Texas-based Cabot Oil & Gas Corp. shares slipped 2.14% to $16.91 Monday. This proved to be an all-around mixed trading session for the stock market, with the S&P 500 Index SPX rising 0.18% to 4,255.15 and the Dow Jones Industrial Average DJIA falling 0.25% to 34,393.75.Cabot Oil & Gas Corp. closed $4.43 short of its 52-week high ($21.34), which the company reached on August 10th. The stock underperformed when compared to some of its competitors Monday, as EOG Resources Inc. EOG fell 0.68% to $84.86.
Cabot Oil & Gas Corp trading volume (7.7 M) remained 1.5 million below its 50-day average volume of 9.3 M. This was the stock’s second consecutive day of losses. Cabot Oil & Gas and Cimarex Energy Co agreed on a merger on Monday to form a U.S.-wide oil and gas firm with an enterprise value of some $17 billion, a deal analysts termed surprising in a sector recently focused on pure-play models.
Cimarex shares tumbled 7.2% to $66.07, while Cabot’s stock fell 6.9% to $16.59. The deal was a surprise according to at least two analysts, as it brings together Cabot’s gas-rich Marcellus shale positions in the U.S. northeast and Cimarex’s oil-heavy acres in West Texas.
U.S. shale producers have in recent years tended to focus on single geography to optimize cost savings and attract investors, though the pure-play model has not stopped money managers exiting amid poor returns versus other economic sectors and environmental concerns. Cimarex shareholders will get 4.0146 shares of Cabot stock for each share held and will own 50.50% of the combined company.