Cabot Plans to Reduce Eagle Ford Wells to One

Cabot Q2 Report
Cabot Q2 Report

Cabot Oil & Gas reported second quarter earnings that highlight increased production, reduced costs and a focus on natural gas.

Related: Cabot Grabs More Eagle Ford Acreage in Oil Window

Shares of Cabot stock fell 4.4% to $26.39 on Friday after the company reported earnings of 3 cents a share for the second quarter. Revenue fell 42.6% year over year to $306.3 million, below analysts' estimates of $372.99 million. The company has no plans to change their $900 million capital campaign for 2015.

Cabot’s production increased over the second quarter of 2014 to 128.4 billion cubic feet (5% increase) of natural gas and 1.6 million barrels (68%) of crude oil.

In an earnings call, Dan O. Dinges, Chairman, CEO said the company will rely on discipline to weather the current pricing environment by focusing on improving efficiencies, reducing cost and focusing on natural gas.

I’m not as confident as what the oil price is going to do as I am what I see available to us on the natural gas side. So with that being said, we’re focused in natural gas, we’ll remain focused in natural gas. If we have the opportunity to improve our liquids position, it’s going to have to compete with what our view is long term in natural gas.
— Dan O. Dinges

Eagle Ford Operations

Cabot’s drilling activity is focused on 89,000 acres in the Eagle Ford Shale, which receives about 40% of the company’s capital allocation. Here are some highlights from the second quarter:

  • Net production was 17,889 barrels of oil equivalent (Boe) per day, an increase of 74 percent over the prior year's comparable quarter.
  • Cash unit costs were approximately $15.00 per Bbl
  • Decreased our drilling days by about 20% relative to 2014
  • Increased the average number of completions per day by about 20%
  • Upwards of 30% cost reductions across all service lines
  • Currently operating three rigs in the Eagle Ford Shale, with plans to decrease to one rig by the end of 2015
  • Plans to drill approximate 45 net wells in the Eagle Ford Shale in 2015

Read the complete press release at cabotog.com

Cabot Grabs More Eagle Ford Acreage in Oil Window

Cabot Eagle Ford & Pearsall Shale Map
Cabot Eagle Ford & Pearsall Shale Map

Houston-based Cabot Oil & Gas Corp. has agreed to pay $210-million for approximately 30,000 net acres in the heart of the Eagle Ford Shale oil window from an undisclosed seller. 17,000 net acres included in the transaction are directly adjacent to Cabot's Buckhorn operating area, which covers parts of Frio, La Salle and Atascosa Counties. The acquisition increases the company's total Buckhorn leasehold position to 60,000 net acres, and its total Eagle Ford position to 83,000 net acres.

Cabot is currently testing 300-foot downspacing across its existing Buckhorn position, which company officials say will add an additional 45 net locations on the acquired leasehold. As a result of this recent transaction, Cabot has added a fourth operated rig in the Eagle Ford to begin drilling on the newly acquired properties. In May, the company indicated it would expand its Eagle Ford drilling program in the third quarter of this year.

Read moreCabot Oil & Gas to Expand Eagle Ford Drilling Program

In addition to the number of new locations, this acreage will allow synergies in our operations on many fronts including infrastructure and facility utilization.
— Cabot President and CEO, Dan O. Dinges.

 

According to Cabot officials. the assets are producing approximately 1,600 boe/d (92% liquids). Based on the company's current spacing configuration of 400 fteet between laterals, Cabot has identified 191 net locations on the additional Buckhorn area acreage with an average lateral length of over 6,500 feet.

The transaction is expected to close in October 2014.

Read more at cabotog.com

Cabot's Eagle Ford Production Up 76% Year Over Year

Cabot Eagle Ford & Pearsall Shale Map
Cabot Eagle Ford & Pearsall Shale Map

Cabot Oil & Gas Corp. net production in the Eagle Ford during the second quarter of 2014 was 10,308 boe/d, an increase of 76% year over year. This included 9,784 bbl of liquids per day, an increase of 83% compared to the same time frame.

Read more: Cabot Oil & Gas to Expand Eagle Ford Drilling Program

During the second quarter of 2014, Cabot placed 10 wells on production that have produced for at least 30 days. These wells had an average 30-day production rate of 840 boe/d per well, with a 92% oil cut from an average lateral length of 6,729 feet. Currently, Cabot has a two-rig program in the Eagle Ford.

Cabot's Q2 Portfolio Wide Production

Across the company's portfolio, which includes ~200,000 net acres in the Marcellus Shale, equivalent production in the second quarter of 2014 was 127.6 Bcfe, consisting of 121.8 billion cubic feet (Bcf) of natural gas and 961,000 bbl of liquids.

Our total liquids volumes increased 40 percent sequentially—with crude oil and condensate volumes increasing 44 percent—due to strong well performance from new Eagle Ford wells that were placed on production during the quarter.
— Cabot CEO, Dan Dinges.

Cabot's Eagle Ford Position Remains the Same in Q2

In its first quarter update, Cabot indicated that it was actively pursuing additional acreage to increase its position in the play, but no acquisitions were confirmed in the company's second quarter update.

During the first quarter, Cabot secured ~4,000 additional net acres, and currently has ~66,000 net acre across the play, with properties principally located in Atascosa, Frio, La Salle and Zavala Counties, Texas. We'll keep you posted if Cabot confirms any additional Eagle Ford acreage acquisitions in the coming months.

Read more at cabotog.com

Cabot Oil & Gas To Expand Eagle Ford Drilling Program

Cabot Oil & Gas Drilling Program
Cabot Oil & Gas Drilling Program

After seeing positive results in the Eagle Ford over the past six months, Cabot Oil & Gas plans on expanding its Ealge Ford drilling program in the third-quarter of this year. Company officials cite continued improvements in production and cost savings as the primary reasons for the decision to expand their drilling program.

Like may other Eagle Ford operators, Cabot is seeing positive results from pad drilling. In the first quarter, the company completed its first six well pad with an average lateral length of 6,658'. The wells achieved an average peak 24-hour initial production (IP) rate of 1,045 boe/d per well (89% oil) during their first ten days online. Currently, the company is drilling a five-well pad with a planned average lateral length of over 8,500'.

We have been very pleased with the strides our Eagle Ford team has made over the last six months. Based on the continued improvement in production rates and realized cost savings, which have resulted in higher rates of return, we are adding a third rig to our Eagle Ford program beginning in the third quarter. This additional rig will be focused on multi-well pads and is expected to have minimal impact on 2014 production but will materially impact our estimated 2015 oil production volumes.
— Cabot CEO, Dan Dinges

Read more: Cabot Completing First Six-Well Pad in Eagle Ford in 2014

Cabot's Eagle Ford First-Quarter Update

During the first quarter of 2014, Cabot netted 7,271 boe/d, a 42% increase compared to the same reporting period last year. Total net production included 6,839 bbl/d of liquids, which represented a 49% increase. Also during the first quarter, Cabot added approximately 4,000 net acres to its Eagle Ford position through its leasing efforts.

In April of 2014, the company revealed that it intends to increase its position in the play. Before the end of the year, the company will almost assuredly strike a deal for more Eagle Ford acreage. Currently, Cabot has ~66,000 net acre across the play, with properties principally located in Atascosa, Frio, La Salle and Zavala Counties, Texas.

Read more at cabtog.com

Cabot Completing First Six-Well Pad in Eagle Ford in 2014

Cabot Eagle Ford Drilling
Cabot Eagle Ford Drilling

Cabot's first four-well pads in the Eagle Ford came online during the fourth-quarter of 2013 and produced an average peak 24-hour rate per well of 885 boe/d.

The company had record production in 2013 of ~412 bcfe or 1.13 bcfe/d, an increase of 55% over 2012. Also, the company's longest lateral well (8,708') came online in the Eagle Ford in 2013. The well was completed with 31 frac stages, and reached a peak 24-hour rate of 1,344 boe/d (92% oil).

Read more: Cabot Oil & Gas More Confident in the Eagle Ford and Pearsall

Cabot Completing First Six Well Pad in 2014

Cabot is completing its first six-well pad, which includes four wells with lateral lengths of approximately 8,000'. The six-well pad is expected to provide approximately $600,000 of cost savings per well.

Cabot Eagle Ford 2014 Plans

Cabot is planning on 40 - 50 Eagle Ford wells in 2014. If the company sees better than expected results from its drilling efforts in the Eagle Ford, you may see more activity than currently planned, according to CEO, Dan Dinges.

We are [] at 36 to 38 [] Eagle Ford wells right now, so [] that’s incorporated already in our guidance. So, moving that up to even 50 would be an impactful move for our current guidance.
— Dan Dinges

abot, which is also active in the Marcellus Shale, is focused on maximizing operating efficiencies and managing its price risk in 2014. Cabot announced that it will continue to monitor regional natural gas prices before making a decision on further acceleration in 2014 in the Marcellus. Maintaining the Marcellus rig count at six rigs will reduce the 2014 capital budget from $1.375 to $1.475 billion to $1.3 to $1.4 billion.

We have elected to stay at eight rigs in our total program, which is what we ended at our — ended ‘13 with, which includes six in the Marcellus and two in the Eagle Ford. And while we will be permitting and be prepared to add additional rigs during the year, we are pleased that our revised program spending — spends less capital but delivers the same absolute midpoint of production guidance.
— Dan Dinges

Cabot Highlights

  • Record production of 413.6 billion cubic feet equivalent bcfe, an increase of 55 % over 2012
  • First four-well pads in the Eagle Ford came online during the fourth-quarter of 2013 and produced an average peak 24-hour rate per well of 885 boe/d.
  • Peak 24-hour rate of 1,344 boe/d (92% oil) for Eagle Ford lateral well
  • Completing its first six-well Eagle Ford pad, which includes four wells with lateral lengths of approximately 8,000'
  • Maintaining Marcellus Shale rig count at 6 will reduce 2014 capital budget to $1.3 to $1.4 billion

Read more at Cabotog.com