Mike Walen, senior vice president and chief operating officer of Cabot Oil & Gas Corp., talked about the company’s Marcellus drilling program at Hart’s DUG conference in Fort Worth last week.

The conference was Cabot’s coming-out party in the Marcellus, the first time it has revealed details of its work in the Appalachian Devonian shale. Cabot works in Susquehanna County, Pennsylvania. It picked that area because the Marcellus is tremendously thick, reaching more than 300 feet. “We made a decision to concentrate our entire leasing program in just a few counties in northeast Pennsylvania,” said Walen.

The company leased its first 20,000 acres in the play in 2006; today it has more than 160,000 net acres. It figures 18 to 27 Tcf of in-place gas resides in the Marcellus beneath its leases, and between 4 and 6 Tcf are recoverable.

Cabot initially drilled vertical wells and took core. “The rocks are exceptionally good source rocks,” he said. Its vertical wells posted rates into the sales line ranging from 600,000 to 1.7 million cubic feet per day.

In 2008, Cabot drilled 15 vertical and five horizontal Marcellus wells. Its 30-day average for the verticals was more than 1 million cubic feet per day, and EURs were 1.4 Bcf per well.

“What got our attention were the IPs of the five horizontals that we drilled,” said Walen. Cabot’s horizontal tests flowed into sales at rates between 6.4- and 8.8 million cubic feet per day. “These wells are 4.5 Bcf or better,” said Walen. “And recent results have confirmed that these are repeatable.”

This year, Cabot plans to drill 30 horizontal and 30 vertical wells. Costs are $3.4- to $4 million completed for a horizontal well. It operates six rigs, split between horizontal and vertical drilling. The verticals are useful for land issues, and also as go-by wells for offset horizontals, but horizontals are the moneymakers.

“This is probably the best play Cabot has in the States,” said Walen. “It’s truly world-class.”

--Peggy Williams, Senior Exploration Editor, Oil and Gas Investor

Contact me at pwilliams@hartenergy.com