Cabot Oil & Gas Corporation announced today a definitive agreement to sell its Canadian operations to a private Canadian company for a combination of cash and stock. Total consideration (denominated in Canadian dollars) for this transaction is CAD$78 million in cash, along with CAD$24 million in new equity. The sale is expected to close on, or before, May 1, 2009 and is subject to due diligence and other customary closing conditions.
"We announced our intent in February to explore the market for a Canadian asset sale, and we are pleased that in this market an agreement was reached," said Dan O. Dinges, Chairman, President and CEO. "Once closed, this further focuses Cabot's regional extent and provides capital to reduce our debt position."
At year end 2008, Cabot's reserve report included 40.4 Bcfe of proved reserves in Canada. "This figure was limited to some extent due to our plans to suspend capital investments in Canada for 2009," commented Dinges. "Over the last several years, Cabot had assembled a nice asset package in Canada, but with our recent success in other basins, Canada became less strategic, long-term."
The effective date of the sale is April 1, 2009 and therefore does not impact first quarter production expectations.
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