A surprise increase in natural gas prices could allow Cabot Oil & Gas Corp. to deploy a sixth drilling rig in the Marcellus Shale by the fall, helping the company accelerate its plans for pad drilling and move more primary term acreage into production.

During a conference call last week to discuss 1Q2013 with industry analysts, CEO Dan Dinges also hinted that Cabot could sell its assets in the Marmaton Shale in the panhandles of Texas and Oklahoma, but he said the Houston-based company wasn’t currently active in trying to sell them.

For 1Q2013, Cabot reported production of 89.3 Bcfe, a 50% increase over 1Q2012 (59.7 Bcfe). The company reported net income of $42.8 million (20 cents/share), more than double the $18.3 million (9 cents) in earnings from the preceding first quarter. Cash flow from operations totaled $212.7 million for 1Q2013.

Dinges said Cabot’s completion rate in the Marcellus was 70% higher year/year and 23% higher than in 4Q2012. He added that the company currently had 429 stages completing or cleaning up, and another 279 stages waiting to be completed.

“We have maintained [a second] completion crew working for us, and that was one of the catalysts that increased the number of stages that we were able to deliver,” Dinges said during the question and answer session. “We have also had ongoing discussions to determine when we might want to bring a sixth rig into the field to start drilling off a given pad. It does not necessarily move extensive pure pad drilling up in the queue.”

In the Pearsall Shale, Dinges said the company had three drilling rigs deployed after moving one back to the Eagle Ford Shale and another to the Marmaton. He said the Cabot and its joint venture (JV) partner, a U.S. unit of Osaka Gas Co. Ltd., had decided to maintain their plans to drill 15 gross horizontal wells in 2013 (see NGI, July 30, 2012). The company is currently drilling three wells, with another three completed or waiting on completion, and nine wells producing.

The CEO said there wasn’t much to report in the Eagle Ford, other than to date the company has 43 wells producing in the Buckhorn area, with three wells awaiting completion and one well currently being drilled. In the Marmaton, Cabot completed five wells with an average initial production rate of more than 800 boe/d.

Dinges said Cabot was not actively marketing its Marmaton assets, “but if a transaction were to be had, we would certainly look at the Marmaton as an area that we would consider and utilize those dollars to enhance some of the other areas of our operation.”

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