Chesapeake Energy and Southwestern Energy are combining in a $7.4 billion all-stock deal to form one of the biggest natural gas producers in the U.S. There have been a string of deals in the energy sector, including the nearly $60 billion acquisition of Pioneer Natural Resources by Exxon Mobil and a $53 billion deal between Chevron and Hess.
Quick Read
- Major Merger in Energy Sector: Chesapeake Energy and Southwestern Energy are merging in a $7.4 billion all-stock deal, forming one of the largest natural gas producers in the U.S.
- Context of Other Energy Deals: This merger is part of a series of significant deals in the energy sector, following the acquisitions of Pioneer Natural Resources by Exxon Mobil and Hess by Chevron.
- Share Exchange Details: Southwestern shareholders will receive 0.0867 shares of Chesapeake common stock for each of their shares at the deal’s closing.
- Ownership Distribution: Post-merger, Chesapeake shareholders will own about 60% of the new company, with Southwestern shareholders owning around 40%.
- Valuation and Scale: The deal, valued at $6.69 per share, will result in a company with substantial acreage in Appalachia and Haynesville, Louisiana, significant net production, and extensive inventory.
- CEO’s Statement: Chesapeake CEO Nick Dell’Osso emphasized the growing global demand for energy and the merged company’s role in delivering natural gas efficiently to support a lower carbon future.
- New Facility in Houston: The combined company plans to construct a facility in Houston to supply lower-cost, lower-carbon energy, focusing on domestic and international LNG demand.
- Pending New Company Name: The merged entity will operate under a new name, which has not been disclosed yet.
- Approval and Closing Timeline: The deal has been approved by both companies’ boards and is expected to close in the second quarter, pending approval from shareholders of both Chesapeake and Southwestern.
- Market Reaction: Following the announcement, Southwestern’s shares fell by over 3% in pre-market trading, while Chesapeake’s shares experienced a slight increase.
The Associated Press has the story:
Chesapeake Energy, Southwestern Energy combining in $7.4 billion deal
Newslooks- (AP)
Chesapeake Energy and Southwestern Energy are combining in a $7.4 billion all-stock deal to form one of the biggest natural gas producers in the U.S.
There have been a string of deals in the energy sector, including the nearly $60 billion acquisition of Pioneer Natural Resources by Exxon Mobil and a $53 billion deal between Chevron and Hess.
Southwestern shareholders will receive 0.0867 shares of Chesapeake common stock for each outstanding share of Southwestern common stock at closing.
Chesapeake shareholders will own about 60% of the combined company, while Southwestern shareholders will own approximately 40%.
The transaction, valued at $6.69 per share, will create a company that has large scale acreage in the Appalachia region and Haynesville, Louisiana. It has current net production of approximately 7.9 Bcfe/d with more than 5,000 gross locations and 15 years of inventory.
“The world is short energy and demand for our products is growing, both in the U.S. and overseas,” Chesapeake CEO Nick Dell’Osso said in a prepared statement Thursday. “We will be positioned to deliver more natural gas at a lower cost, accelerating America’s energy reach and fueling a more affordable, reliable, and lower carbon future.”
The combined company will build a facility in Houston to supply lower-cost, lower carbon energy to meet increasing domestic and international liquefied natural gas demand.
The combined company will have a new name, but that has not yet been disclosed.
The boards of both companies have approved the deal, which is expected to close in the second quarter. It still needs approval from Chesapeake and Southwestern shareholders.
Shares of Southwestern, based in Houston, declined more than 3% before the market opened, while shares of Chesapeake, based in Oklahoma City, Oklahoma, rose slightly.
