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Cabot Oil And Gas Third-Quarter Review
Cabot Oil and Gas (NYSE:COG) reported strong natural gas production growth in the third quarter of 2010, along with the results of wells in various emerging unconventional resource basins in the United States.
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Summary
Cabot Oil and Gas reported production of 36.0 billion cubic feet equivalents (Bcfe) in the third quarter of 2010, up from 25.5 Bcfe in the same quarter of 2010. This growth was concentrated in natural gas from the company's North division, which encompasses the properties where the company is developing the Marcellus Shale.
Cabot Oil and Gas produced 34.8 Bcf of natural gas in the quarter, up from 24.2 Bcf in the same quarter of 2009. Production of oil, condensate and natural gas liquids fell over the same time period, from 231,000 barrels in the third quarter of 2009, to 195,000 barrels in the quarter that just ended.
Marcellus Shale
Cabot Oil and Gas is very active in the Marcellus Shale, where the company has seven rigs currently operating and has 75 wells planned for 2010. During the quarter, the company drilled and completed its first multi-well pad program, bringing three wells onto production. The wells were producing 47.4 million cubic feet per day, and Cabot Oil and Gas plans a six well pad next.
Other companies that are using the multi-well pad concept include Hess Corporation (NYSE:HES), which has permits for more than a dozen multi-well pads in the Bakken.
Eagle Ford Shale
Cabot Oil and Gas reported the successful completion of the company's third well into the Eagle Ford Shale in Texas. The well produced 547 barrels of oil equivalent (BOE) during an initial 24-hour period.
Cabot Oil and Gas is ramping up development in the Eagle Ford Shale in 2011. The company has 52,000 net acres under lease, and also has 18,000 net acres in an area of mutual interest (AMI) with EOG Resources (NYSE:EOG). Cabot Oil and Gas plans to drill as many as 20 net wells in 2011 on its own acreage and in the AMI.
Chainman Shale
Cabot Oil and Gas reported the results of a wildcat well drilled to the Chainman Shale in Nevada, where the company reported that the shale was shallower than initially anticipated and as a result the well was abandoned. However, Cabot Oil and Gas has other prospects in three areas in Nevada and has not given up on this play.
Nevada is not a major producer of oil or natural gas, and the state only produced approximately 33,000 barrels of oil in August 2010. The only public company with production in Nevada is Berry Petroleum (NYSE:BRY), which has a few dozen producing wells in the state.
Bottom Line
Cabot Oil and Gas remains a natural gas company and reported strong year over year growth in production of that commodity, driven mostly by its Marcellus Shale properties. The company also reported the success in advancing the development of various shale plays, while missing on a wildcat well in Nevada. (Find out how to invest and protect your investments in this slippery sector. Check out Peak Oil: What To Do When The Wells Run Dry.)
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Summary
Cabot Oil and Gas reported production of 36.0 billion cubic feet equivalents (Bcfe) in the third quarter of 2010, up from 25.5 Bcfe in the same quarter of 2010. This growth was concentrated in natural gas from the company's North division, which encompasses the properties where the company is developing the Marcellus Shale.
Cabot Oil and Gas produced 34.8 Bcf of natural gas in the quarter, up from 24.2 Bcf in the same quarter of 2009. Production of oil, condensate and natural gas liquids fell over the same time period, from 231,000 barrels in the third quarter of 2009, to 195,000 barrels in the quarter that just ended.
Marcellus Shale
Cabot Oil and Gas is very active in the Marcellus Shale, where the company has seven rigs currently operating and has 75 wells planned for 2010. During the quarter, the company drilled and completed its first multi-well pad program, bringing three wells onto production. The wells were producing 47.4 million cubic feet per day, and Cabot Oil and Gas plans a six well pad next.
Other companies that are using the multi-well pad concept include Hess Corporation (NYSE:HES), which has permits for more than a dozen multi-well pads in the Bakken.
Cabot Oil and Gas reported the successful completion of the company's third well into the Eagle Ford Shale in Texas. The well produced 547 barrels of oil equivalent (BOE) during an initial 24-hour period.
Cabot Oil and Gas is ramping up development in the Eagle Ford Shale in 2011. The company has 52,000 net acres under lease, and also has 18,000 net acres in an area of mutual interest (AMI) with EOG Resources (NYSE:EOG). Cabot Oil and Gas plans to drill as many as 20 net wells in 2011 on its own acreage and in the AMI.
Chainman Shale
Cabot Oil and Gas reported the results of a wildcat well drilled to the Chainman Shale in Nevada, where the company reported that the shale was shallower than initially anticipated and as a result the well was abandoned. However, Cabot Oil and Gas has other prospects in three areas in Nevada and has not given up on this play.
Nevada is not a major producer of oil or natural gas, and the state only produced approximately 33,000 barrels of oil in August 2010. The only public company with production in Nevada is Berry Petroleum (NYSE:BRY), which has a few dozen producing wells in the state.
Bottom Line
Cabot Oil and Gas remains a natural gas company and reported strong year over year growth in production of that commodity, driven mostly by its Marcellus Shale properties. The company also reported the success in advancing the development of various shale plays, while missing on a wildcat well in Nevada. (Find out how to invest and protect your investments in this slippery sector. Check out Peak Oil: What To Do When The Wells Run Dry.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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