Chesapeake to buy Southwestern Energy for $7.4 billion

Chesapeake Energy, based in Oklahoma City, has agreed to buy Southwestern Energy (SWN), based in Spring, for $7.4 billion in an all-stock transaction. Chesapeake shareholders will own 60% of the combined company, which will have an enterprise value of $24 billion.

The deal is expected to close in the second quarter of 2024. After it does, the company will have a new name and its head office will be in Oklahoma City. Chesapeake CEO Nick Dell’Osso will be the CEO of the combined company. No other senior executives were named to leadership roles in the combined business.

SWN is primarily a gas producer with assets in the Marcellus and Utica basins in Appalachia and the Haynesville basin. In recent years, Chesapeake has been concentrating on the Marcellus and Haynesville basins and sold its Eagle Ford operations in 2023. The combined company will be the 3rd largest gas producer in the US, behind Chevron and ExxonMobil

SWN was formed in 1929 in Arkansas as a local gas distribution company. The company began exploration and production in 1943 and went public in 1981.  It relocated its head office to Houston in 2001.

Chesapeake expects to save $400 million from the deal. Most of the savings will come from elimination of corporate and regional costs ($125 million). Reduced capital expenditures in drilling and completion will save $130 million.

This is the second big E&P deal announced in the past week. Apache agreed to buy Callon Petroleum for $4.5 billion.

Investor Presentation – Chesapeake SWN

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