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Energy

UPDATE 1-Gas producer Cabot cuts production outlook on weak gas prices

(Adds details on output curtailments, third-quarter production, background)

Oct 7 (Reuters) - Cabot Oil & Gas Corp on Wednesday cut its full-year production forecast as the natural gas producer started curtailing some of its output last month after the COVID-19 pandemic hit prices for the fuel.

Demand for natural gas has taken a beating as the pandemic stalled economic activity amid excess supply, with exports of liquefied natural gas plunging since the start of the year.

Cabot, among the top U.S. gas producers, said it would continue to evaluate opportunities, including temporarily forgoing production in hopes for higher prices later.

“We remain optimistic about the improving natural gas supply and demand outlook heading into 2021,” Chief Executive Officer Dan Dinges said.

While prices for gas to be delivered in November were trading around $2.58, prices for the fuel at the start of 2021 were more than $3 on expectations of higher demand.

Cabot said it has curtailed an estimated average daily gross production of about 372 million cubic feet equivalent per day (mmcfepd) in the last 13 days of its third quarter, and the cuts have averaged at an estimated 450 mmcfepd so far in October.

That would hurt full-year production, which it now expects to be between 2.33 billion cubic feet equivalent per day (bcfepd) and 2.34 bcfepd, lower than its previous estimate of 2.35 bcfepd to 2.38 bcfepd.

Third-quarter production of about 2.41 bcfepd was close to the lower end of the 2.40 bcfepd to 2.45 bcfepd range it had forecast in July.

The company said prices for its natural gas, including hedges, were expected to be $1.57 per thousand cubic feet in the third quarter. (Reporting by Arathy S Nair in Bengaluru; Editing by Devika Syamnath)

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