Cabot Oil & Gas and Cimarex Energy agree merger deal

US-based Cabot Oil & Gas has agreed to merge with Cimarex Energy to create a combined business valued at almost $17bn.

As per the terms of the all-stock ‘merger of equals’, Cimarex Energy shareholders will be entitled to 4.0146 shares of Cabot Oil & Gas stock for each share held.

Cabot Oil & Gas’ shareholders will hold a stake of around 49.5% in the combined company, while Cimarex Energy’s shareholders will have a holding of roughly 50.5%.

Planned to operate under a new name, the merged business will be based in Houston, Texas.

Cabot Oil & Gas chairman, president, and CEO Dan 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.”

Thomas Jorden, who is currently Cimarex Energy’s chairman, president, and CEO, will become the CEO of the combined entity.

Dinges will be the executive chair of the board of directors of the merged group. The combined group’s board will comprise five directors from the existing Cabot Oil & Gas board including Dinges, as well as five directors from the existing Cimarex board including Jorden.

Jorden said: “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.”

The deal will combine Cabot Oil & Gas’ about 173,000 net acres in northeast Pennsylvania’s portion of the Marcellus Shale with Cimarex’s 560,000 net acres in Permian and Anadarko basins.

Planned to close in the fourth quarter of this year, the deal awaits regulatory clearance and approval from shareholders.