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- The Constitution Pipeline may see an earlier than currently expected in-service date.
- Will add 0.5 Bcf/d to Cabot’s production.
- Will provide access to strategically attractive markets.
Cabot Oil & Gas: Among The Attractive Exploration Stocks
- Cabot Oil & Gas has been among the relatively resilient stocks amidst the carnage in the oil & gas sector.
- Cabot Oil & Gas has an attractive internal rate of return profile from both its core assets.
- 2015 capital expenditure program is fully funded. Low leverage and no near-term debt maturity provides financial respite.
- The last FY15 guidance targets 20% to 30% production growth. Even if lowered from current levels, production growth will remain robust for FY15.
Cabot Oil & Gas Offers Exposure To Best-In-Class Assets
- COG has established an advantageous position in one of the most economic, large-scale resource plays in NA.
- COG’s Marcellus shale position should allow the company to continue to post industry-leading returns and production growth for several years to come.
- Cabot’s continued share buybacks should limit downside.
- Pricing outlook for 2015 in the Marcellus North remains challenging.
- In the longer term, relief will come mostly from transporting gas out of the basin (Constitution, Atlantic Sunrise), not necessarily from local basis contracting, in my opinion.
- While 2015 will be a slow-growth year, Cabot’s longer-term growth trajectory in the Marcellus remains intact.
- The company’s Marcellus production will likely more than double by 2018, from ~1.5 Bcf/d (gross) during the latest quarter.
- Q4 2014 is shaping up as a strong production quarter, with 2014 exit rate in the Marcellus expected in 1.8-2.0 Bcf/d range (gross).
Cabot Oil & Gas Q3 Earnings: Pricing Differentials And Eagle Ford Downspacing
- In the third quarter, Cabot's pricing differential relative to NYMEX prices widened.
- If Cabot could reduce its pricing differential, it could more than double the return on its Marcellus wells.
- Now that FERC has released its final environmental impact statement, Cabot is one big step closer to being able to use the Constitution pipeline.
- Downspacing could grow Cabot's potential drilling locations in the Eagle Ford to 1,000, giving it plenty of opportunities to diversify its production streams.
- Even when crude is trading at $80 a barrel, Cabot still makes a 50% return on its Eagle Ford wells.
Oversold Cabot Oil & Gas Leads In Low Costs, Growth, And IRR% - With Winter Coming It's Worth Considering
- COG has an excellent production CAGR of about 40% over the last five years.
- COG's reserves were up 42% in FY2013.
- COG is a low cost leader in natural gas production. It has fantastic before tax %IRR's for natural gas, which is about 95% of its production.
- A likely colder than normal winter is coming. US natgas storage is lower than normal. Demand is going up. These should buoy natural gas prices and COG's stock price.
- Cabot Oil & Gas has corrected by 20% in the last five months and this is an excellent buying opportunity.
- Along with prized assets in Marcellus and Eagle Ford, the company expects strong production growth in 2014 and 2015.
- Valuations are attractive and a PEG of less then one suggests that there is upside potential for Cabot Oil & Gas as it grows strongly.
- Cabot Oil & Gas is adding a new rig to its Eagle Ford operations, which will allow it to bring more wells online.
- By acquiring additional acreage and testing out 300-feet well spacing, Cabot is significantly adding to its Eagle Ford drilling inventory.
- Trying to figure out the best lateral lengths and the optimal levels of proppant per lateral foot has resulted in Cabot producing much more oil per well.
It's Time To Consider Cabot Oil And Gas Corporation
- A large position in the Marcellus Shale gives Cabot a tremendous advantage.
- Pipelines and LNG facilities coming online in the region means a longer runway of growth.
- Overall, Cabot trades at a reasonable valuation.
- In the Eagle Ford, Cabot "bolts on" ~30,000 net acres and 1,600 boe/d of production (mostly oil) for $210 million, and accelerates the drilling program with a fourth rig.
- Expansion in the Eagle Ford is a logical solution to the limitations on capital deployment in the infrastructure-constrained Marcellus.
- In the Marcellus, Cabot set a new production record of 1.678 Bcf/d gross.
- Marcellus production ramp-up is slightly behind schedule due to midstream delays. Q3 volumes will be lighter than expected.
- Cabot’s $925 million bond financing with coupons ranging from 3.24%-3.77% for 7-12 years reflects the company's superb credit quality.
- The analysts at Stifel research firm recently upgraded the company from hold to buy. The firm also believes that the company offers a nice upside potential of 18%.
- The Marcellus and Eagle Ford shales continue to benefit in the long term as the company has been pursuing an active drilling program.
- With these assets the company is well positioned to deliver production growth of 20% to 30% by 2015.
- In addition to the increased production the company is also putting efforts into strengthening its reserve base.
- During the past three years the company delivered production growth at a CAGR of 26%.
Cabot Oil & Gas: Constitution Pipeline Essential For Growth
- The deadline for the FREC to provide a final environmental impact statement has been delayed by two months.
- The expected in-service date for Constitution Pipeline is between late 2015 and early 2016.
- Constitution Pipeline has the potential to drive margin expansion by generating higher average realized selling prices for COG's natural gas.
- The Marcellus is still hot, with $90 billion in potential profits laying within the prolific play.
- Cabot Oil & Gas is a very low cost Marcellus producer that has cut well costs substantially.
- Marcellus/Utica pricing differentials are holding Cabot back.
- More pipelines and LNG exports could help boost Cabot's realized natural gas prices.
Cabot Oil & Gas: Constitution Pipeline Schedule Slips Again; Stock Thesis Remains Intact
- The final Environmental Impact Statement for Constitution Pipeline is now expected by October 24, 2014, a two-month delay.
- The lack of certainty with regard to the pipeline’s in-service date has been a significant headwind for Cabot’s stock.
- Despite the Constitution delays, Cabot’s investment thesis remains intact.
- The relative slow-down in Cabot’s production growth due to take-away constraints should not overshadow continued strong operating results in the Marcellus and Eagle Ford.
- The in-service date for the Constitution Pipeline is at risk of a delay by several months.
- Nonetheless, the company’s growth potential remains exceptionally strong and has good visibility based on announced projects.
- Basis differentials in the Marcellus area remain the key concern that is unlikely to go away anytime soon.
- In relative terms, Cabot remains one of the most compelling “stories” in the Marcellus and Utica peer group.
- Cabot reported its Q2 earnings which beat the street's estimates by $0.03.
- This news confirms my long position in the stock.
- While it didn't make specific quarterly estimates my original article was correct in predicting that company would have solid earnings momentum in the future.
- Cabot has great positions in the Eagle Ford and Marcellus Shale.
- The Constitution pipeline represents huge potential for profits to increase at the firm.
- The FERC and the NY DEC stand in the way of the pipeline being built.
- The chart is bullish which adds to my conviction that this stock is a buy.
Cabot Oil & Gas Is A Buy On Natural Gas And Oil Development Results And Price Growth
- COG grew production by 34% year over year in Q1 2014. Taking into account asset sales, this figure was actually 39%.
- COG cut total unit costs from $3.29/Mcfe in Q1 2013 to $2.66/Mcfe in Q1 2014. This should add nicely to COG's margins going forward.
- COG also is showing great roughly 90% oil results from its Eagle Ford acreage. This should add to its EPS growth nicely, since oil prices are high.
- Many other factors mentioned in this article add further to COG's attractiveness for the longer term.
Differentials All The Difference For Cabot Oil & Gas
- Cabot Oil & Gas has generated very strong adjusted production growth figures, low cash costs, and good drilling results, but the market is concerned about weak price differentials.
- The Constitution Pipeline should help Cabot's access to better prices, and midstream/pipeline companies are on the prowl for growth projects.
- Cabot is not cheap on an EV/EBITDA basis, but an NAV analysis suggests fair value around $47.
Cabot Oil & Gas: Time To Buy The Sleeping Giant
- Cabot Oil & Gas is a top producer in the prolific Marcellus shale where it grew net production by 70% in 2013.
- For full-year 2013, net income was up 160% yoy and the dividend was increased by 50%.
- Despite the outstanding performance, short-term takeaway capacity concerns have limited the stock to an ~8% increase over the past 12-months.
- As we move into the era of LNG exports, analysts can't see the forest for the trees. The stock should gain 40% over the next year.
- Longer term, natural gas supply/demand fundamentals combined with COG's leverage to natural gas prices mean it will become a premier dividend growth+capital appreciation investment.
Mon, Dec. 22, 10:45 AM
- Natural gas prices fall 9.5% to near two-year lows at $3.133/mmBtu, in the biggest one-day percentage loss since February and the lowest intraday price since January 2013, on mild weather forecasts and inventory that is above year-ago levels.
- Prices are now down more than 15% in three straight losing sessions and are 30% lower than the six-month high closing price of $4.489/mmBtu it hit just a month ago.
- Weather has been unseasonably warm for December, limiting demand for home heating and allowing relatively low stockpiles to catch up to where they were a year ago and encouraging traders to sell based on the belief that supply is relatively healthy.
- Gas producers are among the biggest early decliners: XOM -1.1%, CHK -7.3%, APC -2.6%, SWN -6%, DVN -2.2%, COP -2.3%, BP -1.5%, COG -4%, BHP -1.9%, CVX -1.3%, ECA -5.1%, EQT -4.3%, RDS.A -1.7%, UPL -12%, WPX -6.9%, EOG -1%, OXY -1.1%, RRC -6.1%, APA -2.3%, AR -3.2%, CNX -3%, QEP -4.8%, LINE -4.9%, NBL -1.6%, SM -2.6%, XEC -4.2%, PXD -2.9%, NFX -5.1%.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, NAGS, DCNG
Wed, Dec. 17, 2:20 PM
- New York Gov. Cuomo's administration says it will ban fracking statewide, citing health concerns and what it considers as limited economic benefits to drilling.
- NY's acting health commissioner said at a cabinet meeting in Albany today that studies on fracking’s effects on water, air and soil are inconsistent, incomplete and raise too many “red flags” for the state to allow it; the state Department of Environmental Conservation will now issue a legally-binding recommendation prohibiting fracking.
- The state has had a de facto moratorium on fracking for more than six years, so nothing really changes with today's decision.
- Parts of New York sit atop the gas-rich Marcellus shale formation, whose top producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
Fri, Dec. 5, 5:38 PM
- The Eagle Ford shale formation in south Texas produced its billionth barrel of oil some time last month, according to analysts at research firm Wood Mackenzie.
- Eagle Ford now accounts for 16% of total U.S. oil production, and the firm forecasts E&P spending of $30.8B in the region next year, ~22% of the total $139.3B expected in U.S. onshore spending.
- Eagle Ford is widely considered the most profitable U.S. shale field, and many analysts speculate the break-even price for production to remain profitable is ~$50/bbl in much of the play.
- Top Eagle Ford producers include EOG, CHK, APC, MRO, BHP, APC, APA, BP, COG, CRZO, CWEI, CRK, COP, XOM, FST, GDP, HES, MTDR, MUR, NFX, PVA, PXD, ROSE, RDS.A, RDS.B, SN, SM, STO, SFY, TLM, ZAZA
Wed, Dec. 3, 10:29 AM
- The FERC grants conditional approval for construction of the planned 124-mile Constitution Pipeline that would link the Marcellus Shale region of Pennsylvania to natural gas markets in the northeastern U.S.
- The project is a venture between Williams Partners (WPZ, WMB), Cabot Oil & Gas (NYSE:COG), Piedmont Natural Gas (NYSE:PNY) and WGL Holdings (NYSE:WGL).
- The partners say construction could begin in Q1 2015 to help meet demand in New York and New England by the winter of 2015-16, assuming the pipeline receives other needed approvals in a timely manner.
- WPZ also has several other pipeline projects in the works that would expand and reroute gas shipments to increase its ability to move Pennsylvania gas on its Transco network, which runs from Texas to New York.
Mon, Dec. 1, 6:42 PM
- Lower oil prices will continue for at least several more quarters, meaning that shares of many U.S. oil producers also will remain under pressure, CLSA research analyst Eric Otto tells CNBC, while noting there are haves and have-nots within the group.
- Among Bakken shale plays, Otto is still a buyer of Cimarex Energy (NYSE:XEC) because it is barely outspending its internally generated cash flow of a very strong balance sheet, and half of its production comes from gas; he also likes gas producers Cabot Oil & Gas (NYSE:COG) and EQT.
- He remains negative on Continental Resources (NYSE:CLR) after the company's "wrong-headed move" to monetize its hedges in order to participate in what it saw as a near-term oil price recovery, as well as Laredo Petroleum (NYSE:LPI) as it continues to far outspend internally generated cash flow.
Tue, Nov. 11, 2:52 PM
- Count BofA's Doug Leggate among analysts seeing an opportunity to become contrarian bullish on the energy sector, which he says is now discounting $75 oil.
- His top picks in the sector are Occidental Petroleum (NYSE:OXY) and Hess (NYSE:HES), while Anadarko Petroleum (NYSE:APC) and Devon Energy (NYSE:DVN) justify another look; also, pure play gas names Cabot Oil & Gas (NYSE:COG), Range Resources (NYSE:RRC) and Southwestern Energy (NYSE:SWN) remain Buy rated.
- On the technical side, BofA's Stephen Suttmeier notes the sector hit capitulation levels in mid-October not seen since 2002, suggesting the worst is over and energy is poised to build a base and head higher.
- Earlier: Top energy stocks may have bottomed even if oil has not, J.P. Morgan says.
Fri, Oct. 24, 7:32 AM| 1 Comment
Thu, Oct. 23, 5:30 PM
Tue, Sep. 30, 10:34 AM
- The positive market reaction following Encana's deal for Athlon Energy and other recent transactions may put pressure on inventory short majors and other large-cap companies to pursue M&A activity to increase their quality inventory in the U.S. onshore market, according to a UBS report.
- UBS lists six top potential targets, some of which already are swirling in the rumor mill, including Pioneer Natural Resources (NYSE:PXD), with its own fracking fleet and huge Midland Basin play making it a very attractive but expensive target.
- The firm's other five top M&A candidates: COG, CXO, OAS, RRC, WLL.
Wed, Sep. 24, 7:58 AM
- Cabot Oil & Gas (NYSE:COG) increases its FY 2014 capital budget guidance range to $1.45B-$1.55B from $1.375B-$1.475B after adding a fourth operated rig in the Eagle Ford to begin drilling on newly acquired properties.
- COG now expects to drill ~55 net wells in the Eagle Ford and 165-175 net wells company-wide in 2014.
- Says Q2 production totaled 127.6B cfe, consisting of 121.8B cf of natural gas and 961K barrels of liquids, which were respectively 34%, 34% and 26% higher than in the year-ago quarter.
Tue, Sep. 2, 11:22 AM
- Cabot Oil & Gas (COG -0.7%) isn't getting a lift from an upgrade to Buy from Hold at Stifel, which believes the current share price reflects a very conservative underlying asset value from both volume growth and price assumptions.
- Stifel also expects that a coming seasonal improvement in regional price differentials and potential improvements in Henry Hub pricing heading into the fall should move the stock higher from here.
- The firm sets a target price of $39 for COG shares.
Thu, Aug. 28, 10:58 AM
- The Marcellus region is now the world's biggest natural gas shale play, and there’s still $90B to be made by tapping the area’s reserves, according to a study by Wood Mackenzie.
- The energy consultant predicts that the top 20 operators in the Marcellus will earn nearly $86B over the life of the play after the costs of reaching the reserves; for comparison, it estimates ~$118B to be made by extracting the resources in North Dakota’s Bakken region, but most production there is higher-priced oil.
- Major Marcellus shale producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
Fri, Aug. 22, 11:00 AM
- Citing a lack of near-term catalysts and a belief its buy thesis hasn't played out, Deutsche has downgraded Cabot Oil & Gas (COG -2%) to Hold, and cut its target by $2 to $38.
- Deutsche upgraded Cabot last December, arguing shares are attractively valued relative to other Marcellus shale plays. Shares are down 15% YTD.
Tue, Aug. 5, 7:17 PM
- Natural gas production in the Marcellus region exceeded 15B cf/day in July, the most productive period ever recorded there, according to a new report from the U.S. Energy Information Administration.
- Marcellus, located mostly in West Virginia and Pennsylvania, now accounts for nearly 40% of total U.S. shale gas production, and its rapid growth isn’t expected to ebb soon, the report says.
- New wells in the region are expected to deliver another 600M cf/day, more than offsetting decline rates, for a net production increase of 247M cf/day.
- Major Marcellus shale producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN.
Fri, Jul. 25, 5:58 PM
- 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.
Thu, Jul. 24, 7:36 AM
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