Cabot Oil & Gas has struck an agreement with a U.S. unit of Osaka Gas Co. Ltd. for the sale of a 35% nonoperated working interest in the Pearsall Shale in 50,000 net acres leased by the company in Atascosa, Frio, La Salle and Zavala counties in Texas for $250 million.

Closing, including a joint venture (JV) agreement, is expected Tuesday (June 26). Osaka will pay $125 million in cash to Cabot at closing and an additional $125 million to carry 85% of Cabot’s share of future drilling costs in the Pearsall. The drilling carry is expected to be fully utilized by year-end 2013 based on current drilling plans.

“We are excited to partner with Osaka, one of Japan’s leading energy companies, in developing our leasehold in the Pearsall Shale,” said Cabot CEO Dan O. Dinges.

“We believe the Pearsall Shale could prove to be an additional liquids-rich catalyst in our portfolio and are pleased with the results we have seen to date, both internally and from neighboring peers. This transaction will provide the capital necessary to accelerate drilling of this formation, while still maintaining Cabot’s 100% interest in our Eagle Ford leasehold.”

Initial plans call for two rigs to operate under the JV with drilling beginning in July. A third rig will be added to the program during 2013 and a fourth rig will be added in 2014, Cabot said. Cabot will retain its lease rights above the Pearsall, including in the Eagle Ford.