Cabot - Osaka Pearsall Shale JV Agreed - $250 Million

Maverick Basin Pearsall Shale Map
Maverick Basin Pearsall Shale Map

Cabot Oil & Gas and Osaka Gas have announced a joint venture (JV) agreement in the Pearsall Shale. Cabot is selling a 35% interest in 50,000 acres prospective for shale across Atascosa, Frio, La Salle and Zavala counties. Osaka will pay $125 million at closing and will carry 85% of Cabot's drilling cost until the remaining $125 million is paid. Cabot plans to run two rigs in the play through 2012, three in 2013, and four in 2014. At that rate, the drilling carry will be fulfilled by year-end 2013. Cabot keeps full rights to the Eagle Ford.

The deal follows successful exploration wells proving the Pearsall Shale has better liquids yields east of the Maverick basin.  The JV is beneficial for both parties. Cabot secures the capital needed to begin development sooner than would be possible on its own and Osaka gains natural gas assets in the U.S.  Osaka has been in negotiations to take LNG from the U.S. Owning supply is a natural hedge.

Cabot's CEO commented:

"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. This transaction will provide the capital necessary to accelerate drilling of this formation, while still maintaining Cabot's 100 percent interest in our Eagle Ford leasehold."

Osaka Gas is a Japanese energy supplier with a focus on natural gas. Natural gas is more important than ever after Fukushima accident.