Marcellus's Margins, Oil Production Set to Steer Cabot's 2017
Currently, Cabot Oil & Gas (COG) has an implied volatility of ~37%, 1.3% lower than its 15-day average of ~37.5%.
Since the beginning of 2017, Cabot Oil & Gas (COG) stock has been volatile, not really showing a consistent uptrend or downtrend like it had in 2016.
Cabot Oil & Gas (COG) boasts a strong financial position. According to its March 2017 presentation, it had total debt of $1.5 billion at the end of 4Q16.
Let’s take a look at Cabot Oil & Gas’s (COG) total production and natural gas production between 4Q14 and 4Q16.
Cabot Oil & Gas’s average realized price for crude oil (USO) (UCO) and condensates rose from $37.74 per barrel in 4Q15 to $42.94 per barrel in 4Q16.
Cabot Oil & Gas’s (COG) proved reserves have risen considerably since 2013. At the end of 2016, COG had proved reserves of ~8.6 Tcfe (trillion cubic feet equivalent).
COG’s finding and development costs in the Marcellus Shale have fallen ~47% since 2012. Its total finding and development costs have fallen 57% since 2012.
Cabot Oil & Gas (COG) has provided a production growth guidance range of 5.0%–10.0% for 2017. It expects its oil production to rise 15%.
Williams Companies’ (WMB) Atlantic Sunrise project could play a major role in doubling Cabot Oil & Gas’s (COG) Marcellus Shale production in 2018.
Cabot Oil & Gas (COG) has increased its 2017 capital budget to fund additional drilling and completion activity, most of which will be directed to the Eagle Ford Shale.
Earlier in March, Cabot Oil & Gas raised its 2017 exploration and production (or E&P) capital budget to $650 million, compared to $575 million in 3Q16.
According to recent data released by Cabot Oil & Gas, it had the highest estimated ultimate recovery compared to its peers in the Marcellus Shale and the Utica Shale.
Chesapeake Energy’s (CHK) short interest ratio (short interest as a percentage of float) on January 11, 2017, was ~13.3%.
CHK’s stock has risen 66% year-over-year. Meanwhile, its peers Rice Energy and WPX Energy have risen ~115% and 181%, respectively, in the same period.
Chesapeake Energy’s (CHK) current implied volatility is ~55%, ~4% higher than its 15-day average of 52.5%.
Chesapeake Energy’s (CHK) 3Q16 EV-to-adjusted EBITDA (enterprise value to adjusted earnings before interest, tax, depreciation, and amortization) ratio was 34.7x.
Chesapeake Energy’s (CHK) forward EV-to-EBITDA multiple of ~8.8x is slightly overvalued compared to its peer average of 7.6x.
In 3Q16, Chesapeake Energy (CHK) reported cash flow from operations (or CFO) of ~$376 million, ~18% higher than its CFO in 3Q15.
CHK expects to achieve cash flow neutrality by 2018 resulting from production growth driven by its 2017 investments.
A presentation released by CHK in October 2016 noted that it had reduced $2.1 billion worth of its debt in 2015 and 2016 as of September 30, 2016.