Cabot Oil & Gas Trading In-Line With New Proved NAV

According to Jefferies & Company, Cabot Oil & Gas (NYSE: COG) is currently trading in-line with its new proved NAV based on 2012 reserves and its $53 total NAV captures only about a third of its Marcellus potential.

Jefferies & Company said that Cabot Oil & Gas reported adjusted EPS of $0.19 vs JEF estimates of $0.27 and consensus of $0.21, and that COG's Marcellus economics is comparable to oil plays. “For the wells drilled in 2010, proved reserves were added at an impressive EUR of 10 bcfe per well. For PUD locations, COG has conservatively booked only 6.5 bcfe, assuming a 10-stage frac. We estimate a 10 bcfe well would generate close to 40% pre-tax IRR at $4 gas assuming a fairly high completed well cost of $6.5m. IRR jumps to 60% at $5 gas. For comparison, an Eagle Ford oil well generates ~45% pre-tax IRR ($85 oil; $6.5m well cost), while Bakken would be about 70% ($85 oil; $7.5m well cost).”

Cabot Oil & Gas closed yesterday at $39.83.