Cabot Oil & Gas's Production Could Double In The Next 2 Years

The brokerage expects Cabot's Marcellus shale production to rise from 1.6 Bcf/d currently to 3.9 Bcf/d by YE'18.

"Our estimates remain premised on $3.15 and $3.30/Mcf 2017 and 2018 average U.S. natural gas prices and anticipate improved "basis" differentials (lesser regional discounts) of -$0.60/Mcf '16; -$0.30/Mcf '17; -$0.20/Mcf in '18 because of these new outlets for its production," analyst Robert Christensen wrote in a note.

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The analyst projects 2017 and 2018 EBITDA estimates at $1.6 billion and $2.7 billion, respectively, substantially above consensus of $1.1 billion and $1.6 billion. Christensen, who has a Buy rating on the stock, expects a 2016 loss of $0.17 a share, while expecting a profit of $0.93 a share for 2017.

Meanwhile, the analyst noted that the Atlantic Sunrise Pipeline Project, (estimated start-up in third quarter 2017), the company's biggest near-term project, appears on schedule. The 60-day public comment period for FERC's draft EIS (Environmental Impact Statement) for Atlantic Sunrise closed June 27, and FERC has indicated it will likely issue the final EIS in October. This makes its first half 2017 construction probable.

At time of writing, shares of Cabot rose 1.79 percent to $25.53.

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