Investor Presentation. December 2013 Company Update

Transcription

1 Investor Presentation December 2013 Company Update

2 HIGHLIGHTS FROM CABOT S FIRST 10-WELL MARCELLUS PAD 170 Stages with a Combined Peak Production Rate of 201 Mmcf/d and a Combined Average 30-Day Production Rate of 168 Mmcf/d 10-Well Pad Included Two Upper Marcellus Wells and a 500 Downspacing Pilot Program in the Lower Marcellus Realized Cost Savings of $6 Million for the 10-Well Pad Implying a Reduction in Well Costs from $6.4 Million for a 2-Well Pad to $5.8 Million for a 10-Well Pad Cabot s First Location Hydraulically Fractured by an Entirely Bi-Fuel Frac Fleet

3 OVERVIEW OF CABOT S 10-WELL PAD OPERATIONS Water storage tanks Bi-fuel metering of natural gas to frac pumps Additional sand storage Bi-fuel frac pumps Simultaneous Zipper Ops / Pumpdown Wireline Plug-Perf

4 UPPER MARCELLUS DE-RISKING AND LOWER MARCELLUS 500 DOWNSPACING PILOT 4 Lower Marcellus wells to the North 1,000 1,000 1,000 Upper Marcellus Well 2 Upper / 4 Lower Marcellus wells to the South 1,000 Lower Marcellus Well Fault ,000 Upper Marcellus Interval Lower Marcellus Interval

5 DRILLING AND COMPLETION EFFICIENCIES ON THE 10-WELL PAD Drilling Cost Per Foot ($) $325 $258 $ H Well Pad Frac Stages Per Crew Day H Well Pad

6 PAD DRILLING EFFICIENCIES RESULTING IN LOWER WELL COSTS Marcellus Well Cost For Typical 14 Bcf (18-Stage) Well ($mm) $6.4 ($0.2) ($0.2) ($0.2) $5.8 Single Well Cost for 2-Well Pad Location and Road Savings Drilling Efficiencies Completion Efficiencies Single Well Cost for 10-Well Pad

7 TRANSITIONING FROM ACREAGE CAPTURE TO PAD DRILLING Percentage of Marcellus Wells Drilled on Pads with 5 or More Wells 60% 23% 2013E 2014E

8 COMPANY OVERVIEW

9 KEY INVESTMENT HIGHLIGHTS Extensive Inventory of Low-Risk, High-Return Drilling Opportunities Industry-Leading Production and Reserve Growth Over 3,000 identified drilling locations in the sweet spot of the Marcellus Shale implying 25+ years of inventory at current drilling levels Peer-leading rates of return and EUR per lateral foot in the Marcellus Shale Oil-focused initiative in the Eagle Ford Shale Initiated 2014 production growth guidance of 30% - 50% Reaffirmed 2013 production growth guidance of 44% - 54% 2012 proved reserve growth of 27% resulting in a three-year reserve CAGR of 23% Q total company per unit cash costs 1 of $1.25 per Mcfe Low Cost Structure 2014 Marcellus per unit cash cost 1 guidance of ~$0.80 per Mcf 2012 total company all-sources finding costs of $0.87 per Mcfe 2012 Marcellus all-sources finding costs of $0.49 per Mcf Strong Financial Position and Financial Flexibility Net debt to adjusted capitalization ratio of 33% as of 9/30/2013 Approximately 30% hedged at the midpoint of 2014 production guidance 1 Excludes DD&A, exploration expense, stock-based compensation and pension termination expenses

10 ASSET OVERVIEW 2012 Year-End Proved Reserves: 3.8 Tcfe Q Production: Bcfe per day 2013E Drilling Activity: net wells 2014E Drilling Activity: net wells Eagle Ford Shale ~62,000 net acres Current Rig Count: E Drilling Activity: net wells 2014E Rig Count: E Drilling Activity: net wells Marcellus Shale ~200,000 net acres Current Rig Count: 6 (as of August 21, 2013) 2013E Drilling Activity: ~100 net wells 2014E Rig Count: 7 (beginning January 2014) 2014E Drilling Activity: net wells

11 PEER-LEADING PRODUCTION AND RESERVE GROWTH 42% Production Per Debt-Adjusted Share CAGR ( ) 30% 26% 24% 22% 17% 16% 15% 8% 8% Peer median: 11% 2% (0%) (2%) (3%) COG Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J Peer K Peer L Peer M Peer N (9%) 18% 17% 15% 9% Reserves Per Debt-Adjusted Share CAGR ( ) 5% 4% 2% Peer median: (2%) (1%) (2%) (4%) (10%) (12%) (18%) (21%) COG Peer C Peer E Peer F Peer L Peer D Peer A Peer J Peer K Peer H Peer M Peer G Peer I Peer B Peer N Source: Cabot Oil & Gas, company filings Peer group from 2013 proxy statement includes: CXO, EQT, KWK, NBL, NFX, PXD, QEP, RRC, SM, SWN, UPL, WPX, XCO and XEC (36%)

12 TRANSFORMATION TO A MARCELLUS AND EAGLE FORD FOCUSED STORY IN E Capital Program: $1.1 billion - $1.2 billion 2014E Capital Program: $1.375 billion - $1.475 billion Other 5% Other 2% Eagle Ford / Marmaton / Pearsall 30% Eagle Ford 24% Marcellus 65% Marcellus 74% Production Equipment / Other 5% Land 5% Exploration 3% Production Equipment / Other 6% Land 6% Exploration 3% Drilling 87% Drilling 85%

13 PROVEN TRACK RECORD OF PRODUCTION GROWTH Bcfe % % Guidance: 44% - 54% (increased from 35%- 50%) 2014 Guidance: 30% - 50% Liquids (Net) Gas (Net) E 2014E

14 AND RESERVE GROWTH 4.5? % % Tcfe % Liquids (Net) Gas (Net) E

15 INDUSTRY-LEADING COST STRUCTURE $2.50 $2.47 Operating Transportation¹ Taxes O/T Income G&A² Financing $2.12 $2.00 $ / Mcfe $1.50 $1.76 $1.67 Guidance Midpoint: $1.37 Guidance Midpoint: $1.21 $1.00 $0.80 $0.50 $ E 2014E 2014E Marcellus Only 1 Includes all demand charges and gathering fees 2 Excludes stock-based compensation and pension termination expenses

16 50% PEER-LEADING CASH FLOW PER SHARE GROWTH WHILE GENERATING SUBSTANTIAL FREE CASH FLOW 2013E 2015E Cash Flow Per Share CAGR 40% 30% 20% 10% 0% (10%) COG Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J Peer K Peer L Peer M Peer N $1,250 $1,000 $750 $500 $250 $0 ($250) ($500) ($750) ($1,000) ($1,250) 2014E 2015E Cumulative Free Cash Flow ($mm) COG Peer D Peer C Peer J Peer L Peer A Peer K Peer H Peer N Peer I Peer E Peer B Peer F Peer M Peer G Source: First Call consensus median as of 11/11/2013; cumulative free cash flow defined as cash flow per share times shares outstanding less capital expenditures; consensus 2014 pricing of $3.85 per Mmbtu and $93.92 per Bbl Peer group from 2013 proxy statement includes: CXO, EQT, KWK, NBL, NFX, PXD, QEP, RRC, SM, SWN, UPL, WPX, XCO and XEC

17 POTENTIAL USES FOR FREE CASH FLOW Expand Core Acreage Positions in the Marcellus and Eagle Ford Accelerate Development of our Marcellus and Eagle Ford Programs Organically Build Positions in New Venture Opportunities Return Cash to Shareholders Via Share Buybacks and Increased Regular Dividends

18 MARCELLUS SHALE

19 CABOT CONTINUES TO PRODUCE THE MOST PROLIFIC WELLS IN THE MARCELLUS SHALE Cumulative Production From January to June 2013 (Bcfe) Top 20 Pennsylvania Marcellus Wells (January to June 2013) 15 of the top 20 (January to June 2013) 10 of the top 20 (July to December 2012) 14 of the top 20 (January to June 2012) 15 of the top 20 (July to December 2011) Source: PA DEP Oil & Gas Reporting Website Note: Peers include Chief Oil & Gas and EQT Corporation

20 DERISKING OF CABOT S MARCELLUS POSITION 15 of Top 20 Marcellus Wells (Jan Jun 2013) SILVER LAKE HALLSTEAD SILVER LAKE GREAT BEND Pad A Q2FRIENDSVILLE / Q Well Results MIDDLETOWN LANESBORO Recently Announced Q2 / Q Well Results HARMONY SUSQUEHANNA Number of Total Frac Peak 24-Hour DEPOT Wells Stages Rate (Mmcf/d) FRANKLIN FOREST LAKE Pad B Pad C 3 JACKSON Pad D Pad E Pad F 1 23 NEW MILFORD BRIDGEWATER MONTROSE OAKLAND THOMPSON 32.8 ARARAT JESSUP HARFORD RUSH GIBSON BROOKLYN HERRICK DIMOCK UNIONDALE HOP BOTTOM AUBURN LATHROP SPRINGVILLE LENOX CLIFFORD Cabot Acreage FOREST CITY Peer Acreage Conservation Areas

21 CONTINUED PERFORMANCE IMPROVEMENTS IN THE MARCELLUS Horizontal Length Average IP and 30-Day Rate Thousand Ft Mmcfpd Average Number of Stages EUR Stages Bcf Number of wells: , , , , Note: Data excludes wells drilled in the northern portion of our acreage position

22 MARCELLUS RIG MOVE EFFICIENCIES Move Days (Release to Spud) /2012 (25 Moves) Implementation of New Move Process (4 Moves) Average For Last 19 Moves Target Implemented a new rig move process in 2013 including 24-hour operations for rig up and rig down The new process has reduced average rig moves by ~4 days 4-day reduction in move time yields $250K in savings per move including rig time, trucking, rentals, and labor charges

23 CABOT IS DRILLING MARCELLUS WELLS FASTER DESPITE LONGER LATERAL LENGTHS 0 Drilling Days (Spud-to-Rig Release) ,500 Measured Depth (Feet) 5,000 7, YTD 10,000 12,500

24 MARCELLUS COMPLETION EFFICIENCIES FRAC EVOLUTION: 2010 Daylight Operations, single well pads Hour operations, multi well pads Hour operations, multi well pads, modified zipper operations 10 8 Average Frac Stages Per Crew Day Record of 9 frac stages per crew day (achieved five times) Hour operations, multi well pads, simultaneous zipper operations Days 6 EFFICIENCY RESULT: 4 100% increase in stages per day compared to 2010 Significant cost savings through the reduction in days on site YTD

25 EVOLUTION OF CABOT S FRAC STAGE SPACING SHORTER STAGE LENGTHS AND REDUCED CLUSTER SPACING RESULTING IN HIGHER EURS PER 1,000 FEET OF LATERAL EUR Per 1,000 of Lateral (Bcf) Q Q3 - Q Packer Systems Completion 400 spacing Packer Systems Completion 300 spacing Plug/Perf 250 spacing Plug/Perf 200 spacing

26 COMPRESSED NATURAL GAS (CNG) AND LINE GAS USAGE IN CABOT S MARCELLUS OPERATIONS CNG Usage in Cabot s Vehicles - Estimated displacement of ~110,000 gasoline gallon equivalents (GGE) in 2014 CNG / Line Gas Usage in Cabot s Drilling Operations - Estimated displacement of ~1.1 million diesel gallon equivalents (DGE) in Plan to utilize CNG / Line Gas in 100% of Cabot s future drilling operations for estimated displacement of 2.5+ million DGE Line Gas Usage in Cabot s Completion Operations - Estimated displacement of ~1.5 million DGE in Plan to utilize Line Gas in 100% of Cabot s future completion operations for estimated displacement of 2.6+ million DGE

27 COG MARCELLUS MARKETING STRATEGY Diversifying on Multiple Pipelines to Multiple Geographic Locations Firm Transportation Arrangements Long-Term Sales Agreements (Firm Sales) Investing in New Pipeline Projects Opportunistic Hedging Program

28 CABOT S MARCELLUS GATHERING CAPACITY Cabot s Gross Marcellus Gathering Capacity (Mmcf/d) 4,000 3,650 3,800 Gross Takeaway Capacity (Mmcf/d) 3,000 2,000 1, ,380 1, Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Note: Capacity volumes above are indicative deliverability estimates for facilities that are in place or planned for those periods; these are not production estimates. Facilities include compression, dehydration and measurement.

29 INTERSTATE PIPELINE MARKETS NY Canada Iroquois VT NH TGP 200 Line Constitution MA Boston Laser Millennium CT RI TGP 300 Line Hartford Springville Susquehanna County Long Island Transco PA New York City Charlotte NJ Current Markets Tennessee Gas Pipeline 300 (CT, NJ, OH, PA, WV) Transco Gas Pipeline (DC, MD, NC, NJ, NY, PA, VA) Millennium Gas Pipeline (CT, NJ, NY, RI) 2015 Market Additions Iroquois Pipeline (CT, Long Island) Tennessee Gas Pipeline 200 (CT, MA, NH) TransCanada Pipeline (via Iroquois)

30 SCHEDULED APPALACHIA PIPELINE EXPANSIONS Over 13.3 Bcf/d of pipeline capacity expansions in Appalachia between now and 2017 with even more projects currently in the planning phases Cumulative Pipeline Capacity Additions (Bcf/d) Q Source: Bentek

31 CABOT S MARCELLUS ECONOMICS Typical Well IRR Sensitivity $6.5 million D&C $6.0 million D&C BTAX %IRR 200% 175% 150% 125% 100% 75% 50% 195% 150% 170% 115% 130% 80% 100% 70% $3.00 $3.50 $4.00 $4.50 Henry Hub ($ / Mmbtu) Typical Well Parameters (Based on 2012 Program) EUR: 14.1 Bcf IP Rate: 17.4 Mmcfpd Lateral Length: 4,100 Number of Stages Per Well: 18 Average Working Interest: 100% Average Revenue Interest: 85%

32 EAGLE FORD SHALE

33 EAGLE FORD SHALE SUMMARY ~62,000 net acres Current operated rig count: 2 Added a second rig in late July that will focus solely on multi-well pad development (3 6 wells per pad) Operated wells producing: 56 Pad A 4-well pad Completing Lateral lengths ranging from 5,200 to 8,000 Operated wells currently drilling / suspended: 6 Operated wells completing: 5 Average completed well cost: ~$6.5mm Multi-well pad drilling expected to reduce well costs by $500,000 - $600,000 per well Recently completed an extended lateral well (8,000 +) with a 24-hour peak rate of ~1,130 Boepd and a 120-day rate of ~1,100 Boepd Pad B 6-well pad Drilling Average lateral length over 8,000 Frio La Salle Atascosa McMullen ~20 miles

34 SIMPLE GROWTH STORY 3,000+ Locations in the Sweet Spot of the Marcellus Shale Implying 25+ Years of Inventory at Current Drilling Levels Currently Producing 1.3 Bcf/d of Gross Marcellus Production From Only 8% of Our Identified Locations Peer-Leading Rates of Return and EUR Per Lateral Foot in the Marcellus Shale Industry-Leading Cost Structure Continuing to Improve Due to Efficiency Gains Best-In-Class Production and Cash Flow Per Share Growth While Generating Free Cash Flow

35 Thank you The statements regarding future financial performance and results and the other statements which are not historical facts contained in this presentation are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price of natural gas and oil, results of future drilling and marketing activity, future production and costs, and other factors detailed in the Company s Securities and Exchange Commission filings.