Moody's changes Cimarex view to positive

Moody's Investors Service said it changed Cimarex Energy Co.'s outlook to positive from stable in response to the company reporting plans to merge with Cabot Oil & Gas Corp. Moody's also affirmed Cimarex's Baa3 senior unsecured rating.

Cimarex and Cabot plan to combine in all-stock merger of equals. Upon completion, Cabot shareholders will own about 49.5% and Cimarex shareholders will own about 50.5% on a fully diluted basis.

"The combination of Cimarex and Cabot will result in a company of compelling size, albeit substantial increase in the proportion of natural gas production, and significantly enhance basin diversity. Both the companies have track record conservative financial polies with low propensity for debt and focus on free cash flow generation. The capital discipline track record of both the companies and their respective conservative capital structures point to similar focus on capital allocation and cash flow, which together contribute to the positive outlook," explained Sreedhar Kona, a Moody's senior analyst, in a press release.

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