DENVER, Nov. 19, 2018 /PRNewswire/ — Cimarex (NYSE: XEC) and Resolute Energy Corporation (NYSE: REN) (“Resolute”) today announced that Cimarex has entered into a definitive agreement to acquire Resolute in a cash and stock transaction valued at $35.00 per share, or a total purchase price of approximately $1.6 billion, including Resolute’s long term debt of $710 million, as of September 30, 2018. The transaction was unanimously approved by both companies’ Boards of Directors.
“This high-quality, bolt-on asset is tailor-made for Cimarex,” said Thomas E. Jorden, Chairman, President and CEO of Cimarex. “It is a perfect fit with our existing Reeves County position and will allow us to leverage our knowledge and deliver superior results over a broader asset base for the benefit of both Cimarex and Resolute shareholders. The Resolute assets are expected to generate free cash flow in 2019, basically funding any additional development capital from the start. I want to compliment Rick Betz and the entire Resolute team on the outstanding job that they have done in building these premier Reeves County assets.”
Cimarex will continue to maintain an industry-leading cost structure and strong balance sheet. Cimarex expects the combined companies to generate free cash flow in 2020.
“Today’s transaction further demonstrates the commitment of the Board of Directors and entire management team at Resolute to maximizing long term value for the company’s shareholders,” said Rick Betz, Chief Executive Officer of Resolute. “Our dedicated team of talented professionals has worked tirelessly to position this company to be able to capitalize on the tremendous opportunity this merger represents. The combination of our assets and people with the incredibly strong platform that Tom and his team at Cimarex have built will surely lead to superior results for the shareholders of both companies. We look forward to working through a seamless transition with the Cimarex team.”
Compelling Strategic and Financial Benefits include:
- Acquisition Consistent with Disciplined Investment and Capital Allocation Strategy: Cimarex utilized its disciplined returns-driven approach in this transaction, employing its strong balance sheet to acquire assets with attractive returns that are competitive with those in Cimarex’s existing high-return portfolio.
- Operational Excellence Results in Productivity Gains: Through the application of sound, idea-driven science, Cimarex has shown significant well productivity gains in this area. Cimarex expects to apply these learnings to the acquired properties in the future.
- Increases Scale of Key Delaware Basin Asset: Net acres in Reeves County, Texas, increase 34% with the addition of 21,100 acres. Pro forma Q3 2018 production was over 253 MBOE/d (79,647 bo/d).
- Financially Accretive: Accretive to 2019 key per-share metrics including: earnings and non-GAAP cash flow.
Terms and Financing
Under the terms of the definitive merger agreement, Resolute shareholders will have the right to receive 0.3943 shares of Cimarex common stock, $35 per share in cash, or a combination of $14 per share in cash and 0.2366 share of common stock. The amount of stock and cash is subject to proration for total stock and cash mix of 60% and 40%, respectively.
The consideration represents an approximate 14.8% percent premium to Resolute’s closing price of $30.49 on November 16, 2018. Upon closing of the transaction, Cimarex shareholders will own approximately 94.4% of the combined company, and Resolute shareholders will own approximately 5.6%. The transaction, which is expected to be completed by the end of the first quarter of 2019, is subject to the approval of Resolute shareholders, and the satisfaction of certain regulatory approvals and other customary closing conditions.
The cash portion of the transaction is expected to be funded through a combination of cash on hand (including proceeds from the previously announced sale of assets in Ward County, Texas) and borrowings under Cimarex’s revolving credit facility.
Upon closing, the Board of Directors and executive team of Cimarex will remain unchanged. The resulting capital structure is consistent with Cimarex’s strategy of maintaining a conservative financial position and is expected to have no impact on the company’s investment grade credit rating.
Evercore is acting as exclusive financial advisor to Cimarex, and Akin Gump Strauss Hauer & Feld LLP is acting as legal advisor. Petrie Partners Securities, LLC and Goldman Sachs & Co. LLC are acting as financial advisors to Resolute. Arnold & Porter and Wachtell, Lipton, Rosen & Katz are acting as legal advisors to Resolute.
Conference Call and Webcast
Cimarex will host a conference today at 9:00 a.m. EST (7:00 a.m. MST). The call will be webcast and accessible on the Cimarex website at www.cimarex.com. To join the live, interactive call, please dial 866-367-3053 ten minutes before the scheduled start time (callers in Canada dial 855-669-9657 and international callers dial 412-902-4216).
A replay will be available on the company’s website.
For more details, please refer to the company’s investor presentation available at www.cimarex.com.
Denver-based Cimarex 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. For more information, visit https://www.cimarex.com. The company’s common stock is traded on the NYSE under the ticker symbol “XEC.”
Resolute is an independent oil and gas company focused on the acquisition and development of unconventional oil and gas properties in the Delaware Basin portion of the Permian Basin of west Texas. For more information, visit www.resoluteenergy.com. The company routinely posts important information about the Company under the Investor Relations section of its website. The company’s common stock is traded on the NYSE under the ticker symbol “REN.”