"Different from prior years, there has been no slowdown in activity in the new year. We have five rigs running in the East Region including the drilling of two horizontal wells, increasing to 12 by May to support our 240-well program. We have four rigs in the Gulf Coast region with three new builds coming during the year. In the West region and Canada we have a combined seven rigs running. With this level of activity, we expect our largest drilling program ever in 2006," said Dan O. Dinges, Chairman, President and Chief Executive Officer.
Minden Prospect, East Texas
Cabot Oil & Gas has successfully drilled and tested its discovery well and a confirmation well on its Minden Prospect in East Texas. The two wells, Harrell #1 and Rogers #1, were drilled through the Cotton Valley formation and tested at a combined rate of 4.8 Mmcf of gas per day. Cabot owns a 100 percent working interest in these wells. The Harrell #1 was recently hooked up and is producing, while the Rogers #1 is waiting on a pipeline connection. Additionally, the Company has logged a third well in the prospect and is currently preparing to test. A fourth well has also spud in the prospect area.
"The Minden prospect originated this past summer through a large acreage acquisition from a major oil company and Cabot now controls 3,500 acres over the area. We are pleased with our initial results and will remain active in this area throughout 2006. On forty-acre spacing, the prospect has the potential for 80 plus locations," added Dinges.
Also, as a result of a 2005 acreage acquisition, Cabot added to its north Louisiana position in the Vernon area. Subsequent to the acquisition, the Weyerhaeuser 10 #1-Alt (72.65 percent WI 54.96 NRI) well was drilled in the fourth quarter. The well reached total depth on December 7, 2005 and logged over 160 feet of net pay in the lower Cotton Valley. The rig was moved over to drill another well from the same pad site, the Davis Brothers 10 #2-Alt. Stimulation work is scheduled on both wells during March. Initial production rates are anticipated at 5 to 8 Mmcf per day with estimated reserve potential of 3 to 6 Bcfe per well.
Cabot Oil & Gas Corporation has completed a seven-well development program in our Lopeno field, part of the Company's transition to a more resource-oriented drilling program. The Lopeno field was purchased from Cody Energy in 2001 and had seen little activity. Reserve additions are estimated at 6.6 net Bcfe. Net production has increased from approximately 2 Mmcfe of gas per day (1-1-05) to 5 Mmcfe of gas per day (1-1-06). The company is currently drilling one well and completing two others in this program where it controls 100 percent working interest in these operations.
Update on other Gulf Coast projects:
Shallowhorn -- The Company logged another discovery on its CL&F acreage with the #21-1 well which was completed and tested in October 2005. Facility installation and barge construction operations for the well were interrupted due to the hurricanes; however, the well has been completed and tested with first production anticipated by the end of February 2006 at an anticipated rate of 3.3 Mmcfe per day. Cabot has a 100% working interest.
East Cameron 111 -- The discovery well was completed and tested in June 2005. Though operations have been delayed as a result of Hurricanes Rita and Katrina, offshore facilities and pipelines have been installed. First production is anticipated by mid-February 2006 at an initial rate of 15 Mmcfe per day. Cabot has a 50% working interest.
Lake Pelto -- The S.L. 16510 #1 well reached total depth in November and logged 115 feet net pay over seven sands. Though operations were delayed as a result of Hurricanes Rita and Katrina, facilities have been installed and production commenced January 5, 2006 at a rate of 7.0 Mmcfe of gas per day. Cabot has a 75% working interest.
Cabot continues its development program in the Kakwa/Musreau area. Cabot has recently completed drilling four wells in these two areas. Three wells have been put on production at a restricted rate of 10.6 Mmcf of gas per day (net 3.4 Mmcf of gas per day). These wells were brought on line between November 2005 and January 2006. One additional well is completing with production anticipated by March 2006.
In other areas of Canada, the Company has two exploration wells drilling and two exploration wells testing. Cabot will continue to be active in these areas during the 2006 drilling period. The Company will provide more detailed information regarding this and other activity in Canada in its year-end teleconference call on February 17.
"In the last six months, Cabot has leased over 200,000 acres and is in negotiations on an additional 300,000 acres in several of our new buying areas. These areas fit well into our strategic transition from higher risk, one-off exploration plays to a more predictable growth-oriented, resource-dominated operation," commented Dinges.
"Much of our strategic shift is providing production advances over the next 60 days in the Gulf Coast," stated Dinges. "This effort sets the stage for Gulf Coast growth in 2006, along with production growth in our East, West and Canada regions."
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