Cabot Oil & Gas Announces Pearsall Joint Venture

Cabot Oil & Gas

today announced the Company has signed a definitive agreement with a wholly-owned U.S. subsidiary of Osaka Gas Co., Ltd. ("Osaka") for the sale of a 35 percent non-operated working interest in the Pearsall Shale in approximately 50,000 net acres leased by the Company in Atascosa, Frio, La Salle and Zavala counties of Texas for a total price of $250 million. Closing of the transaction, including the joint venture agreement, is anticipated to occur on June 26, 2012. Under the agreement Osaka will pay $125 million in cash to Cabot at closing and will pay an additional $125 million to carry 85 percent of Cabot's share of future drilling costs ("drilling carry") in the Pearsall Shale. The drilling carry is expected to be fully utilized by year-end 2013 based on current drilling plans. Initial plans call for two rigs to operate under the JV with drilling commencing in July 2012. A third rig will be added to the drilling program during 2013 and a fourth rig will be added in 2014. Cabot will retain its lease rights above the Pearsall, including the Eagle Ford Shale formation.