Cabot Oil & Gas Corp. closed out 2011 averaging 600 MMcf/d from the Marcellus Shale, including one day where the Houston company produced a record 606 MMcf.

By comparison, Cabot closed out 2010 producing 236 MMcf/d from the Marcellus. The increase comes largely from expanding takeaway capacity.

Cabot recently commissioned an upgrade to the Teel Compressor Station that doubles its capacity to 200 MMcf/d, giving the company 650 MMcf/d in total compression.

Cabot also began delivering gas to Williams Partners LP’s 33-mile, 24-inch diameter Springville gathering pipeline in northeastern Pennsylvania in late December. While those supplies are currently being used for linepack and compression commissioning, the company expects to begin delivering up to 250 MMcf/d to Transcontinental Gas Pipe Line (Transco) via Springville as soon as this week (see Shale Daily, Oct. 31, 2011).

Cabot should be able to move up to 625 MMcf/d on the system by mid-2012.

“Ending 2011 with this momentum provides us a great start to the new year,” CEO Dan O. Dinges said. “We have long anticipated these events and completing these during 2011 gives an exclamation point to what has been Cabot’s best year in many regards.”

Growing production across the Marcellus filled up Tennessee Gas Pipeline (TGP) in the region in 2011, causing a price differential between Line 200 that runs through New York State and Line 300 that runs through the heart of the play in Pennsylvania (see Shale Daily, Sept. 7, 2011). The Springville option will eventually allow Cabot to decrease its Line 300 deliveries to 350 MMcf/d, which should “alleviate acute price weakness,” according to a note from Canaccord Genuity Energy Research analysts. Earlier in the fall Cabot made similar moves by beginning deliveries to Millennium Pipeline via Laser pipeline.

“The majority of our 2012 production will be going to markets not served today by Cabot, which we think is an improvement,” Dinges said in an October 2011 conference call.

Cabot also announced a two-for-one stock split that will be distributed on Jan. 25 to all shareholders as of Jan. 17, and indicated that its quarterly dividend would jump 33% to 16 cents/share on a pre-share basis. “We see these moves positively, as they should provide additional liquidity and indicate confidence in the company’s outlook,” Canaccord wrote.

With a 101% increase over the past year, Cabot also earned the distinction of being the best-performing stock on the Standard & Poor’s 500 in 2011. Cabot stock was trading at $78.24/share on the New York Stock Exchange on Wednesday morning.

While Cabot posted a record year for production, it continues to face old challenges.

A resident of Dimock Township, PA is accusing the board of supervisors, Cabot officials and drilling supporters of meeting privately in early December to discuss an offer to accept water supplies from nearby Binghamton, NY, according to the Scranton Times-Tribune. Dimock ultimately refused the offer from Binghamton (see Shale Daily, Dec. 7, 2011).

The U.S. Environmental Protection Agency recently began surveying Dimock homeowners to address “potential gaps in sampling and sample results” (see Shale Daily, Jan. 3).

Some homeowners in the northeastern Pennsylvania community blame Cabot for contaminating their water supplies. Cabot settled the issue with the Pennsylvania Department of Environmental Protection in December 2010 without accepting blame, but agreed to pay the affected residents, provide whole-house gas mitigation systems and deliver fresh water. The company recently got permission to stop those deliveries.