Low Oil & Gas Prices Force Cabot to Slash Capex Plans for 2015

Researched by Industrial Info Resources (Sugar Land, Texas)--Cabot Oil & Gas Corporation (NYSE:COG) (Houston, Texas) plans to cut back on its planned capital expenditures (capex) this year as a result of lower crude and natural gas prices, company executives said Friday during an earnings conference call.

Cabot revised its 2015 capital budget to $900 million, down more than 40% from the $1.53 billion-to-$1.6 billion 2015 capex that it had announced in October. Capex for 2014 amounted to nearly $1.2 billion. About 80% of the 2015 capex is focused on drilling and completion activities, with 60% allocated to the Marcellus Shale and 40% to the Eagle Ford Shale, said Chief Executive Officer Dan Dinges.

Industrial Info tracks three active Cabot projects worth $403.06 million. Two projects, valued at $203 million, are in the construction phases, while one project, valued at $200 million, is in the planning stages, where a variety of factors could affect the outcome.

The Susquehanna County shale gas lease drilling program in Pennsylvania has a total investment value of $200 million. It includes drilling 75 to 100 new natural gas production wells to an average vertical depth of 7,000 feet and a horizontal depth of 7,500 feet, with a total well production capacity of 1.2 billion cubic feet per day.

Cabot said it will lower its number of operating rigs in the Marcellus from five to three by the end of the second quarter, and will decrease the number of rigs in the Eagle Ford from three to two.

The company reported a net loss of $222 million for fourth-quarter 2015, compared with a gain of $77.95 million for the same quarter a year earlier. The results included $771 million in oil and gas property impairment charges, largely stemming from Cabot's decision not to pursue further activity in non-core fields in East Texas, the company said. Excluding certain charges, Cabot's adjusted net income for fourth-quarter 2014 was $404.6 million, company executives said.

Revenue for fourth-quarter 2014 totaled $618 million, compared with $487 million a year earlier.

For all of 2014, Cabot reported net income of $104 million, compared with nearly $280 million in 2013. Revenue in 2014 totaled $2.73 billion, compared with $1.75 billion in 2013.

The company saw production of 531.8 billion cubic feet equivalent in 2014, a 29% increase from 2013.

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