Cabot Oil & Gas Corporation (COG), Devon Energy Corp (DVN), Continental Resources, Inc. (CLR): Oil and Gas Companies Expanding to Meet Rising Demand

Continental Resources, Inc. (NYSE:CLR) has decreased its rig count to 20 from 22 as more of its rigs are switching to pad drilling. About 70% of rigs in Bakken are on pad, helping to improve efficiency with lower cost. The well cost in the region declined to $8.3 million this quarter from $9.3 million in 2012 due to pad drilling. The cost will further reduce to $8.2 million by the end of the year. This drilling method will help it to complete 245 net wells, up from 226 estimated in February.

The company currently operates nine rigs in the Scoop region, and is planning to increase its rig count to 12 by the third quarter of the year. It is also planning to reduce well operating costs by $0.5 million by the end of the year, down from the current cost of $8.5 million – $10 million. With the savings in well costs in the Scoop and Bakken regions, the company plans to drill 55 net wells this year, compared to a February estimate of 41, without any incremental capex.

The production in Scoop increased 100% quarter-over-quarter to 14.2 million barrels of oil equivalent per day, or MBoed, in the first quarter. Looking at strong performance in first quarter, it is expected that total production will rise to 136.5 MBoed with 40% year over year growth this year.

Conclusion

Cabot Oil & Gas Corporation (NYSE:COG) infrastructure expansion with a central processor and an additional rig will increase its well drilling capacity.

Devon Energy Corp (NYSE:DVN)’s MLP and output growth in the Permian Basin provides good prospects for better future growth.

Continental Resources, Inc. (NYSE:CLR)’ growth in the Scoop region will enhance overall production, and cost reductions from pad drilling in Bakken will improve efficiency.

All three of these companies are buys.

Madhukar Dubey has no position in any stocks mentioned. The Motley Fool owns shares of Devon Energy.

The article Oil and Gas Companies Expanding to Meet Rising Demand originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.