HOUSTON—Cabot Oil & Gas Corp. (NYSE: COG) is producing a little over 2.1 Bcf/d, and the Houston-based independent oil and gas company is doing so with just 300 employees.

“So it gives you an idea what we are able to do with the number of employees that we have and the asset that we have maintained,” Dan Dinges, CEO of Cabot Oil & Gas, said during the Leaders In Industry Luncheon at the Houston Petroleum Club on July 11. “All of this serves well for the balance sheet.

“We have an objective to keep a clean balance sheet.”

During his presentation to oil and gas industry leaders, Dinges stressed the need for fiscal responsibility, saying it’s been critical to Cabot’s growth. He said Cabot has about a half-a-billion dollars in the bank and recently sold one of its assets in the Eagle Ford.

“[Net leverage] is a little bit below where we want to be, but nevertheless, we are very comfortable with how we are managing our leverage with what we have ahead of us to be to help manage this particular aspect of our business,” he said. “With that low-cost structure balance sheet, we have been able to continue to grow our daily production.”

But like all oil and gas companies in the U.S., production growth has been met by continued infrastructure problems. Dinges said Cabot has had its fair share of problems in the northeast due to regulatory and political restrictions, which have hampered the ability for the industry to get sufficient infrastructure in place to get the gas out of the Marcellus.

Similar to other basins around the country, the Appalachian Basin is producing more gas than pipeline infrastructure will move out.

“We have suffered a differential up there in that northeast part of Pennsylvania unlike any part of the country has for the last three or four years simply because we have about 8 Bcf/d of gas in a six-county area up there moving per day,” Dinges said. “The pipeline just will not hold any more capacity than that. We are trying to break the logjam.”

Dinges went on to say efforts by the “keep it in the ground movement” and politicians trying to keep hydrocarbons out of the energy mix are affecting all oil and gas companies in the region.

“Not only from the standpoint of being able to access demand markets out there, but also its creating issues in certain geographic areas of the differentials with the loss of the proceeds that are not able to come back to the operators in the area simply because you are having some bottlenecks in the system,” he said. “The Permian Basin is a little different right now. They are suffering the differentials at this period of time. But getting the pipelines in the ground and moving them out is going to happen. But the regulatory environment is still slowing down the process to be able to accomplish this.”

But Dinges believes better days are ahead. Dinges says the inflection point is coming for Cabot, which has an eventual goal of 3.7 Bcf/d. It’s just a matter of time.

“We have had the 2.1-plus Bcf production for a while,” he said. “We have started on new pipelines and new efforts to try to move our gas not only on pipelines but within basin. Some of the basin projects have been to establish to establish a co-op with power plants.

“The good thing about the power plants is they hook up to the backend of our gathering system. We have no transportation charges attached to the delivery of the gas.”

Dinges said 100% of the Moxie Freedom Plant is in its test phase right now and will start at 165 MMcf/d. There is also the Lackawanna Energy facility, which recently came online. Lackawanna is the largest power plant in Pennsylvania at this point and has put Train 1 online. It is working on Trains 2 and 3.

The next building block for Cabot is the Atlantic Sunrise Pipeline. After years of trying to get this pipeline into the ground, it’s set to be commissioned later this summer.

Dinges said the gas that will come through the Atlantic Sunrise Pipelines has already been sold. He expects that project to generate significant cash flow in the next three years and beyond.

“We have gas going into the pipe and we have gas coming out of the pipe sold for 20 years, 15 years, 3 years at what I would deem in many cases a favorable contract,” Dinges said. “So our realizations by virtue of getting this gas out of basin is going to improve. And I would expect by moving not only our Bcf but the 1.7 when the Atlantic Sunrise is commissioned I would think it’s going to help in basin differentials at the same time.”

Terrance Harris can be reached at tharris@hartenergy.com