COTERRA ENERGY INC. Item 1.01 Entry into a Material Definitive Agreement.
OnSeptember 16, 2021 ,Cabot Oil & Gas Corporation ("Cabot") entered into the Second Amendment to the Second Amended and Restated Credit Agreement (the "Second Credit Agreement Amendment"), which amends that certain Second Amended and Restated Credit Agreement, dated as ofApril 22, 2019 , among Cabot,JPMorgan Chase Bank, N.A ., as Administrative Agent, and the other agents and the lenders party thereto (as amended by the First Amendment thereto, the "Credit Agreement", and as further amended by the Second Credit Agreement Amendment, the "Amended Credit Agreement"). As previously disclosed in a Form 8-K filed by Cabot onSeptember 8, 2021 , the Second Credit Agreement Amendment, among other things: (1) removes the provisions of the Credit Agreement which limit borrowings thereunder to an amount not to exceed the borrowing base and certain related provisions; (2) replaces the existing financial maintenance covenants with a covenant requiring maintenance of a ratio of total debt to consolidated EBITDA of not more than 3.0 to 1.0 (the "Credit Agreement Leverage Covenant"); (3) provides that if, in the future, Cabot no longer has any other indebtedness subject to a leverage-based financial maintenance covenant substantially similar to the Credit Agreement Leverage Covenant, then the Credit Agreement Leverage Covenant shall be replaced by a covenant requiring maintenance of a ratio of total debt to total capitalization not to exceed 65% at any time; and (4) provides for changes to certain exceptions to the negative covenants to reflect the completion of the previously announced merger transaction contemplated by the Agreement and Plan of Merger, dated as ofMay 23, 2021 , as amended onJune 29, 2021 , as it may be further amended from time to time (the "Merger Agreement"), among Cabot,Double C Merger Sub, Inc. , a wholly owned subsidiary of Cabot ("Merger Sub"), and Cimarex Energy Co. ("Cimarex"), pursuant to which Merger Sub will merge with and into Cimarex, with Cimarex surviving the merger as a wholly owned subsidiary of Cabot (the "Merger"), including the size of the combined business. After giving effect to the Second Credit Agreement Amendment, at the settlement date of the Exchange Offers (as defined below), there will be$1.5 billion of commitments available under the Amended Credit Agreement, subject to any outstanding borrowings or letters of credit thereunder. The effectiveness of the Second Credit Agreement Amendment is conditioned upon, among other things, (1) the completion of the Merger in accordance with the terms of the Merger Agreement and (2) the issuance by Cabot of the New Cabot Notes (as defined below) and the payment by Cabot of the other Exchange Consideration (as defined below), as applicable, in each case in exchange for Cimarex Notes (as defined below) accepted for exchange pursuant to Cabot's previously announced offer (the "Exchange Offers") to all eligible holders of Cimarex's (a) 4.375% Senior Notes due 2024, (b) 3.90% Senior Notes due 2027 and (c) 4.375% Senior Notes due 2029 (collectively, the "Cimarex Notes") to exchange such Cimarex Notes for (i) up to$2,000,000,000 aggregate amount of new notes issued by Cabot ("New Cabot Notes") and (ii) cash (collectively, the "Exchange Consideration"). The foregoing description of the Second Credit Agreement Amendment does not purport to be complete and is subject to and qualified in its entirety by reference to the Second Credit Agreement Amendment, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and which is incorporated by reference into this Item 1.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.
Item 8.01 Other Events.
Litigation Related to the Merger
In connection with the Merger, two putative stockholders of Cabot have filed separate lawsuits against Cabot and the Cabot board of directors. The lawsuits were filed in theUnited States District Court for the Southern District of New York and are captioned Bushansky v. Cabot, et al., Case No. 1:21-cv-07577, and Miers v. Cabot, et al., Case No. 1:21-cv-07699. Each of those actions is asserted only on behalf of the named plaintiff and alleges violations of Section 14(a), Rule 14a-9, and Section 20(a) of the Securities Exchange Act of 1934, as amended, premised on purported failures to disclose material information related to, among other things, Cabot's financial projections and the financial analysis of Cabot's financial advisor. Each action seeks injunctive relief enjoining the Merger and damages and costs, among other remedies. It is possible that additional, similar complaints may be filed or the complaints described herein may be amended. If this occurs, Cabot does not intend to announce the filing of each additional, similar complaint or any amended complaint unless it contains materially new or different allegations. Although Cabot cannot predict the outcome of or estimate the possible loss or range of loss from these matters, Cabot and the Cabot board of directors believe that the claims asserted against them in the pending actions are without merit.
Supplemental Joint Proxy Statement/Prospectus Disclosure
Cabot does not believe, with respect to the complaints in the two pending
actions described above, that supplemental disclosures are required or necessary
under applicable law. However, in order to avoid nuisance, potential expense and
delay, and to provide additional information to Cabot's stockholders, and
without admitting any liability or wrongdoing, Cabot is electing to make the
supplemental disclosures to the joint proxy statement/prospectus relating to the
Merger (the "Joint Proxy Statement/Prospectus") set forth below for the purpose
of mooting the allegations made in those actions. Cabot denies the allegations
in the pending litigation and denies any violation of applicable law. Cabot
believes that the Joint Proxy Statement/Prospectus disclosed all material
information required to be disclosed therein, and denies that the supplemental
disclosures are material or are otherwise required to be disclosed. Nothing in
the supplemental disclosures should be deemed an admission of the legal
necessity or materiality of any supplemental disclosures under applicable law.
supplement to the JOINT PROXY STATEMENT/PROSPECTUS
This supplemental information should be read in conjunction with the Joint Proxy Statement/Prospectus, which should be read in its entirety. Defined terms used but not defined below have the meanings set forth in the Joint Proxy Statement/Prospectus. All page references in the information below are to pages in the Joint Proxy Statement/Prospectus. Paragraph references used herein refer to the Joint Proxy Statement/Prospectus before any additions or deletions resulting from the supplemental disclosures. The information contained herein speaks only as ofMay 23, 2021 unless the information indicates another date applies. Without admitting in any way that the disclosures below are material or otherwise required by applicable law, Cabot makes the following amended and supplemental disclosures:
1. The section of the Joint Proxy Statement/Prospectus entitled "Opinion of J.P.
hereby amended in its entirety as follows:
Public Trading Multiples
Using publicly available information, J.P. Morgan compared selected financial data of Cabot and Cimarex with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be sufficiently analogous to those engaged in by Cabot and Cimarex, as applicable.
The companies selected by J.P. Morgan with respect to Cabot were as follows:
• EQT Corporation
• Range Resources Corporation
• CNX Resources Corporation
• Southwestern Energy Company
• Antero Resources Corporation
The companies selected by J.P. Morgan with respect to Cimarex were as follows:
• Diamondback Energy, Inc.
• Devon Energy Corporation
• Magnolia Oil & Gas Corporation
• Continental Resources, Inc.
These companies were selected, among other reasons, because they are publicly traded companies with operations, assets and basin presence that, for the purposes of J.P. Morgan's analysis, may be considered similar to those of Cabot and Cimarex, as applicable. However, certain of these companies may have characteristics that are materially different from those of Cabot and Cimarex, as applicable. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the selected companies differently than they would affect Cabot or Cimarex, as applicable. Using publicly available information, J.P. Morgan calculated, for each selected company, the ratio of (1) the company's firm value (which we refer to as "FV") to the company's EBITDAX (calculated as earnings before interest, taxes, depreciation, amortization and exploration expenses) for the years endingDecember 31, 2021 (which we refer to as the "FV/2021E EBITDAX") andDecember 31, 2022 (which we refer to as the "FV/2022E EBITDAX") and (2) the company's equity value (which we refer to as "EV") to the company's operating cash flow (which we refer to as "OCF") for the years endingDecember 31, 2021 (which we refer to as "EV/2021E OCF") andDecember 31, 2022 (which we refer to as "EV/2022E OCF").
The FV/2021E EBITDAX, FV/2022E EBITDAX, EV/2021E OCF and EV/2022E OCF for each selected company with respect to Cabot are as follows:
FV/2021E FV/2022E
EBITDAX EBITDAX EV/2021E OCF EV/2022E OCF
EQT Corporation 7.0 x 6.2 x 5.1 x 4.5 x
Range Resources Corporation 7.0 x 7.0 x 5.4 x 5.1 x
CNX Resources Corporation 5.5 x 5.8 x 4.1 x 4.3 x
Southwestern Energy Company 5.0 x 5.3 x 3.0 x 3.3 x
Antero Resources Corporation 4.6 x 6.2 x 3.0 x 4.4 x
The FV/2021E EBITDAX, FV/2022E EBITDAX, EV/2021E OCF and EV/2022E OCF for each selected company with respect to Cimarex are as follows:
FV/2021E FV/2022E
EBITDAX EBITDAX EV/2021E OCF EV/2022E OCFDiamondback Energy, Inc. 6.4 x 5.4 x 4.4 x 3.7 x Devon Energy Corporation 5.3 x 4.6 x 4.6 x 4.0 x Magnolia Oil & Gas Corporation 5.3 x 5.2 x
4.9 x 4.9 x Continental Resources, Inc. 5.0 x 5.6 x 3.7 x 4.1 x For Cabot, based on the results of this analysis, J.P. Morgan selected multiple reference ranges of 4.50x - 7.00x, 5.25x - 7.00x, 3.00x - 7.00x and 3.25x - 7.00x for Cabot's FV/2021E EBITDAX, FV/2022E EBITDAX, EV/2021E OCF and EV/2022E OCF, respectively. After applying such ranges to the projected EBITDAX and OCF for Cabot for the years endingDecember 31, 2021 andDecember 31, 2022 , the analysis indicated the following ranges of implied per share equity value (rounded to the nearest$0.25 ) for shares of Cabot common stock: Implied Per Share Equity Value (rounded) Low High Cabot FV/2021E EBITDAX $ 10.50 $ 17.50 Cabot FV/2022E EBITDAX $ 14.25 $ 19.75 Cabot EV/2021E OCF $ 7.25 $ 16.75 Cabot EV/2022E OCF $ 8.50 $ 18.25 The ranges of implied per share equity value for Cabot common stock were compared to the closing share price of Cabot common stock of$17.81 onMay 21, 2021 , the trading day immediately preceding the date of the written opinion, datedMay 23, 2021 . For Cimarex, based on the results of this analysis, J.P. Morgan selected multiple reference ranges of 5.00x - 6.50x, 4.75x - 5.75x, 3.75x - 5.25x and 3.75x - 5.00x for Cimarex's FV/2021E EBITDAX, FV/2022E EBITDAX, EV/2021E OCF and EV/2022E OCF, respectively. After applying such ranges to the projected EBITDAX and OCF for Cimarex for the years endingDecember 31, 2021 andDecember 31, 2022 , the analysis indicated the following ranges of implied per share equity value (rounded to the nearest$0.25 ) for shares of Cimarex common stock: Implied Per Share Equity Value (rounded) Low High Cimarex FV/2021E EBITDAX $ 56.25 $ 77.50 Cimarex FV/2022E EBITDAX $ 58.00 $ 73.25
Cimarex EV/2021E OCF $ 51.75 $ 72.50 Cimarex EV/2022E OCF $ 55.75 $ 74.25
The ranges of implied per share equity value for Cimarex common stock were
compared to (1) the closing share price of Cimarex common stock of
Cautionary Statement Regarding Forward-Looking Information
This communication includes forward-looking statements within the meaning of federal securities laws. All statements, other than statements of historical fact, included in this communication are forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the proposed Merger, the Exchange Offers and the commitments available under the Credit Agreement at the settlement date of the Exchange Offers. No assurances can be given that the forward-looking statements contained in this communication will occur as expected and actual results may differ materially from those included in this communication. Forward-looking statements are based on current expectations assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those included in this communication. These risks and uncertainties include, without limitation: the ability to obtain the requisite Cabot and Cimarex stockholder approvals to consummate the Merger; the risk that an event, change or other circumstances could give rise to the termination of the Merger, which would constitute the failure of a condition to the Exchange Offers; and the risk that a condition to closing of the Merger may not be satisfied on a timely basis or at all. Additional important risks, uncertainties and other factors are described in the definitive joint proxy statement/prospectus filed by each of Cabot and Cimarex onAugust 23, 2021 in connection with the proposed Merger, Cabot's Annual Report on Form 10-K for the year endedDecember 31, 2020 and Cabot's Quarterly Reports on Form 10-Q for the quarterly periods endedMarch 31, 2021 andJune 30, 2021 , Current Reports on Form 8-K and other filings Cabot makes with theSecurities and Exchange Commission (the "SEC") and in Cimarex's Annual Report on Form 10-K for the year endedDecember 31, 2020 and Cimarex's Quarterly Reports on Form 10-Q for the quarterly periods endedMarch 31, 2021 andJune 30, 2021 , Current Reports on Form 8-K and other filings Cimarex makes with theSEC . Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Except to the extent required by applicable law, neither Cabot nor Cimarex undertakes any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy . . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 10.1 Second Amendment to Second Amended and Restated Credit Agreement,
dated as of September 16, 2021 , by and among Cabot Oil & Gas
Corporation , the Lenders party thereto and JPMorgan Chase Bank, N.A .,
as Administrative Agent
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)© Edgar Online, source
