Southwestern makes $1.85bn Haynesville shale purchase
Southwestern Energy Company said November 4 it agreed to pay $1.85bn in cash and shares to acquire GEP Haynesville, a major player in the Louisiana shale basin.
Southwestern said the agreement would bring another 700mn ft3/d of gas production to its portfolio, bringing its overall output to around 4.7bn ft3/d-equivalent. The company will also gain some 2.2 trillion ft3 in equivalent proven reserves, bringing its total to 20.9 trillion ft3.
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Southwestern added that the purchase could expand its exposure to LNG export opportunities along the US Gulf Coast.
Bill Way, the company’s president, said the acquisition positioned Southwestern as the largest producer in the Haynesville play, which is on pace to be the third-largest gas producer in the Lower 48 states this month if federal forecasts prove accurate.
“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,” Way added.
The transaction is due to be closed by the end of the year, and will see Southwestern fork out $1.325bn in cash and issue around $525mn of its common shares.
Southwestern said its net production after the deal is closed would be about 65% natural gas, which would be marketed to the demand centres along the US Gulf Coast. Under current market conditions, the company expects to generate some $1bn in free cash flow in 2022.