By the OGJ Online Staff
HOUSTON, June 21 -- Cabot Oil & Gas Corp., Houston, said its board has approved an agreement to acquire Cody Co., the parent of Cody Energy LLC, for $230 million in cash and Cabot stock.
Cody's board and shareholders also approved the transaction. Cody, of Denver, has 166 bcf equivalent of reserves (58% gas and 42% oil) and 50 MMcfd of production (84% gas and 16% oil) in Texas and Louisiana.
Cabot said the transaction is valued at $1.39/Mcf based on proved gas equivalent reserves, without valuing the probable and possible reserve potential.
It said the deal would increase Cabot's reserves 16% to 1,185 bcf equivalent and production 25% to 250 MMcfd, with the Gulf Coast providing about 50% of total daily volume.
Ray Seegmiller, chairman and CEO of Cabot, said, "We have consistently emphasized our plan to acquire additional reserves in the onshore Gulf Coast area. Cody gives Cabot's Gulf Coast region a 3-year inventory of development drilling locations plus undeveloped acreage to complement its current inventory of exploration prospects."
Cody shareholders will get $168 million in cash and $62 million in stock, or cash and stock, at Cabot's election. Seegmiller said, "At this time our intent is to issue to the Cody shareholders $62 million in stock. This would bring our pro forma debt to capital ratio to about 50%, still below the 52.6% where Cabot ended last year."
The acquisition is expected to close on or before July 31.
