The company will sell 74,500 acres of Eagle Ford Shale leasehold primarily located in Frio and Atascosa counties which produced 15,656 barrels of oil equivalent (Boe) per day during third quarter of 2017.
Separately, the company, which has its entire resources, located in the continental US, sold its remaining East Texas assets to an undisclosed buyer.
Cabot Oil & Gas chairman, president and chief executive officer Dan O. Dinges said: "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.”
Cabot Oil & Gas wants to use the cash proceeds from the deal strengthen its cash position, further strengthen its balance sheet and expand its share purchase program.
The cash generated from the divesture will help the company in funding exploration activity at its ongoing projects.
The company is also expecting that the latest round of divesture and previous selling of West Virginia assets will help it reduce its operating cost per unit (including interest expense) to drop by almost 20% to $1.65 per thousand cubic feet equivalent (Mcfe) in 2018.
Cabot Oil & Gas also said that it does not want to allocate its resources on Eagle Ford Shale assets, especially in low oil price environment.
O. Dinges added: “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."
The company expects to incur about $270 to $280m non-cash, after-tax impairment on the Eagle Ford Shale assets in the fourth quarter of 2017.
