Independent energy exploration and production (“E&P”) company Cabot Oil and Gas (COG) has entered into an agreement with Tourmaline Oil Corp. to sell its remaining investment in Canada for about $61.3 million in cash and stock.
In April 2009, Cabot struck a deal to dispose its Canadian unit – Cabot Petroleum Canada Corporation – to Tourmaline Oil Corp. in return for cash and three million shares in the private company. With Tourmaline beginning to trade on the Toronto Stock Exchange as a public company, the sale of the stock is now allowed to take place. Settlement for the new shares will take place on November 26, 2010.
The Tourmaline transaction, Cabot’s second asset sale in a week following its agreement with Williams Partners L.P. (WPZ) to sell its midstream assets in Pennsylvania for $150 million, is expected to further shore up its strong balance sheet.
(Read our full coverage on the news: Cabot to Dispose Midstream Assets)
The combined capital infusion of over $200 million will help the Houston, Texas-based independent natural-gas producer to bolster its operations in the prolific Marcellus Shale play (a key natural gas drilling area located throughout Western Pennsylvania and much of the Appalachian Basin) and the Eagle Ford oil window in south Texas.
Cabot, which currently retains a Zacks #3 Rank (short-term ‘Hold’ rating), has four domestic focus areas: the Appalachia, the Gulf Coast, the Rocky Mountains, and the Anadarko Basin (in Oklahoma, Kansas, and the Texas Panhandle).
As of year-end 2009, the company had 2.06 trillion cubic feet equivalent (“Tcfe”) in proved reserves (98% natural gas). Cabot produced 103.0 billion cubic feet equivalent (“Bcfe”) of oil and gas in 2009, of which more than 95% was natural gas.
CABOT OIL & GAS (COG): Free Stock Analysis Report
WILLIAMS PTNRS (WPZ): Free Stock Analysis Report
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