Cabot Cimarex Merger

Cabot Cimarex Merger

Postby KGardiner » Mon May 24, 2021 6:46 am

Dan, What do you think of the XEC merger with Cabot, and what that means for existing XEC shareholders this year?
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Re: Cabot Cimarex Merger

Postby Fraser921 » Mon May 24, 2021 7:45 am

conference call happening right now

https://www.cabotog.com/
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Re: Cabot Cimarex Merger

Postby Fraser921 » Mon May 24, 2021 7:48 am

slide deck

https://s26.q4cdn.com/162280839/files/doc_presentations/2021/Cabot-and-Cimarex-Announce-Merger-of-Equals-Presentation.pdf

Questions Who is next?
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Re: Cabot Cimarex Merger

Postby Fraser921 » Mon May 24, 2021 7:58 am

Both names are down pre market 2 to 3 %, XEC side doing all the talking
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Re: Cabot Cimarex Merger

Postby Fraser921 » Mon May 24, 2021 8:29 am

I like to make my own decisions whether to invest in oil and gas.

One clear winners are the executives who's options will vest.
Analysts are pressing them on who benefits. The xec guy came across as defensive
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Re: Cabot Cimarex Merger

Postby Fraser921 » Mon May 24, 2021 8:35 am

The market hates this deal, both names down 8 %!!
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Re: Cabot Cimarex Merger

Postby dan_s » Tue May 25, 2021 1:46 pm

Cabot and Cimarex to merge. Cabot Oil & Gas (NYSE: COG) has agreed to merge with Cimarex Energy (NYSE: XEC), combining two shale drillers in a deal valued at $7.4 billion. It is the latest sign of consolidation in the shale industry, and the combined company will have a major presence in the Marcellus, Permian, and Anadarko basins.

Investors skeptical of new oil deal. Shares of both Cabot and Cimarex fell by 6% on the announcement, an indication of skepticism from investors. Analysts questioned the logic of combining companies from different geographies rather than creating scale in one basin. “This deal comes as a bit of a surprise and may have a less clear story to tell investors,” Andrew Dittmar, an analyst at Enverus, wrote in a statement. “Some investors may wonder why in-basin opportunities weren’t pursued ahead of a surprising multi-basin deal.”
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I do understand the concern, but it is puzzling the the stock prices of both companies went down this much. One of them got a better deal. This will make Cimarex more of a "gasser", but with gas and NGL prices going up that is a good thing. This "NewCo" concept is probably causing some confusion as well. The justifications for an all-stock "merger of equals" is to increase scale, lower expenses and gain market share.

It has been a few years since I built a forecast model for COG. I am updating it now and I hope to post it to the EPG Website late today.

FEAR based selloffs seldom last, so now is the time to dig in and work the numbers. On the surface, XEC is grossly oversold.
Dan Steffens
Energy Prospectus Group
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Re: Cabot Cimarex Merger

Postby KGardiner » Tue May 25, 2021 4:40 pm

Thanks Dan, cost savings on scale makes a lot of sense to me.
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Re: Cabot Cimarex Merger

Postby dan_s » Tue May 25, 2021 6:57 pm

IMO the Wall Street Gang is a "herd". On a deal like this, which they did not see coming, they based their valuations more on the market's initial reaction (in this case a selloff of both companies) than on a detailed analysis.

If you'd like to read BofA's analysis and comments on the deal send me an email and I will forward it to you. BofA's price target of COG is $20, so based on today's XEC share price, it is a good deal for XEC shareholders. But BofA's take on the deal is somewhat negative.
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