HOUSTON, Dec. 19, 2013 /PRNewswire/ -- Cabot Oil & Gas Corporation (NYSE: COG) today reported the execution of a definitive gas sale and purchase agreement with Pacific Summit Energy LLC, a wholly owned subsidiary of Sumitomo Corporation, under which Cabot has agreed to sell 350,000 MMBtu per day of natural gas from its Marcellus Shale position for a term of 20 years commencing on the in-service date of the Dominion Cove Point LNG liquefaction project currently scheduled for 2017.
"We are extremely excited to be partnering with Sumitomo to provide a long-term source of natural gas to the Cove Point LNG facility and ultimately to the people of Japan," said Dan O. Dinges, Chairman, President and Chief Executive Officer. "This long-term firm sales agreement is another milestone for Cabot's marketing efforts and ensures the continuing development of our Marcellus Shale position in Northeast Pennsylvania for years to come."
Cabot recently achieved a new gross production record in the Marcellus of 1.5 billion cubic feet (Bcf) per day. "This week marks the one-year anniversary of surpassing the one Bcf per day milestone in the Marcellus, highlighting a 50 percent year-over-year increase," commented Dinges. "As such, we are increasing our 2013 production growth guidance range from 44 to 54 percent to 50 to 55 percent. 2014 production growth guidance for the Company remains unchanged at 30 to 50 percent."2014 Hedging Program During the fourth quarter of 2013, Cabot added 55 natural gas hedge contracts for 2014. The Company now has approximately 970 million cubic feet (Mmcf) per day of natural gas volumes hedged for 2014 at a weighted average floor of $4.12 per thousand cubic feet (Mcf). "Given the recent uptick in the natural gas strip for 2014, we have opportunistically added these hedge contracts to protect downside risk and lock-in pricing that provides best-in-class rates of return," explained Dinges. "Additionally, these hedging initiatives, combined with our continued marketing efforts, mitigate a portion of potential summer pricing volatility." Firm Transportation Contracts During the fourth quarter of 2013, Cabot added 280 Mmcf per day of additional firm transport capacity, with 130 Mmcf per day beginning in October 2013 and 150 Mmcf per day beginning in September 2014. "We continue to analyze opportunities to strategically add to our portfolio of firm transportation contracts and long-term firm sales contracts for our Marcellus production, with the focus on improving our netbacks and flexibility," stated Dinges. Constitution Pipeline The Federal Energy Regulatory Commission (FERC) recently issued its planned schedule for the completion of its environmental review of Constitution Pipeline. The FERC schedule established June 13, 2014 as the date of issuance of the final Environmental Impact Statement and September 11, 2014 as the 90-day federal authorization decision deadline for the project. "We are pleased that the FERC is moving forward with its review of the Constitution Pipeline project and this notice from the FERC is the next important step in receiving a final order," affirmed Dinges. "As a result of this new schedule, the in-service date for Constitution Pipeline could potentially be pushed until later in 2015; however, any delay in the timing of in-service will not affect Cabot's anticipated production growth in 2015 due to our diversity of takeaway options and the ample amount of lead time we have to plan around any schedule changes. As noted above, we will continue to evaluate all opportunities to add incremental takeaway capacity, regardless of whether the timing of Constitution Pipeline's in-service date is altered." Financial Update The Company completed the previously announced sale of its Marmaton assets to Chaparral Energy Inc. as anticipated. Additionally, Cabot recently exercised the $500 million accordion feature on its credit facility, increasing the total commitments to $1.4 billion. "While our 2014 program is expected to generate free cash flow under current commodity price assumptions, these new commitments provide additional liquidity and increase our overall financial flexibility," noted Dinges. Cabot Oil & Gas Corporation, headquartered in Houston, Texas is a leading independent natural gas producer, with its entire resource base located in the continental United States. For additional information, visit the Company's homepage at www.cabotog.com. The statements regarg future financial performance and results and the other statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, market factors, the market price (including regional basis differentials) 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.