Cabot O&G 2016 – Production Grows from 3.8 to 4.4 Bcf per 1K Feet

Cabot Oil & Gas, one of our favorite Marcellus drillers, turned in their fourth quarter and full year 2016 update on Friday. In something of a surprise (for us), the company reports losing $417 million in 2016, up from losing $114 million in 2015. However, when you dig into the numbers, you find that it’s a paper loss. Cabot reports “impairments” (i.e. loss of value) in their assets of $435 million for the year. Some $275 million of that was a write-down in the value of oil and gas properties, including pipelines, in West Virginia and Virginia. Cabot drilled 40 gross (38.0 net) wells and completed 76 gross (76.0 net) wells in 2016, exiting the year with 51 gross (45.2 net) drilled and uncompleted wells, of which 29 gross (26.2 net) were in the Marcellus Shale and 22 gross (19.0 net) were in the Eagle Ford Shale. What’s ahead in 2017? Cabot plans to spend more money this year than they did last year–to drill in both the Marcellus and Eagle Ford. Cabot plans to spend $610 million on drilling, completion, and facility capital in 2017. Of that, two-thirds (67%) will go to the Marcellus and one-third (33%) will go to the Eagle Ford. With that money they plan to drill and complete 90 net wells. On the earnings call with Cabot’s top brass, we learn about their “Gen 4” completions in the Marcellus, which have increased estimated ultimate recovery (EUR) rates from 3.8 billion cubic feet (Bcf) per 1,000 feet of lateral well to 4.4 Bcf. Translation: Cabot gets double the gas per lateral foot of well than some of its competitors, which is why they consistently have something like 15 of the top 20 producing wells in the state. Here’s the Cabot update…

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