Cimarex Energy announced that it completed its acquisition of Resolute Energy Corporation on March 1, 2019.

4March - Cimerex

Image: Cimarex completes acquisition of Resolute Energy. Photo: Courtesy of rawpixel on Unsplash.

Resolute stockholders were able to elect to receive all cash, all stock or a combination of the two, subject to proration, so that the aggregate merger consideration consisted of no more than 60 percent shares of Cimarex Common Stock and 40 percent cash, based on the closing sale price for shares of Cimarex Common Stock on November 16, 2018.

Following proration, Cimarex issued approximately 5.7 million shares of Cimarex Common Stock and paid $325.6 million in cash to former holders of Resolute Common Stock and Resolute Equity Awards. At closing the total amount of funds necessary to pay the cash portion of the merger consideration, pay transaction fees and expenses and repay in full the amount outstanding under Resolute’s revolving credit facility was approximately $615 million, which Cimarex funded with cash on hand.  In connection with the merger and concurrently with the closing, Cimarex also deposited funds sufficient to redeem any $600 million 8.50% Senior Notes of Resolute outstanding on April 1, 2019, using cash on hand and borrowings under Cimarex’s revolving credit facility, satisfying and discharging the indenture governing the 8.50% Senior Notes.  As of March 1, 2019, we had $525 million in borrowings outstanding under our revolving credit facility, leaving an unused borrowing availability of $722.5 million.

Tom Jorden, Chairman and CEO of Cimarex stated, “We are ready to get to work on the high-quality assets we acquired from Resolute and are commencing completion operations on wells on the acquired acreage in the next few days.”  He went on to say, “Cimarex is committed to cash flow neutrality in 2019, including payment of our common stock dividend.  We can achieve this at a $52.50 NYMEX oil price and grow oil production.”

In our recently provided 2019 production guidance, Cimarex assumed a contribution from the Resolute assets for the month of March of 28,000 barrels of oil equivalent per day (including 12,000 barrels of oil per day).  This estimate takes into account volumes that are expected to be shut in to accommodate nearby completion operations.  Cimarex estimates combined year over year production growth of 18 percent at the midpoint of guidance, with oil expected to grow 23 percent at the midpoint.

Source: Company Press Release.