Osaka Gas Co. Ltd. of Japan will purchase a 35% nonoperated working interest in 50,000 net acres in the South Texas Pearsall shale from Cabot Oil & Gas Corp. for $250 million.
The two companies will form a joint venture that will field two rigs starting work in July 2012 to be joined by a third in 2013 and a fourth in 2014.
Cabot said the Pearsall shale could prove to be a liquids-rich catalyst in its portfolio and is pleased with results seen to date. The acreage is in Atascosa, Frio, La Salle, and Zavala counties. Closing is expected in late June.
Osaka will pay $125 million in cash to Cabot at closing and will pay a further $125 million to carry 85% of Cabot’s share of future drilling costs in the Pearsall shale. The drilling carry is expected to be fully utilized by the end of 2013 based on current drilling plans.
Cabot will retain its lease rights above the Pearsall, including the Eagle Ford shale.