Cabot Oil & Gas Corp. (NYSE: COG) has reported results from the company's first 10-well pad in the Marcellus shale play. Additionally, the company has provided an update on its share repurchase program and announced the sale of legacy conventional Mid-Continent properties.
Cabot recently turned-in-line its first 10-well pad in the Marcellus, which included eight Lower Marcellus wells and two Upper Marcellus wells. The 10-well pad was completed with 170 fracture stimulation (frac) stages with a combined peak production rate of 201 MMcfd and a combined average 30-day production rate of 168 MMcfd. The production rates per 1,000 feet of lateral exceeded the company's 14 Bcf type curve, further reiterating the consistency of results across Cabot's Marcellus position.
As a result of the drilling and completion efficiency gains on its first 10-well pad, Cabot anticipates well costs for the company's typical 14-Bcf well will decrease from $6.4 million on a two-well pad to $5.8 million or less on a 10-well pad. Cabot anticipates that 60% of its 2014 program will be drilled on pads with five or more wells.
During the fourth quarter, the company has repurchased approximately 4.8 million shares, representing 25% of the 19.2 million shares authorized under its current share repurchase program. The recent share repurchases will be funded by the proceeds from the company's previously announced Marmaton and West Texas divestitures.
In addition to the previously announced Marmaton and West Texas divestitures, Cabot recently entered into a purchase and sale agreement with an undisclosed buyer to sell certain legacy conventional oil and gas properties located in the Mid-Continent for approximately $123 million. This transaction is expected to close by year-end 2013. Evercore acted as financial advisor to Cabot on this transaction.