Oil and gas producer Cimarex Energy (NYSE: XEC) said on Monday it would buy smaller rival Resolute Energy (NYSE: REN) in a deal valued at $1.6 billion, including debt, as it seeks to expand its assets in the shale-rich Permian Basin.
Oil producers have been cementing their positions in the Permian Basin of West Texas and New Mexico, the country's fastest growing oil field.
Earlier this year, Concho Resources (NYSE: CXO) paid $8 billion in stock, or more than $70,000 per acre, for West Texas shale rival RSP Permian (NYSE: RSPP), while Diamondback Energy (NASDAQ: FANG) agreed to buy shale rival Energen in an all-stock deal valued at $9.2 billion.
As part of the offer, Resolute shareholders have the option 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 Cimarex common stock.
For the cash offer of $35 per share, the deal represents about 14.8% premium to Resolute's Friday closing price of $30.49 per share.
The deal, which adds 35,000 barrels of oil equivalent per day (boe/d) to Cimarex's production base, is expected to be completed by the end of the first quarter of 2019, Cimarex Energy said.
To quote CEO Thomas Jorden, "This high-quality, bolt-on asset is tailor-made for 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."
Shares in Cimarex dipped $3.61, or 4.1%, to $85.09, while Resolute shares scaled higher $3.51, or 11.5%, to $34.00
