Oil and gas producers Cabot Oil & Gas Corp and Cimarex Energy Co said on Monday they would combine to form a company with an enterprise value of about $17 billion, the latest in a sector rebounding from one of its worst downturns.
The deal would combine Cabot's about 173,000 net acres in Pennsylvania's Marcellus shale and Cimarex's 560,000 net acres in Texas's Permian and Oklahoma's Anadarko basins.
It follows EQT Corp's deal to buy Appalachian basin rival Alta Resources earlier this month and Pioneer Natural Resources agreeing in April to buy privately-held rival DoublePoint Energy for $6.4 billion.
Cabot and Cimarex expect to save $100 million in annual general and administrative costs, beginning within 18 months to two years following the deal's closing, expected in the fourth quarter.
Cimarex shareholders will receive 4.0146 shares of Cabot common stock for each Cimarex share owned. That implies an offer value of $71.50 per share, a less than 1% premium to Cimarex's Friday close, according to Reuters calculations.
Cabot shareholders will hold about 49.5% and Cimarex shareholders will own about 50.5% of the combined company.
Cabot Chief Executive Officer Dan Dinges will serve as executive chair of the board, while Cimarex boss Thomas Jorden will lead the combined company as CEO.
Scott Schroeder, Cabot's current chief financial officer, will serve as the financial head of the combined business.
The combined company, which will operate under a new name, plans to be headquartered in Houston. Its board will consist of five directors from each company.
(Reporting by Rithika Krishna in Bengaluru; Editing by Aditya Soni and Sriraj Kalluvila)