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Why Atlantic, Constitution Are Crucial to COG’s Marcellus Growth

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Atlantic Sunrise project

Williams Companies’ (WMB) Atlantic Sunrise project could play a major role in doubling Cabot Oil & Gas’s (COG) Marcellus Shale production in 2018.

The pipeline construction was finally approved by the FERC (Federal Energy Regulatory Commission) in February 2017 after being under review for almost two years.

In a press release on October 13, 2016, Cabot Oil & Gas announced that the FERC was “evaluating certain alternatives to the Central Penn Line North and South routes, which are portions of the Atlantic Sunrise Project.” Following the announcement, COG’s stock fell ~5% on the day. However, after the company’s latest announcement on February 3, 2017, its stock opened at a rise of 10.5% on February 6.

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Constitution pipeline

Another major pipeline project long-awaited by COG is Williams Companies’ (WMB) Constitution pipeline project, which, though it’s been cleared by the FERC, has been blocked by the New York Department of Environmental Conservation. Cabot Oil & Gas has equity investments in both the Constitution and the Atlantic Sunrise pipelines. The reward for Cabot Oil & Gas if the pipeline projects come online could be huge given the insufficient takeaway capacity in the Marcellus Shale.

Both pipelines are expected to relieve the takeaway capacity constraints of several Marcellus producers, including Cabot Oil & Gas, Southwestern Energy (SWN), and Range Resources (RRC). These companies make up a combined 1.3% of the holdings of the iShares North American Natural Resources ETF (IGE).

In the following article, we’ll discuss COG’s plan for the Eagle Ford Shale in 2017.

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