Cabot Oil & Gas Corp. completed its $230 million purchased of Cody Co., the parent company of Cody Energy LLC, doubling its reserves in the Gulf Coast region (see Daily GPI, June 22). Cabot paid Cody shareholders $181 million in cash and two million shares of its common stock with a value per the agreement of $24.497 per share.

All of Denver-based Cody’s reserves are in Texas and Louisiana and will add 116 Bcfe to Cabot’s proved reserves, of which 58% will be natural gas, and 50 MMcfe/d of equivalent production, with 84% in natural gas. Based on proved gas equivalent reserves, the deal is valued at $1.39/Mcf. With the merger, Cabot increases its total proved reserves 16%, to 1,185 Bcfe, and doubles its Gulf Coast proved reserve base to 300 Bcfe. Daily production will increase 25%, to 250 MMcfe/d, with the Gulf Coast providing about 50% of the total daily volume.

“The addition of the Cody reserves further solidifies Cabot’s position in the Gulf Coast,” said Cabot CEO Ray Seegmiller. “During due diligence, we have identified multiple exploration opportunities that complement the significant level of development drilling which originally attracted us to these assets. The Gulf Coast drilling program now has a three-year inventory of exploration and development drilling prospects, balanced between south Texas and south Louisiana.”

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