Cabot Oil & Gas Corp. has received a long-awaited air quality permit from Pennsylvania regulators to build three natural gas compressors in Susquehanna County, PA, in the heart of its Marcellus Shale operations.
The three units to be built at the Lathrop Station, once fully permitted and operational, would add an estimated 105-120 MMcf/d of capacity, Cabot said. The Houston-based producer expects to have the units operational by early to mid-February.
"This is yet another exciting event for Cabot as we end 2010 and look ahead to 2011," said CEO Dan O. Dinges. "We have been capacity-constrained much of this fall and winter waiting on this permit. As we move forward with facility installation, we will be able to provide new clarity on production guidance in the February year-end teleconference."
In a note Monday Jefferies & Co. Inc. analysts said the permit approval would "remove what had been a big overhang for the stock." Assuming new production comes online as scheduled, Jefferies said Cabot's output growth should approach 35% in 2011, well ahead of current forecasts of 20% growth.
Cabot started up the Lathrop compressor station in late June and together with its Teel station was at the time able to produce on average 170 MMcf/d gross.
Last month Cabot agreed to sell its midstream assets in Pennsylvania to Williams Field Services Co. LLC for $150 million and a 25-year gathering agreement (see Shale Daily, Nov. 22). Among other things, the Williams unit agreed to complete construction of Cabot's 32-mile 24-inch diameter high-pressure pipeline to Transcontinental Gas Pipe Line from Cabot's Lathrop Station.