HOUSTON, Nov. 18, 2010 /PRNewswire/ -- Cabot Oil & Gas
Corporation (NYSE: COG) today announced the sale of its
Pennsylvania midstream assets to
Williams Field Services Company, LLC (WFS), a subsidiary of
Williams Partners L.P. (NYSE: WPZ), for consideration of
$150 million plus a 25-year gathering
agreement. The transaction is scheduled to close during
December 2010, subject to normal and
customary closing conditions and regulatory clearance.
In the deal, Cabot is selling
approximately 75 miles of gathering pipelines and two existing
compressor stations that the Company has installed and constructed
over the last three years. The transaction also establishes a
25-year firm gathering arrangement between Cabot and WFS whereby WFS will in the next two
years:
- Complete construction of a 32-mile 24" high pressure pipeline
to Transco from Cabot's
Lathrop Station
- Build about 65 miles of various 16" to 24" trunk lines in
Susquehanna County
- Construct two additional compressor stations with a total of
40,000 horsepower, and
During the term of the agreement:
- Connect all Cabot drilling
program wells with 8" and 10" gathering lines
- Deliver Cabot production to
five interstate pipeline delivery points.
"With the exceptional well success we have seen in our Marcellus
operations, we needed to adjust the way we thought about
infrastructure and take-away capacity going forward," said
Dan O. Dinges, Chairman, President
and Chief Executive Officer. "Williams Partners L.P. is one
of the premier mid-stream providers that has the capabilities to
help us make a significant step change in the way we develop this
resource and execute our program."
The new Williams Marcellus Gathering System will create takeaway
capacity for Cabot of
approximately 1.2 Bcf per day off the existing leasehold during the
next two to three years with its planned expansions and will invest
in excess of $150 million in 2011.
"This agreement will displace roughly $75 million annually in planned infrastructure
expenditures by Cabot during
2012-2015 along with eliminating the need for infrastructure
investment in 2011," commented Dinges. "This planned level of
investment by Cabot would not have
provided us the takeaway capacity proposed under the Williams
agreement."
Additionally, as part of this new arrangement, Cabot has increased its firm takeaway capacity
to the Williams Partners' Transco Pipeline just south of
Susquehanna County. The new
level is 350 Mmcf per day, up from 150 Mmcf per day announced in
February, 2010.
"We are excited to form this relationship and create enhanced
value for both companies' shareholders," added Dinges. "The
inflow of cash will also reduce our spending deficit for 2010."
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 Internet
homepage at www.cabotog.com.
The statements regarding future financial performance and
results and the other statements which are not historical facts
contained in this release are forward-looking statements that
involve risks and uncertainties, including, but not limited to,
market factors, the market price (including regional basis
differentials) of natural gas and oil, results of future drilling
and marketing activity, future production and costs, and other
factors detailed in the Company's Securities and Exchange
Commission filings.
SOURCE Cabot Oil & Gas Corporation