Cabot O&G 3Q17: Marcellus Production 2 Bcf/d, $32M Profit
Cabot Oil & Gas, one of our favorite Marcellus drillers, released its third quarter 2017 update on Friday. Some of the things we learn from the report and the analyst phone call held by Cabot’s top brass: Production grew another 12% during 3Q17. In the Marcellus, Cabot’s natural gas production averaged just over 2 billion cubic feet per day gross (Bcf/d). If you use U.S. Energy Information Administration numbers from the most recent monthly drilling report, Cabot’s 2 Bcf/d equals 8% of all Marcellus production, and 3.3% of all shale gas production in the U.S! That’s truly amazing, considering it all comes from Susquehanna County (with a couple of wells in neighboring Wyoming County), in northeast PA. Profitability returned in 3Q17 with net income of $32 million, versus a net loss of $16.7 million in 3Q16. In the Marcellus, Cabot drilled and completed 13 net wells and placed online into production 15 net wells. They now have 49 “fourth generation” wells online and producing at an average of 4.4 Bcf per 1,000 feet. They also have 12 “fifth generation” wells online. One of the highlights for Cabot during 3Q17 was the announcement that Williams is now building their $3 billion, 198-mile Atlantic Sunrise natural gas pipeline project. Cabot says when the pipeline is done in mid-2018, Cabot will flow 1 Bcf/d of gas to new markets. Cha ching! New markets equal higher prices and more profitability for the company. Below is the full 3Q17 update, followed by remarks from CEO Dan Dinges made during the analyst call…
Read More “Cabot O&G 3Q17: Marcellus Production 2 Bcf/d, $32M Profit”
Cabot Oil & Gas has long been one of our favorite Marcellus drillers. We are friends with several members of the Cabot team. We are impressed with their many acts of philanthropy in northeastern Pennsylvania–donating millions of dollars to worthy causes in the local community where they drill. As we’ve pointed out many times, Cabot somehow spins gold out of hay in Susquehanna County–producing something like 2.5% of all the natural gas that’s produced in the U.S. from a single county. They have some of the best rocks in the shale business. Cabot’s assets have not gone unnoticed on Wall Street, where investors and analysts call the company “a unicorn.” While the term unicorn as applied to a company can have several meanings, as applied to Cabot the meaning is clear: the company is rare, and desirable. In an Investor’s Business Daily article, several analysts gush about Cabot in light of the beginning of construction of the Atlantic Sunrise Pipeline project. Cabot will be the main shipper on the new pipeline. Analysts are predicting next year, in 2018, Cabot’s production will increase 23% from this year. And in 2019, one analyst says Cabot production will be up a whopping 47%! You begin to see why Cabot has a reputation as a unicorn on Wall Street…
Some big news that both Cabot Oil & Gas and the two families suing them seem to want to keep quiet: they’ve settled out of court. Brief background for those new to MDN and to the “Dimock” story: There were 14 families along the Carter Road area of Dimock Township, PA (Susquehanna County) that reportedly experienced turbidity in their water from methane migrating, supposedly from Cabot’s drilling operations nearby. The state Dept. of Environmental Protection (DEP) investigated in 2010 and declared Cabot guilty and imposed stiff fines and requirements, including a requirement to install permanent water treatment systems at each home and even an offer to each of the families to pay twice what their property was worth at the time (see 
Yesterday we brought you the “Top 10” drillers in southwestern Pennsylvania, as ranked by the number of permits issued (see 
When a driller sinks a hole in the ground looking for one hydrocarbon–like natural gas–other hydrocarbons also come out of the ground. Sometimes its oil. Sometimes condensate. Sometimes natural gas liquids (NGLs), including ethane, propane, butane, pentane, etc. In northeast and central Pennsylvania where the Marcellus Shale is prolific, most of what comes out of the ground is just methane–or natural gas. However, in the southwestern portion of PA, and in the northern panhandle of WV and on into eastern OH, it’s a different story. They are considered “wet gas” areas because (depending on the county) the wells are prolific NGL producers. Most NGLs, like propane, fetch much higher prices than plain old methane. Typically ethane is the NGL that mostly comes out of the ground, but for many drillers ethane can’t (yet) be sold, so it’s considered a “waste” product, mixed into the methane stream to get rid of it. But that’s changing. There are now pipelines to carry ethane to facilities in both Philadelphia and to a cracker plant in Canada. There’s even a pipeline for ethane (and other NGLs) that goes all the way to the Gulf Coast (ATEX, Appalachia to Texas). Some of the largest Marcellus/Utica drillers now have markets for their NGLs, so they are ramping up production and selling more NGLs. In fact, six of the eight largest M-U drillers increased their NGL production in the second quarter of 2017 compared to 2Q16. Which six increased, and which two decreased NGL production last quarter?…
Exactly one week ago MDN brought you the exclusive news of WHO is selling a bunch of conventional wells and leases (and pipelines) located in West Virginia, Ohio and Virginia to Carbon Natural Resources (see 
Carbon Natural Gas Company, through its affiliate Carbon Appalachian Company, teased in a press release issued yesterday that the company has just completed the acquisition of “natural gas producing properties and related facilities” located “predominantly in the State of West Virginia” for $21.5 million. The release does not identify the seller–but MDN believes we know who it is: Cabot Oil & Gas. We supply our evidence below. Carbon Natural Gas is an independent oil and gas exploration and production company (i.e. “driller”) that owns, operates and develops oil and gas properties in the Appalachian, Illinois and Ventura Basin areas of the U.S. Most of the wells they own and operate are conventional. However, in April the company began dipping its toe into unconventional shale as well (see 
We have to confess, we are not only shocked, but somewhat distressed at news we are reading that Cabot Oil & Gas is considering all options, including a sale of its Marcellus acreage in Susquehanna County, PA. To be fair, and to keep it in balance, it seems that the company would prefer to add to its Marcellus acreage, rather than sell it. However, chief financial officer Scott Schroeder said at a conference in Denver yesterday that all options are on the table, including a Marcellus acreage sale “if the terms are right.” MDN editor Jim Willis lives next door to Susquehanna County (and regularly visits Montrose, PA), and knows landowners in the county signed with Cabot. You have to understand how fundamentally Cabot has changed the county, by investing $1.5 billion into the pockets of landowners over the past 10 years, along with spending another $3.1 billion to do the drilling (see 
It’s about time. Cabot Oil & Gas is tired of being sued, and slandered, by people like Dimock resident Ray Kemble and his ambulance-chasing lawyers. So Cabot has sued back–for $5 million. Kemble lives in Dimock Township, in Susquehanna County, PA. Kemble and other families claimed Cabot’s drilling in the area (nearly 10 years ago) caused problems with their water wells–a claim strongly refuted by Cabot. Cabot settled with most of the landowners, including Kemble.
Just when you thought we’d heard the last of “Dimock” and “fracking poisons water” nonsense, the storyline as pushed by mainstream fake news has come roaring back to life–thanks to the Trump Administration. Dimock, Pennsylvania was made famous in Josh Fox’s faux documentary Gasland, which aired on HBO a bizillion times. It was Fox’s 15 minutes of fame. He lied about fracking, painting it as an evil practice that polluted water wells around Dimock. His lies were later exposed by a real documentary called 
Last Thursday some 450-500 supporters, oil and gas industry workers and politicians gathered at the Shadowbrook Golf Course in Wyoming County, PA to express support for Williams’ $3 billion, 198-mile Atlantic Sunrise Pipeline project, most of which will get built in northeast Pennsylvania. The event was organized and sponsored by Cabot Oil & Gas, one of the major beneficiaries of the pipeline, and Williams, which will build and operate the pipeline. The overall purpose of the event was to give a metaphorical kick in the rear-end of Gov. Tom Wolf and his Dept. of Environmental Protection (DEP), which appears to be intentionally dragging its feet with granting stream crossing permits–about the only thing left before the backhoes fire up and start digging. The event, held from noon to 2pm, began with lunch–barbecue pulled pork and chicken–followed by a series of short speeches by political leaders from the region. With people gathered at tables, and some standing, a half dozen speakers stood on a giant flatbed trailer underneath what has to be the biggest American flag MDN editor Jim Willis has ever seen, hoisted and held between two large cranes (see the pic). The upshot of the speeches can best be summarized in a single statement delivered by Alan Hall, Chairman of the neighboring Susquehanna County Board of Commissioners, when he said: “It’s time to kick the politicians in the ass and get this [pipeline] done.” There were some other great one-liners too…
Yesterday the 11th “Think About Energy” Briefing was held at Misericordia University, near Wilkes-Barre, PA. The session aimed to provide an update on the economic and environmental benefits of PA natural gas, and was organized/sponsored by Borton-Lawson, Cabot Oil & Gas, UGI Energy Services, UGI Utilities, and Williams, in conjunction with ACT for America and the Back Mountain Chamber of Commerce. About 100 people attended. Carl Marrara, vice president of government affairs for the Pennsylvania Manufacturers’ Association, had this to say: “The demand for natural gas is expected to increase by 40 percent over the next decade, and even more in Pennsylvania.” He said that more natural gas is needed by PA manufacturers, but slow pipeline infrastructure approvals by “government officials” are “holding up growth.” MDN friend Bill desRosiers of Cabot Oil & Gas was the moderator and master of ceremonies. Other speakers included: Abe Amorós of the Laborers’ International Union of North America (LiUNA), Mike Atchie of Williams, and Larry Godlasky of UGI Energy Services. Although it was a gas-friendly crowd, the session wasn’t, however, without a touch of controversy. One anti showed up–a math professor from Luzerne Community College–and left in a huff when the audience told him to shut up and sit down during the Q&A portion…
Last week one of our favorite Marcellus drillers, Cabot Oil & Gas, issued its first quarter 2017 update. There’s lots to see and to discuss. First up, Cabot’s production was up 7% from the same quarter a year earlier. And while Cabot lost $51 million in 1Q16, the company profited $106 million in 1Q17. So production went up a little, but profits went up a lot. Perhaps the main reason why Cabot made more money in 1Q17 is that the price they got for their natural gas went up 77% over the same period last year. Two items in particular caught our attention about the update: (1) Cabot predicts Williams’ Atlantic Sunrise Pipeline will be fully permitted “by early July” and construction will begin in the third quarter. They are jazzed about shipping an extra 1 billion cubic feet (Bcf) per day on the pipeline when its fully operational in 2018. (2) Other shale plays are now catching Cabot’s eye and CEO Dan Dinges is spending $125 million THIS YEAR on buying leases and drilling test wells–in plays they aren’t yet ready to disclose. The only hint we have is “that our focus is going to be oil.” Hmmmm. We don’t much like the sound of that. Cabot has developed a wandering eye for other plays. Make no mistake, Cabot will continue to drill aggressively in the Marcellus–but they will no longer be laser focused on the Marcellus. To be fair, the company has previously fiddled around in the Eagle Ford (an oil play in Texas). But apparently the Eagle Ford is not where “the next big thing” will be found. Cabot is looking elsewhere for the next miracle, like the one they found in Susquehanna County, PA with the Marcellus. Except this time it’s in oil and not gas…