Two Us Energy Companies Merge in All-Stock Transaction Valued at $7.4 Billion

Two-Us-based energy firms – Chesapeake Energy Corporation and Southwestern Energy Company – on Thursday entered into an agreement to merge in an all-stock transaction valued at $7.4 billion, or $6.69 per share, based on Chesapeake’s closing price on 10 January 2024. The deal is targeted to close in the second quarter of 2024.

Under the terms of the agreement, Southwestern shareholders will receive 0.0867 shares of Chesapeake common stock for each share of Southwestern common stock outstanding at closing.

The combination will create a premier energy company underpinned by a leading natural gas portfolio adjacent to the highest demand markets, premium inventory, resilient free cash flow, and an Investment Grade quality balance sheet.

The combined company, which will assume a new name at closing, will be uniquely positioned to deliver affordable, lower carbon energy to meet growing domestic and international demand with significant, sustainable cash returns to shareholders through cycles.

The merger will create a global platform in Houston to maximise value of the combined company’s scale of production, investment grade quality capital structure and 100% certified Responsibly Sourced Gas to supply lower-cost, lower carbon energy to meet increasing domestic and international LNG demand.

 The new company will maintain its low natural gas emissions profile, commitment to achieving net zero Scope 1 and 2 GHG emissions by 2035, transparent disclosure on measurable targets, investment in low-carbon solutions, and social and governance excellence.

Merger Beneficial

Nick Dell’Osso, Chesapeake’s President and CEO, said that this combination redefines the natural gas producer, forming the first US based independent that can compete on an international scale.

He said that the merger will create a deep inventory of advantaged assets adjacent to high demand markets, allowing for the application of proven operational practices and the power of an Investment Grade quality balance sheet to drive significant synergies benefiting energy consumers and shareholders alike.

“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 fuelling a more affordable, reliable, and lower carbon future,” he said.

Southwestern President and CEO, Bill Way said that the two companies can drive improved margins and returns from their complementary portfolios through enhanced scale, capital allocation flexibility, and access to premium markets to supply growing global natural gas demand.

“Most importantly, both sets of shareholders are able to participate in the substantial value creation and future growth opportunities of the combined company, with one of the top shareholder return frameworks in the sector,” he added.

About the Companies

Headquartered in Oklahoma City, Chesapeake Energy Corporation is powered by dedicated and innovative employees who are focused on discovering and responsibly developing leading positions in top U.S. oil and gas plays. With a goal to achieve net zero GHG emissions by 2035, Chesapeake is committed to safely answering the call for affordable, reliable, lower carbon energy. The Texas based Southwestern Energy Company is a leading US producer and marketer of natural gas and natural gas liquids focused on developing large-scale energy assets in the nation’s most prolific shale gas basins.