Under terms of the deal, Cimarex shareholders will receive 4.0146 shares of Cabot for each share of Cimarex common stock they own. Once finalized, Cabot shareholders will own approximately 49.5% and Cimarex shareholders will own approximately 50.5%.
The deal combines Cabot's roughly 173,000 net acres in the Marcellus Shale and Cimarex's approximately 560,000 net acres in the Permian and Anadarko basins, giving what the companies said will be “a multi-decade inventory of high-return development locations in the premier oil and natural gas basins in the United States.”
"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," Cabot CEO Dan Dinges said in a statement.
The combined company is expected to support cumulative free cash flow of approximately $4.7 billion from 2022 to 2024 based on $55 per barrel WTI oil prices and $2.75 per MMBtu NYMEX natural gas prices.
Shareholders are expected to receive an annual base dividend of 50 cents. Cabot and Cimarex also plan to declare and pay a 50-cent special dividend once the deal closes.
The combined business is expected to have pro-forma liquidity of $2.2 billion. Cost savings are being targeted at $100 million beginning within 18 months to two years after closing. The transaction is expected to close in the fourth quarter of 2021.
Dinges will serve as executive chair of the board of the newly combined business, while Cimarex CEO Thomas Jorden will lead the company as CEO. The remainder of the company's leadership team will include executives from both Cabot and Cimarex.
At last check, shares of Cabot Oil were down 8.31% at $16.32, while shares of Cimarex were down 8.88% at $64.85.