Cimarex shareholders will receive 4.0146 shares of Cabot common stock for each share of Cimarex common stock owned. The pricing reflects an enterprise value for the combined companies of approximately $17 billion.
The deal will combine Cabot’s 173,000 acres in the Marcellus Shale and Cimarex’s 560,000 net acres in the Permian and Anadarko basins. The new company is estimated to have free cash flow of $4.7 billion from 2022 to 2024 based on $55 per barrel WTI oil prices. It will also pay an annual base dividend of 50 cents.
“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 the release.
The combined company is expected to have annual cost synergies of $100 million within two years. The deal is expected to close in the fourth quarter, pending regulatory and shareholder approval.
Shale Oil Stocks M&A Heats Up
Cabot shares fell 1.8% to 17.60 in pre-market trading on the stock market today. Cimarex shares were down 1.7% to 69.99. Among other top shale oil stocks, EOG Resources (EOG) was up 1.5%, and Continental Resources (CLR) was quiet.
There has been a flurry of M&A activity in the shale fields in recent months. In September, Devon Energy (DVN) announced it would buy WPX Energy $2.56 billion to expand its acreage in the Delaware Basin area of the Permian Basin.
In October, Pioneer Natural Resources (PXD) reached a deal to buy Parsley Energy. Also in October, ConocoPhillips (COP), another top Permian Basin producer, agreed to buy Concho Resources to become the largest U.S. independent oil company.
EQT Corp (EQT) announced it would buy Alta Resources earlier this month and Pioneer Natural Resources announced it would buy DoublePoint Energy in April.
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