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Cabot Swaps Appalachian For Rockies' Assets

Cabot Swaps Appalachian For Rockies' Assets

Cabot Oil & Gas Corp. said it "high graded" its portfolio last week with the announced sale of Appalachia properties to Enervest Management Co. for $46.2 million, and the subsequent purchase of proved reserves in the Wyoming Green River Basin worth 10.3 Bcfe. Cabot said proceeds from the sale were used both to help fund the Wyoming acquisition and to repay debt. So far this year Cabot has sold 73.9 Bcfe of non-strategic reserves for $60 million across all regions.

The Rocky Mountains acquisition included 18 wells located in the Blue Forest Unit of the Moxa Arch with production of 2.4 MMcfe/d net and proved reserves of 10.3 Bcfe. The acquired assets produce predominantly from the Dakota formation. In addition, nine potential drilling locations have been identified to date. The Houston, TX-based Cabot will be the unit operator for all wells on the property.

"We have indicated throughout this year that we would sell non-strategic properties as we continue to high grade our reserve base," said Ray R. Seegmiller, CEO of Cabot. "By divesting non-strategic properties in Appalachia and acquiring properties we believe have considerable upside potential in the Rocky Mountains, we are also increasing our assets in our faster growth areas."

Seegmiller added that these transactions, together with previously closed deals, eliminate approximately 25% of Cabot's total well count (1,108 wells) while reducing production by only 13 MMcfe/d, or about 6%. In spite of this reduction, Cabot still anticipates a 5% production increase for the year over 1998. Most of the employees affected by the sale are being absorbed by the purchaser, Cabot said. The Green River Basin purchase requires no additional personnel.

In total, Cabot sold 59.5 Bcfe of proved reserves in the Appalachia properties. The largest concentration of reserves divested was the Clarksburg properties, located in northern West Virginia, which accounted for a total of 791 wells, producing a net 8.7 MMcfe/d. These reserves were not contiguous to Cabot's Cranberry pipeline system and high quality drilling opportunities were limited, the company said.

John Norris

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