Exhibit 10.23


                         [Puget Sound Energy Letterhead]

                               September 21, 1999


Cabot Oil & Gas Corporation
Attention:  Scott Schroeder
1200 Enclave Parkway
Houston,  Texas  77077

Re: 6% Convertible Redeemable Preferred Stock

Dear Scott:

     Puget Sound Energy,  Inc.  ("PSE") wishes to confirm its binding  agreement
with Cabot Oil & Gas  Corporation  ("Cabot")  with respect to the  repurchase by
Cabot of the 1,134,000 shares of its 6% Convertible  Redeemable Preferred Stock,
stated  value $50 per share  ("Preferred  Stock"),  held by PSE on the terms set
forth below.

1.  BASIC TRANSACTION

     Cabot  will  repurchase,  and PSE will  sell,  the  Preferred  Stock for an
aggregate  price of $51,600,000,  together with accrued and unpaid  dividends to
the date of Closing (as defined below),  payable by wire transfer of immediately
available  funds on the date of Closing.  Cabot will determine the date on which
the repurchase  shall occur,  which shall be on or before November 1, 1999 or as
soon thereafter as is, in Cabot's judgement,  practicable, but in no event after
November 1, 2000 (the  "Closing") nor prior to the  satisfactory  receipt of the
conditions  described  in section  2.1) and 2.b) of the Gas  Purchase  Agreement
Letter of Intent  between PSE and Cabot Oil & Gas  Marketing  Corporation  dated
September __, 1999. In this  connection,  PSE understands  that Cabot expects to
conduct an offering of Class A Common Stock,  par value $.10 per share  ("Common
Stock"), of Cabot to fund the repurchase.

     At the mutual election of Cabot and PSE, Cabot may, in lieu of repurchasing
the Preferred  Stock for cash,  repurchase  the Preferred  Stock for a number of
shares of Common Stock to be mutually agreed on by PSE and Cabot. In such event,
PSE will arrange for the sale of the Common  Stock at or as soon as  practicable
after the Closing.

2.  PUBLICITY

     The parties will consult with each other and will  mutually  agree upon any
press  releases  or public  announcements  pertaining  to the  agreement  or the
repurchase contemplated hereby prior to the Closing, and will not issue any such
press releases or make any such public announcements prior to such consultation,
except as may be required by applicable  law or by  obligations  pursuant to any
listing agreement with any national securities exchange, in which case the party
proposing to issue such press release or make such public announcement shall use
its best  efforts to consult in good faith with the other party  before  issuing
any such press releases or making any such public announcements.

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<PAGE>
Mr. Scott Schroeder
Page 2
September 21, 1999

3.  COSTS

     Each party shall be responsible for and bear all its own costs and expenses
(including  any  broker's or finder's  fees)  incurred  in  connection  with the
repurchase  transaction and any sale of Common Stock,  including expenses of its
representatives  and  brokers.  PSE  shall  pay all  brokerage  or  underwriting
commissions or discounts in connection with any sale of Common Stock by PSE, and
in the event the  repurchase is for cash, PSE will pay Cabot $137,500 in cash at
Closing in lieu of the brokerage costs avoided by PSE.

     If Cabot is in agreement with the foregoing,  please execute both originals
of this Letter of Intent and return one of them to the undersigned.

                                            Very truly yours,

                                            PUGET SOUND ENERGY, INC.

                                            By: /s/ DONALD E. GAINES
                                                --------------------------------
                                                Donald E. Gaines
                                                Treasurer


Acknowledged and agreed:

CABOT OIL & GAS CORPORATION

By:  /s/ RAY SEEGMILLER
     ---------------------------------
Ray R. Seegmiller
Chairman and
Chief Executive Officer

Date:  September 21, 1999

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