Cabot Oil & Gas (COG) and Cimarex Energy (XEC) join forces for a peer-to-peer merger

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Cabot Oil & Gas Corporation (NYSE: COG) and Cimarex Energy Co. (NYSE: XEC) announced today that they have reached a definitive agreement under which the companies will combine in a fully peer-to-peer merger. in actions. The combination will bring together two leading operators with leading oil and gas assets to create a diversified energy leader who is positioned to generate better free cash flow generation and returns for investors throughout market cycles. .

Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies, Cimarex shareholders will receive 4.0146 Cabot common shares for each share of Cimarex common stock held. The exchange ratio, along with the closing prices of Cabot and Cimarex on May 21, 2021, reflects an enterprise value for the combined companies of approximately $ 17 billion. Upon completion of the transaction, Cabot shareholders will own approximately 49.5% and Cimarex shareholders approximately 50.5% on a fully diluted basis.

“The combination of Cabot and Cimarex will create a diversified, free cash flow focused energy company with the scale, inventory and financial strength to thrive through commodity price cycles,” Dan O. Dinges, President, President and CEO of Cabot. “The combined business will be overseen by an experienced board of directors and a management team that is committed to a prudent strategy based on disciplined capital investments, strong generation of free cash flow and increasing returns to shareholders. . With its world-class assets, an increased diversity of resources and a strong financial base, the company will be well positioned to create long-term value for its shareholders and other stakeholders. “

“This transformational merger will combine our leading assets and advance our common goal of delivering superior returns to investors,” said Thomas E. Jorden, President and CEO of Cimarex. “We are building an even more resilient platform with greater financial strength to generate sustainable returns on and on capital throughout the cycle. We view the diversification of commodities, geography and assets as strategic advantages that will generate more resilient and long-term free cash flow. long-term value creation. We are aligned with our commitment to ESG and sustainability and look forward to bringing together our talented teams to unlock the enormous potential of this compelling combination. “

Strategic and financial benefits of creating a diversified, free cash flow focused oil and gas producer

  • The Premier Multi-Basin Exhibit will enhance scale, diversity, and optional capital: With approximately 173,000 net acres of Cabot in the Marcellus Shale and around 560,000 net acres of Cimarex in the Permian and Anadarko basins, the Combined company will have an inventory of decades back from development sites in the major oil and gas basins of the United States.
  • Attractive and Sustainable Free Cash Flow Profile: By executing a disciplined strategy of capital allocation and reinvestment, the Combined Business will be positioned to capitalize on its high quality assets and diversification to generate free cash flow throughout. cycle across a wide range of commodity price scenarios. The company’s low-cost, capital-efficient inventories are expected to support its strong cumulative free cash flow outlook of approximately $ 4.7 billion free cash flow from 2022 to 2024, based on WTI oil prices of $ 55 per barrel and $ 2.75 per MMBtu NYMEX natural gas prices.
  • Positioned to accelerate return of capital to shareholders: The combined business will be well positioned to deliver enhanced returns on capital to shareholders under a full range of market conditions through a multi-faceted program providing a sustainable core dividend that is positioned to grow over time, a variable dividend and a special dividend. The new company is expected to have an annual base dividend of $ 0.50 per share (which represents a forward dividend yield of 2.8%), which is paid quarterly, and plans to supplement the base dividend with a dividend. Quarterly variable to achieve a target capital return of at least 50% of quarterly free cash flow, with the first payment expected in the first quarter of 2022. The combined business also plans to declare and pay a special dividend of 0.50 USD per share to all common shareholders of the combined company promptly after the closing of the transaction.
  • Substantial Savings Opportunity: The companies are targeting annual general and administrative cost synergies of $ 100 million from 18 months to two years after closing.
  • Strong Balance Sheet: The combined business is expected to have a solid capital structure with minimum short-term debt maturities and a low cost of capital. At closing, the combined business is expected to have pro forma liquidity of $ 2.2 billion and will aim for a net debt to EBITDAX ratio of less than 1.0x. This strong financial base and larger scale are expected to provide flexibility and discretion for the deployment of capital.
  • Commitment to ESG and Sustainability: Cabot and Cimarex share commitments to environmental stewardship, sustainability and strong corporate governance. The combined activity will build on the continued ESG efforts of both companies, including continuing to link executive compensation to ESG performance and maintaining rigorous board oversight of ESG risks and programs. The combined company is expected to publish sustainability indicators in accordance with SASB and TCFD standards.

Headquarters, leadership and governance

The combined company, which will operate under a new name, plans to be headquartered in Houston and maintain its regional offices.

Upon closing, Mr. Dinges will serve as executive chairman of the board of the newly merged company and Mr. Jorden will lead the company as CEO and serve on the board of directors. Scott Schroeder, current CFO of Cabot, will serve as CFO of the combined company. The remainder of the company’s management team will include executives from Cabot and Cimarex.

The board of directors of the company will be composed of five directors from the current board of directors of Cabot, including Mr. Dinges, and five directors from the current board of directors of Cimarex, including Mr. Jorden.

Schedule and approvals

The transaction is expected to close in the fourth quarter of 2021, subject to regulatory clearance, the approval of common shareholders of Cabot and Cimarex and the satisfaction of other customary closing conditions.

Cabot and Cimarex both intend to continue to pay quarterly cash dividends on a basis until closing.

Joint investor call

Cabot and Cimarex will hold an investor conference call and webcast at 8:30 am ET / 6:30 am MT to discuss the details of the transaction. The event is accessible from the Investor Relations pages of the Cabot and Cimarex websites at and

Conference Call Information Incoming call (for callers in the United States): 1-866-367-3053 Incoming call (for callers in Canada): 1-855-669-9657 Intl. Incoming call: 1-412-902-4216

A reading of the call will also be available on the Investor Relations page of each company’s website after the call is concluded.


JP Morgan Securities LLC is acting as financial advisor to Cabot and Baker Botts LLP is acting as legal advisor. Tudor, Pickering, Holt & Co. acts as financial advisor to Cimarex and Wachtell, Lipton, Rosen & Katz acts as legal advisor.

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