With gas prices soaring over $5 this month, Cabot Oil & Gas Corp. has locked in prices for more of its 2003 and 2004 natural gas production. It also added to its 2003 oil hedge position during the first two weeks of December.

Cabot announced it had sold an additional 12-month contract for 40,000 MMBtu/d of gas for January through December 2003, along with 1,500 b/d of its oil production for July through December 2003. In total, the company now has hedged 50% of its anticipated 2003 natural gas volumes, all at a Nymex equivalent price of $4/MMBtu or higher. Additionally, Cabot sold 25,000 MMBtu/d of its gas production for 2004 also above the $4 Nymex equivalent level. About 40% of its anticipated 2003 oil production is now covered by either a costless collar or a range swap.

“Our focus of layering in hedged volumes as the opportunities arise has been consistent,” said CEO Dan O. Dinges. “Locking in natural gas prices at least $1/MMBtu above our budgeted project economic hurdle level provides Cabot with an array of value creating options for the incremental free cash flow. We will continue to evaluate the merits of entering into additional hedge positions for both 2003 and 2004 at levels consistent with our existing positions.”

Two of the five new natural gas hedges are costless collars and three are straight swaps. The following summarizes its new gas hedge positions:

Cabot said its new oil hedge is in the form of a “range swap” which provides for a fixed price swap at $27.75 per barrel. To receive the premium swap price Cabot agreed to a “fade-out” provision that calls for the company to receive the market price for any month the crude oil Nymex contract average is less than $21 per barrel during that single month.

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