Cabot Cuts 2015 Budget 44%, Will Drill 70 New Marcellus Wells
Last week Cabot Oil & Gas issued its fourth quarter 2014 and full year 2014 update, along with guidance on what they plan to do for 2015. In October Cabot said they would spend upward of $1.6 billion on drilling in 2015 and planned to grow their production a very healthy 20-30% (see Cabot O&G 3Q14: A Wandering Eye + Welcome to the 2 Bcf/d Club!). Last week Cabot slashed the budget to $900 million and their new planned growth projection is 10-18%. Cabot also said they’re downsizing their rig fleet–in the Marcellus they’re going from 5 rigs to 3, and in the Eagle Ford (Texas) they’re cutting back from 3 rigs to 1. Revenue for 2014 was down 63% over 2013 due mostly to the low price of natgas along with certain other “impairment” charges. Amidst the bad news of budget cuts and lower revenue, there was really good news: Cabot hit a new production high of 531.8 billion cubic feet in 2014, up 29% from 2013; proved reserves increased 36%–to 7.4 trillion cubic feet equivalent; and they still plan to drill upward of 70 new wells in 2015 in the PA Marcellus (in Susquehanna County)…
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There’s a stark difference between pro-drillers and anti-drillers. Take pro-drillers in New York State as an example. NY landowners have had their property rights stripped away by a lawless (and spineless) governor–Andy Cuomo. Yet NY landowners soldier on. When the state’s highest court handed them an unfair and crushing blow by allowing municipalities to ban drilling, they continued to make their case and use whatever means they can–within the law–to advance their cause. NY landowners hate the fact that Cuomo and the courts have bastardized the law in the Empire State, but they continue to recognize the rule of law and abide by it. They are good citizens. Let’s contrast that with anti-drillers–say those in Ohio. When a court decision goes against anti-drillers, like the recent OH Supreme Court ruling (see 
Calling OH Gov. John “foreigner hunter” Kasich. We have an infraction! Quick! You’re needed, stat. Word has leaked out that MarkWest Energy has not only reduced the number of union members they’re using on jobs in Harrison County, OH, they’re using non-union (gasp) out-of-state workers–from exotic places like Texas and Louisiana and Oklahoma. Those places have been defined by John Kasich as “foreign” locations (i.e. non-Ohio). Periodically the jingoist-in-chief gets on his high horse and goes riding after those darned foreigners (see 
New York’s anti-drillers are still not happy–even after winning a ban by pressuring a spineless governor. They continue to rally and agitate and spread lies and threats and tell scary stories of environmental boogeymen…”that pipeline’ll kill ya”…”the fracked gas comin’ out the stove has radon in it”…”the compressor station three miles from your house that you didn’t even know existed is poisonin’ Mother Earth.” Why do they persist long after they’ve won? Are they empty in the soul and only find meaning in these silly pursuits and endless meetings? Do they have otherwise meaningless lives? Is there a permanent cloud over their heads no matter the circumstance? Who knows. Here’s the latest “fracking will still kill New Yorkers–even though there is no fracking in New York” event this Thursday, starring the so-called “distinguished scholar in residence” at Ithaca College, Sandra Steingraber…
David Fessler is energy and infrastructure strategist (i.e. stock analyst/researcher) with The Oxford Club–a publisher based in Baltimore, Maryland that publishes the Oxford Resource Explorer, among other financial publications. Fessler spends his days immersed in the energy industry and in the stocks of companies in that industry. Fessler and The Oxford Club have produced a special report called “The Oil Company Death List” which is a list of 19 publicly-traded oil and gas companies that, according to a formula worked out by Fessler, will “die soon.” That is, they’ll go bankrupt if they don’t sell themselves or otherwise sell off major assets. Why? They’re “swimming in debt” and way over leveraged with “ugly balance sheets.” Fessler’s simple formula is all about a company’s debt ratio. When a company’s debts reach 4 times or higher its earnings (EBITDA), that’s a huge red flag. Below we have the list of 19 on the “death list” along with a copy of Fessler’s full report (describing his methodology). The interesting/troubling aspect is that 8 of the 19 are Marcellus/Utica operators–one of which is #1 for highest debt-to-earnings ratios. Some companies in the list surprised us–others did not. Is your favorite Marcellus/Utica driller in the list?…