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Cabot Oil & Gas to sell off Eagle Ford assets

21 Dec 2017 19:02 GMT
Cabot Oil & Gas to sell off Eagle Ford assets

Houston, 21 December (Argus) — Independent producer Cabot Oil & Gas has agreed to sell its Eagle Ford shale assets for $765mn to an affiliate of Venado Oil & Gas.

The deal includes about 74,500 net acres, of which about 65,100 is operated by Cabot, located primarily in Frio and Atascosa counties in Texas.

Production from these properties during the third quarter was 15,656 b/d of oil equivalent (boe/d).

The company will also sell its remaining east Texas assets to an undisclosed buyer in a transaction that is expected to close by July 2018.

The assets Cabot is selling accounted for 5pc of the company's year-to-date total equivalent production and 4pc of its proven reserves, chief executive Dan Dinges said.

Cabot's operating expenses per unit are expected to fall by almost 20pc to about $1.65/1,000 cf in 2018 as a result of the sale.

"In a higher oil price environment, the Eagle Ford shale assets were a nice complement to our Marcellus shale position and provided capital allocation optionality," Dinges said. "Based on our current outlook for the oil markets and the resulting rates of return from these assets relative to our Marcellus Shale returns, we did not plan to allocate any incremental capital to the Eagle Ford Shale above the current maintenance capital levels."

The transaction is expected to close during the first quarter of 2018.