It’s Time To Consider Cabot Oil And Gas Corporation – Cabot Oil & Gas Corporation (NYSE:COG) | Seeking Alpha

Summary

A large position in the Marcellus Shale gives Cabot a tremendous advantage.

Pipelines and LNG facilities coming online in the region means a longer runway of growth.

Overall, Cabot trades at a reasonable valuation.

Natural gas stocks have been down broadly over the last few weeks and are down through no fault of their own. In fact, natural gas prices have been well-supported over the last few months. The reason all these gas stocks are down so much is because of Brent Crude, which has dropped 13% since only June. Because many oil and gas stocks trade in lockstep with one another, many pure-play gas producers have declined only on news of a drop in oil prices.

Therefore, I believe that there is now an opportunity to pick up the highest-quality natural gas stocks that are down for no good reason. When an entire sector, whether good or bad, is broadly out of style, investors can often get selective and pick up the best companies within that sector. Among natural gas producers, most regard Cabot Oil and Gas (NYSE: COG) as the best of breed name.

Cabot has a strong balance sheet. It is the largest acreage holder in the most economical, fastest-growing shale gas play in North America. Not surprisingly, Cabot also has the lowest cost base in the industry and is growing production among the fastest of all upstream gas names.

SharpCharts.com

Cabot is down significantly since May. The stock has dropped even more since in the later half of September, largely due to the decline in Brent Crude over the same period.

Cabot has a fantastic 200,000 net acres in the Marcellus shale, which accounts for the majority of Cabot’s overall production. The Marcellus easily has the most economical natural gas production prospects of all the North American shale plays, and Cabot accounts for 14% of all Marcellus production. The cost advantage that Cabot has over other producers is substantial.

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