Odd Coupling: Cimarex And Cabot Join In $17B Merger Of Unlikely Oil And Gas Equals

Odd Coupling: Cimarex And Cabot Join In $17B Merger Of Unlikely Oil And Gas Equals

Drilling in the Permian basin. In an eyebrow-raising deal that runs counter to the recent pure-play trend we've been seeing in oil and gas consolidations, today Cimarex and Cabot Oil & Gas COG announced an all-stock merger. The deal will create a company with an enterprise value of $17 billion and a portfolio of assets split between Cimarex's core 560, 000-acre position in the oily Permian basin of west Texas, and Cabot's core 173, 000 acres in northeastern Pennsylvania's Marcellus shale gas fields. It's very nearly a 50/50 deal. Cimarex (market cap $7. 3 billion) shareholders will get 50. 5% of the new company, which hasn't yet been named. Cabot ($7. 1 billion) gets 49. 5%. Both sides will get five seats on the board. Tying together two wildly disparate operations with zero overlapping businesses was an "unexpected combo," noted William Janela of Credit Suisse in an analyst note this morning. Cabot has been eyed as a potential takeover target for acquisitive EQT EQT , which recently acquired Alta Resources to consolidate in the Marcellus. Meanwhile, Cimarex has long been seen as a favorite takeover target by bigger Permian-focused players looking to gain heft and synergies. That was the rationale