Cabot Oil & Gas said it was selling off parts of its portfolio in Texas to focus more on Appalachian natural gas. File photo by Gary C. Caskey/UPI | License Photo
Dec. 21 (UPI) -- U.S. shale energy company Cabot Oil & Gas said it was leaving parts of Texas behind in order to focus more on the Appalachia shale natural gas basin.
Cabot said it sold off around 74,500 net acres of assets in the Eagle Ford shale basin in Texas to an affiliate of Venado Oil $ Gas for $765 million. Production during the third quarter was around 15,656 barrels of oil equivalent. Separately, the company said it sold its remaining interests in East Texas to an undisclosed buyer for an undisclosed sum.
"In a higher oil price environment, the Eagle Ford shale assets were a nice complement to our Marcellus shale position," Dan O. Dinges, the company's top official, said in a statement. "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 U.S. Energy Information Administration in August started consolidating data from the Marcellus and Utica shale basins that cover states from Ohio to New York because the overlapping formations made it difficult to determine how much was coming out of which basin distinctively.
It its latest drilling productivity report, EIA said natural gas production from the Eagle Ford shale should increase less than 1 percent by January, while output from Appalachia increases 1.3 percent. In terms of volume, natural gas production from the Appalachia basin is about three times as much as Eagle Ford.
Total natural gas production for Cabot during the third quarter was at the low end of its expectations, in part because of the impact from Hurricane Harvey, which swept over parts of the Eagle Ford basin in late summer.
Cabot expects total production to increase by at least 15 percent next year. At least $750 million of its $1 billion budget range for 2018 is designated for the Appalachia basin.