XEC - Cabot Cimarex sink as investors see little benefit to merger deal

Cimarex Energy ([[XEC]] -5.7%) and Cabot Oil & Gas ([[COG]] -5.3%) both plunge following their $17B merger deal that combines two energy producers operating in different regions and extracting different commodities.Downgrading Cimarex to Sector Weight from Overweight in reaction to the news, KeyBanc cites unfavorable terms of the deal, which include a near-zero premium despite Cabot trading at double the enterprise value-to-debt adjusted cash flow multiple in 2022.The deal increases Cimarex's gas cut to 79% from 42%, greatly reducing its exposure to potentially higher oil prices in 2022, dilutes the company's free cash flow per share and complicates what had been a simple Permian free cash flow play.Cabot and Cimarex "also have no acreage overlap, which results in no clear strategic benefit to XEC shareholders and precludes the two companies from realizing any operational synergies," KeyBanc Leo Mariani writes.

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Cabot, Cimarex sink as investors see little benefit to merger deal