- Cabot Oil & Gas (NYSE:COG) extended yesterday's losses following solid Q2 results, with earnings, production and cash flow all growing by double digits while costs continued to trend down, but wide price differentials in the Marcellus shale remain a major near-term concern.
- COG received just $3.47/Mcf for its gas production during Q2, down 15% Y/Y and an $0.89 discount to Nymex settlement prices, significantly wider than the $0.60-$0.65 average discount the company reported in Q1.
- However, COG's low total unit costs, which improved 16% Y/Y to just $2.59/Mcfe, make the company one of the lowest-cost Marcellus shale producers.
- Baird Research today downgraded COG to Neutral from Outperform, noting the lack of visibility into Appalachian basin pricing results, a lack of secure 2015 hedges, and downside Nymex skew amid growing Marcellus volume.