Privately owned Venado Oil & Gas LLC, Austin, says an affiliate plans to buy Cabot Oil & Gas Corp.’s Eagle Ford shale holdings for $765 million. The deal includes 65,100 operated and 9,400 nonoperated acres, primarily in the South Texas counties of Frio and Atascosa.
Cabot, Houston, expects to record a noncash, after-tax impairment on the Eagle Ford shale assets of $270-280 million during the fourth quarter, based on estimated net book value as of Nov. 30, 2017.
Third-quarter production from the Eagle Ford assets was 15,656 boe/d of oil and natural gas. Closing is expected during the first quarter of 2018, subject to customary conditions and adjustments.
Separately, Cabot announced the sale of its remaining East Texas assets to an undisclosed buyer, expected to close by July 1, 2018.
Dan O. Dinges, Cabot chairman, president, and chief executive officer, said the assets accounted for 5% of Cabot’s year-to-date total equivalent production and 4% of Cabot’s proved reserves.
Pro forma for these transactions and the previously announced divestiture of Cabot’s conventional assets in Virginia, West Virginia, and Ohio combined will bring Cabot's operating expenses per unit (including interest) down by almost 20% to about $1.65/Mcf of gas-equivalent in 2018.
Dinges said the Eagle Ford shale assets complemented its Marcellus shale position during times of higher oil prices.
“We did not plan to allocate any incremental capital to the Eagle Ford shale above the current maintenance capital levels," Dinges said.
