Cimarex to buy Resolute Energy for $1.6bn

Shares in Resolute Energy surged in pre-market trade on Monday as it agreed to be bought by larger rival Cimarex for around $1.6bn.

Under the terms of the deal, which has been approved by the boards of directors of both companies, Resolute shareholders will have the right to receive 0.3943 shares of Cimarex common stock, $35 per share in cash, or a combination of $14 per share in cash and 0.2366 share of common stock.

The consideration represents a premium of around 15% to Resolute's closing price on Friday. Cimarex said the cash portion of the deal will be funded through a combination of cash on hand and borrowings under its revolving credit facility.

Cimarex chairman, president and chief executive Thomas E. Jorden said: "This high-quality, bolt-on asset is tailor-made for Cimarex.

"It is a perfect fit with our existing Reeves County position and will allow us to leverage our knowledge and deliver superior results over a broader asset base for the benefit of both Cimarex and Resolute shareholders. The Resolute assets are expected to generate free cash flow in 2019, basically funding any additional development capital from the start. I want to compliment Rick Betz and the entire Resolute team on the outstanding job that they have done in building these premier Reeves County assets."

Resolute CEO Rick Betz said the combination of its assets and people with the "incredibly strong" platform at Cimarex "will surely lead to superior results for the shareholders of both companies".

The deal is expected to complete by the end of the first quarter of 2019.

At 1250 GMT, Resolute shares were up 8.2% in pre-market trade at $33.00, while Cimarex shares were down 2.5% at $86.55.