Dry gas producers have been a victim of their own success, but they’re still making their way in a glutted market. The Marcellus Shale is throwing off decent returns and plenty of gas.

Cabot Oil & Gas Corp. has much for which to thank the Marcellus. Despite a year of languishing natural gas prices, Cabot Oil & Gas Corp. annual revenues for the first time surpassed $1 billion in 2012. Cash flow set records as proved reserves grew by 27% to 3.8 Tcf on organic growth that replaced 417% of record production. The Marcellus Shale gave much despite infrastructure challenges.

According to data from the state of Pennsylvania, Cabot had 15 of the top 20 producing Marcellus wells in the state last year. The company’s cumulative production from the play has reached 500 Bcf in four years of activity. Gross production is hovering around 1 Bcf/d and reached a record 1.038 Bcf/d during one 24-hour period last year, the company said. And there’s more to come.

“Our team, in conjunction with our service partners, has done a tremendous job making a step change in our Marcellus operations during 2012,” said Cabot CEO Dan O. Dinges. “We have thousands of locations in front of us along with ongoing infrastructure expansion plans in place to aid with this continued momentum.

“While we derive value from each of our plays, the Marcellus continues to be the primary contributor to our recent success.”

Overall, all-source finding cost was 87 cents/Mcfe last year, but it was 49 cents/Mcf in the Marcellus, Dinges told analysts during an earnings conference call.

The company’s 41 wells completed and brought online in the Marcellus last year have a 13.9 estimated ultimate recovery (EUR) average. Cabot has 10 wells in the play with EURs higher than 20 Bcf.

“In addition, Cabot continues to de-risk its acreage with the recent post-completion flowback results from a pad location on the farthest eastern edge of its acreage position, which are consistent with the Zick area wells,” the company said. “These wells represent a nine-mile step-out from the company’s Zick area and are currently waiting on pipeline, which is scheduled to arrive in the fourth quarter as planned.” Last year Cabot also cut costs for Marcellus well stimulation, reducing costs per stage by 15-20%.

Cabot’s overall production also set a record of 267.7 Bcfe, an increase of 43% over 2011, the second consecutive year of a more than 40% increase. Revenues were $1.2 billion.

Net income last year was $131.7 million (63 cents/share) compared to $122.4 million (59 cents/share) in 2011. Excluding special items, adjusted income was $138.9 million (66 cents/share) compared to $139.2 million (67 cents/share) in 2011, with the decrease due mainly to a change in the treatment of deferred income taxes.

Dry gas player Southwestern Energy Co. is having “success in a low gas-price environment,” not just surviving, said CEO Steve Mueller. In the Marcellus Shale, fourth quarter production was 19.3 Bcf, up from 8.1 Bcf during the year-ago quarter. Production from the Marcellus Shale was 53.6 Bcf in 2012, compared to 23.4 Bcf in 2011.

For 2012 the company reported a net loss of $707.1 million ($2.03/share), which included $1.94 billion in noncash ceiling test impairments ($1.19 billion net of taxes) of the company’s natural gas and oil properties resulting from lower natural gas prices. Excluding this and a modest loss on derivatives, adjusted net income was $485.2 million ($1.39/share) compared to $637.8 million ($1.82/share) in 2011.

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