Tuesday, March 25, 2014

Constitution Pipeline schedule slips 6-12 mos., Cabot's stock price plummets 11% in 3 days

Why did Cabot Oil and Gas's stock price take a
staggering 11% drop (from $40 to $35.6) in late Feb
leading up to their 4Q13 earnings call?


It's very strange, because Cabot by the numbers looks good.
The Street lists it as a BUY. Everything is great!


The only thing that jumps out from reading the earnings call transcript
is they announced that Constitution Pipeline schedule slipped
the in-service date from March 2015 to late '15 or early '16.

(6 months to a year). This is the first time the "March 2015" date
has been slipped since the open season announcement.


The next question will come from Charles Meade of Johnson Rice. Please go ahead.

Charles Meade - Johnson Rice

Good morning Dan. You’d anniversary your team there. I wonder if we could just pick up on that point about Constitution a bit. Can you -- I’m recognizing that Williams is the operator there. Can you maybe be a bit more explicit in what you are current plans reflect on when that line will come in to service for you. And could you possibly talk about some of the -- if there is any local permitting that you still have in front of you or if you are really this -- what you got last week with EIS is really the last definitive thing to look at?

Dan Dinges CEO 
Cabot Oil and Gas

Yeah. I’m going to pass this to Jeff real quick. My comment on the timing that we’re working with as I have stated in this comment, teleconference here that later ‘15 is our hope that we would be able to secure all the remaining permits and some being local and the outside would be moving into ‘16 a little bit. I’ll let Jeff make any comment that you might have?

Jeff Hutton, Senior Vice President, Marketing,
Cabot Oil and Gas
Senior Vice President, Marketing
Senior Vice President, Marketing

As you know, we all knew this would be a three year process with the FERC and way they operate and quite frankly we are very pleased now the FERC has handled this process and the issuance of their schedule and the issuance of the draft EIS. Those are all very, very positive steps.

In terms of the schedule itself, I’m sure you read Williams’ transcript or heard it yesterday, they also are very pleased with how the process has been working on the federal level. They have some feedback as the operator that -- and that is -- has shared that with some of the owners or with the owners that there is a little bit of a resistance at the state level in getting some permits generated from the EC.

So that’s something that Williams is working through on the government relation side, on the regulatory side, and continue to get updates from them. But the process is working good, but it does take state permits as well as federal permits to get its project built.

Release of PA Production Data

The other possible contributing factor is the release of the Pennsylvania production data. The PA DEP releases the production, waste, and spud databases twice per year, August and February. On Feb 19 this year, the PA production database was released. This was the begin of the slide in Cabot's stock price plunge. (h/t Leland Snyder for this connection)


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