EOG To Sell Some Natural Gas Assets in the Marcellus: Read the Fine Print (Newfield Doubles Its Footprint in the Marcellus)

Remember the shellacking EOG took for missing estimates this past quarter? In response, EOG said they would increase their focus on oil and sell some of their natural gas assets to help pay for oil exploration and production.

Today, EOG announced just that. They will sell some of their natural gas assets in the Marcellus.

EOG announced the signing of a purchase and sale agreement with Newfield Exploration Company (NFX) for approximately 50,000 net acres in Bradford County, Pennsylvania. The transaction, valued at $405 million, is expected to close by year-end 2010.

Representing less than one-half of one percent of EOG's total North American production, this Marcellus Shale acreage in northeastern Pennsylvania includes five producing natural gas wells with 7 million cubic feet per day of gross production. Following the close of the divestiture, EOG retains approximately 170,000 net acres in the Marcellus Shale in northwestern Pennsylvania.

With this transaction and others that EOG has signed or anticipates signing by year-end 2010, EOG estimates that the total proceeds from these asset sales will be approximately $1.0 billion.

Comment: this is incredible -- this transaction, valued at $405 million, represents less than one-half of one percent of EOG's total North American production. 

Yes, it's a lot of cash, but it hardly represents a significant shift to oil. Just saying.

Meanwhile, Newfield doubles its footprint in the Marcellus. Hmmm. Very, very interesting.