HOUSTON, Dec. 20, 2017 /PRNewswire/ -- Cabot Oil
& Gas Corporation (NYSE: COG) ("Cabot" or the "Company")
announced today that it has reached an agreement to sell its
operated and non-operated Eagle Ford Shale assets to an affiliate
of Venado Oil & Gas LLC for $765
million. The divestiture includes approximately 74,500 net
acres (~65,100 operated and ~9,400 non-operated) of Eagle Ford
Shale leasehold primarily located in Frio and Atascosa counties. Production from these
properties during the third quarter of 2017 was 15,656 barrels of
oil equivalent (Boe) per day. This transaction is expected to close
during the first quarter of 2018, subject to customary closing
conditions and adjustments. Separately, the Company announced the
sale of its remaining East Texas
assets to an undisclosed buyer. This transaction is expected to
close on or before July 1, 2018,
subject to customary closing conditions and adjustments.
Cash proceeds from these transactions, in addition to the
Company's current cash position and its outlook for significant
free cash flow generation during its three-year plan through 2020,
are expected to allow Cabot to continue to enhance shareholder
value by:
- Delivering double-digit growth per debt-adjusted
share from its Marcellus Shale
position;
- Providing sustainable dividend growth;
- Enhancing its share repurchase program;
- Further strengthening its balance sheet; and
- Funding any potential increases in future activity in its
ongoing exploratory programs, depending on the outcome of initial
testing efforts in these areas during the first half of 2018.
"Beginning over a decade ago, Cabot began the process of
transforming the Company into one of the lowest cost operators in
the industry, which has allowed us to create value for shareholders
by delivering returns-focused growth while maintaining a strong
balance sheet throughout the commodity cycles," commented
Dan O. Dinges, Chairman, President
and Chief Executive Officer. "These transactions represent a
further step in our transformation process and accelerate the value
of these assets while improving Cabot's cost structure and
corporate returns. These assets accounted for only five percent of
our year-to-date total equivalent production and four percent of
our proved reserves. Pro forma for these transactions and the
previously announced divestiture of the Company's legacy
West Virginia properties, Cabot's
operating expenses per unit (including interest expense) are
expected to decrease by almost 20 percent to approximately
$1.65 per thousand cubic feet
equivalent (Mcfe) in 2018. In a higher oil price environment, the
Eagle Ford Shale assets were a nice complement to our Marcellus Shale position and provided capital
allocation optionality. However, based on our current outlook for
the oil markets and the resulting rates of return from these assets
relative to our Marcellus Shale
returns, we did not plan to allocate any incremental capital to the
Eagle Ford Shale above the current maintenance capital levels."
Cabot expects to record a non-cash, after-tax impairment on the
Eagle Ford Shale assets of approximately $270 to $280
million (based on estimated net book value as of
November 30, 2017) in the fourth
quarter of 2017.
Scotiabank served as financial advisor and Norton Rose Fulbright
US LLP served as legal counsel to Cabot on the Eagle Ford Shale
transaction. Kirkland & Ellis LLP served as Venado's legal
counsel on the Eagle Ford Shale transaction.
2018 Guidance Update
Based on the announced divestitures, Cabot has updated its 2018
daily production growth guidance range to 10 to 15 percent (18 to
23 percent pro forma for the Eagle Ford, East Texas, and West
Virginia divestitures). The Company has also updated its
2018 capital budget range to $900
million to $1.0 billion
consisting of the following:
•
|
Marcellus
Shale:
|
|
$750 - $850
million
|
•
|
Exploration
Areas:
|
|
$75
million
|
•
|
Pipeline
Investments:
|
|
$60
million
|
•
|
Corporate:
|
|
$15
million
|
Additionally, the Company has updated its 2018 operating expense
guidance to the following to reflect the impact of the announced
divestitures:
•
|
Direct
operations:
|
|
$0.09 - $0.11 per
Mcfe
|
•
|
Transportation and
gathering:
|
|
$0.68 - $0.70 per
Mcfe
|
•
|
Taxes other than
income:
|
|
$0.05 - $0.06 per
Mcfe
|
•
|
Depreciation,
depletion and amortization:
|
|
$0.55 - $0.65 per
Mcfe
|
•
|
Interest
expense:
|
|
$0.09 - $0.10 per
Mcfe
|
•
|
Cash general and
administrative (ex. stock-based compensation):
|
|
$55 - $60
million
|
•
|
Exploration:
|
|
$30 - $35
million
|
Cabot Oil & Gas Corporation, headquartered in Houston, Texas, is a leading independent
natural gas producer with its entire resource base located in the
continental United States. For
additional information, visit the Company's website at
www.cabotog.com.
This press release includes forward‐looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The statements regarding future financial and operating
performance and results, capital budgets, estimated expenses,
dividend growth, share repurchases, strategic pursuits and goals,
market prices, and other statements that are not historical facts
contained in this report are forward-looking statements. The words
"expect", "project", "estimate", "believe", "anticipate", "intend",
"budget", "plan", "forecast", "target", "predict", "may", "should",
"could", "will" and similar expressions are also intended to
identify forward-looking statements. Such statements involve risks
and uncertainties, including, but not limited to, market factors,
market prices (including geographic basis differentials) of natural
gas and crude oil, results of future drilling and marketing
activity, future production and costs, legislative and regulatory
initiatives, electronic, cyber or physical security breaches and
other factors detailed herein and in our other Securities and
Exchange Commission (SEC) filings. See "Risk Factors" in Item 1A of
the Form 10-K and subsequent public filings for additional
information about these risks and uncertainties. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially
from those indicated. Any forward-looking statement speaks
only as of the date on which such statement is made, and the
Company does not undertake any obligation to correct or update any
forward-looking statement, whether as the result of new
information, future events or otherwise, except as required by
applicable law.
FOR MORE INFORMATION CONTACT
Matt Kerin (281) 589-4642
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SOURCE Cabot Oil & Gas Corporation