Cabot grows natural gas production, reserves

Cabot Oil & Gas boosted its 2018 natural gas production by 7pc from the prior year and increased its proven reserves by 19pc.

The independent producer reached output of 2 Bcf/d of natural gas equivalent (Bcfe/d) (57mn m³e/d) last year on increased takeaway and increased drilling at its operations in the Marcellus shale in Appalachia. The company's proven reserves rose to 11.6 Tcf in 2018, despite the sale of its property in Texas' Eagle Ford shale in late 2017.

Company executives today in an earnings call touted cash flow improvements that were driven primarily by higher production, stronger natural gas price realizations and an improvement in the producer's cost structure.

Cabot's realized natural gas prices before hedges in the fourth quarter rose by 50pc from a year earlier to $3.11/1,000 cf on a "significant improvement in differentials," probably from the start-up of the 1.7 Bcf/d Atlantic Sunrise pipeline project. Cabot has 850mn cf/d of capacity on the pipeline, which gave trapped gas output in northeast Pennsylvania a conduit to an LNG export facility and to the Gulf coast.

The producer in 2019 will devote $800mn to capital expenditures, down by 2pc from last year, which it said should translate to at least a 20pc increase in production growth this year.

The company this year will focus on increasing cash flow now that Atlantic Sunrise is on line and two gas-fired power plants the company has exclusive rights to fuel have started up.

Cabot is "comfortable with the infrastructure buildout," and the company's ability to grow deliveries on that infrastructure, chief executive Dan Dinges said, referring to Atlantic Sunrise and the two plants.

Cabot's fourth quarter output was 2.2 Bcfe/d, up by 25pc on the year. The company drilled 37 wells during the quarter, or 17 more than in the fourth quarter of 2017.

The company reported profits of $341mn in the fourth quarter, compared with a $459mn loss a year earlier.