Cabot Oil & Gas (COG) Increases 2014 Capex Guidance
Cabot Oil & Gas Corporation (COG) provided an update on its 2014 capital expenditure and production guidance, recent acquisitions, share repurchase programs and note offerings.
Guidance
The independent oil and gas exploration company has increased its 2014 capex guidance to $1.45–$1.55 billion from $1.375–$1.475 billion owing to the addition of a rig in the Eagle Ford. With its fourth rig in place, Cabot now plans to drill about 55 net wells in the region. Across the company, Cabot expects to drill 165–175 net wells in 2014.
For the third quarter, Cabot anticipates 2% sequential growth in daily net production volumes. However, for 2014, production guidance has been lowered to 530–555 billion cubic feet equivalent (Bcfe) from 530–585 Bcfe. The reduced guidance is due to the delay in achieving target production level as a result of infrastructure issues.
Acquisition
Cabot announced that it has entered into an agreement to acquire about 30,000 net acres in Eagle Ford. The transaction was valued at $210 million and is expected to close in October. The acquired acreage – comprising 92% liquids – has an average production of 1,600 barrels of oil equivalent per day.
The company has discovered several potential drilling locations in the recently acquired properties, which led to the above-mentioned addition of the fourth rig in the Eagle Ford.
Share Repurchases
Cabot mentioned that it has bought back about 2.7 million shares since second-quarter 2014 results. The company is still left with around 11.7 million shares under its current stock repurchase program.
Closure of Notes Offering
Cabot announced that it has closed the recently announced three-part offering of senior notes, receiving $925 million as proceeds. The offering comprised $100 million of 7-year 3.24% notes due to mature in 2021, $575 million of 10-year 3.67% notes due in 2024 and $250 million of 12-year 3.77% notes due in 2026.
The company added that the proceeds from this offering would be used to fund the Eagle Ford acquisition, lower debt under its credit facility and for other corporate purposes.
Zacks Rank & Other Stock Picks
Houston, TX-based Cabot Oil & Gas currently carries a Zacks Rank #3 (Hold).
Meanwhile, one can consider better-ranked players from the same industry like Northern Oil and Gas, Inc. (NOG), WPX Energy, Inc. (WPX) and Warren Resources Inc. (WRES). Northern Oil and Gas and WPX Energy sport a Zacks Rank #1 (Strong Buy), while Warren Resources holds a Zacks Rank #2 (Buy).
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