Cabot Oil & Gas Corporation announced highlights from its areas of focus including the Marcellus, Eagle Ford, Marmaton and Pearsall. "As indicated in today's other releases, our operational efforts during 2012 resulted in several record breaking performances, including new highs for both oil and gas production, total proved reserves, and cash flows," said Dan O. Dinges, Chairman, President & Chief Executive Officer. "While we derive value from each of our plays, the Marcellus continues to be the primary contributor to our recent success."
Based on recently released data from the state of Pennsylvania, the Company had 15 of the top 20 producing Marcellus wells in the state during 2012. Cabot's cumulative production in the field has reached 500 Bcf in just over four years of activity. Today's gross production, depending on operational variations, remains at one Bcf per day and has reached a record of 1.038 Bcf in one 24-hour period.
Recent well successes in the Marcellus include:
A single well with cumulative production of 5 Bcf in 205 days.
A four-well pad with a combined 24-hour peak rate of 92 Mmcf per day.
A 13-stage well with an initial production rate of 28.5 Mmcf per day and a 30-day average production rate of 20.2 Mmcf per day.
A 35-stage well with a 24-hour peak rate of 41.4 Mmcf per day and a 30-day average production rate of 35.9 Mmcf per day.
Well results continue to improve as evidenced by the 13.9 Bcf estimated ultimate recovery (EUR) average for the 41 completed/producing 2012 wells. The Company now has 10 wells with EURs in excess of 20 Bcf. In addition, Cabot continues to de-risk its acreage with the recent post-completion flow back results from a pad location on the farthest eastern edge of its acreage position, which are consistent with the Zick area wells. These wells represent a 9-mile step-out from the Company's Zick area and are currently waiting on pipeline, which is scheduled to arrive in the fourth quarter as planned. Cabot also continues to improve economics with cost savings resulting from decreased stimulation costs per stage, which are down approximately 15 to 20 percent.
"Our team, in conjunction with our service partners, has done a tremendous job making a step change in our Marcellus operations during 2012," commented Dinges. "We have thousands of locations in front of us along with ongoing infrastructure expansion plans in place to aid with this continued momentum."
In Texas and Oklahoma, the Company has continued its effort to allocate capital towards liquids-focused activity. The established Eagle Ford and Marmaton efforts continue to see advances in productivity and efficiency. The Pearsall remains in the beginning of the exploitation phase as Cabot delineates the optimal placement for drilling and completion in a thick geologic column.
"Our 67 percent increase in oil production from 2011 to 2012 exceeded expectations," stated Dinges. "Our challenge is to continue that momentum with more capital being allocated to the Marcellus."
Some recent highlights in the plays include:
The Company has experienced continued success with the 400' down spacing program, maintaining a range of EURs between 350 and 500 Mboe per well, depending on lateral length. Cabot continues to see improvements in EUR per lateral foot as the Company refines its lateral placement and completion techniques. This down spacing is expected to double the recoverable reserves in Cabot's Buckhorn area. The Company continues to see decreases in average well costs in the Eagle Ford as a result of lower stimulation costs and increases in drilling and completion efficiencies. Additionally, drilling days continue to decline with the fastest well drilled to date in 9.5 days and an average for recent wells of 13 days. "With the second half of 2012 focused primarily on our initial Pearsall activity, we have limited new data on the Eagle Ford," stated Dinges. "We have, however, continued our efficiency efforts as evidenced above."
To date, nine wells have been drilled with five wells producing, four wells completing or waiting on completion and three wells drilling. "We continue to refine the process of determining the best place to land the laterals in the prospective interval," commented Dinges. "This exploitation project, like the Marmaton before it, requires considerable engineering to optimize cost and well performance."
Our three extended reach horizontal wells with laterals of approximately 9,500' have an average EUR of 230 Mboe with drilling costs between $4.3 million and $4.5 million. The average initial production rate from the three wells has been 792 Boe per day with a 90 percent oil cut. "This rate does not match our best well in the play, but the profile has been flat after inclining for a period of time," said Dinges. "We are cautiously optimistic about the well performance and based on the first full year of our Marmaton program we are seeing returns that are consistent with our Eagle Ford program."
Cabot's 2013 capital plan of approximately $1 billion remains unchanged from prior guidance, with approximately 65 percent allocated to the Marcellus, 30 percent to our oil initiatives in Texas and Oklahoma and the remaining 5 percent on other new opportunities. The capital program is expected to be fully funded by cash flow while generating 35 to 50 percent production growth and double digit reserve growth.
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