Cabot: Minimal Impact on Pa. Operations from Flooding

- Cabot: Minimal Impact on Pa. Operations from Flooding

Friday, September 09, 2011
Cabot Oil & Gas

Cabot Oil & Gas Corporation, in response to a significant volume of inquiries, today announced that its drilling operations in Susquehanna County, Pennsylvania have experienced only minimal disruptions as a result of the flooding. The Company elected, out of an abundance of caution, to temporarily shut-down its drilling operations last evening to insure the safety of its workers and to allow for individuals to take care of their personal needs. At the same time it reached out to the local emergency providers to offer assistance.

"Clearly the most important thing at this time is to help the community begin the recovery process and immediately help all of the residents who have been impacted," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "To that end, we have committed both monetary and equipment resources to the area and are working with our service providers to engage their assistance as well."

Dinges added, "Least important at the moment, but in response to the questions being asked, the Company has restarted its operations and has continued to produce its wells at pre-flooding levels throughout this crisis, with no anticipated disruptions expected. Because of our closed loop drilling systems and frac staging that is contained in closed containers, the environmental impact to the drilling operation is significantly mitigated."

Cabot Oil & Gas Corporation, headquartered in Houston, Texas is a leading independent natural gas producer with its entire resource base located in the continental United States.

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Cabot to Sell Assets in Rocky Mountain

- Cabot to Sell Assets in Rocky Mountain

Thursday, July 28, 2011
Cabot O&G Corp.

Cabot O&G announced new milestones in its Marcellus operation, well successes in its Eagle Ford position, a discovery in its Marmaton effort in Oklahoma, and an agreement to sell its Rocky Mountain natural gas assets – primarily the Green River basin assets of Wyoming. Additionally, the Company increased its production guidance for the remainder of the year.

Rocky Mountain Sale

The Company has signed a Purchase and Sale Agreement under which it is selling all of its producing assets and acreage in Wyoming, Colorado and Utah to an undisclosed third party for total consideration of $285 million, subject to normal and customary closing adjustments. Cabot will remove approximately 170 Bcfe of booked reserves and about 27 Mmcfe in daily production from its portfolio on the effective date of this sale. "We have not allocated capital to these assets since early 2009, and we have no near-term plans for new investments due to other opportunities in our portfolio," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "For this reason, when the opportunity arose to monetize and effectively accelerate the cash flows from these assets, we agreed with the thought to redeploy non-valued capital into our Marcellus activity and our oil initiatives."

The transaction has an effective date of September 1, 2011, is scheduled to close in early October 2011 and excludes the Company's prospective oil shale acreage in both Montana and Nevada. "To that end, we are still evaluating our first Heath Shale well in Montana," said Dinges.

The Rocky Mountain deal, the East Texas joint venture/asset sales and some small miscellaneous sales activity are expected to provide Cabot with over $340 million in proceeds during 2011. This reinforces Cabot's commitment to fiscal discipline. "These transactions provide us the opportunity to add to our acreage position in liquid-rich areas of Texas and Oklahoma, as well as enhance the opportunity to drill a few more wells in the Marcellus in Pennsylvania," commented Dinges. "Only a portion of the expected proceeds are earmarked for 2011 expenditures currently, so my expectation is for debt to be reduced year over year – 2010 to 2011 – and for our program to deliver significant reserve and production growth even after these sales."

Operations

In the Marcellus, the wells continue to perform with exceptional success. Recently the Company completed a three-well pad, which resulted in all three wells reporting a 24-hour initial production rate of over 20 Mmcf per day. The corresponding 30-day production rate averaged over 17 Mmcf per day per well, or 52 Mmcf per day in total.

"Our acreage continues to provide consistently outstanding results," stated Dinges. "It is our plan to allocate a portion of our sales proceeds to drill more pad sites, to assist in the replacement of the sold Rocky Mountain production."

Additionally in the Marcellus, the Company now has two wells that have produced over 4 Bcf, one in 12 months, the other in 16 months; eight other wells that have produced over 3 Bcf; and overall field production now totals above 135 Bcf since the project commenced. At the time of this release, production from the Marcellus is a restricted rate of 420 to 430 Mmcf per day, nearly all of which is from 81 horizontal wells.

In the Eagle Ford during the second quarter, four horizontal oil wells were placed in production. The average 24-hour initial production rate for each of the four completed wells was 721 barrels per day equivalent. "Our Eagle Ford plan for the year is for 25 to 30 net wells," said Dinges. "Right now we have drilled 16 wells, have two wells drilling and have six in the queue for completions."

Earlier this year, the Company tested a new oil concept in the Marmaton oil shale located in the Texas and Oklahoma panhandles. The result was a 24-hour initial production level of 646 barrels of oil equivalent (592 Bopd, 325 Mcf per day) from a 10-stage completion in a 4,000' lateral. Additionally the completed well cost was just over $4.0 million, including some science work. "We remained quiet about this well as we wanted to add acreage," commented Dinges. "We now have over 32,000 net acres in the play, plan to participate as a non-operator in six wells and, depending on rig availability, may use some of our asset sale proceeds to drill another operated well here later in the year. Clearly a 10-stage completed well with initial production competitive with the Eagle Ford play and at a lower cost is an attractive place to allocate capital."

"I have been pleased with our 2011 effort as we continue to make great strides in our operations that have allowed another increase in production guidance, even with the Rocky Mountains sale," said Dinges. "We are building great momentum for 2012 where, based on moderate commodity prices, an early review of our program shows a cash flow positive investment year even after funding what is expected to be a record level organic investment effort."

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Cabot Charges Ahead in US Shale Plays

Cabot Charges Ahead in US Shale Plays

Thursday, April 28, 2011
Cabot O&G Corp.

Cabot O&G announced continued achievement of milestones in the Marcellus, drilling success in the Eagle Ford and agreements in principle for its Haynesville joint venture effort. "We continue to build momentum in our two areas of focus for 2011," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "Additionally, we have streamlined our east Texas operation with arrangements that are accretive to Cabot."

North Region

In the Marcellus, the Company ended the quarter producing at a curtailed rate of 320 Mmcf gross per day. This represents a production increase since year-end of 90 Mmcf per day as the benefits of the Lathrop expansion began to show up in production.

Contributing to these totals was the completion of several multi-well pads that were turned in line, albeit at curtailed rates. Cabot's first six-well pad added 51 Mmcf gross per day, although infrastructure limits are restricting its full productive capacity. A two-well pad with 29 completion stages is producing 36 Mmcf gross per day. "The productivity we have seen repeatedly for the last 18 months provides a great deal of confidence in our program," commented Dinges. "Tempering this excitement is the 'blocking and tackling' in the trenches to get the infrastructure in place timely to exploit these results."

In regards to the infrastructure build-out, all seven compressors at Lathrop are installed, and the Company is working on additional dehydration and more piping to reach full functionality. This effort will afford Cabot 450 Mmcf per day of takeaway capacity from this station and together with the Teel station provides a total of 550 Mmcf per day of capacity. "In conjunction with this growing capacity of Lathrop, we have identified and secured markets throughout the summer that will allow us to utilize a portion of this additional capacity," stated Dinges. "However, we will still have excess production capacity until the Springville pipeline to Transco becomes operational, which is scheduled during the third quarter."

To highlight the productivity of Cabot's Marcellus acreage, last week Cabot achieved 100 Bcf of cumulative production in Susquehanna – a feat that took just under three years. At the current production rate, it will take less than one year to achieve the next 100 Bcf of cumulative production.

In other North Region news, the Pennsylvania Department of Environmental Protection (PaDEP) has requested the industry to stop disposing of frac flowback fluids at certain approved sites. "We fully support this action by the PaDEP and the Pennsylvania administration," said Dinges. "Since late 2009, we have been recycling 100 percent of our frac fluid returns. We are committed to performing all our operations using best practices and endorse continuing improvements in those practices to minimize impact on the environment and communities in which we operate."

"Additionally, we converted our drilling operation to utilize a closed loop system by the fourth quarter of 2010. This eliminates the need for open pits at drill sites and significantly enhances our fluid management capabilities," added Dinges.

South Region

In the Eagle Ford shale, the Company added three more successful operated completions with 24-hour initial production rates ranging from 345 to 958 barrels of oil per day equivalent. "This range of results highlights the variability as we continue to evaluate completion techniques in the early stages of development in this play," stated Dinges. "Presently we have three more wells drilled, cased and in the queue for completion in our Buckhorn area."

At the Haynesville area, Cabot has signed two deals with industry peers that provide the Company with a carried interest in the initial well for 24 units. In the third deal, Cabot has elected to sell several non-operated units producing 4 Mmcf per day. This deal is signed and under the normal due diligence evaluation. Closing is scheduled for early May with approximately $50 to $55 million in proceeds expected from all these transactions.

"We are pleased with the joint venture outcome as we accomplished our goal of being carried by selling one-third of our acreage and eliminating the need for near term capital allocation in this area," said Dinges.