Cabot Oil & Gas Can Hedge — But for How Long?

The oversupply that accompanied OPEC's decision to flood the markets in 2015 wreaked havoc on oil and gas producers, driving down prices for crude oil and natural gas. This year, we can expect more low prices and oversupply thanks to Russia and OPEC. In the midst of this uncertainty, one company, Cabot Oil and Gas (NYSE: COG), has consistently cut operating costs, posted an operating profit margin of 40% in 2019, and sells its natural gas for much more than the commodity's trading price, thanks to some clever moves by management. But the company may not be able to sustain this impressive track record forever.

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OPEC's 2015 actions made leaving the oil game a likely no-brainer for Cabot's management. Houston-based Cabot has been steadily decreasing production of oil since then. Here's Cabot's production mix since 2015:

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