COG - Earnings call transcript Q2 2018

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Operator

Good morning, and welcome to the Cabot Oil & Gas Second Quarter 2018 Earnings Conference Call and Webcast. All participants will be in listen only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Dan Dinges, Chairman, President and CEO. ahead. go Please

Dan Dinges

team. and make us Garry, measures. may call. to Thanks expectations. morning's of Cabot's all. me emphasize some like Thank on Also, statements that for good non-GAAP based Cabot's reference joining this executive of members today are we earnings comments would second for financial first today to will you, call, the morning I forward-looking quarter our With current XXXX on

well release. as GAAP as of statements the provided comparable disclaimers, Forward-looking and directly reconciliations financial in most other this are measures morning's earnings

For Cabot share, of compared income quarter quarter. the the per per $XX.X $X.XX comparable second for share of generated adjusted to $X.XX prior XXXX, million or year net

impacted expense on areas. dry million Our adjusted by exploratory our net $XX.X resulting cease investment our income hole decision one to of operating two was exploration for from quarter the

production have X.XXX Excluding high the range quarter $X.XX at Ford a higher. this earnings that came which X% for share equivalent at increase of the one-time February. the our in charge, would of first and approximately been to adjusting per per day, for quarter the adjusted Shale of Daily guidance the the Bcfe sequential relative Eagle quarter closed represented when our end end for was

as Our quarter. comparable posted unit cost an continued the to prior year we relative cost improve X% to decline in

remaining improvement expense We cash a related our the cash prices prior XXXX. flow deficit realizations by third the by tax the did our positive driven and mentioned expectations of dry the return improved quarter year relative pipeline a the income exploratory project. free noncash equity hole volumes to strong price previously flow sequentially generate Atlantic production funding to anticipated quarter, period based of the cost, second interest volumes. our the by May anticipate and generation higher X% comparable majority Excluding to realized free continued improved primarily of Despite would on associated investment of during unit in in expense reserves, relative Company capital with Sunrise operating XX% in June a than and have first cost in onetime and and our lower the to quarter

On would that bid week were May quarter. the placed and pressure than while on pricing XX% front, for our April, prices I highlight lower realized June downward prices about which the

week quarter We quarter in quarter. July. the differentials look an additional XX% second will the curve, our than repurchase second similar better XX.X third at would the an early bid prices in program share forward on our prices Northeast August a than there Cabot XXXX, did with imply to of be shares seen have quarter Based to XX% XX% repurchase average Pennsylvania million On second additional XX improvement an we shares, higher pricing July shares and program settling indications to million to total weighted of average Including price payments, million back by shares represented million X%. of current year our XX X% dividend our a of this increase approximately our board million to effectively $XXX yesterday, meeting capital of which bringing we repurchased. shares approval our returned $XX.XX, approximately our year-to-date have authorization outstanding. obtained shareholder the XX At reloaded total yield year-to-date or

we our to assuming XXX outstanding our authorization. XX share execute shares our million by continue we Since and view X% million as value. our intrinsic current share our and Company's we long share strong remain price second free on executing program to the for in repurchase a sheet the disconnect we we have reduced reactivated program quarter on XXXX, to fully repurchase on of outlook expansion, the balance our shares Given continued and opportunistically between committed cash see flow our as

reduce shares than to lower outstanding XXXX. in will our equity issues We before early levels

of a exploratory hole nominal generating with announced clear the our as the dividend ago, an we to we returns quarter, Marcellus front, exploratory gathered we recorded this the primary ultimately shareholders the last intention I associated and exploration to from the the exploration. growth market share focused Based capital Over year, that have during We was allocation over one with year shale of returning expense to via increasing we and to mentioned, the on decision operating our cease of an capital made a data allocate areas. amount were repurchases. portion second capital to dry on focus area. Moving our two to

However, generate we the competitive we the to have an of in and rates same have long-term find cycle our create in clear testing return, as today it ability depth and new portion extremely we a not this provide life that would also to have asset the the did limited inventory meaningful venture funding potential and that for a be to area. problem given ourselves and walking self away, returns allocating commodity where time, resource concepts new We're budget merit is at did a environment price full relates If we no internally in to the exploratory world-class the hurdle value. Marcellus. low our generate that very capital see from allocation high capital we

an our third test area plan second on update earnings also in on XXXX and We quarter provide October. to to area continue this call will the exploratory

the to end remains did with of EBITDAX of as month liquidity $XX approximately to quarter divestiture announced net over our quarter, and close X.X end. previously Haynesville position for debt ratio billion X.X million. we financial times at a strong ever on trailing the XX of Our Subsequent

cash down note from this senior that we Additionally, $XXX the X.X% matured paid with month our sheet. balance million

net it times. to X.X EBITDAX in While this fairway leverage to impact the target of X of which debt times, from improve X.X is transaction had on absolute no our debt X.X did EBITDAX, range our to times to right

and for our resulting sequentially differentials throughout both X% balance flows despite in as with cash deployment. strong increased driven time the over expand improving in performance the deleveraging production and in quarter. price downtimes quarters future unplanned coming Marcellus Operationally, additional continued second during a delivered sheet forecasting volumes meaningful are capital the up We capacity volumes we another the quarter by planned

and production X.X of X.X wells our Bcf quarter per guidance of the budgeted our an top being annual by the Our XX% production the XX%. during the production to XX production of resulting third-party to Due have in our Transco relative throughout on to than to from first quarter, quarter XX% slightly volumes second range day for year-to-date we end lower placing increase the represents net is on third XX% guidance lowered to sequential Millennium compressor driven originally the actual in XX% expectations delays quarter quarter. downtime and of from primarily stations to second XX% and

a we're line our Additionally, occurring see pressure given unprecedented production guiding during the conservatively year in maintenance. more for second a when half ramp with to we that's the and tend year pipeline time of high issues some

result, rather the air we side conservatism. of much are As on the a

well in As to more it to relates related to Upper we Gen wells enhanced continue data our our complete completions. X the asset together Marcellus productivity, additional

X.X. completion XX As with that lateral highlighted designs our feet Bcf Marcellus completed curve. Upper average per have we tracking previously, wells that thousand type older have are on we were

reservoir Our of independent ongoing Upper support unique the continues to lower work the incremental Marcellus Marcellus. and

and both economics potential the both productivity top deliver compared not extremely in in upper that the all, lower our vast confident U.S. and resource zones are to resource will majority, when oil across and We the gas if Marcellus tier plays

on multiple significant reported progress last enjoyed projects. we demand in-basin our fronts have quarter, we As and infrastructure regarding

is LNG facility notification in As a short Point Energy recap, XX that was agreement the Cove Pacific Dominion effect. Xth with placed we and year Summit April in-service announced the supply our now subsequent

obligation been staff of combination and a through fulfilling production. that purchase have We equity

County. you their LNG equity to is near and William Atlantic of are second last Susquehanna transportation connection supply week sure conditions weather with Cobot's I'm pipeline path production our new the Cabot's during Sunrise commitment subject announced half to greenfield a expectations of As is XXX% This and fall unique to aware, completion, August. very is direct project in-service

XXX per excited day Atlantic the deliver Cove are approximately Point to to We via in million very future. near Sunrise

Light that foot year project. per day summary, also Bcf cubic Washington will in-service sales effect with let additional several approximately Cabot's me this agreement million Atlantic new Gas of take XXX approximately with new In long-awaited Sunrise along remind everyone the pipeline day Additionally, XX to with for production per X with deliver of significantly to markets realizations. infrastructure Cabot positions price agreement better

our projects. Moving on in-basin to power

Center Energy placed June Lackawanna was Xst. First, on in-service the

expected, train been has very feet approximately X in operation. As XX per cubic early day million consistent and its is burning

the in is developer and fact on As a schedule in-service. currently And test gas additional receiving train as Xst, X and towards on December steps remain X train respectively commissioning. X takes October Xst reminder,

facility an had and early Freedom previously facility, some June was power generation Unfortunately, Moxie in-service of that date the additional further required X testing. Regarding modifications we reported obtainable.

However, the the have recently could been August. early of week we Freedom notified as plant first in-service as full be that of

this These differentiate prices. We come. to strategy in-service natural we and a at to on change test promise said, the capital the in for more both the you since is continue gas high These that shareholders. huge go-ahead and gas unappreciated share sentiment this growth with is for today gas likely and metrics, deficit, But delivered to I return I that to with replace improvement from that, will demand this -- would natural than final do plans higher infrastructure initially any will to will nearing for power I think we’re questions. execute be enough significant the exciting points long return you delivering case growth long-term finally better term come commodity apathy storage seasonal they major Cabot lightest the Gerry, effort price over can to general believe be around With for XXX widget as value due on the near-term volumes exports. benefits create are from gas awaiting primarily today. the financial we’re team think forward look gas I being In given day today projects especially where would is X-year been sentiment the to per increasing going answer return of in inflection we and currently performance happy model. large in resulting and three providing a to if another of provide in million project. and drive on to with differentials as markets our by our premium together exposure years coupled leverage being are to industry an than as Regard as and significantly long-term to Sunrise I’d Cabot have will very our with strategy year-to-date summary, access that return market post-Atlantic continue and of know XXXX same that capital natural to long for have current I believe average time. for times a commodity natural our

Operator

now Instructions] ahead. [Operator Drew will Our Morgan Stanley. the Venker comes with We go question-and-answer from begin first Please session. question

Drew Venker

the forecast assumptions drilled like talk that you about what you production are test know remarks, a the Marcellus? right now. prepared it’s made in in out Can yours past. of that your the that in assumption talked focus do Dan, Upper in before in I in about Upper the made just you’ve made What you forecast? case XX-year for Marcellus something you

Dan Dinges

XX completed about forecast. and been forecast you’re we’re We’ve the our completions with X.X where XX-year assumed what we’ve in the that that have that today seen in we’ve old talking technique. assumed Drew

Drew Venker

think thoughts on said dividend? then, have time. dividend guys return the like to to of with Can in the but obviously used buyback to cash have the the grow also what I over more us incremental just on update you -- on past And preference positive buybacks, for shareholders, you more you focus today would on

Dan Dinges

that we step make And it to dividends experienced these the clear beginning projects dividend. pains and of time step a again meeting, we're this that had but to commissioning be delays. was And them board’s commissioned. we’ve of commentary on We that these our taken the board that of made We’ve kind last to imminent each ramping on intent smaller when the of to was the prudent of sure delays discussion it we dividend see year. we projects started our any intent at took was time it Yes, year all getting and incremental going some are at commission. we the not the felt and infrastructure of the

and commission coming again dividend So from cash to flow revisit it we prudent where in keep infrastructure once the get the right we dividend thought would it was then these the door policy. the the we is now projects,

Drew Venker

Dan. lot a Thanks

the think you if started one you the this the Just When me. success plan? on that market didn't process then I the all you beginning in have exploration still play that Is you acreage one from last said would backend.

Dan Dinges

the of go still is through spent the some taken back We've intact, on we we expenditures the on that acreage we write-down capital -- process will that have and the and end.

Operator

question comes go ahead. Securities. Please Leo with next NatAlliance The from Mariani

Leo Mariani

Hey over about here. of cadence over XQ, had a CapEx next the you quarters? thinking in obviously, quarters year down XQ? you here, you know see come tiny the the sense Is the But do where more kind get any a guys a in just a of kind just of I around trying full all question that at we your high sort quarterly of quite that to of couple completions Does XQ got apex next CapEx can in bump point? couple guide. few of should to

Dan Dinges

Well, as the remain our complete those continue guidance full on year those and bring wells bring we the wells CapEx inline. infrastructure, on to into will wells for intact, we'll

So, the of into a commissioning Sunrise. heading we little ramp up of a have bit Atlantic

Leo Mariani

you you have gas guess at I the level second the weeks. I guys the had kind prices of on I with I this the and make some at in share the being the stuff, we high increased in seen program guys But should and you here of looking sort came of had the out and look repurchases here. guys year NYNEX that, recently weakness last program? plan debt also obviously mean, half couple aggressive here that just Okay guess still repayment you in of that to over pretty Irrespective just buyback if

Dan Dinges

board our that it the I this the Yes, lines that at week on is authorization past Leo, was our is and to and intent not that was meeting again that granted. mentioned specifically authorization the it the in the conversation our is has that have execute optics, along board proaction

intend program away take we fully the that to So continue would implemented. that be we have our

Leo Mariani

helpful. Upper here. just know wells mentioned, some that's lastly guess Marcellus that I the Okay, you you completing on recently wells And

have indications of here? out of you little Just more market those any the early and robust bit those kind when at might look for a

Dan Dinges

the thousand that work and reservoir accretive that Upper we Well, off my Marcellus continue of we're also indications the the incremental lower. early are lateral. the to our We in as that opinion believe of and is wrapped up comment and our X.X completion indicated independent foot improve per of that techniques will

Operator

question Charles The with Johnson Rice. next from ahead. comes Meade Please go

Charles Meade

for maybe and second bigger a quick One question question. then you

pace As but us where this should have QX. back you XX crews? I'd pace? we or What's far what out, or And of any then, as you bringing be sort of gave you of on on frac half be XX half for that disclosure about year. Are that more looking QX sense pace outlook? completion crews frac in of the in on like you moving home? to into then are going this give sending them going you what, whether the Can XXXX that the that you're XX a

Dan Dinges

increased has the of always in Sunrise. The design, get XXXX second our as half been Atlantic to we commissioning

a those had recently pads. quite in any how on for have 'XX in the wells stages that timing couple our in field, what anticipate is So of X long and more we on And as -- least depended many timing consistent say wells. how on wells X pad We we not upon going lateral And and been the 'XX, and and were depended pad XXxX. those fairly to that a is to another XXXX. any at XX some quite have laterals pad had that is of a wells pad with level long as And completions activity XX as right on that links not we in long wells. this that we are a many -- the additional particular -- cue. of pad pad. that had area given while in bringing regard completing In we the long not than crews and have good stay don’t long that activity had of we frac done And location upon we

So these seen have as Then we at in areas are plan forward to 'XX. fairly look that through looking field because I in returns say consistently our we consistent have fairly won't out with things lumpy the I with turning scheduling in what think these 'XX we in for being of that. But line. line

Charles Meade

a got that that’s sounds in on you And the really going conservative a to add you it's I your for have also honest, and big have couple Transco because to have XX XQ from million back XX it got back an then that with the some on numbers of prepared like you've just as ask the in that you be right. but start XQ, day look first probably market piece, guidance that this whether volumes whopper being the but But net then I you, got And Millennium wanted for train and for the questions to and Atlantic then in guidance to you of made you you I months pieces Lackawanna to half have pad. you comment downtime about -- about Sunrise. up well don’t the guiding a spent of your I at year. several XX over remarks about the incremental XXX are

big volumes pieces Sunrise together. So feels to I are add on but be start to and something missing it recognize all when what's Atlantic like happen me And not I volumes? going must together started to those on with sequential to incremental I that I one, pieces add those

Dan Dinges

missing you the Are part? conservative

Charles Meade

But you when said Atlantic Well, are of delivering the of Atlantic that? actually in startup take be past your onto -- but possible of is you you a you that from, given ramp day magnitude it, he of I a maybe I -- that volumes online, it maybe may Sunrise, are all local go in within -- know that Bcf -- that is the appreciative couple it's the Dan. market, be of Summers. comes not comments, said But that weeks -- it to the on all in I to going your

Dan Dinges

Atlantic Sunrise?

Charles Meade

Right.

Dan Dinges

and Bcf coordinating in the that conservatives, and out. gas it’s I with same Charles, but small I done two valves and gas a it's the at -- time the relevant, to to on guess, to Sunrise power and is a planning around we be The get soon deliver at connection is coming that utilizing Atlantic conservative, upstream geographic available gas full as capacity Atlantic will we’re valves think are Atlantic get on small committed all I in intent on of one the things area cute a it. to smoothed of Charles, but units of that One soon it thing gathering take our moving of the on multiple it gas is our in the the of area, volume coordination and the Sunrise portion on shifting as the available. a designed system ramp switch is try to is done Sunrise take as the wouldn't comment up to as a multiple our other

higher the early the month to starts will a So the the volumes put exception. you of And pipelines has pressure in the pipes be basin. happened year amount in back that shorter to the going back pipe. the to get you're of reduction that in in a volumes the accept light creating the that able the every back without of to into back, it the year, That within bit when are some the up at year the cool pressure ramps of little weather, time pipes, which time

of August how volume of is is our Well, we to coming we've that higher into good it’s extent look We’ve So the large a Lackawanna you plant help, a in moved moved we and it's is occurs kind on to Sunrise When it's half large on moving very around to the proposition done but at of us you gas have it August. had be come gas example the consistent and June by is swag, still deliveries and still and period, and I'm that's that. Charles has date part June it now on commissioned tweaking the same try or of it for ecstatic to to Well with sure commissioning contingencies And that. can plant, now. back knocked conservatively than up chance to out we all we’re to get a to numbers of what fashion to pipeline, happy right of full out contingency. the had we're Well, would've thing. kind and a we're out In that thought get they're can however we swag. we is, line is you pressure immediately our to made What the plan the Sunrise, should we about think demeanor do Atlantic Atlantic off on we as that and of reasons extent comfortable when we more acceptance much and there. earlier what these to that the side at look aggressively. is, policy timing that some to swing your takes they're fact, with place, some able we being guide in test of the in our If and safety July. they they possible How do it’s jet very don't line the our That that and operated a know it going do account that Bcf same get be been forecast. under Moxie forecast and try now in that up fullest a forecast was when what with of okay, end facility and pressure right thought saying, And maybe protocol timely an we but gas from and so of line in we the fill goes high been as Freedom the the forecast? a over delays there of thing the into good Sunrise get to we or and that. Atlantic see time thought think of if go we difficult

Operator

The Please next comes ahead. Campbell Jeffrey question from go Tuohy with Brothers.

Jeffrey Campbell

Looking see were Charles then XX there just with XXXX than referencing quarter-to-quarter no and completions that 'XX? in remarks will in less taking that you that we that variance that at imply first bearing of Does XXXX I'm and from fairly Slide mind in completions your is had quarter be and XXXX. consistent

Dan Dinges

I getting -- is of Jeffrey. kind have top to I my quarter quarter throughout because the line the expectation back consistent going but at get I've to to looked fairly That's looked to granular, would guidance think I'd is and be but at fairly to haven't comment guidance be year. you quarter, with my the entire

Matthew Kerin

the this or the into about because outcome. lines pad if looking next Jeff, have have at drastically in is, well it change Matt. thing that careful last of be two an One add quarterly that's the week to turning pushed we the get quarter and we X completed is quarter would I'd

think holistically more slide got on quarter granular full bit just more it as a year. XX We given we to little away. like a we're So about a

Jeffrey Campbell

that. appreciate I No,

of big can doesn’t a fact I able where to of quarter you're week because but this off. effect is go. I on what is been on looked smoother I'm think if that you Atlantic challenge looks this two really quarter Sunrise is it at in might just to there's trying and the bit slip coming asking But always have and it, that huge just 'XX, wells or complete like the the then reason kind was had first little look backing push and there's if a pads saying a that in you have as

Dan Dinges

that Jeffrey, as not point you keep in quarter. on one in a line reminder, in did well first turn made we just the mind

Jeffrey Campbell

big where things bit that's I this kind of which to quarter, at. of the trying Right, look Sunrise Atlantic the the in kind the probably that would was that 'XX smoother don't course I was jump have 'XX. over third of you years would assume predicated and if as gap in first opposed a on get of little and to quarter

is. lines. The you laterals like feet thousand move increasing XXXX sound bias lateral average that continue average? XXXX are are other the for those your at and question think XXXX or It longer? increases Would X.X average incremental going Do be can is to to meaningfully

Dan Dinges

right it'd think I be now. incremental,

be incremental we as we that and efforts is going any think throughout areas just if we laterals have extend now We can continue the have throughout to 'XX longer in successful are throw to to ongoing to in Right been laterals again we 'XX, will with we 'XX mix. effort. in that

that. to continue to will try do We

Operator

go from ahead. question Bob Morris comes next The Citi. Please with

Bob Morris

didn't attracted come the else? but to is, you didn’t whether rate potentially can you And Dan, though monetize mention write be play you someone that process just to it here. that questions. meet some hurdle hit there and what you do just back have you to try me circle there. can't you and did But off my know you back on on But exploration let what of find you I your in there some color didn't current even value but meet give you it hydrocarbons might disclose us it economic can it's on some the

Dan Dinges

on couple dynamics we are last all on, aware In near the hydrocarbons out going infrastructure of there's No, are as and seeing on the we of Permian. you headwinds project, did this term some there. find years in working

the though service even have have last in You till results the gotten But increase today return impacts other still for couple and in there's there. we little there price move -- And increase bit our out the have build consideration that out we commodity to an certainly get be the seen to not decision punitive some forward. the a of made you the the years. going cost we differentials affect pipeline longer apparent seen and that field

Bob Morris

how the And write million $XX for off then were million the $XX that much budget took spent exploration? of this total you of year dollar in

Matthew Kerin

related it was XX year. year about That XX last close. Bob, to million million this too was

Operator

The comes Please Brian go Singer Goldman with ahead. next Sachs. from

Brian Singer

competitive of through do rig others some gear wanted you sheet maintain it's a amongst that gotten have the I XXXX? behind in towards activity dynamic or of the question -- you pipe How But ducks wells activity the as before. on of players. the may balance see plans [indiscernible] to influence ask [indiscernible] asset level the improved you

Dan Dinges

I think the at at at in what's natural space. that and gas, Appalachia looking gas macro looking on of natural in dynamics going looking

a gas and what markets rational of we think different number to going probably some when parties management the that profiles that be gas complete take public realizations, approach where gas have can't more ability growth, this going -- by internal growth would just surprised course in get would time into the space for dollars to are realizations the in now allocated marketplace. realizations spend there's with a see And that to way type to some for that own way with own like efficient of controlled ramping a the to want allow not we complexities, not of prudent their think profiles, that the maybe increase environment talks create capital lower that gas have with from that dealt we be to realizations in that the opportunity that lot a and out point and action. efficient just companies think rationalization dollars the I production a a better of sake as allocation oversupplied are have ducks its gas environment at a same natural is environment, moving under to moving kind there believe up everybody I its look to move with I And but for model in created dynamics some efficiency more I to that the capital capital they years. have allows If better space into price that talk would in help every growth. dollar boardrooms their and for of initiatives company I about get be obtain -- about supply the how in there’s points particularly and to again to fact opposed the conversations highly obtain you just shareholders to the has of in strategic into punitive there see try our some to every

Brian Singer

come depending pipeline elements relatively follow ’XX exploration And on CapEx that different design, second of flex on CapEx investment as investment to versus the questions and pending to the three bit the the the on the XXXX, method exploration Atlantic the flat of then clarity. side more method explorations fair away then think the add wanted just be Marcellus to is that share your CapEx that upstream the that Atlantic results CBD have in up repurchase little Is in of equity we the in because depending Marcellus ’XX. conversations the second investments an in on pipeline, about seems equation? And it the of and play comments I There’s already when Sunrise of go maybe a say equity -- in up budget, call that investment. on

Dan Dinges

On yes, in the it the goes answer equity is, investment is side, that the away. -- XXXX equity

the mentioned continue I We as on exploratory effort. second

there, of on to allocation this consistent be little manageable a year. area. to had our allocation bit that going particular spin to fairly in it’s continue that the We the on with allocations the Marcellus, very-very capital we’ve And capital

Operator

Please from ahead. KeyBanc. with Deckelbaum The comes great go question David

David Deckelbaum

in outlook know have And all -- am more I on and larger but of things like should fill into these curious a or once curious multiyear you've specifically your of long-term level, reiterated if optimization free assumptions unconstrained the see in sensitivities. the generation step expect a for and of I volumes some cost, at change you should assumptions know around in the LOE sort field in about side. environment? a optimization those Just we your I cash you any we at various lot

Dan Dinges

in it down seeing looking number to in that think expect our is at say I 'XX From a costs we safe tick associated we're that would 'XX our direct unit. per

David Deckelbaum

Did be Moxie bit Freedom then to more in and after that and project. on just it the that? gas gas originally the color re-modified a Okay tested testing plant then begin needed not April little project Or has yet?

Dan Dinges

Yes, project. of has let I'll in about kind been that David, I'll let him Jeff -- that. live talk

Jeffrey Hutton

David. Sure,

Xst minute. started in project going the our that. through contract for was of server from time financing a up August and and originally back The first we the to negotiating rest scheduled Just

of was able Xst around progress June construction made the the So, up move date we service thought on the in at would to one date. a be they point what front lot and

the take gas sort April And May, performance the of a of tweaking I on larger modifications best thing. the COD and did testing megawatt event. some that is and in And and kind in that's in X,XXX number volumes can't have took test gas This and now a bit facility on of they of of way go gone beautiful facility. so, little -- they're testing to any and that that emissions specifics, simply they I or through up very finding into very, a start would operate slight day call the

more the to tweaks anything minor facility, say so, it's we're some I And plan excited really again surely they how it and but on much that. than wouldn’t about just operate

David Deckelbaum

how from around last the was And why. of me, Jeff. capital much know exploration gave reasons that side, kind one I some Dan, just you the on and spent Appreciate the guidance

going have to how how is wells many that with you Just the compared does play comprehensive then curious tested? zones evaluation the been be? or to if And remind how second could

Dan Dinges

we that in second five -- we several wells. we we similar what those we in had tested project and we Well, testing wells our wells find project, had and zone be we'll of tested will number have

Operator

The Jane next with comes from Stifel. Trotsenko question

Jane Trotsenko

pay PennEast on And us a what the probability what's regulatory update standpoint? East project of and from need attention please do to you we Could getting built?

Dan Dinges

Okay, to that, answer Jane, I’m going to turn you. that Jeff thank to

Jeffrey Hutton

that from bit and half weeks. with lot made still get a their had group. accomplishments PennEast have final and position, But have XXXX. in disclosure My there. customer keep coming PennEast in in group shipped we operations that not Jane. our have are mind They understand they that conversations have on the changed the Yes, analyst their owners calls PennEast shipper Pennsylvania. permits has from second the the understanding little understanding of public up some already that from for a remaining facility. our the on Jersey of a do is permitting challenges companies that New all PennEast few I to in we

information to into push our bit. will so, And little surveys it be and they that’s back to through But where continue we watching sure the And if perspective. right the proper permits. that a see that now stands to make they get from building

Jane Trotsenko

we question next line should is any My on impact expect Transco quarter? maintenance this from

Jeffrey Hutton

No, just on. on maintenance from This we the thing. of two our that Transco actually playgrounds regular had sort understanding was and early year, events maintenance

expected. is that had Atlantic Sunrise course when outage time have we the Of which something into gathering system we Cabot/Williams

of out the we three notices have looking So from no maintenance any pipelines.

Jane Trotsenko

is is Atlantic the on flows And if gas are Sunrise. Sunrise do section Bcfe It's already? a section then line. already that COD. It understanding of My XXX question Atlantic any flowing you on --- not the on looks like on know like that you next the is

Jeffrey Hutton

I didn’t what section, quite about. understand you're specifically talking

the pipeline, that. gas for it process of the just is sections meters regulation of the pipe. as all are that in pipe the know There's and gas There of hydro into been course is do testing stations certain has details the stations actually a introduced we I for is can't way. -- commissioning this we answer jam ongoing. of me the try don't pipe I ongoing areas. and which The the example, been but introduced Let commission the and in of aware shipper, have packed to and that of into the

Jane Trotsenko

And the else the and only Is to different? between difference geographic first that there is my allocation last question is it second on Or that? areas. something exploratory

Dan Dinges

You geographic asking every the area? identified

Jane Trotsenko

just it Marcellus. to areas the is No, I’m Upper -- understand board's targeting are trying exploratory

something Or pressure is like areas? So on it or it -- your geographically is difference, know different locations? different the makes debt? as don’t you operating else I exploratory different separate identify it

Dan Dinges

the Upper identifying not Marcellus the is us. is geographically second area where project we’re different exploratory Yes, for exploratory Marcellus. a allocating and than an And

Jane Trotsenko

So the of first all solely just exploratory second on wells? operating allocation the areas and the difference between based the geography right,

Dan Dinges

It’s No. geology. based on

Jeffrey Hutton

Marcellus. from away or Geology in the

Jane Trotsenko

Upper same same that Marcellus the testing, Marcellus. it’s right? it of So you're geography Is and but into Upper all geology, it’s

Jeffrey Hutton

different The decade. United we’ve is are clarify. me of more in the development the are Marcellus. Marcellus in exploration The It a Let for projects They project. not located that States. parts than been a has

Jane Trotsenko

the So, guys to related not dry right? hole this to exploration the that so Upper reported they’re you quarter result, Marcellus,

Jeffrey Hutton

That’s correct.

Jane Trotsenko

becomes front about activity Pennsylvania, other sorry Atlantic levels online? Northeast of you in in My last it question operators this, the do see from coming Sunrise

Dan Dinges

levels? Activity

Jane Trotsenko

Yes.

Dan Dinges

some see activity traditionally maybe a there we activity. ramp we the period summer keep is that The right increased been up in levels anticipation in year. the of time Yes, atypical on a level up winter activity not and past small type going moving of levels of of gas. that each track at has have activity occurred That now of

Jane Trotsenko

and Atlantic is it’s really up see like I online everybody coming through not but drilling? Sunrise the picking

Dan Dinges

No.

Operator

from ahead. Hall Advisors. comes question Michael go next Heikkinen Please The Energy with

Michael Hall

reiterated has been I thing guess coverage A you X.X costs, covered. just one as costs. lot guys million nearly the of about well kind

So costs pricing service curious Anticipate serves Just if memory latest you on for has Northeast in the well, are on you some any a of that? kind seeing commentary spin some inflation there any Do what guys of well it, around improving guys? little of bit. perhaps cost that?

Dan Dinges

we as kind up on trajectory per and lateral cost comfortable We’re the flat and there Michael we’re $X,XXX of fairly pretty review with that. a has been good benchmark a with foot

Michael Hall

a anticipate So basis? potential then you on reduction any near-term don’t

Dan Dinges

we’re are where our and mind on contractually so both in costs moved needle we that's… committed major keep the rigs Well, crews, that frac

Michael Hall

contracts? crew term like costs are your long frac those on the how What's

Dan Dinges

We the go of through year. the end

Michael Hall

sorry just kind and Okay the -- context up other the of exploratory the I the the side following little guess but programs then dividend bit I'm on in of buyback. is a of

has and buyback been as for thing the of kind and item is about talked the expected. gaiting getting commissioned infrastructure running that one You up

on you on the move committing did buybacks? up say you assume your Just wondering see extents fair along kind to let's And all any buybacks, also to lines? it step achieved extent exploration you to second the commentary be then have been programs even from or did what more the another in the on Would governors program? of those

Dan Dinges

dovetails of Well, along buyback portion our as now, power laid out mayo demand with decisions in-basin program of on Sunrise. influenced cash opportunistic and commissioning our buybacks. now our made not anticipate with and dividend, to anticipation dovetails I the our Atlantic available both it on the of exploratory it We be has level comment we've the

of amount the that effort not Cabot's money compared the cash is our on does available impact capital being exploratory decision and So and to to buybacks. de it is allocated minimis

Michael Hall

I would guess restrain capital like requirements that. more more and maybe maybe kind forward potential I about sound guess but the buybacks doesn't so of thing it dividends

Dan Dinges

on I'm areas that market also to Board also able right our comfortable that growth pricing. No, and be the have capital I that we'll be the program And prudent of we're on no, granted. am hopefully we Marcellus be we our we'll comfortable I'm undeterred. area better to would a that I'm shares have into into will very And allocation profile into with exploratory this new comfortable able authority allocations comfortable our for capital of an has exportation an buyback to now. phase exploration

Operator

ahead. question with Tudor, go comes Holt. Sameer Panjwani Pickering, Please next The

Sameer Panjwani

below You to shareholders? touched to color balance a prepared on target sheet this improve years. use the provide little range leverage remarks, some in coming the set your just and additional the capital return Can tracking you with willingness to on bit your in but to further

Dan Dinges

in board board that would the see that plants in as that intent our have we we And X% continue last the the that free also. fall shares. will would and yield, that that Yes, on remarks execute power as dividend authorization that full intrinsic expectation authorization, indicated a execute authorization Atlantic the disconnect million get is the meeting by a we our our increase would revisit the to completion we additionally, value board's of commission once policy sure XX And that authority cash shares. anticipate. be to outstanding to our we is prepared generating got we buyback in we our Sunrise our have are I��m on we of at X%

Sameer Panjwani

I’m target the clarify, times, more longer guys you but think in your is X.X right and I to times presentation XX Just X.X term, thinking X highlighted the to trailing months now levered is on leverage.

the overtime, capacity to increase let's further? buybacks X.X your between end leverage that you use the So expect call we to times between it should guys GAAP X and low times

Dan Dinges

made policy build stage, out going fairly of as times have several a and is we at of have I policy this see I commissioning. stream component it But is opportunistic of even clear to think our be again steady a identified we consistent preference cash that wanted have we anticipate. though visited. The the to on that plan that buyback infrastructure we it something we use also certainly regular

what I’ll leverage, Scott leverage might might maturities and sheet look talk and or the let do the about reload. we at position using balance we balance how the sheet So, with

Scott Schroeder

balance on leaned in haven't Sure, long-term that historically, the Sameer, terms sheet. thanks. we of look,

level really. generating significant cash borrowed we to We that the buy and a back money change shares doesn't into look you long of free term, then haven’t will forward When be out flow.

level funding point, be disconnect outsize something would get absolute any source we on a It’s debt -- would not a or have in. part that any to target an that spot from sweet our impact If guide disconnect money below X we we we level. buyback in So, obviously, away of target undrawn point at use wouldn’t the do That's that fall It’s our nice but be is if are we to same at use back to going no a that just of in to time the optimal make that big shy level. the go first problem to in to we to on at X.X money X.X emphasis not. the if be for saw point with those Keep I’d But we borrow we buyback. first to mind, are at not program. on reading are had the disconnects. on this revolver an this but point a any

that play work that a towards into of that lot dynamics will decision. We but there's

Sameer Panjwani

may. And become since call? Is looking then an last now more the I if on that's last are anything the there provide anything know right you question, guys to quarter or likely portfolio. expand I to always takeaway update

Dan Dinges

let Yes, Jeff that. to I'll answer

Jeffrey Hutton

had were the in-basin an to two about and active out maybe project this challenged in very a takeaway. on trying And talk Sameer, we with both we bit quite environment, right exciting. a the there and to we right all And projects requirement to additional the their talk demand program, scale. we in-basin various were ultimately find initiatives, pipeline about just We’ve and -- demand outlook have working and little demand sized improved for there’s a our the trying to time, am continue always moving we’re with -- it’s good long pipeline does improve to remember pipeline about have, right day. industry I bit gas and for relocate all our realizations Cabot those it’s there nature lot underlying the find said, now, projects, to in and got our trying confident learned a it’s always several Pennsylvania natural we’re But be are and exciting. in but demand users and realizations we also would currently the with -- -- to pretty looking requirements and the be price basins That at in-basin for for this a project Cabot. options projects be are that and there going together those good that realizations. good and additional we’re to we’re that it’s built That said, we’ve I up on improving. question and industries. And every going And are we’ve the think the projects in-basin we’re find that

working We’re details. just being the very through selective and

Dan Dinges

users that area. in demand when York add a pipeline. that asked really and over that many from our good might idea I New could Evercore some gas for have get in much up there’s we we project goes field And have there into a

So, that we gas haven’t deliver that the given effort to much on up country. needed to of part

Operator

to session. turn our concludes to I’d over conference question-and-answer back for This any remarks. Dinges the Dan closing like

Dan Dinges

the and the thank details. for I Gerry, you, and interest Thank everybody questions in

make are call. privilege the call of again of opportunity That the to discussing friendly us for infrastructures first shareholder hopefully looking in that for continue We quarterly past I have in be to support forward have cash and the flow lot the made call overdue decisions we’ll commissioning look the the years the our that will many that we of would we’ll October with and clarity to future. of in

So, third thank call. quarter to you, forward the conference look

Operator

conference for you today’s The now concluded. is presentation. attending Thank

You may now disconnect.

Coterra Energy (CTRA) 27 Jul 182018 Q2 Earnings call transcript