Cabot O&G: Marcellus Cost Structure Goes Through the…Floor!
Cabot Oil & Gas continues to impress and astonish the drilling industry. MDN has written many times before about Cabot’s ability to spin “gold” (profits) from “hay” (low cost price environment). Cabot recently presented at a pair of “global energy conferences” arranged by investment firms Jeffries & Co. and Bank of America Merrill Lynch. We have the slide deck from each (which is pretty much identical) and we’ve embedded it below. You’ll want to review it if you have an interest in the Marcellus Shale.
One of the startling pieces of information we glean from it: Starting in 2009 Cabot’s cost to drill and produce gas was $2.47 per thousand cubic feet (Mcf). By 2013, that number had dropped to an average $1.37/Mcf. Next year, in 2014, Cabot says their Marcellus per unit cash cost, the cost of drilling and producing, will be around…
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Is there an issue on which both anti- and pro-drillers can agree? Is there ever a time both sides can sit at the same table and discuss a potential problem, and do so without hyperbole and snarky comments? Is there an issue over which both sides can talk and not have it end in shouting? Indeed there is–and it is the issue of air pollution. MDN realizes we’re on shaky ground with our industry friends by writing this, but on several occasions we’ve pointed out there is a growing body of evidence that shows a marked increase in air pollution in heavily drilled areas–mostly from compressor plants, but also from drilling rigs, truck traffic, etc. (see 
This has to be a record for the Marcellus… The Pennsylvania court had ordered an auction of various parcels of land in Susquehanna and Bradford counties (in the prolifically productive northeastern “dry gas” portion of the Marcellus). There were 222 acres of land in total located in prime Marcellus drilling country. An auction was held on Oct. 30 in Wysox, PA and the land was all sold–to various buyers from across the country. Here’s the kicker: Some of the land sold for $16,700 per acre! This is rural farm land folks, not prime real estate in the middle of downtown. The money paid was not for a gas lease but the new owners get mineral rights with the land. You know the land was purchased in hopes of turning around and leasing it for Marcellus drilling. We don’t know for sure, but some of the land may even have been purchased by drilling companies (time will tell).
Who doesn’t like a Top 10? We have one for you: What are the Top 10 producing Marcellus Shale wells in Pennsylvania? Would it surprise you to learn that 8 of the top 10 wells are found in a single PA county, drilled by the same driller?
Cabot Oil & Gas, one of our favorite Marcellus drillers, continues to amaze and astound just about everyone. Last Friday (a week ago) the company issued a new “guidance” or “this is our best, educated guess” as to how much natural gas production the company will end up producing for 2013, and how much they believe it will grow in 2014. Given Cabot is already the number one natural gas producer in PA and the first member of what MDN calls the “billion cubic feet per day” club (see