COG’s West Virginia divestiture
In 2Q17, Cabot Oil & Gas (COG) entered a sale and purchase agreement to sell certain legacy conventional oil and gas assets in West Virginia, Virginia, and Ohio for $41.3 million.
Production from these properties was 38.8 million cubic feet equivalent (MMcfe) per day (99% gas) year-to-date in 2017. Production from these assets makes up 2% of COG’s total production and 3% of its proved reserves.
COG’s management noted in the 2Q17 earnings release that it has been making efforts to “high-grade” its portfolio in the Marcellus Shale since 2006, and is focusing instead on drilling activity in its lower-cost assets.
The image above shows COG’s previous divestments of its non-core assets. COG’s management noted in the 2Q17 press release that the company hadn’t allocated drilling capital to these assets since 2009 and had no plans to allocate capital to these assets in the future either.
The transaction is expected to close at the end of 3Q17. Pro forma for this transaction, COG anticipates a $0.03 to $0.04 per Mcfe reduction in its direct lease operating expenses (or LOE).