Southwestern Energy Co. announced additional natural gas derivatives that the Spring, Texas-based company said will add financial support for a recent billion-dollar acquisition in the Haynesville Shale.
“Protecting financial strength is one of the core pillars of our strategy,” Bill Way, president and CEO of Southwestern Energy, commented in a company release on Nov. 29.
In early November, Southwestern entered an agreement to acquire GEP Haynesville LLC in a cash-and-stock transaction valued at $1.85 billion. The acquisition of GEP Haynesville, expected to close by year-end, is set to position Southwestern as the largest producer in the Haynesville, a premier natural gas basin with exposure to the LNG corridor and growing demand centers along the U.S. Gulf Coast.
According to the release on Nov. 29, Southwestern secured additional natural gas derivatives implemented by the company and GEP Haynesville to support the repayment of the borrowings contemplated by Southwestern to help finance its pending acquisition of GEP.
The incremental positions are sufficient to cover at least 80% of the expected 2022 to 2024 production from the acquired properties, the company release noted.
“With these incremental and acquisition-specific hedge positions executed at favorable prices,” Way continued in his statement, “we have locked in sufficient cash flow to repay acquisition debt in a timely manner, which aligns with our stated goal to reduce our total debt to a target range of $3.0 billion to $3.5 billion.”
The total consideration of $1.85 billion for the GEP transaction is comprised of $1.325 billion in cash and approximately $525 million in Southwestern common shares.
Upon closing, Southwestern expects to realize at least $25 million in annual synergies, driven by G&A and other operational savings. Further, the company projects pro forma free cash flow of approximately $2.3 billion in 2022-23.
2023-02-06 - At the 2023 NAPE summit, Chesapeake Energy CEO Nick Dell’Osso explained the reasoning behind the company’s Eagle Ford asset divestiture.
2022-11-16 - Here’s a quicklist of oil and gas assets on the market including a Recoil Resources Eagleville Field well package within the Eagle Ford Basin in Atascosa and Wilson counties, Texas.
2022-11-30 - Here’s a quicklist of oil and gas assets on the market including Revolution Resources Midcon divestiture plus Canyon Creek Energy - Arkoma package in Hughes County, Oklahoma.
2023-02-01 - Here’s a quicklist of oil and gas assets on the market including Point Energy Partners Operating LLC's Ward County, Texas, divestitures and Quadrille Energy Co. LLC's of interests in various Oklahoma counties.
2023-01-18 - Chord’s Permian position spans the Midland and Delaware basins and the Central Basin Platform, with most of the company’s assets described as stable operations from conventional reservoirs and waterflood assets with horizontal development potential.