Cabot Oil & Gas and Cimarex Energy sign $17bn merger deal

US-based upstream companies Cabot Oil & Gas Corporation and Cimarex Energy have agreed to combine in an all-stock merger of equals that values the enlarged firm at around $17 billion.

Based in Texas, Cabot Oil & Gas is a natural gas producer with assets located in the continental US. On the other hand, Cimarex Energy is an oil and gas exploration and production company, which mainly operates in the Permian Basin and mid-continent areas of the US.

The merger will bring together Cabot Oil & Gas’ nearly 173,000 net acres in the Marcellus Shale and Cimarex Energy’s roughly 560,000 net acres in the Permian and Anadarko basins.

The combined company will operate under a new name and will be based in Houston.

Dan O. Dinges – Chairman, President, and CEO of Cabot Oil & Gas said: “The combination of Cabot and Cimarex will create a free cash flow focused, diversified energy company with the scale, inventory and financial strength to thrive across commodity price cycles.

“The combined business will be overseen by an experienced Board and a management team that is committed to a prudent strategy built on disciplined capital investment, strong free cash flow generation and increasing returns to shareholders.

“With its premier assets, increased resource diversity and a strong financial foundation, the company will be well positioned to deliver long-term value creation for its shareholders and other stakeholders.”

Cabot Oil & Gas and Cimarex Energy sign $17bn merger deal. Photo courtesy of Monika Wrangel from Pixabay.

As per the terms of the merger, Cimarex Energy’s shareholders will exchange each of their shares in the company with 4.0146 shares of Cabot Oil & Gas’ shares.

Following the closing of the deal, Cabot Oil & Gas’ shareholders will hold a stake of around 49.5%, while Cimarex Energy’s shareholders will own a stake of about 50.5%.

Thomas E. Jorden – Chairman, President, and CEO of Cimarex Energy said: “This transformational merger will combine our top-tier assets and advance our shared focus on delivering superior returns for investors.

“We’re building an even more resilient platform with greater financial strength in order to deliver sustainable, through-cycle returns on and of capital. We view commodity, geography and asset diversification as strategic advantages that will drive more resilient free cash flow and long-term value creation.

“We are aligned on our commitment to ESG and sustainability and look forward to bringing our talented teams together to unlock the tremendous potential of this compelling combination.”

Thomas E. Jorden will be the CEO of the enlarged company.

The deal, which is subject to regulatory clearance, approvals of shareholders of both the firms, and the meeting of other customary closing conditions, is likely to close in Q4 2021.