COG seeks successful new ventures
As we saw in the previous parts, Cabot Oil & Gas’s key focus is growth coming in from the Marcellus and increasing value for shareholders.
However, as a part of its investment philosophy and as a long-term strategy, the company also plans to allocate a limited portion of its capital to test newer concepts that could enhance its long-term value. As a part of this strategy, the company plans to seek opportunities and ventures that based on full-cycle returns could compete with capital. Apart from full-cycle returns, the company would also look at self-funding capabilities against a backdrop of volatile energy prices.
If this strategy proves to be successful, the company plans to fund its near-term deficits via non-core asset divestitures, as it had done during its initial development phase in the Marcellus (see image on the left). However, if unsuccessful, Cabot would sell said venture and use the funds for “value-creating” opportunities such as drilling expenses in the Marcellus, dividends, share repurchases, and debt reduction.