Southwestern and Chesapeake Energy agree to merger
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Chesapeake Energy Corporation and Southwestern Energy Company have agreed to merge in an all-stock transaction valued at US$7.2 billion ($11.1 billion), forming one of the largest natural-gas producers in the world.
A press release on the announcement explains that the combined company will have an entreprise value of approximately US$24 billion.
Under the agreement, Southwestern shareholders will receive 0.0867 shares of Chesapeake common stock for each share of Southwestern common stock outstanding at closing. Chesapeake shareholders will own approximately 60% and Southwestern shareholders will own approximately 40% of the combined company, on a fully diluted basis.
Nick Dell'Osso, Chesapeake's president and CEO said in statement: "The world is short energy and demand for our products is growing, both in the U.S. and overseas. 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."
Southwestern and Chesapeake Energy near $25.4b merger
The news: US natural gas companies Chesapeake Energy and Southwestern Energy are in talks to become the country’s largest single producer, according to unnamed sources reported by The Wall Street Journal.
The numbers: A merger would give the two companies a combined valuation of USD17 billion ($25.35 billion). Stock in both companies jumped on the back of the news, with Southwestern and Chesapeake closing up 7.3% and 2.9% respectively on Friday.
The context: Reuters first reported that Chesapeake had approached Southwestern about the acquisition in October 2023, and a final deal could be reached as early as this week.
Chesapeake and Southwestern produced approximately 3.4 billion and 4 billion cubic feet of gas respectively per day in Q3 2023, and the consolidation would push the duo ahead of the US’ current gas leader, EQT, which produced 5.4 billion cubic feet in the same period.
The US oil and gas sector saw a wave of consolidation last year; Occidental Petroleum announced plans to acquire CrownRock for USD12 billion in December, Chevron made a USD53 billion purchase of oil company Hess in October and ExxonMobil bought out Pioneer Natural Resources for USD60 billion the same month.
The source: Wall Street Journal
