Cabot Oil and Gas: 4Q14 earnings and big changes for 2015 (Part 3 of 6)
(Continued from Part 2)
Marcellus Shale
Cabot Oil and Gas Corporation’s (COG) net production in the Marcellus Shale during 4Q14 was 1,491 million cubic feet per day (or Mmcf/d). This was 27% higher year-over-year and 15% higher compared to 3Q14.
Dan Dinges, Cabot’s CEO (chief executive officer), commented, “Cabot’s impressive sequential growth from our Marcellus Shale asset in the fourth quarter of 2014 has resulted in strong production volumes to date in the first quarter of 2015. . . . However, in light of weaker than anticipated price realizations this winter and expectations for this price environment to persist throughout the year, we are taking a more measured approach to our production levels in 2015.”
Cabot plans to decrease its rigs operating in the Marcellus from the current five to three by the end of the second quarter of 2015.
Cabot’s key peers drilling in the Marcellus include Chesapeake Energy (CHK) and Range Resources (RRC).
Eagle Ford
Net production in the Eagle Ford during 4Q14 was 14,829 barrels of oil equivalent per day (or Boe/d). This was a 100% increase over the prior year’s comparable quarter and a 46% sequential increase over 3Q14.
As in the case of Marcellus, Cabot Oil and Gas plans to reduce its drilling activity in the region in response to lower commodity prices. The company plans to decrease its three rigs operating currently to one rig by the end of 2Q15.
However, Dinges added, “We will remain flexible throughout the year and will consider increasing our level of activity if we see a sustained recovery in oil prices sooner than we are currently forecasting.”
Production growth forecast
Because of its lower level of activity this year, Cabot Oil and Gas has pared back its forecast production growth to 10% to 18%. Earlier guidance from the company’s third quarter earnings was 20% to 30% growth.
EOG Resources (EOG), a key Eagle Ford operator, has also joined its upstream counterparts in slashing capital expenditures.
COG, CHK, RRC, and EOG are key components of the Energy Select Sector SPDR ETF (XLE). Together, they make up ~7% of the ETF.
Continue to Part 4
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