At a time when many production companies are trying to reduce their exposure to natural gas, Cabot Oil & Gas Corp. is accelerating production in the Marcellus Shale, announcing this week that it had reached the milestone of 1 billion cubic feet per day.
“Our new baseline for production has moved significantly higher, and we will work to build on this throughout 2013,” said Dan O. Dinges, chairman, president and CEO.
The company’s average daily production is 930 million cubic feet of natural gas.
Natural gas was trading at $3.32 per million British thermal units Wednesday morning, down from a high of $12 in mid-2008.
But Cabot spokesman George Stark said the Marcellus fields continue to be profitable for Cabot, in part because the wells produce at a high rate and because of nearby pipelines and other infrastructure.
“We are fortunate that we have a market for our natural gas, and we are able to produce it and be profitable,” Stark said. “We have the transmission lines nearby. We’re close to market, whether it be Pennsylvania, New York, New Jersey, Connecticut.”
He said Cabot operates eight of the top 10 producing wells in Susquehanna County, Pa., and 14 of the top 20.
Cabot also announced the sale of four South Texas fields with approximately 18 billion cubic feet equivalent of booked reserves for $29 million to an undisclosed buyer.
The company said the sale will result in a book loss of approximately $12 million after taxes. Closing is set for this week.
Dinges said in a statement that the sale was part of a strategy to sell legacy assets and buy high-return assets.