A wholly-owned U.S. subsidiary of Japan's Osaka Gas Co. will buy a 35 percent non-operated interest in Pearsall shale acreage from Houston-based Cabot Oil & Gas for $250 million, Cabot reported Friday.
Osaka will buy an interest in approximately 50,000 net acres leased by Cabot in Atascosa, Frio, La Salle and Zavalla counties, Texas. Under the agreement, Osaka will pay $125 million in cash to Cabot at closing and an additional $125 million to carry 85 percent of Cabot's share of future drilling costs.
The acquisition will provide Cabot with the capital needed to accelerate drilling in the Pearsall formation while still maintaining Cabot's 100 percent interest in its Eagle Ford lease, said Cabot Chairman, President and Chief Executive Officer Dan O. Dinges in a statement.
"We are excited to partner with Osaka, one of Japan's leading energy companies, in developing our leasehold in the Pearsall shale," said Dinges. "We believe the Pearsall shale could prove to be an additional liquids-rich catalyst in our portfolio and are pleased with the results we have seen to date – both internally and from neighboring peers."
The companies plan to operate two rigs under the joint venture, with drilling expected to begin next month. A third rig will be added to Cabot and Osaka's drilling plan in 2013 and a fourth rig in 2014.
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