Cabot Oil &Gas Corp. plans to acquire the onshore South Louisiana properties of Oryx Energy Co. for about $72 million. Under the terms of the agreement, Houston-based Cabot will purchase 10 fields (six operated, four non-operated) covering 34,345 net acres with 68 producing wells. The acquired producing assets are concentrated in three primary fields that each provide Cabot with a high working interest. These fields make up 80% of the value assigned to the transaction.
Previous to announcing its merger with Kerr-McGee (see NGI Oct. 19, 1998), Oryx said it would be divesting some of its assets, said Dale Stoltzfus, Oryx manager of investor relations. “The cash that will be received from selling assets to Cabot will be used to reduce debt. Therefore, the merged company will have fewer assets but also lower debt.” Oryx and Kerr-McGee are awaiting the results of Securities and Exchange Commission review of the proposed merger. The companies filed with the SEC Nov. 17 and expect to hear something “shortly.” Both Oryx and Kerr-McGee have been tightening their belts lately, especially Oryx. In short, the deal marries cash-strapped Oryx’s exploration portfolio with Kerr-McGee’s healthier balance sheet.
Current production from the properties to be acquired by Cabot is 14 MMcfe/d. Total proved reserves are 74 Bcfe with total un-risked reserve potential approaching 190 Bcfe. The transaction is expected to close before year-end.
“Cabot Oil &Gas is acquiring producing assets, a 3-D seismic inventory and a reserve base with excellent upside potential,” said Ray R. Seegmiller, CEO. “This acquisition provides a geographic fit with our existing onshore 3-D effort in Terrebonne Parish where we have 33% interest in a joint exploration play covering 95,000 net acres. This acquisition is anticipated to boost total production in our Gulf Coast region by more than 5 Bcfe in 1999. Production will be increased from the existing 14 MMcfe/d by reworking a portion of the non-producing wells and commencing a wildcat and development drilling program.”
The three primary fields are Belle Isle in St. Mary Parish, Lake Pelto in Terrebonne Parish and Chacahoula in Lafourche Parish.
Joe Fisher, Houston
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