information specified in the Bylaws.

SOLICITATION OF PROXIES

The cost of soliciting proxies in the enclosed form will be borne by
the Company. In addition to solicitation by mail, officers, employees or agents
of the Company may solicit proxies personally, by telephone and by telegraph.
The Company may request banks and brokers or other similar agents or fiduciaries
to transmit the proxy material to the beneficial owners for their voting
instructions and will reimburse them for their expenses in so doing.

- 21 -
<PAGE> 25

MISCELLANEOUS

The Company's management does not know of any matters to be presented
at the Annual Meeting other than those set forth in the Notice of Annual Meeting
of Stockholders. However, if any other matters properly come before the Annual
Meeting, the persons named in the enclosed proxy intend to vote the shares to
which the proxy relates on such matters in accordance with their best judgment
unless otherwise specified in the proxy.

BY ORDER OF THE BOARD OF DIRECTORS,

/s/ LISA A. MACHESNEY

LISA A. MACHESNEY
Corporate Secretary

March 31, 1999

- 22 -

<PAGE> 26

CABOT OIL & GAS
CORPORATION
c/o EquiServe
P.O. Box 8040
Boston, MA 02266-8040

CA951A DETACH HERE

Please mark
[X] votes as in
this example.

<TABLE>
<S> <C>
--------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITEMS I AND II.

1. ELECTION OF DIRECTORS (check one box only) II. Ratification of the appointment of FOR AGAINST ABSTAIN
NOMINEES: Samuel W. Bodman, Ray R. Seegmiller and PricewaterhouseCoopers LLP as the [ ] [ ] [ ]
William P. Vititoe Company's independent certified
public accountants.
FOR WITHHELD
[ ] [ ]
III. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any
[ ] ________________________________________ adjournments or postponements thereof.
For all nominees except as noted above

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]

Please date this proxy and sign your name exactly as it appears
hereon. In the case of one or more joint owners, each joint owner
should sign. If signing as executor, trustee, guardian, attorney, or in
any other representative capacity, or as an officer of a corporation,
please indicate your full title as such.

Signature ___________________________ Date ____________ Signature ____________________________ Date ____________
</TABLE>

<PAGE> 27
DETACH HERE

PROXY

CABOT OIL & GAS CORPORATION

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 11, 1999

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned acknowledges receipt of the notice of Annual Meeting of
Stockholders and the Proxy Statement, each dated March 31, 1999, and appoints
Lisa A. Machesney and Scott C. Schroeder, or either of them, proxies for the
undersigned, with power of substitution, to vote all of the undersigned's
shares of common stock of Cabot Oil & Gas Corporation at the Annual Meeting of
Stockholders to be held at The Luxury Collection Hotel, in Houston, Texas, at
10:00 a.m., local time, on May 11, 1999, and at any adjournments or
postponements thereof.

THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS I AND
II AND WILL GRANT DISCRETIONARY AUTHORITY PURSUANT TO ITEM III.

THIS PROXY WILL REVOKE ALL PRIOR PROXIES SIGNED BY YOU.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

SEE REVERSE SEE REVERSE
SIDE SIDE