Shale Drillers Baffle Analysts With $7.4 Billion Merger

Shale investors have been demanding more consolidation in the U.S. oil patch. But not exactly a deal like this one.

The merger of Cabot Oil & Gas Corp. with Cimarex Energy Co. announced Monday has confounded investors and analysts, leaving them to question the logic behind a tie-up that the companies say will increase diversification. Cimarex is mostly an oil explorer in Texas and Oklahoma, while Cabot is focused on natural gas drilling in the Marcellus shale basin in Appalachia.

Although the two companies are following a path blazed by other shale explorers of late by clinching a deal involving ...