Cabot Oil & Gas has signed a gas sale and purchase agreement with Sumitomo’s wholly-owned subsidiary Pacific Summit Energy to sell 350,000 million British thermal units per day of natural gas from its wells in the Marcellus Shale.
The agreement is for a period of 20 years and will commence on the in-service date of the Dominion Cove Point LNG liquefaction project currently scheduled for 2017.
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Cabot Oil & Gas chairman, president and chief executive officer Dan Dinges said that the company will provide a long-term source of natural gas to the LNG facility in partnership with Sumitomo.
"This long-term firm sales agreement is another milestone for Cabot’s marketing efforts and ensures the continuing development of our Marcellus Shale position in northeast Pennsylvania for years to come," Dinges added.
Recently, the company achieved a new gross production record in the Marcellus of 1.5 billion cubic feet per day.
Cabot added 55 natural gas hedge contracts for 2014 during the fourth quarter of 2013, and currently has around 970 million cubic feet (mmcf) per day of natural gas volumes that are hedged for 2014 at a weighted average of $4.12 per thousand cubic feet.
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By GlobalDataDuring the period, the company also added 280mmcf per day of additional firm transport capacity.
"We continue to analyse opportunities to strategically add to our portfolio of firm transportation contracts and long-term firm sales contracts for our Marcellus production, with the focus on improving our netbacks and flexibility," Dinges noted.
Image: Cabot will supply gas to Dominion Cove Point LNG terminal. Photo: courtesy of Vichaya Kiatying-Angsulee / FreeDigitalPhotos.net.
