Houston-based Cabot Oil & Gas reported yesterday it hasinitiated hedges in the form of “costless collars” covering 97,000MMBtu/d of its natural gas production for the period from February2001 through October 2001.

For the Appalachia operating area, Cabot put a floor price on35,000 MMBtu/d of $5.43, with a ceiling price of $9.09 per MMBtu.On 25,000 MMBtu/d in the Midcontinent operating region, the companyset a floor of $5 and a ceiling of $8.57. Likewise, for 37,000MMBtu/d from the Gulf Coast, Cabot placed a $5 floor, and a $9ceiling per MMBtu. In total, the 97,000 MMBtu/d will have aweighted average floor price of $5.15 per MMBtu, and a ceilingprice of $8.92 per MMBtu. The hedging equates to a $5.50 per Mcffloor price, and a ceiling price of $9.55 per Mcf.

“We continue to be encouraged by the fundamentals of the naturalgas market,” commented Ray Seegmiller, Cabot’s CEO. “While webelieve there is a sustained strengthening in natural gas prices,this environment of extremely high prices, combined with the dailyvolatility in the futures market, creates the opportunity and needfor some price protection. We will continue to evaluate the meritsof adding to this position; however, we have no plans at this timeto hedge beyond October of 2001. This action will allow the companyto realize a minimum price (related to the new hedged volumes) thatis more than $1.00 per Mcf higher than the original 2001 budget forthis same nine month period.”

The company estimates that the new hedges cover about 51% of itsanticipated 2001 natural gas production for the nine month period.After accounting for all of Cabot’s open hedges, the companyexpects that 45% of its gas production during the nine month periodwill remain subject to market pricing.

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