Cabot Oil & Cimarex Energy to merge in $17bn deal
Cabot Oil & Gas and Cimarex Energy have agreed to merge to create a $17bn company.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Cimarex shareholders will receive 4.0146 shares of Cabot common stock for each share their shares. Once the deal completes, Cabot shareholders will own about 49.5% and Cimarex shareholders will own 50.5% on a fully diluted basis.
Cabot chairman, president and chief executive officer Dan O. Dinges 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."
The companies are targeting annual general and administrative cost synergies of $100m, beginning within 18 months to two years after closing. The combined business is expected to have a strong capital structure with minimal near-term debt maturities and a low cost of capital. Upon closing, it is expected to have pro forma liquidity of $2.2bn and will target a net debt-to-EBITDAX ratio of less than 1.0x.
"This strong financial foundation and broader scale is expected to provide flexibility and optionality for capital deployment," the companies said.