Cabot Oil & Gas Corp., Houston, (NYSE: COG) says it has adjusted its 2009 drilling program to focus on the Pennsylvania Marcellus gas play and East Texas and to fit within its capital expenditure budget of $475 million.
 
Cabot had 18 rigs in operation at the start of the year but expects the level to fall to 13 rigs by June.
 
Cabot president and chief executive officer Dan O. Dinges says, "We, like all of our peers, are in a hunker-down mode to weather this economic downturn and allow service cost to calibrate with commodity prices. While I like where we are positioned, we will still be cautious in our actions."
 
In Marcellus, Cabot says it had production nearing 20 million cubic feet per day at Dec. 31, 2008. In the play, the company is producing from 15 wells, with one horizontal well turned in-line, five horizontal wells waiting on completion or pipeline hook-up and two verticals waiting on pipeline.
 
Dinges says, "These wells will provide the next step in our production increase for Pennsylvania. From completion activity, together with our 2009 Marcellus program remaining at 60 wells, 30 horizontal and 30 vertical, we expect further reserve and production enhancements.
 
"Additionally, at this time, we have five rigs running, two drilling horizontals with the other smaller rigs drilling the vertical sections for later horizontal work. We will drill this program with five rigs expanding to six by the end of the first quarter and then growing our rig count to seven or even eight rigs as permits allow. We will be flexible and adjust our 30/30 split towards more horizontals when possible."
 
Since making its east Texas acquisition in August 2008, Cabot says it has been drilling vertical Cotton Valley wells that are testing the Haynesville limestone.
 
In East Texas, Jarrell #4 was tested at 5 million cubic feet per day from two zones; Hays #4 was tested at 1.1 million cubic feet per day with Cotton Valley pay behind pipe; and Hughes #2 was completed at 2.7 million cubic feet per day from two zones.
 
Cabot has also drilled and completed two horizontal wells also testing the Haynesville limestone and the middle Bossier shale. Pinkerton 11H was drilled to a total depth of 14,144 feet in the middle Bossier shale; completion was delayed due to a lack of frac sand in east Texas, and Cabot says it experienced difficulty in opening the frac ports. The company is considering whether remedial work is needed or if another well should be drilled.
 
Pinkerton 12H was drilled to a measured depth of 14,427 feet in the Haynesville limestone; completion was also delayed on this well because of a lack of access to frac sand, and as with Pinkerton 11H, Cabot wasn't able to open the ports.
 
Dinges says, "We do not believe that we got an effective stimulus, and the low producing rates suggest this. We are currently undergoing well diagnostics to determine whether we treated any of the Hayneville lime. We are presently planning to either sidetrack this well or drill a new well to continue our evaluation of the Haynesville lime in this area, which we know is very prospective due to the vertical results mentioned in this release."
 
Cabot drilled Von Goetz #3 to a total depth of 13,800 feet. Production casing was run, and three fracs were performed.
 
"We are extremely pleased with the results, but with the competitive nature of this play, we will not release specifics at this time. We do plan to move in a rig and drill a horizontal test to evaluate these zones in the near future," Dinges says.