Markets
COG

Cabot Oil & Gas to Considerably Cut 2016 Capital Spending

Independent oil and gas exploration company Cabot Oil & Gas CorporationCOG has significantly lowered its 2016 and 2015 capital spending budget. This is not a surprise move as the upstream energy players are struggling in an unfavorable business scenario amid relentless commodity price weakness.

Cabot has pegged its 2016 capital spending budget at $325 million, nearly half the prior guidance of $615 million set last October. The 2016 projected spending figure is also 58% below $774 million of the newly expected expenditure for 2015. In details, the company is anticipated to allocate 92% of the budget for drilling, completion and facilities activities. Investors should know that comparing on the basis of resources, 70% of the investment will go toward Marcellus Shale and the remaining 30% will be spent for Eagle Ford Shale.

The company added that during this year it is planning to drill net 25 wells in the Marcellus and 5 net wells in the Eagle Ford shale plays. Moreover, Cabot seeks to complete 40 net wells in the Marcellus and 15 net wells in the Eagle Ford. Most importantly, throughout its operations, Cabot will likely lower its rig count to only one by mid February.

The huge reduction in 2016 anticipated capital spending will likely get reflected in production. This is obvious from the indication that Cabot has lowered the top-end of its production growth guidance range to 2-7% from 2-10%.

Along with the 2016 projected capital spending announcement, Cabot also gave its operational update for fourth-quarter and full-year 2015.

For the fourth quarter, the company projects production of around 1,642 million cubic feet equivalent (Mmcfe) per day, higher than 1,626 Mmcfe per day - the midpoint of its guidance range. Moreover, Cabot is projecting 2015 production growth of 13%.

Cabot's capital spending for the fourth quarter is estimated at $97 million. As already mentioned, for 2015, the company anticipates an investment budget of $774 million, much lower than the previous projection of $850 million. The company reveals that weak operations during the fourth quarter led to the overall reduction of the 2015 capital spending.

Fourth-Quarter Estimates

Houston, TX-based Cabot is expected to release fourth-quarter 2015 results on Feb 19, 2016, before the opening bell. The Zacks Consensus Estimate for the company's fourth-quarter is pegged at a loss of 3 cents per share.

Zacks Rank and Stocks to Consider

Cabot currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, some better-ranked players in the energy space include Transocean Ltd. RIG , Valero Energy Corporation VLO and Tesoro Corporation TSO . Each of these stocks carries a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

VALERO ENERGY (VLO): Free Stock Analysis Report

TESORO CORP (TSO): Free Stock Analysis Report

TRANSOCEAN LTD (RIG): Free Stock Analysis Report

CABOT OIL & GAS (COG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

COG VLO RIG

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More