Cabot Oil & Gas Corp.

Sold proved and unproved assets in Mid-Continent and West Texas

Cabot Oil & Gas Corp. (NYSE: COG) announced Oct. 17 the sale of proved and unproved assets in Mid-Continent and West Texas for $188 million.

“The divestiture of our Marmaton and West Texas properties reflects our commitment to accelerating value within the portfolio by monetizing non-core positions and redeploying proceeds to our higher-return projects in the Marcellus Shale,” said Dan O. Dinges, chairman, president and CEO.

The assets include approximately 66,000 net acres, current production of approximately 2,000 barrels of oil per day (MBOE/d) and proved reserves of approximately 8.4 MMBOE, as of Oct. 1, 2013.

Cabot sold its assets in the Marmaton play in Oklahoma and Texas for approximately $160.1 million to Chaparral Energy, a privately held company. The Marmaton oil sale is expected to close on Dec. 18. COG sold its West Texas legacy conventional properties to an undisclosed buyer for approximately $28.0 million. The assets include current production of approximately 260 BOE/d and proved reserves of approximately 1.5 MMBOE, as of 2012 year-end.

The transactions averaged an implied valuation of $19 per proved BOE, $83,230 per flowing BOE/d of production and $2,850 per acre, said Gabriele Sorbara, an analyst with Topeka Capital Markets.

“These are great metrics for non-core assets, especially when considering the potential value creation to COG from redeploying the proceeds to the Marcellus shale, with IRRs north of 100 percent, and the Eagle Ford shale, with IRRs north of 50 percent,” he said.

Cabot can likely make up the lost production with an acceleration of the Marcellus shale and/or Eagle Ford shale “as the proceeds are more than enough to add a full-time rig in the play,” Sorbara said.

Evercore acted as financial advisor to Cabot on the transactions.