Southwestern Energy to Acquire GEP Haynesville for $1.85 Billion
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Southwestern Energy Company has entered into a definitive agreement with the third largest private Haynesville producer, GEP Haynesville, under which it will acquire GEP for approximately $1.85 billion. The transaction is expected to close by year-end 2021, subject to customary closing conditions.
“This strategic move positions Southwestern as the largest producer in the Haynesville and enhances our leading presence in the top two premier natural gas basins in the U.S. The company’s increased scale from both a reserves and production perspective is expected to deliver higher margins, enhanced economic returns and improved per-share cash flow metrics. The transaction adds significant high-return locations to our development inventory while expanding access to premium Gulf Coast markets,” said Bill Way, Southwestern Energy president and chief executive officer.
“This transaction reflects the company’s strict adherence to our rigorous acquisition framework and will build on our leading execution in the integration and development of large scale assets. The financing and hedging strategy for the deal aligns with our commitment to financial strength and disciplined enterprise risk management. Combined with our other strategic actions, this transaction further expands the sustainable value being generated for our shareholders,” added Way.
The total consideration of $1.85 billion will be comprised of $1.325 billion in cash and approximately $525 million in Southwestern common shares. The transaction was unanimously approved by each of Southwestern Energy’s and GEP Haynesville’s boards of directors. It is expected to close by year-end 2021, subject to regulatory approvals and customary closing conditions.
Once the transaction is closed, the company will produce approximately 4.7 Bcfe per day. Within Southwestern’s balanced portfolio, approximately 65 percent of its daily natural gas production will be marketed to growing demand centers along the Gulf Coast, positioning the company to efficiently capture natural gas price improvement and expand margins.
Upon closing, Southwestern expects to realize at least $25 million in annual synergies, driven by G&A and other operational savings. The company expects further value enhancing opportunities through operating economies, marketing synergies, contract optimization, and reduced cost of capital given its improved financial and business risk profile.
About Southwestern Energy
Southwestern Energy Company is a leading U.S. producer of natural gas and natural gas liquids focused on responsibly developing large-scale energy assets in the nation’s most prolific shale gas basins. SWN’s returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution.
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