Cabot Oil & Gas Corp. said it “high graded” its portfolioyesterday with the announced sale of Appalachia properties toEnervest Management Co. for $46.2 million, and the subsequentpurchase of proved reserves in the Wyoming Green River Basin worth10.3 Bcfe. Cabot said proceeds from the sale were used both to helpfund the Wyoming acquisition and to repay debt. So far this yearCabot has sold 73.9 Bcfe of non-strategic reserves for $60 millionacross all regions.
The Rocky Mountains acquisition included 18 wells located in theBlue Forest Unit of the Moxa Arch with production of 2.4 MMcfe/dnet and proved reserves of 10.3 Bcfe. The acquired assets producepredominantly from the Dakota formation. In addition, ninepotential drilling locations have been identified to date. TheHouston, TX-based Cabot will be the unit operator for all wells onthe property.
“We have indicated throughout this year that we would sellnon-strategic properties as we continue to high grade our reservebase,” said Ray R. Seegmiller, CEO of Cabot. “By divestingnon-strategic properties in Appalachia and acquiring properties webelieve 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 withpreviously closed deals, eliminate approximately 25% of Cabot’stotal well count (1,108 wells) while reducing production by only 13MMcfe/d, or about 6%. In spite of this reduction, Cabot stillanticipates a 5% production increase for the year over 1998. Mostof the employees affected by the sale are being absorbed by thepurchaser, Cabot said. The Green River Basin purchase requires noadditional personnel.
In total, Cabot sold 59.5 Bcfe of proved reserves in theAppalachia properties. The largest concentration of reservesdivested was the Clarksburg properties, located in northern WestVirginia, which accounted for a total of 791 wells, producing a net8.7 MMcfe/d. These reserves were not contiguous to Cabot’sCranberry pipeline system and high quality drilling opportunitieswere limited, the company said.
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