New Cabot Drilling Program Kicks Off This Week in Ashland, OH

As we have reported since last December, Cabot Oil & Gas, long-known for the incredible amount of Marcellus natural gas they produce out of a single northeastern Pennsylvania county (Susquehanna), is eyeing north central Ohio as a potential spot for “what’s next” after the Marcellus (see Cabot O&G Considers Drilling in Ashland County, OH). Cabot locked up leases and is planning to drill a number of test wells in not only Ashland, but also Holmes, Knox, Richland and Wayne counties in the Buckeye State (see New Details Emerge on Cabot’s Shale Plans in Central Ohio). The company doesn’t know exactly what it will find–gas, NGLs or perhaps even oil (see Just What is Cabot Looking for in Ohio – NatGas, Oil or NGLs?). Cabot is about to find out. Beginning tomorrow (Tuesday), Cabot says they will start to push dirt around and build their very first well pad in Ashland County. If all goes according to plan, Cabot will spud (begin to drill) the well itself in about three weeks. Plans for a second well, also located in Ashland County, are already in the works and will come along after the first well is drilled…
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Cabot Completes $2.5M Endowment for Lackawanna College 1 Yr Early

Cabot O&G regional HQ in Dimock, PA

Cabot Oil & Gas is such an impressive company. They are, without a doubt, one of our favorite Marcellus/Utica drillers. We know! You’re not supposed to have favorites among your “children.” We can’t help it. Cabot is a favorite child for us. The company pumped $4.6 billion into Susquehanna County the first 10 years they were in the county (see Amazing: Cabot O&G Invests $4.6 BILLION in One PA County in 10 Yrs). Some $1.5 billion of that amount was lease bonuses and royalty payments–direct into the pockets of landowners. The other $3.1 billion was money Cabot spent in the county to drill there–money that was spread around to contractors, suppliers and workers. It is an incredible story, and certainly would be “enough” if Cabot left it at that. But Cabot hasn’t settled for just benefiting the community with an enormous amount of investment–an investment that benefits Cabot’s own business. Cabot is also one of the biggest philanthropists in Susquehanna County (perhaps THE biggest). In 2012, Cabot gave $2.2 million, that was matched, helping to raise $4.4 million for a new hospital in the county (see Cabot Effort Raises $4.4 Million for PA Physicians Clinic). Then in April 2014, Cabot announced it would donate $2.5 million to Lackawanna College (Scranton, PA) over a five-year period (Cabot Oil & Gas Does it Again – $2.5 Million Gift to Lackawanna College). The gift funds the School of Petroleum & Natural Gas located in New Milford, PA, and is the largest single private donation in the history of Lackawanna College. Cabot has just completed fully funding the $2.5 million Lackawanna gift–a full year ahead of schedule…
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Just What is Cabot Looking for in Ohio – NatGas, Oil or NGLs?

Two days ago MDN revealed which rock layers Cabot Oil & Gas is targeting with new test wells in central Ohio (see New Details Emerge on Cabot’s Shale Plans in Central Ohio). Today we answer the question, What does Cabot hope to find? Cabot representative Brittany Ramos told an area newspaper that the company is looking for, “a hydrocarbon, an oil, natural gas, natural gas liquid, something, in the layers below the Utica Shale, but the only way to find that out is to actually drill a well and test.” In other words, they don’t know. They know *something* is down there, but they aren’t sure what. We suspect they’re hoping it’s either oil or NGLs. Cabot, long known for their prolific natural gas production in Susquehanna County, PA, had a previous dalliance with oil drilling in the Texas Eagle Ford shale play–assets they ended up selling in December 2017 (see Cabot O&G Sells Texas Eagle Ford Assets for $765M, Focus on Marc.). Does the company have a renewed interest in finding oil? Perhaps. If not oil, certainly NGLs. We seriously doubt they’re looking for yet another dry gas zone. Below is yet another update on Cabot’s foray into central OH. It is one of the more fair and balanced articles we’ve read. Yes, the reporter interviewed a representative from the faux “landowner group” called the Tri-County Landowners Coalition–in reality an anti-fossil fuel group controlled by elements of the Big Green movement (see Fake Ohio Landowner Groups Launch Misinformation Campaign). In this article the reporter actually asks Cabot to respond to the wild claims made by the Tri-County rep, point for point. Cabot obliterates the anti’s arguments…
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New Details Emerge on Cabot’s Shale Plans in Central Ohio

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Cabot Oil & Gas director of external affairs, George Stark, recently spoke to the Ashland Times-Gazette about the company’s plans to drill test wells in and around Ashland County, OH. As MDN previously reported, Cabot is sniffing around central Ohio, looking for “what’s next” after the Marcellus Shale. Last December we told you that Cabot has leased acreage in Ashland County (see Cabot O&G Considers Drilling in Ashland County, OH). Two weeks ago we told you that Cabot has filed for its first permit to drill a test well (see Cabot Files for Permit to Drill Below the Utica in Ashland, OH). Stark revealed, in his interview, that Cabot geologists “see something in Ohio” and that Cabot “wants to go touch it.” What, exactly, does Cabot want to touch? We originally thought it was the Utica, but Stark told MDN no, it’s not the Utica–but a layer “lower than the Utica.” However, Stark won’t say specifically which layer or layers. We now think we know. We also learn (from the article) that Cabot has acreage not only in Ashland, but in four neighboring counties too…
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A (Very) Rough Method for Calculating Royalties on Cabot Wells

Cabot Oil & Gas, one of our favorite Marcellus drillers, has just published a new PowerPoint slide deck presentation as part of an investor’s conference they attended earlier this week (the Scotia Howard Weil Energy Conference). Normally a new slide deck isn’t all that big a deal. However, thanks to MDN friend Chris Acker who pointed it out to us, there is some new information in the deck worthy of note. Back in December MDN brought you the news that Cabot had signed a deal to sell off their Texas Eagle Ford Shale assets in order to concentrate solely on the Marcellus (see Cabot O&G Sells Texas Eagle Ford Assets for $765M, Focus on Marc.). The slide deck notes that the Eagle Ford divestiture closed on Feb. 28th (slide #3). Also in the slide deck is a mention that Cabot plans to experiment with drilling “upper Marcellus” wells in the second half of 2018 (slide #11). Most (all?) of the wells they’ve drilled to date are “lower Marcellus.” A successful program of drilling upper Marcellus certainly bodes well for existing landowners with existing lower Marcellus wells–perhaps Cabot will revisit those pads to drill new wells? Slide #11 has some great information on it. We’ve used it to create a (very) rough royalty estimation calculator for Cabot landowners…
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Cabot Files for Permit to Drill Below the Utica in Ashland, OH

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Cabot Oil & Gas continues its quest to discover “what’s next after the Marcellus.” As we told you in December, Cabot has leased acreage in Ashland County, OH, west of most active Utica drilling (see Cabot O&G Considers Drilling in Ashland County, OH). We originally thought Cabot was targeting the Utica in Ashland County, but Cabot director of external affairs, George Stark, set us straight. Cabot is targeting a layer below the Utica in Ashland County. (Although so far, Cabot will not reveal which layer.) The new news is that last week Cabot filed for a permit with the Ohio Dept. of Natural Resources to drill a test well in Ashland…
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Top 3 Most Productive Drillers in the Marcellus Shale

We spotted an intriguing story that summarizes some of the information found in a newly-released report from private equity firm Baird Equity Research. Baird’s report purports to show, using data, “the most productive operators in the Marcellus shale.” What is the criteria used? They use productivity per average well along with how much money the average well is generating for the operator (i.e. driller). We wish we had a copy of the full report. Sadly, we do not. However, we do have the article summarizing it, which shares the top three operators. The top operator stands head and shoulders above the rest. Would it surprise you to learn the top operator in the Marcellus, according to Baird, is Cabot Oil & Gas? No, it didn’t surprise us. What about the other two in the top three? And what about the top Utica operator? Read on…
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Cabot: 2018 “Inflection Year” with 1.5 Bcf/d of New Demand Coming

Cabot Oil & Gas, one of the biggest and best drillers in the Marcellus Shale, released its fourth quarter and full year 2017 update today. Cabot continues to be the low cost leader. Cabot’s cost to find and develop shale gas in northeastern PA is an amazingly low $0.22 per thousand cubic feet (Mcf). Breakeven price for Cabot in the Marcellus in 2017 was ~$1.05/Mcf, meaning any sales above that amount is profit. Cabot sold its gas for an average of $2.31/Mcf in 2017, a 36% increase over 2016. You can see why they’re profitable, even with low gas prices in NEPA. Cabot produced 685.3 billion cubic feet equivalent (or 1.9 Bcfe/d) in 2017. Most of that came from a single county, Susquehanna County, PA. Like many shale companies, Cabot lost money in 2016 ($417 million), but they turned it around last year by making a $100 million profit. Cabot has now drilled in NEPA for the past 10 years. Have they run out of places to drill? Nope. Looking at a chart in Cabot’s most recent slide deck, they still have around 3,000 locations left where they can drill on existing leased acreage. At the end of last year Cabot owned 561 producing Marcellus wells. There’s plenty more to come! In this update Cabot indicates that 2018 will be “an inflection year” for the company. Why? Several large projects will come online in PA this year that will sop up a considerable amount of Cabot’s gas: (1) Moxie Freedom Power Plant, (2) Lackawanna Energy Center Power Plant, and (3) Atlantic Sunrise Pipeline. You can likely add a fourth to the list–the startup of the PennEast Pipeline. Take all of those together, and Cabot will get new demand to sell an additional 1.5 Bcf/d of gas they don’t sell now. In other words, Cabot will just about have to double their production to meet the new demand–which they are quite capable of doing. All eyes are on Cabot in 2018 as they hit an inflection point…
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OH Fractivist Claims Obliterated with Cold, Hard Facts from NEPA

MDN friend Chris Acker, standing in front of a rig about 200 yards from his house in NEPA

In December MDN brought you the news that Cabot Oil & Gas is sniffing around Ashland County, OH, with plans to possibly drill in a rock layer even deeper than the Utica Shale (see Cabot O&G Considers Drilling in Ashland County, OH). Cabot’s activity in the area was met with resistance by anti-fossil fuelers. Nothing new about that. What is new, however, is that some of the antis (a handful) in the Ashland area formed a faux landowner coalition, trying to fool landowners into joining them (see Warning to Ohio Residents: Beware Fake Landowner Coalitions). The faux landowner coalition has been busy spreading lies about Cabot, making wild accusations about what will happen if Cabot is allowed to drill in the county. MDN friend (and right arm) Chris Acker, a northeast PA landowner signed with Cabot, has written a guest post/rebuttal that obliterates the lies being spread by Ashland antis. Buckle up, this one will be fun to read!…
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Impressive 2018 Marcellus Growth Not So Impressive Because of DUCs?

Our lead story today is about Gulfport Energy which highlights some exciting news: This year (in 2018) Gulfport will fund their entire drilling budget out of the cash flow the company generates from selling gas/oil/NGLs (see Gulfport Energy Continues Focus on Utica for 2018, No Borrowing). Thing is, Gulfport isn’t the only Marcellus/Utica driller to advertise the fact that this year they are “living within their means” and not borrowing. Others include Range Resources, EQT and Antero Resources. Wow! We’re finally profitable!! Or are we? MDN spotted some analysis by a hedge fund manager. Writing on the Seeking Alpha investor’s website, Josh Young says (in our words) “hold on a minute” with respect to M-U drillers appearing to be able to grow production without borrowing. Why is Josh not convinced with this good news? Because when you dig deeper into the numbers, you find that “organic growth within cash flow is further from reach” because drillers are using DUCs to spend less on drilling, and grow production, than they otherwise would be. A DUC is a Drilled but UnCompleted well. Many times drillers will drill the initial hole in the ground, but then not “complete” (or frack) the well. Why do that? For a variety of reasons. The biggest reason is usually because the commodity price of gas (or oil, depending on the well) is not favorable. Rather than lose the lease (an expensive proposition), drillers will begin the process by drilling, and then leaving, the well, returning later to complete it when prices go up again. Josh’s thesis is that by using DUC inventory drillers aren’t really funding the entire budget from current year cash flow, because some of the money was spent in a previous year to drill the well. They are, in essence, still borrowing–from a different year. Josh estimates an average of 20% of the “new” wells coming online are DUCs and not truly new wells funded by current year dollars–meaning these companies aren’t as “profitable” as they may seem. Does he have a point? Is it all just financial mumbo jumbo? You decide…
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Cabot O&G Continues Tradition of Philanthropy in NEPA Communities

The following guest post was written by Rick Hiduk:

Cabot Warming Hearts at Coldest Time of Year

It has been a particularly cold couple of months, and those most effected by winter’s bite tend to be the less fortunate families in our region and their children. Since Thanksgiving, Cabot Oil & Gas has been reaching out to the community in a variety of ways and brightening the lives of hundreds of area residents. While Cabot has become known for its ongoing philanthropy, the initiatives covering the holiday season were especially well received, helping more than 800 families in northeast Pennsylvania…
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Cabot O&G Sells Texas Eagle Ford Assets for $765M, Focus on Marc.

Cabot Oil & Gas is a unique company. To date, Cabot produces ~2.5% of the U.S.’ entire natural gas production out of a single northeastern Pennsylvania county: Susquehanna. One company, one county, 2.5% of all our natural gas production. It’s mind-blowing! No wonder they are called Wall Street’s natural gas unicorn (see Marcellus Driller Cabot Oil & Gas: Wall Street’s NatGas “Unicorn”). Although we jealously like to think of Cabot as a Marcellus-only driller, the truth is, they own acreage and wells, and do drilling, in a number of other plays too. Not much drilling, mind you. But some. Cabot mostly sticks to drilling in the Marcellus in northeast PA, although lately they’ve had a wandering eye (see Cabot O&G Considers Drilling in Ashland County, OH). One of the other shale plays where Cabot has been active in the past is the Eagle Ford Shale, in South Texas. The Eagle Ford is largely an oil play. This past year it did not escape our notice that Cabot had de-emphasized their Eagle Ford drilling efforts. Looks like drilling for oil in Texas is not in the cards for Cabot. Yesterday Cabot announced they’ve cut a deal to sell all of their Eagle Ford assets–land and wells–to Venado Oil & Gas for $765 million. They also said they are selling their remaining East Texas assets to an undisclosed buyer. The Houston-based Cabot won’t have any active operations in the Lone Star State. As part of yesterday’s announcement, Cabot released high level budget numbers for 2018. They intend to spend close to $1 billion next year–almost all of it in the Marcellus…
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Cabot Asks Court for Stiffer Fine Against NEPA Lawbreaking Anti

A little-known (outside of northeast Pennsylvania) anti-driller, Vera Scroggins, was fined $1,000 in April 2015 in Susquehanna County court (see PA Anti-Driller Fined $1K for Trespassing on Cabot O&G Site, Jail?). Vera’s biggest claim to fame is her potty mouth treatment of FrackNation filmmaker Phelim McAleer (watch it here). She is a repeat trespasser on Cabot Oil & Gas drilling sites and has been warned, repeatedly, to stay off their land–for her own safety and the safety of others. Scroggins runs so-called tours where she shows New York City celebrities and other urbanites (who don’t know the difference between a cow’s udder and a roof gutter) the gas fields of Susquehanna County, claiming drilling operations somehow harm local residents. In 2015, the judge had enough. He said at the hearing that Vera had 45 days to pay the $1,000 fine for her latest violation and if she didn’t, she was going to jail. Apparently she paid. However, she’s at it again. Cabot says Vera has continued her trespassing ways and is now (allegedly) in contempt of court for disobeying the judge’s orders. Cabot is requesting Vera be find $5,000 and chip in money for their legal fees. Some people never learn…
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Cabot O&G Considers Drilling in Ashland County, OH

Important Update (12/18/17) – A highly placed source in Cabot Oil & Gas called MDN to let us know Cabot is not looking to drill the Utica Shale in Ashland County, OH, as we first presumed. Instead, Cabot is looking to drill LOWER than the Utica–in a different rock layer. We were not told which layer. This is purely exploratory. Sometimes you hit and sometimes you miss. Something about the area has caught Cabot’s attention–but that doesn’t mean it will pan out. Stay tuned!

This, for us, is HUGE news. Cabot Oil & Gas is sniffing around the possibility of drilling in the Ohio Utica. We suppose it shouldn’t surprise us, but it does. Especially since we haven’t heard or read a word about Cabot’s Utica interest–until now. Put yourself in Cabot’s shoes–what comes next? After all, they’ve been drilling in Susquehanna County, PA for the last 10 years. Sooner or later Cabot will run out of new places to sink wells. Cabot previously fiddled around in the Eagle Ford Shale play in Texas, drilling for oil, but that hasn’t panned out. In May, MDN picked up on a little bit of information slipped into Cabot’s first quarter update–the company is spending $125 million THIS YEAR on buying leases and drilling test wells, in plays they weren’t ready to disclose at that point (see Cabot O&G 1Q17 – Oil Turning Cabot’s Eye Away from Marcellus). The only hint we had about where Cabot may be looking was this statement: “our focus is going to be oil.” We now know where at least some of that $125M is going–to Ashland County, OH. Cabot is looking to drill an exploratory well (or two or three) in Ashland, to see what they find. We think Cabot’s choice of location interesting. Ashland County is located well west (and north) of Ohio counties currently drilled for Utica oil and gas. We’ve checked the statistics in our forthcoming Marcellus & Utica Shale Almanac. Devon Energy got a single permit and spud (began to drill) a single well in Ashland’s Utica Shale back in 2011. Since that time (and through the end of 2016) no other permits were issued, and there’s been zero production from that single Devon well. It’s likely Cabot is shopping for a bargain–go where no one else is going, to see if they can make the magic happen once again that they’ve experienced in northeast PA. The reason we know about Cabot’s dalliance in Ashland is because local antis in the county are up in arms over the prospect of Cabot “fracking” the county…
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Cabot O&G Asks Judge to Make Dimock Anti Pay for Extortion, Slander

Cabot Oil & Gas is tired of being sued, and slandered, by people like Dimock resident Ray Kemble and his ambulance-chasing lawyers. So in August Cabot sued back–for $5 million (see Cabot O&G Countersues Dimock Anti, Lawyers). Kemble lives in Dimock Township, in Susquehanna County, PA. Kemble and other families claimed Cabot’s drilling in the area (10 years ago) caused problems with their water wells–a claim strongly refuted by Cabot. Cabot settled with most of the landowners, including Kemble. But a couple of Kemble’s neighbors did not settle. They sued and, in a sham trial, won a jury award of $4.2 million (see Dimock Jury Levies $4.25M Judgement Against Cabot in Dimock Case). However, a federal court later threw out the verdict and the $4.2 million judgement (see Fed Court Overturns $4.2M Dimock Judgement Against Cabot O&G). The judge said the Dimock lawsuit would have be re-tried. Our theory is that news of a potential new lawsuit and the previous OJ-like jury’s award of $4.2 million must have got old Ray a thinkin’…What if? So in April Ray and lawyers from two law firms launched yet another frivolous lawsuit against Cabot, litigation over something previously settled. It was a naked attempt to shake down Cabot for money in a quick settlement. But Cabot called them on it, filing a counter-lawsuit seeking $5 million–against Kemble, and against lawyers Charles Speer (Speer Law Firm) and Edward Ciarimboli and Clancy Boylan (Fellerman & Ciarimboli). Yesterday motions in Cabot’s counter-lawsuit were argued before a judge in Susquehanna County…
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NatGas, Oil Industry Partnership to Accelerate Methane Reductions

Yesterday America’s natural gas and oil industry announced “a landmark partnership”–called the Environmental Partnership–to “accelerate improvements to environmental performance in operations across the country.” How will they do that? The first area of focus will be to reduce methane and volatile organic compound (VOC) emissions. The Environmental Partnership includes 26 natural gas and oil producers, including several major Marcellus/Utica drillers (Chesapeake Energy, Cabot Oil & Gas, Chevron and Southwestern Energy). The list of 26 produce a “significant portion” of American energy resources–we’d peg it at around 80% of all production. The participating companies (full list below) will begin implementing the voluntary program starting January 1, 2018. Did you get that? It’s VOLUNTARY. Yet they will do it and they will voluntarily hold themselves and each other accountable–because they are good corporate citizens and (gasp) actually care about the environment. They don’t need the jackboot of government to force them to do it. Here’s how profoundly biased mainstream media reports it: Oil Firms Pledge to Plug Methane Leaks in Bid to Burnish Image (Bloomberg News). Yep, according to the anti-everything people, these companies are only doing it to “burnish” their image. They don’t really care about the environment. They’re evil, nasty fossil fuel companies (icky). MDN readers know differently. These companies are respectable, providing jobs and investment in local communities AND protecting the environment in those same communities–where they live. The other side? Groups like the Sierra Club destroy jobs in the name of “protecting” Mom Earth…
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