HOUSTON, June 13 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today provided an update of its 2001 drilling program, including progress in the Gulf Coast and Rocky Mountains. Additionally the Company disclosed a revised capital budget for 2001 along with natural gas price estimates for the second quarter.
In the Kent Bayou Field, at the Etouffee prospect, production facility modifications are complete for the first four wells. By the end of the week the first four wells will be producing in aggregate 160 Mmcfe per day or 38 Mmcfe per day net to Cabot. The No. 5 well is completing and is expected to be turned in-line by November 2001.
Commenting on the overall success of this prospect, Ray Seegmiller, Chairman and Chief Executive Officer said, "With this latest modification to the facility, production is expected to increase 47%. Since March of this year production from the field has hovered around 109 Mmcfe per day from three wells and now will be 160 Mmcfe per day from four wells."
In south Texas at the Aransas Pass Field, Cabot participated in its third successful offset to the initial Frio discovery last year. The Grant 2B well tested at 4.1 Mmcfe per day with a flowing tubing pressure of 6,300 psi. This well will be producing to sales by August 1, 2001. Cabot holds a 25% net revenue interest in the well. "The continued success in Aransas Pass further reinforces our investment in the adjoining Frio play at Redfish Bay," stated Seegmiller. "So far we have identified 8 drilling opportunities in this area and will commence drilling our first well on this prospect in the third quarter."
The Castor well on the Starpath project in south Texas reached total depth in May, testing the Wilcox formation. "Although we found gas bearing sands in the Wilcox, we did not find the reservoir quality we had expected. Therefore, we are evaluating the merits of the play," discussed Seegmiller. "However, we did encounter a significant gas show in the Queen City formation up hole."
Also during the second quarter, Cabot participated in one offshore exploration test that resulted in a $4.6 million dry hole, net to Cabot. The well targeted the Lentic sands in the Sigma prospect.
"Today Cabot is producing 80 Mmcfe per day from its Gulf Coast region compared to 45 Mmcfe per day last year at this time," highlighted Seegmiller. "Of this total Gulf Coast production, 44% is the result of successes in the exploration program since 2000." Currently the Company has four exploration wells drilling or completing in the region along with three development wells.
Cabot recently experienced two successful development wells in the Blue Forest Unit in Sweetwater County, Wyoming. The locations were the result of a Frontier reservoir characterization study undertaken by Cabot to provide a better understanding of reservoir distribution. The BFU #20-14 is producing 4.7 Mmcfe per day with a flowing casing pressure of 2,350 psi. In the BFU #30-14, Cabot tested the Frontier at 3.6 Mmcfe per day at a flowing casing pressure of 1,480 psi. Cabot has a net revenue interest of 40% and 31%, respectively, in these two wells. "In 2001, 10% of our Rocky Mountain development drilling program will be based on this evaluation method and will be expanded in 2002," said Seegmiller.
At a recent meeting, Cabot's Board of Directors increased the 2001 capital budget from $167 million to $200 million. At this point approximately $190 million of spending has been identified including an $18 million investment in seismic and a $16 million investment in leasehold for the development of future prospects. This investment for seismic reflects a $9 million increase over the original budget.
Presently there is a divergence in the marketplace regarding realized natural gas price expectations for the second quarter. Cabot Oil & Gas reported on January 4, 2001 that it had hedged 51% of its gas production, utilizing costless collars, with a $5.15 per Mmbtu floor and a $8.92 per Mmbtu ceiling. As a result of this hedging activity and the remaining hedges from 2000 (forward Rocky Mountain sale that expired in April, and the Beaurline field swap) realized gas prices benefited by $3.4 million for the second quarter. "At this time with the positive hedge results offsetting a portion of the softness in June prices, we approximate our second quarter natural gas price realizations to be between $4.50 and $4.75 per mcf," stated Seegmiller. "With this price expectation, this year's second quarter results will easily exceed any previous second quarter."
Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading domestic independent natural gas producer and marketer with substantial interests in the onshore Texas and Louisiana Gulf Coast, Rocky Mountains, Appalachia and Mid-Continent. For additional information, visit the Company's Internet homepage at www.cabotog.com.
The statements regarding future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) of natural gas and oil, results of future drilling and marketing activity, future production and costs and other factors detailed in the Company's Securities and Exchange Commission filings.
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CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, 281-589-4993