Boston, MA, 04/11/2014 (usastockreport) – Stifel Nicolaus downgraded Cabot Oil & Gas Corporation (NYSE:COG)’s stock prices from $45 to $36 a share. Previously Stifel had an investment rating of Buy for COG but now it is reduced to hold. The change in ratings is done as Stifel expects COG to miss its FY14 cash flow expectations. The shares fell after the news of a downgrade by Stifel Nicolaus. The company shares are trading near the 52 week low.
The strength of company
Cabot has managed to show significant improvement in the Marcellus EURs in last one year. It is especially praiseworthy as at the same time the company managed to reduce Marcellus cash unit costs. The problem area still is Marcellus price differentials. Cabot has to still deal with the realized gas pricing issues.
The problem area
The company is facing the problem of natural gas price realizations standing much lower than the expectations. Cabot was unable to capitalize the surge in gas prices in the last year. In the last quarter of year 2013, the natural gas price realizations stood at $3.44 per Mcf. As compared to the last quarter of year 2013, Cabot did much well in the fourth quarter of 2012. In 2012, the gas prices were much lower than the last year. This is one factor that has caused concerns over the company’s performance.
The future ahead
The problem of wider price differentials resulted to the oversupply of natural gas in the Marcellus. The problem worsens in the summer months. The company has taken steps to improve the takeaway solutions. It can narrow down the price differentials. Amidst all these measures, the company has to still deal with the volatility of the gas pricing. It is expected to remain a cause of worry for the company in the current year as well as in the coming year.