Independent oil and gas exploration company, Cabot Oil and Gas (COG) reported that it has revised its 2013 production growth outlook.
The Houston, Texas based upstream operator has set its new production growth guidance at 50% to 55%, up from the previous outlook of 44% to 54%. Cabot added that recently it has produced roughly 1.5 billion cubic feet per day of natural gas from Marcellus shale operations, reflecting a year-over-year hike of 50%. This record production has encouraged the company to lift its 2013 production growth outlook. However, Cabot has retained its production growth guidance for 2014 at 30% to 50%.
Moreover, Cabot has decided to supply Marcellus shale-generated natural gas – at the rate of 339.5 million cubic feet per day – for 20 years to Dominion Cove Point LNG Terminal. The company is expected to start deliveries from 2017. Dominion Cove Point LNG Terminal is a shipping terminal of liquefied natural gas, situated off the coast of Maryland, United States.
Founded over 100 years ago in Pennsylvania, Cabot originally operated in the Appalachian Mountains of the eastern U.S. before moving the bulk of its activities to the Gulf Coast.
We believe that Cabot’s high natural gas exposure raises its sensitivity to gas price fluctuations, compared to its more-diversified independent peers with higher oil production.
Cabot currently holds a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the oil and gas sector like Abraxas Petroleum Corp. (AXAS), Harvest Natural Resources Inc. (HNR) and Clayton Williams Energy Inc. (CWEI). All the stocks sport a Zacks Rank #1 (Strong Buy).
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