Marcellus gas going to Japan

[dan_s]

Very positive. COG announced a 20-yr contract to sell 350 MMcf/d of natural gas to Sumitomo starting in 2017 when the Dominion Cove Point LNG liquefaction project in Maryland comes online. This represents a key positive milestone for COG, for Marcellus producers, for the industry, and ultimately for US gas prices, as it’s the first long-term sales agreement that we know of where Marcellus gas will be destined for export via LNG. It should also serve to quell some fears surrounding the vulnerability around Marcellus gas prices/differentials. Separately, COG announced that its gross production in the Marcellus recently hit a record of 1.5 Bcf/d, a ~50% increase from the 1.0 Bcf/d milestone hit at this time last year and a significant increase from the ~1.30 Bcf/d rate that it hit in October.