Cabot Oil & Gas Corp. now expects net production for the third quarter to be slightly below previous guidance, driven by startup delays at Williams Cos. Inc.'s Atlantic Sunrise natural gas pipeline expansion project, as well as other operational changes.
The natural gas producer lowered its preliminary estimate of third-quarter net production to about 2,029 MMcfe/d, which would still be a 7% increase over the second quarter and a 19% increase year over year on a divestiture-adjusted basis. Cabot previously estimated third-quarter net production to be between 2,100 MMcfe/d and 2,200 MMcfe/d. Cabot also attributed the modified estimate to changes in the timing of its third-quarter pads placed on production, according to an Oct. 9 news release.
Cabot also said its current gross operated production volumes saw an increase of 19% over its average daily gross volumes during the previous quarter, coming in at above 2.6 Bcf/d.
Third-quarter natural gas price realizations are expected to be at $2.36/Mcf, which is 54 cents lower than NYMEX settlement prices. "Our realized prices for the third quarter came in higher than [forecast] due to narrower basis differentials as fundamentals in the Northeast continued to improve," Cabot Chairman, President and CEO Dan Dinges said. "We anticipate a further strengthening of realized prices during this coming winter heating season driven by the in-service of Atlantic Sunrise, current storage level expectations, and seasonal demand."
Cabot also expects fourth-quarter net production to be in the 2,225 MMcfe/d to 2,275 MMcfe/d range. The company also lowered its full-year daily production growth guidance range to 7% to 8%, from the previous 10% to 12%, reflecting impacts of third-quarter actual numbers and a change in completion timings during the fourth quarter. The company reduced its capital budget for 2018 to $940 million, which represents a $20 million decrease.