Cabot O&G 2015: $114M Loss, Drilled 142 Wells, Production Up 13%

We consider Cabot Oil & Gas one of the bellwether Marcellus drillers that provides a good measuring stick for where the industry is heading. Last Friday Cabot released their fourth quarter and full year 2015 financial results. What did it show? In 2014 Cabot made $104 million after expenses. In 2015, the company lost $114 million after expenses. But that’s not the whole story. Cabot has been disciplined in their spending. If you look at net income or loss for the fourth quarter, in 2014 Cabot lost $222 million–but in 4Q15 they lost $111 million. That is, they’re getting better at reigning in costs. And Cabot is already a low-cost leader. The big battle they faced in 2015 and continue to face is lack of pipeline takeaway capacity. NY Gov. Andrew Cuomo is punitively withholding approval of stream crossing permits for the Constitution Pipeline and that is damaging Cabot (we think they have a good case for a lawsuit). Because Cabot must sell most of their gas locally, they get bottom of the barrel prices. In 2015 they averaged a price of $2.15 per thousand cubic feet (Mcf) for the gas they sold. Hence, they began to shut-in some of their wells and vastly slowed down drilling. In 2014 Cabot drilled 200 wells. In 2015, that number slide to 142 wells. Even with shut-in wells and less drilling, Cabot still managed to grow production by 13% in 2015 over 2014. Here’s Friday’s Cabot update…

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