HOUSTON and DENVER, May 24,
2021 /PRNewswire/ -- Cabot Oil & Gas Corporation
("Cabot") (NYSE: COG) and Cimarex Energy Co. ("Cimarex") (NYSE:
XEC) today announced that they have entered into a definitive
agreement whereby the companies will combine in an all-stock merger
of equals. The combination will bring together two industry-leading
operators with top-tier oil and natural gas assets to create a
diversified energy leader that is positioned to drive enhanced free
cash flow generation and returns for investors through market
cycles.
Under the terms of the agreement, which has been unanimously
approved by the Boards of Directors of both companies, Cimarex
shareholders will receive 4.0146 shares of Cabot common stock for
each share of Cimarex common stock owned. The exchange ratio,
together with closing prices for 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
will own approximately 50.5% on a fully diluted basis.
"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,"
Dan O. Dinges, Chairman, President
and CEO of Cabot. "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.
With its premier assets, increased resource diversity and a strong
financial foundation, the company will be well positioned to
deliver long-term value creation for its shareholders and other
stakeholders."
"This transformational merger will combine our top-tier assets
and advance our shared focus on delivering superior returns for
investors," said Thomas E. Jorden,
Chairman, President and CEO of Cimarex. "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. We are aligned on our commitment to ESG
and sustainability and look forward to bringing our talented teams
together to unlock the tremendous potential of this compelling
combination."
Strategic and Financial Benefits of Creating a Free Cash Flow
Focused, Diversified Oil & Gas Producer
- Premier Multi-Basin Exposure Will Enhance Scale, Diversity
and Capital Optionality: With Cabot's approximately 173,000 net
acres in the Marcellus Shale and Cimarex's approximately 560,000
net acres in the Permian and Anadarko basins, the combined business
will have a multi-decade inventory of high-return development
locations in the premier oil and natural gas basins in the United States.
- Attractive and Sustainable Free Cash Flow Profile:
Executing a disciplined capital allocation and reinvestment
strategy, the combined business will be positioned to capitalize on
its high-quality assets and diversification to drive through-cycle
free cash flow generation across a wide range of commodity price
scenarios. The company's low-cost and capital efficient inventory
is expected to support its robust, cumulative free cash flow
outlook of approximately $4.7 billion
of free cash flow from 2022 to 2024 based on $55 per barrel WTI oil prices and $2.75 per MMBtu NYMEX natural gas prices.
- Positioned to Accelerate the Return of Capital to
Shareholders: The combined business will be well
positioned to deliver enhanced capital returns to shareholders
across a full range of market conditions through a multi-faceted
program offering a sustainable base dividend that is positioned to
grow over time, a variable dividend and a special dividend. The new
business is expected to have an annual base dividend of
$0.50 per share (representing a
forward dividend yield of 2.8%), which is paid quarterly, and
plans to supplement the base dividend with a quarterly variable
dividend 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 $0.50 per share special
dividend to all common shareholders of the combined business
promptly after the closing of the transaction.
- Substantial Cost Saving Opportunity: The
companies are targeting annual general and administrative cost
synergies of $100 million beginning
within 18 months to two years following the closing.
- Strong Balance Sheet: The combined business is
expected to have a strong capital structure with minimal near-term
debt maturities and a low cost of capital. Upon closing, the
combined business is anticipated to have pro forma liquidity of
$2.2 billion and will target a net
debt-to-EBITDAX ratio of less than 1.0x. This strong financial
foundation and broader scale is expected to provide flexibility and
optionality for capital deployment.
- Commitment to ESG and Sustainability:
Cabot and Cimarex share commitments to environmental stewardship,
sustainability and strong corporate governance. The combined
business will build on the two companies' ongoing ESG efforts by,
among other things, continuing to link executive compensation to
ESG performance and maintaining strong board oversight of ESG risks
and programs. The combined business is expected to report
sustainability metrics pursuant to SASB and TCFD standards.
Headquarters, Leadership and Governance
The combined business, 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 Chair of the
Board of Directors of the newly combined business and Mr. Jorden
will lead the company as CEO and will serve on the Board of
Directors. Scott Schroeder, Cabot's
current Chief Financial Officer, will serve as CFO of the combined
business. The remainder of the company's leadership team will
include executives from both Cabot and Cimarex.
The Board of Directors of the company will be composed of five
directors from the current Cabot Board of Directors, including Mr.
Dinges, and five directors from the current Cimarex Board of
Directors, including Mr. Jorden.
Timing and Approvals
The transaction is expected to close in the fourth quarter of
2021, subject to regulatory clearance, the approval of Cabot and
Cimarex common shareholders and the satisfaction of other customary
closing conditions.
Both Cabot and Cimarex intend to continue paying base quarterly
cash dividends through 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 can be accessed from the Investor Relations
pages of Cabot's and Cimarex's websites at
https://www.cabotog.com/investor-relations/default.aspx and
https://www.cimarex.com/investor-relations/overview/default.aspx.
Conference Call Information
Dial-In (for callers in
the U.S.): 1-866-367-3053
Dial-In (for callers in Canada):
1-855-669-9657
Intl. Dial-In: 1-412-902-4216
A playback of the call will also be available on the Investor
Relations page of each company's website after the conclusion of
the call.
Advisors
J.P. Morgan Securities LLC is serving as financial advisor to
Cabot and Baker Botts L.L.P. is serving as its legal counsel.
Tudor, Pickering, Holt & Co. is serving as financial advisor to
Cimarex and Wachtell, Lipton, Rosen & Katz is serving as its
legal counsel.
About Cabot Oil & Gas
Cabot Oil & Gas Corporation, headquartered in Houston, Texas is a leading independent
natural gas producer, with its entire resource base located in the
continental United States. For additional information, visit
the Company's homepage at www.cabotog.com.
About Cimarex Energy
Cimarex Energy Co. is an independent oil and gas exploration and
production company with principal operations in the Permian Basin
and Mid-Continent areas of the U.S.
Cautionary Statement Regarding Forward-Looking
Information
This communication contains certain "forward-looking statements"
within the meaning of federal securities laws. Words such as
"anticipates," "believes," "expects," "intends," "plans,"
"outlook," "will," "should," "may" and similar expressions may be
used to identify forward-looking statements. Forward-looking
statements are not statements of historical fact and reflect
Cabot's and Cimarex's current views about future events. Such
forward-looking statements include, but are not limited to,
statements about the benefits of the proposed merger involving
Cabot and Cimarex, including future financial and operating
results; Cabot's and Cimarex's plans, objectives, expectations and
intentions; the expected timing and likelihood of completion of the
transaction; the expected timing and amount of any future
dividends; and other statements that are not historical facts,
including estimates of oil and natural gas reserves and resources,
estimates of future production, assumptions regarding future oil
and natural gas pricing, planned drilling activity, future results
of operations, projected cash flow and liquidity, the achievement
of synergies, business strategy and other plans and objectives for
future operations. No assurances can be given that the
forward-looking statements contained in this communication will
occur as projected and actual results may differ materially from
those projected. Forward-looking statements are based on current
expectations, estimates and assumptions that involve a number of
risks and uncertainties that could cause actual results to differ
materially from those projected. These risks and uncertainties
include, without limitation, the ability to obtain the requisite
Cabot and Cimarex stockholder approvals; the risk that Cabot or
Cimarex may be unable to obtain governmental and regulatory
approvals required for the merger; the risk that an event, change
or other circumstances could give rise to the termination of the
proposed merger; the risk that a condition to closing of the merger
may not be satisfied on a timely basis or at all; the length of
time necessary to close the proposed transaction, which may be
longer than anticipated for various reasons; the risk that the
businesses will not be integrated successfully; the risk that the
cost savings and any other synergies from the transaction may not
be fully realized or may take longer to realize than expected; the
risk that any announcement relating to the proposed transaction
could have adverse effects on the market price of Cabot's common
stock or Cimarex's common stock; the risk of litigation related to
the proposed transaction; the effect of future regulatory or
legislative actions on the companies or the industry in which they
operate, including the risk of new restrictions with respect to
well spacing, hydraulic fracturing, natural gas flaring or other
oil and natural gas development activities; the risk that the
credit ratings of the combined business may be different from what
the companies expect; disruption from the transaction making it
more difficult to maintain relationships with customers, employees
or suppliers; the diversion of management time on merger-related
issues; the volatility in commodity prices for crude oil and
natural gas; the continuing effects of the COVID-19 pandemic and
the impact thereof on Cabot's and Cimarex's businesses, financial
condition and results of operations; actions by, or disputes among
or between, the Organization of Petroleum Exporting Countries and
other producer countries; the presence or recoverability of
estimated reserves; the ability to replace reserves; environmental
risks; drilling and operating risks; exploration and development
risks; competition; the ability of management to execute its plans
to meet its goals; and other risks inherent in Cabot's and
Cimarex's businesses. In addition, the declaration and payment of
any future dividends, whether regular base quarterly dividends,
variable dividends or special dividends following completion of the
proposed transaction, will depend on the combined business'
financial results, cash requirements, future prospects and other
factors deemed relevant by the board of directors of Cabot (as then
constituted). These risks, as well as other risks related to the
proposed transaction, will be described in the registration
statement on Form S-4 and joint proxy statement/prospectus that
will be filed with the SEC in connection with the proposed
transaction. While the list of factors presented here is, and the
list of factors to be presented in the registration statement on
Form S-4 are, considered representative, no such list should be
considered to be a complete statement of all potential risks and
uncertainties. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated. For
additional information about other factors that could cause actual
results to differ materially from those described in the
forward-looking statements, please refer to: (1) Cabot's annual
reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, which are available on Cabot's website at
www.cabotog.com/investor-relations and on the SEC's website at
http://www.sec.gov; and (2) Cimarex's annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K,
which are available on its website at
www.cimarex.com/investor-relations and on the SEC's website at
http://www.sec.gov.
Forward-looking statements are based on the estimates and
opinions of management at the time the statements are made. Except
to the extent required by applicable law, neither Cabot nor Cimarex
undertakes any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only
as of the date hereof.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to buy or sell or the solicitation of an offer to buy or
sell any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made, except by
means of a prospectus meeting the requirements of Section 10 of the
U.S. Securities Act of 1933, as amended.
Additional Information about the Merger and Where to Find
It
In connection with the proposed transaction, Cabot intends to
file with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-4 that will include a joint proxy
statement of Cabot and Cimarex and that also constitutes a
prospectus of Cabot. Each of Cabot and Cimarex may also file other
relevant documents with the SEC regarding the proposed transaction.
This communication is not a substitute for the joint proxy
statement/prospectus or registration statement or any other
document that Cabot or Cimarex may file with the SEC. The
definitive joint proxy statement/prospectus (if and when available)
will be mailed to stockholders of Cabot and Cimarex. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT,
JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS
THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF
AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT CABOT, CIMAREX AND THE PROPOSED
TRANSACTION. Investors and security holders will be able to obtain
free copies of the registration statement and joint proxy
statement/prospectus (if and when available) and other documents
containing important information about Cabot, Cimarex and the
proposed transaction, once such documents are filed with the SEC
through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by Cabot may be obtained
free of charge on Cabot's website at
www.cabotog.com/investor-relations or by contacting Matt Kerin by email at matt.kerin@cabotog.com or
by phone at 281-589-4642. Copies of the documents filed with the
SEC by Cimarex may be obtained free of charge on Cimarex's website
at www.cimarex.com/investor-relations.
Participants in the Solicitation
Cabot, Cimarex and certain of their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information about the directors and executive officers of Cabot,
including a description of their direct or indirect interests, by
security holdings or otherwise, is set forth in Cabot's proxy
statement for its 2021 Annual Meeting of Stockholders, which was
filed with the SEC on March 12, 2021,
and Cabot's Annual Report on Form 10-K for the fiscal year ended
December 31, 2020, which was filed
with the SEC on February 26, 2021.
Information about the directors and executive officers of Cimarex,
including a description of their direct or indirect interests, by
security holdings or otherwise, is set forth in Cimarex's proxy
statement for its 2021 Annual Meeting of Stockholders, which was
filed with the SEC on March 26, 2021,
and Cimarex's Annual Report on Form 10-K for the fiscal year ended
December 31, 2020, which was filed
with the SEC on February 23, 2021.
Other information regarding the participants in the proxy
solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant
materials to be filed with the SEC regarding the proposed
transaction when such materials become available. Investors should
read the joint proxy statement/prospectus carefully when it becomes
available before making any voting or investment decisions. You may
obtain free copies of these documents from Cabot or Cimarex using
the sources indicated above.
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SOURCE Cabot Oil & Gas Corporation; Cimarex Energy Co.