Cabot Oil & Gas Corp. (NYSE: COG) said Dec. 20 it is selling its 74,500-net-acre position in the Eagle Ford Shale as a lower-for-longer oil price environment has led the Houston-based company to pivot toward the Marcellus.

An affiliate of Venado Oil & Gas LLC agreed to buy the Eagle Ford properties for $765 million. About 61,500 net acres of the position, which is located primarily in Frio and Atascosa counties in South Texas, is operated and about 9,400 net acres are nonoperated. Production from the properties during third-quarter 2017 was 15,656 barrels of oil equivalent per day.

Separately, Cabot said it also agreed to sell its remaining East Texas assets to an undisclosed buyer.

Cabot CEO Dan O. Dinges said the transactions represent a step forward in a transformation process the company began more than a decade ago to become “one of the lowest cost operators in the industry.”

Cabot expects to use proceeds from the divestitures to fund its growth plans in the Marcellus Shale, where the company expects to achieve a compounded annual growth rate for its production of more than 20% from 2017 to 2020.

“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 in a statement. “However, 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.”

Cabot’s Eagle Ford assets account for only 5% of the company’s year-to-date total equivalent production and 4% of its proved reserves, Dinges added.

Meanwhile, Venado, an Austin, Texas-based company backed by investment firm KKR, has spent much of 2017 bulking up its position in the Eagle Ford.

Earlier in the year, the company agreed to buy SM Energy Co.’s (NYSE: SM) Eagle Ford assets for $800 million. The transaction, which closed in March 2017, included about 37,500 net acres in the Maverick Basin.

Venado had also entered an agreement in April 2017 to acquire Exco Resources Inc.’s Eagle Ford position for $300 million. However, the deal hit a snag following a legal dispute between Exco and a subsidiary of Chesapeake Energy Corp. (NYSE: CHK) over a natural gas sale contract related to the assets.

In August—roughly two months after the sale was expected to close—Venado and Exco mutually agreed to terminate the deal, according to filings with the U.S. Securities and Exchange Commission.

Cabot said it expects to close its transaction with Venado during first-quarter 2018. The company’s East Texas sale is expected to close by July 1, 2018. Both transactions are subject to customary closing conditions and adjustments.

Additionally, Cabot expects to record a non-cash, after-tax impairment in fourth-quarter 2017 on the Eagle Ford Shale assets of about $270 million to $280 million, based on estimated net book value as of Nov. 30.

Scotiabank was Cabot’s financial adviser and Norton Rose Fulbright US LLP served as its legal counsel on the Eagle Ford Shale transaction. Kirkland & Ellis LLP was Venado’s legal counsel on the transaction.

Emily Patsy can be reached at epatsy@hartenergy.com.

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