HOUSTON, June 13 /PRNewswire-FirstCall/ -- Cabot Oil & Gas Corporation (NYSE: COG) today announced that its year-to-date operations and drilling program are on track to meet or exceed expectations. Cabot is participating in 20 rigs currently drilling and has 35 wells completing or waiting on pipeline. "Though the investment community is soft on our sector, our success across all our regions has led to a positive impact on production and has positioned us well with activity expected to continue to ramp up in the coming weeks," said Dan O. Dinges, Chairman, President and Chief Executive Officer.
The initial results at the Company's Minden project in east Texas have been very positive. One rig has been operating continually for seven months, with two more rigs to be added by the end of June. To date, nine wells have been drilled (seven completed) in the field establishing over 12 Mmcfe per day of gross production. The program has 15 more wells to drill in 2006, and with 7,800 acres under lease, nearly 200 locations remain in the Minden inventory. Cabot has a 100% working interest in the field.
In north Louisiana, the initial wildcat well at our Castor prospect, the Weyerhaeuser 24-1, is waiting on completion. Cabot found 14 feet of pay in a Hosston sand and will start completion operations about June 23, 2006. The second well at Castor, approximately four miles to the northeast of the Weyerhaeuser 24-1, the Brazzel 4-1, has reached total depth and is waiting on completion. The Company found approximately 40 feet of net sand in the Cotton Valley section plus over 50 feet of net pay in five separate Hosston sands. We will start completion operations on or about June 19. "We are cautiously optimistic about the Cotton Valley potential at Castor and see significant potential in the Hosston sandstones on the structure," stated Dinges.
Redfish Bay, in south Texas, continues to add value to the portfolio. The production profile has been enhanced with the recent re-completion of our ST277 #1 in the Frio F-80 sandstone, flowing 13.5 Mmcf of gas plus 138 barrels of oil per day at 5,420 flowing tubing pressure. Cabot has a 75 percent working interest.
The Company has now drilled and completed five horizontal wells in the Sissonville Huron shale project. "We are encouraged with our progress in both cost structure and production profiles with this program. Our production rates have steadily improved with each well and the cost efficiencies continue to show progress," said Dinges. The latest well, the Amherst 24H, was drilled to a measured total depth of 6,615 feet, including 2,600 feet of lateral hole (100% WI). It was recently completed flowing 1.1 Mmcf per day after a four- stage frac at a total cost of $1.5 million. "We are currently drilling our sixth horizontal well in Sissonville and will be starting our first well on the Hurricane acreage by the end of June. Hurricane was one of our new acreage initiatives mentioned late last year where we have nearly 130,000 gross acres under lease," stated Dinges.
Cabot has spud a confirmation well at its Hinton discovery in northwest Alberta. This 11,000-foot offset should reach total depth in 50-60 days. The discovery well is flowing at a pipeline constrained rate of four Mmcf per day. To mitigate the constraints, Cabot and others are contracting for 50 Mmcf per day of expanded capacity with construction expected to start in August and be completed in February, 2007.
At Musreau, Cabot has received approval to downspace its development acreage from 640 to 320 acres per well, with further downspacing to 160 acres expected. This will provide an additional 30 locations in the field on 160- acre spacing. Additionally, Cabot is laying a new pipeline to access the Cutbank plant gas pipeline thereby bypassing a bottle neck which has significantly impacted daily production. This line will be completed by the end of June.
Expanding its resource acreage base and drilling inventory is the catalyst for Cabot's success in Canada. Recently Cabot has been successful in acquiring an interest in a 37,120-acre block adjacent to the Musreau development area at a cost of $4.5 million in the form of cash and drilling dollars. Cabot's interest will range between 16 to 40 percent working interest on this acreage. The initial well location has been built, and the Company expects the first well to spud in June. With success, Cabot could be exposed to as many as 120 gross locations, assuming 160-acre spacing.
Cabot has spud its initial well at the McKenna project in San Juan County, Utah. The McKenna 14-14 (75 percent working interest) well is drilling below 2,646 feet, targeting Honaker Trail, Ismay and Paradox Group shales at 10,000 feet. Cabot has leased approximately 40,000 gross acres over this project.
Cabot has also spud its first operated Frontier/Dakota infill well in the Moxa Arch area based on 80-acre spacing. With successful down-spacing operations, Cabot has 700 additional locations on its Moxa Arch acreage.
Cabot's equivalent guidance for the second quarter (as posted on its website) is between 240 and 252 Mmcfe per day. "At the time of this release, we have a production profile for April and May that is at slightly above the upper end of this guidance due to the activity I just highlighted," stated Dinges.
Stock Buy Back
"With the softness occurring in the E&P space and our underlying valuation, we have been an active participant in our stock, buying in shares," commented Dinges. "When you compare the industry's acquisition prices and its organic finding costs, allocating a portion of our capital to buying our own reserves in the stock market is very attractive."
Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading independent natural gas producer with substantial interests in the Gulf Coast, including Texas and Louisiana; the West, with the Rocky Mountains and Mid- Continent; the East and an expansion effort in Canada. 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.
SOURCE Cabot Oil & Gas Corporation
CONTACT: Scott Schroeder of Cabot Oil & Gas Corporation, +1-281-589-4993
1341 06/13/2006 08:30 EDT http://www.prnewswire.com