Cabot presents at EnerCom’s The Oil & Gas Conference®
During Cabot’s breakout session, management was asked the following questions:
- Where are you in terms of held by production in the Eagle Ford in the next 3-5 years and would you consider divesting and investing in the Marcellus instead?
- What should we model for Eagle Ford in terms of EUR, oil cut, gas to oil ratio, well cost, and net revenue interest?
- Is the number of drilling locations you gave for the Eagle Ford gross or net?
- On the Eagle Ford, if you take natural gas strip prices, what oil price would you need to match the returns in the Marcellus?
- In your slides, you talk about decline rates of 50% in 5 years, is that natural or are you choking it back?
- What is the upper limit for lateral length over time?
- As you are putting together the 5 year ramp plans in the Marcellus, how are you thinking about developing the lower versus upper Marcellus? And will you use currently existing pads or will you create new pads?
- It seems to me that once the infrastructure is in place, Appalachia will destroy the economics anywhere. Do you have any perspective on this? Is there any reason why Appalachia cannot make 40-50 BCF per day?
- You have tried to lead by example in Northwest Pennsylvania in being disciplined. Do you have any commentary on how disciplined your competitors are?
- Do you see Rover and some of the other pipeline projects taking some pressure off of you and Northwest Pennsylvania?
- You mentioned some interest in private equity in the Eagle Ford. Do you have any commentary in the M&A markets in the Eagle Ford?
- Do you see upper Eagle Ford potential in any of your locations?
- When you think about CAPEX per rig for the Eagleford, how does that compare to the Marcellus?
You can listen to Cabot’s presentation by clicking here.
For the company’s second quarter results, click here.
Cabot Oil & Gas (ticker: COG) is an exploration and production company headquartered in Houston, Texas. Cabot is primarily a natural gas producer that is focused on developing its acreage positions in the Eagle Ford and Marcellus Shale. As of December 31, 2015, the company had approximately 8.2 Tcfe of proved reserves.
In Q2 2016, Cabot drilled seven net wells in the Marcellus and no wells in the Eagle Ford. During the quarter, the company averaged 1,535 MMCF per day of net Marcellus production, an increase of 14 percent compared to the second quarter of 2015. Cabot’s net production in the Eagle Ford shale during the Q2 2016 was 14,312 BOE per day, an increase of 10 percent sequentially compared to the first quarter of 2016. Cabot’s efficiency gains in the Marcellus have allowed it to generate internal rates of return over 100 percent under current price expectations, so the company plans to opportunistically grow gas production in 2017.
Cabot recently announced a 10-year sales agreement reached with Invenergy LLC’s Lackawanna Energy Center, a power plant in Pennsylvania. The company believes this deal will reduce risk for both parties and guarantee Cabot a meaningful return on all gas sold under the contract.
The pricing terms for the natural gas supplied by Cabot to the Lackawanna Energy Center are confidential, but they will be tied to power prices, rather than natural gas prices. When asked by Oil & Gas 360®, COG Treasurer Matt Kerin said the deal offers the company attractive returns by connecting it to end-user demand.
Cabot realized a net loss in Q2 2016 of $62.9 million ($0.14 per share). Cash flow from operations was $85.2 million in Q2 2016, compared to $171.2 million in Q2 2015. Cabot Oil & Gas has increased its capital budget from $325 million to $345 million for the year, which the company expects will allow production growth of 2-7% for 2016.
