Cabot Oil & Gas Corp. and Cimarex Energy Co. on Oct. 1 completed the all-stock “merger of equals” forming one of the largest U.S. shale companies with a new moniker—Coterra Energy Inc.

The Coterra name reflects “two companies coming together, combining teams and assets to create a stronger platform to deliver sustainably higher returns,” the companies said in a joint release.

“Today marks the beginning of our journey as one Coterra team,” Thomas E. Jorden, CEO, president and director of Coterra, commented in the release on Oct. 1. “We couldn’t be more excited to bring together our teams and form a new E&P company that is positioned to succeed in the next phase of the shale revolution and beyond.” 

The combined business, to be headquartered in Houston, was previously estimated to have an enterprise value of approximately $17 billion with a top tier asset base across over 700,000 net acres in the Marcellus, Permian and Anadarko shale basins. The combined production base,  as of second-quarter 2021, was approximately 605,000 boe/d, according to the Oct. 1 release.

“With tremendous flexibility between premier oil and natural gas assets and a focus on operating efficiently,” Jorden continued, “driving substantial cash flows and generating capital returns through commodity cycles, Coterra is poised to deliver enhanced value to our shareholders.”

In addition to Jorden, Scott C. Schroeder, formerly CFO of Cabot, joined Coterra upon closing of the merger as executive vice president and CFO, as previously announced. Additional members of Coterra’s senior leadership team announced in the Oct. 1 release include:

  • Stephen P. Bell, executive vice president of business development;
  • Francis B. Barron, senior vice president and general counsel;
  • Christopher H. Clason, senior vice president and chief human resources officer;
  • Steven W. Lindeman, senior vice president of production and operations;
  • Phil L. Stalnaker, senior vice president of Marcellus business unit;
  • Michael D. DeShazer, vice president of business units; and
  • Kevin W. Smith, vice president and CTO.

“We are proud to complete our transaction and launch Coterra, which will build upon the impressive legacies and many strengths of both Cabot and Cimarex,” Dan O. Dinges, executive chairman of Coterra, commented in the release on Oct. 1.

Under the terms of the merger agreement originally announced in May, Cimarex shareholders received 4.0146 shares of Cabot common stock for each share of Cimarex common stock owned. The value of the all-stock merger was pegged by Enverus at roughly $9.25 billion.

At closing, Cimarex shareholders were expected to own approximately 50.5% of the combined company with Cabot shareholders owning the remaining 49.5%. The companies said on Sept. 29 more than 99% of Cabot common shareholders and more than 90% of Cimarex shareholders voted in favor of the merger.

Coterra Outlook

In May, the companies projected a free cash flow outlook of the combined company of approximately $4.7 billion from 2022 to 2024 based on $55/bbl WTI oil prices and $2.75/MMBtu Nymex natural gas prices.

Plans are for Coterra to supplement an annual base dividend of $0.50 per share with a quarterly variable dividend to achieve a target capital return of at least 50% of quarterly free cash flow. The companies are also targeting annual general and administrative cost synergies of $100 million beginning within 18 months to two years following the closing.

Coterra also expects to build on Cabot and Cimarex’s 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.

“Driven by a commitment to operating accountably, sustainably and safely, Coterra will be well positioned to increase returns to shareholders and deliver long-term value for all our stakeholders,” added Dinges, who previously served as chairman, president and CEO of Cabot.

In addition to Dinges and Jorden, Coterra’s 10-member board of directors has equal representation from Cabot and Cimarex and include:

  • Lisa A. Stewart, lead independent director (former Cimarex board member);
  • Dorothy M. Ables, independent director (former Cabot Board member);
  • Robert S. Boswell, independent director (former Cabot Board member);
  • Amanda M. Brock, independent director (former Cabot board member);
  • Paul N. Eckley, independent director (former Cimarex board member);
  • Hans Helmerich, independent director (former Cimarex Board member);
  • Frances M. Vallejo, independent director (former Cimarex board member); and
  • Marcus A. Watts, independent director (former Cabot board member).

J.P. Morgan Securities LLC was financial adviser to Cabot for the transaction and Baker Botts LLP served as its legal counsel. Tudor, Pickering, Holt & Co. was Cimarex’s financial adviser and Wachtell, Lipton, Rosen & Katz is provided legal counsel.

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