Chesapeake Energy Merges With Southwestern For $7.4 Billion—Becomes Largest Natural Gas Producer In U.S.

Topline Chesapeake Energy will merge with Southwestern Energy in an all stock deal valued at $7.4 billion, both companies announced Thursday, the latest transaction in the energy industry that would make Chesapeake the largest natural gas producer in the U.S. Key Facts Chesapeake will acquire Southwestern in a deal that values the company at $6.69 per share, with Southwestern shareholders receiving 0.086 shares of Chesapeake stock for each Southwestern share at the deal’s closing, both companies said Thursday.

Chesapeake will acquire 7.9 billion cubic feet equivalent per day from Southwestern’s production in Appalachia’s shale formations and the Haynesville basin in Louisiana. The deal is expected to close in the second quarter of 2024 pending approval by regulators and Chesapeake and Southwestern shareholders, who will own approximately 60% and 40% of the combined firm, respectively, the companies said.

Shares for Southwestern fell slightly (1.89%) to $6.89 in premarket trading on Thursday, while shares for Chesapeake rose 2.82% to $77.18. Surprising Fact If the deal is approved, Chesapeake will become the largest natural gas producer in the U.S. in market value and output, according to Reuters . The combined firm will take the top spot over EQT Corp.

Key Background The expected deal was reported by the Wall Street Journal last week. Chesapeake filed for bankruptcy in 2020 and later emerged from its financial restructuring process the following year, after the company said it expected a free cash flow of more than $2 billion through 2026. In 2021, the company acquired natural gas firm Vine Energy for $1.1 billion and later purchased Chief E&D for $2.6 billion .

Tangent Other energy companies have announced acquisitions over the last year. Exxon Mobil purchased Pioneer Natural Resources for $59.5 billion in October, the largest deal by an oil giant since the late 1990s. Chevron later acquired Hess for $53 billion that same month. In December, Occidental Petroleum acquired CrownRock for nearly $11 billion.

Oil firm APA acquired Callon Petroleum in a $2.6 billion deal last week. Further Reading Chesapeake To Become Top U.S. Natural Gas Producer With $7.4 Billion Deal For Southwestern ( Reuters ) Southwestern, Chesapeake Near $17 Billion Merger ( Wall Street Journal ).