Cabot Oil & Gas Corp. and Cimarex Energy Co. announced May 24 the two publicly traded companies have entered into a definitive merger agreement.
In the all-stock transaction, Cimarex shareholders are set to receive 4.0146 shares of Cabot common stock for each share of Cimarex common stock. The deal values the combined entity at about $17 billion with Cabot shareholders owning 49.5% and Cimarex shareholders owning 50.5% upon close of the deal.
Once combined, the new company, which will go by a fresh name, will be headquartered in Houston.
The in-house team at Houston-based Cabot was led by Deidre L. Shearer, vice president administration and corporate secretary.
The company selected Baker Botts to advise on legal matters and J.P. Morgan Securities on financial matters.
The entirely Houston-based Baker Botts team includes corporate partners Ted Paris and Clint Rancher; special counsel Eileen Boyce and Gerry Morton; and associates Jonathan Kovacs, Rob Cowan and Michael Mazidi.
Also advising were Houston partner Mark Bodron and associates Gabriela Alvarez on benefits; Houston partners Derek Green and Jon Lobb and associate Griffin Peeples on tax matters; and Houston partner Andrew Thomison on finance.
The J.P. Morgan leads were Paschall Tosch and Jonathan Cox.
Cimarex senior vice president – general counsel Francis B. Barron led the transaction for the Denver-based company.
Wachtell, Lipton, Rosen & Katz counseled Cimarex on legal matters, while Tudor, Pickering, Holt & Co. counseled on financial matters.
Partners Dan Neff and Zach Podolsky led the Wachtell team, and Maynard Holt, Paul Perea, formerly of Baker Botts, Chad Michael and Jeff Knupp led the effort for TPH.
The combination is set to bring together Cabot’s 173,000 net acres in the Marcellus Shale and Cimarex’s approximately 560,000 net acres in the Permian and Anadarko basins.
In an analyst note this morning, Simmons Energy wrote that the transaction should be accretive to Cabot on free cash flow yield with a relatively minimal impact to leverage – though it noted that the merger comes as a surprise given the diverse asset bases of the companies and the “only tangible benefit being a $100mm of G&A synergies.”
Yet, the firm did point to a potential bright spot for Cabot.
“Perhaps more importantly, it provides COG with access to the low cost Delaware Basin as development on the Lower Marcellus is winding down to a close thereby implying declining laterals over the next several years before a transition toward Upper Marcellus development,” the note stated.
The transaction has already been unanimously approved by both boards of directors and is expected to close in the fourth quarter, pending regulatory and shareholder approvals.