Continuing a quest to grow through the drill bit, Houston-based explorer Cabot Oil & Gas Corp. upped its capital budget for 2003, and has set its sights on drilling 60% more wells by the end of the year.

The company filed a statement with the Securities and Exchange Commission last week detailing its plans for growth this year, which comes just days after releasing its record 2002 year-end results. Cabot said it plans to “remain disciplined in our capital program while providing for growth potential. We believe these strategies are appropriate in the current industry environment, enabling us to add shareholder value over the long term.”

Cabot said it would drill 180 gross wells in 2003, and would spend $153.9 million. in total capital and exploration expenditures. Last year, it spent $126.3 million for its drilling program, which included 108 gross wells. Expanded spending this year includes $88.9 million for drilling and dry hole exposure, $10.8 million for lease acquisition, and $12.9 million in geological and geophysical expenses. Cabot also plans to spend money on production equipment and for gathering and pipeline infrastructure maintenance this year.

Cabot ‘s ’02 net income was $16.1 million ($.51 per share), with discretionary cash flow of $178.8 million ($5.63), compared with ’01 net income of $47.1 million ($1.56), and discretionary cash flow of $230.5 million ($7.61).

“Lower realized commodity prices were the main factor in the decline in reported results,” Cabot said. The company’s average realized natural gas price fell more than 30% in 2002 to $3.02/Mcf, compared to an average realization of $4.36/Mcf in 2001. Oil prices declined from $24.91 to $23.79/bbl.

However, Cabot saw its production last year jump 12% over 2001, reporting equivalent production of 91.1 Bcfe, compared to 81.1 Bcfe produced in 2001. This increase was the result of a full year of production from the Cody acquisition (8%), versus a five-month contribution in 2001, and organic drilling results (4%). Cody’s full year impact also contributed to increases in both absolute dollars and unit costs for direct operations and depreciation, depletion and amortization, which were more than offset by a $31 million reduction in exploration expense for 2002.

“The year 2002 ended up with strong momentum,” said CEO Dan O. Dinges. “We recorded our second highest level of discretionary cash flow, our second straight year of double-digit production growth and we reduced long-term debt by $28 million.”

In the fourth quarter, Cabot reported net income of $8.7 million (27 cents), compared to a net loss of $15.6 million (minus 49 cents) in 4Q01. Discretionary cash flow increased to $58.1 million ($1.82), versus $33.9 million ($1.07) the year before.

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