Cabot Oil & Gas (COG-N)

(Top Pick March 10/14, Down 14.12%) They are a lower cost operator. He sold this a couple of months after recommending it. Their challenge has been that their industry has been wildly successful in getting production growth and now there is a severe shortage of pipelines in the region so the price they sell for is lower than other regions in the US. He sold when a major pipeline was deferred by 6-9 months.

Sitting on 25 years of drilling inventory in the Marsalis shale play. This is a play that in the past 4 years has grown from a very low production base to a current production of 13,000,000,000 ft.³ a day, which is equivalent to all of Canada. This is a reason longer-term that he is a little bearish on natural gas because of this one area that has up to 25 BCF of productive capability. Stock has lagged by about 25% this year because all of this production growth and the infrastructure isn’t keeping up to the same pace. The value of their gas in the short term is lower than that of other areas in the US. This is above the one year phenomena. Share price fell by about 8% when they disclosed they are going to get about $0.60 less. He feels you are looking at a $45 share price in the next year as they continue to drill unbelievably economic wells.