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.
Advisors
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.
Presentation
For more details, please refer to the
company's investor presentation available at www.cimarex.com.
About Cimarex
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."
About Resolute
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."
Additional Information and Where to Find It
This
communication does not constitute an offer to buy or sell or the
solicitation of an offer to buy or sell any securities or a
solicitation of any vote or approval. This communication relates to
a proposed business combination between Cimarex and Resolute.
In connection with the proposed transaction, Cimarex intends to
file with the SEC a registration statement on Form S-4 that will
include a proxy statement of Resolute that also constitutes a
prospectus of Cimarex. Each of Cimarex and Resolute also plan to
file other relevant documents with the SEC regarding the proposed
transaction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
U.S. Securities Act of 1933, as amended. This communication is not
intended to and does not constitute an offer to sell or the
solicitation of an offer to buy any securities or the solicitation
of any vote or approval in any jurisdiction pursuant to or in
connection with the proposed transaction or otherwise. Any
definitive proxy statement/prospectus of Resolute will be mailed to
stockholders of Resolute if and when available.
INVESTORS AND SECURITY HOLDERS OF CIMAREX AND RESOLUTE ARE URGED
TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND
OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, CAREFULLY AND IN
THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain free
copies of these documents (if and when available) and other
documents containing important information about Cimarex and
Resolute, once such documents are filed with the SEC through the
website maintained by the SEC at http://www.sec.gov. Copies of the
documents filed with the SEC by Cimarex will be available free of
charge on Cimarex's website at
https://www.cimarex.com/home/default.aspx under the tab "Investor
Relations" and then under the heading "Financial Information."
Copies of the documents filed with the SEC by Resolute will be
available free of charge on Resolute's website at
https://www.resoluteenergy.com/ under the tab "Investors" and then
under the heading "SEC Filings."
Participants in the Solicitation
Cimarex, Resolute and
certain of their respective directors, executive officers and other
persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information
regarding the directors and executive officers of Cimarex is
available in its definitive proxy statement for its 2018 annual
meeting, filed with the SEC on March 30,
2018, and information regarding the directors and executive
officers of Resolute is available in its definitive proxy statement
for its 2018 annual meeting, filed with the SEC on May 18, 2018. Other information regarding the
participants in the proxy solicitations and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC when such materials
become available. Investors should read the proxy
statement/prospectus carefully when it becomes available before
making any voting or investment decisions. You may obtain free
copies of these documents from Cimarex or Resolute using the
sources indicated above.
Cautionary Statements Regarding Forward-Looking
Information
This communication contains certain
"forward-looking statements" within the meaning of federal
securities laws. Words such as "anticipates," "believes,"
"expects," "intends," "will," "should," "may" and similar
expressions may be used to identify forward-looking statements.
Forward-looking statements are not statements of historical fact
and reflect Cimarex's and Resolute's current views about future
events. Such forward-looking statements include, but are not
limited to, statements about the benefits of the proposed merger
involving Cimarex and Resolute, including future financial and
operating results, Cimarex's and Resolute's plans, objectives,
expectations and intentions, the expected timing and likelihood of
completion of the transaction, and other statements that are not
historical facts, including estimates of oil and natural gas
reserves and resources, estimates of future production, assumptions
regarding future oil and natural gas pricing, planned drilling
activity, future results of operations, projected cash flow and
liquidity, business strategy and other plans and objectives for
future operations. No assurances can be given that the
forward-looking statements contained in this communication will
occur as projected and actual results may differ materially from
those projected. Forward-looking statements are based on current
expectations, estimates and assumptions that involve a number of
risks and uncertainties that could cause actual results to differ
materially from those projected. These risks and uncertainties
include, without limitation, the ability to obtain the requisite
Resolute stockholder approval; the risk that Resolute or Cimarex
may be unable to obtain governmental and regulatory approvals
required for the merger, or required governmental and regulatory
approvals may delay the merger or result in the imposition of
conditions that could cause the parties to abandon the merger, the
risk that an event, change or other circumstances could give rise
to the termination of the proposed merger, the risk that a
condition to closing of the merger may not be satisfied, the timing
to consummate the proposed merger, the risk that the businesses
will not be integrated successfully, the risk that the cost savings
and any other synergies from the transaction may not be fully
realized or may take longer to realize than expected, the risk that
any announcement relating to the proposed transaction could have
adverse effects on the market price of Cimarex's common stock or
Resolute's common stock, the risk of litigation related to the
proposed transaction, disruption from the transaction making it
more difficult to maintain relationships with customers, employees
or suppliers, the diversion of management time on merger-related
issues, the volatility in commodity prices for crude oil and
natural gas, the presence or recoverability of estimated reserves,
the ability to replace reserves, environmental risks, drilling and
operating risks, exploration and development risks, competition,
government regulation or other actions, the ability of management
to execute its plans to meet its goals and other risks inherent in
Cimarex's and Resolute's businesses.
All such factors are difficult to predict and are beyond
Cimarex's or Resolute's control, including those detailed in
Cimarex's annual reports on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K that are available on its
website at https://www.cimarex.com and on the SEC's website at
http://www.sec.gov, and those detailed in Resolute's annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K that are available on Resolute's website at
https://www.resoluteenergy.com/ and on the SEC's website at
http://www.sec.gov.
Forward-looking statements are based on the estimates and
opinions of management at the time the statements are made. Cimarex
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date
hereof.
Non-GAAP Measures
This communication also
contains certain historical and forward-looking non-GAAP measures
of financial performance that management believes are good tools
for internal use and the investment community in evaluating
Cimarex's overall financial performance. These non-GAAP measures
are broadly used to value and compare companies in the exploration
and production industry.
Certain measures in this release do not have any standardized
meaning as prescribed by U.S. GAAP and, therefore, are considered
non-GAAP measures. These measures may not be comparable to similar
measures presented by other companies and should not be viewed as a
substitute for measures reported under U.S. GAAP.
This news release contains references
to non-GAAP measures as follows:
- Non-GAAP Cash Flow, Non-GAAP Cash Flow Per Share
(CFPS) and Free Cash Flow – Non-GAAP Cash Flow (or
Cash Flow) is defined as cash from (used in) operating activities
excluding net change in other assets and liabilities and working
capital. Non-GAAP CFPS is Non-GAAP Cash Flow divided by the
weighted average number of common shares outstanding. Free Cash
Flow is Non-GAAP Cash Flow in excess of capital expenditures,
excluding net acquisitions and divestitures. Management believes
these measures are useful to the company and its investors as a
measure of operating and financial performance across periods and
against other companies in the industry and are an indication of
the company's ability to generate cash to finance capital programs,
to service debt and to meet other financial obligations. These
measures may be used, along with other measures, in the calculation
of certain performance targets for the company's management and
employees.
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SOURCE Cimarex Energy Co.