Cabot Oil and Gas (COG) held a conference call on October 26, 2010, to discuss the company’s earnings report for the third quarter of 2010. The company made comments on its operations in several unconventional resource basins including the Haynesville Shale.
Cabot Oil and Gas increased its capital budget for 2010 by $65 million due to higher service costs in the Haynesville Shale and its obligations on non-operated wells in the play. The company is also looking for a joint venture partner in the Haynesville Shale.
“The two main reasons for the capital increase are our participation in non-operated wells in the Haynesville/Bossier combined with the increased cost of pumping services the industry is seeing across the board.”
“To assist with capital allocation in 2011 in the Haynesville/Bossier area, we are working on a joint venture to fund this area for 2011.”
“In the South Region for the remainder of 2010, Cabot is participating in 16 outside operated Haynesville/Bossier wells that are currently drilling, completing, or waiting on completion with working interests generally ranging from 10 to 20%.”
“Results today in the play continue to show production at high initial rates with excellent recoverable reserves. This is true for both the Haynesville and Bossier formations, so we continue to be encouraged by the Bossier wells on and around our acreage."
“Cabot is seeking a 33% working interest in non-operated—non-operating partner in our Haynesville/Bossier acreage. This joint venture would potentially include some upfront consideration plus a capital carry and an AMI which allows for participation in future acreage acquisition. This process is moving forward as we speak.”