Cabot’s third quarter production, income rebounds from 2016

By Patrick C. Miller | November 06, 2017

In the third quarter this year, Cabot Oil & Gas Corp. experienced daily production growth of 12 percent above the same period a year ago and net income of $17.6 million compared to a $10.3 million loss in last year’s third quarter.

Cabot’s third quarter financial results showed an adjusted net income of $32 million compared to an adjusted net loss of $16.7 million at the same time last year. The company’s cash flow from operating activities was $189.1 million, an increase of 79 percent compared to the third quarter of 2016. Cabot generated positive free cash flow for the sixth consecutive quarter.

"Our disciplined approach to managing the business continued this quarter as we generated positive free cash flow despite lower than anticipated natural gas price realizations due to wider regional differentials," said Dan Dinges, Cabot chairman, president and CEO. "We remain committed to delivering positive free cash flow in 2017 and beyond, while continuing to focus on improving our corporate returns and increasing our return of capital to shareholders through prudent capital allocation."

In the Marcellus shale during the third quarter, Cabot averaged 1.7 million cubic feet per day of net production, drilling and completing 13.2 net wells and placing 15.2 net wells in production. Cabot is operating two rigs and using one 24-hour completion crew in the Marcellus Shale. It plans to remain at this level for the remainder of the year.

“We now have 49 fourth-generation wells on production and the production data continues to support our 4.4 Bcf per 1,000 lateral feet type curve," Dinges said. "Additionally, we have placed 12 fifth-generation wells on production and the results to date are encouraging with an emphasis on increasing economics by lowering well costs without comprising recoveries."

Cabot's net production in the Eagle Ford shale during the third quarter was 15,656 barrels of oil equivalent per day (87 percent oil), an increase of 19 percent compared to the second quarter of 2017. The company drilled 7.2 net wells and completed and placed 9 net wells on production.

The nine wells placed on production during the quarter had an average lateral length of 10,163 feet, were completed with 1,938 pounds of proppant per foot and had an average 30-day production rate of approximately 1,040 boepd. Cabot is operating one rig and using one 24-hour completion crew in the Eagle Ford shale. It plans to maintain one rig for the remainder of the year and cease its completion activity for the year in mid-November.

Cabot has initiated its 2018 daily production growth guidance range at 15 to 20 percent based on a capital budget range of $1.025 to $1.150 billion consisting of the following: Marcellus shale, $750 to $850 million; Eagle Ford shale, $125 to $150 million, exploration areas, $75 million; pipeline investments, $60 million; and corporate, $15 million. Cabot plans to operate three rigs and use two completion crews in the Marcellus shale during 2018.

The company’s said its capital allocation within this guidance range will be dependent on the timing of completion activity throughout the year.

"Our focus is on maximizing margins, returns and free cash flow and we firmly believe the flexibility in our current plan for 2018 will allow us to make the most prudent capital allocation decisions throughout the year in response to evolving market dynamics," Dinges said.