Southwestern Energy Co. SWN and Chesapeake Energy Corp. CHK are reportedly on the verge of a merger, creating a $17 billion entity. The outcome of this merger could result in one of the nation’s largest natural gas producers.
What Happened: The merger between these two energy powerhouses is expected to be finalized as early as next week, according to a report by The Wall Street Journal.
The combined valuation of the new entity is estimated to be around $17 billion, considering Southwestern’s market capitalization at approximately $7.6 billion and Chesapeake’s at $10.3 billion.
The announcement of the potential merger saw Southwestern’s stock rise by over 7%, while Chesapeake’s shares gained over 2%, on Friday.
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If the merger goes through, it will join the ranks of other recent energy industry consolidations, such as the deals by Exxon Mobil Corp. XOM and Chevron Corp. CVX in October, and Occidental Petroleum Corp.’s OXY acquisition of Midland-based CrownRock in December.
In October 2023, Exxon Mobil announced the acquisition of Pioneer Natural Resources Co. PXD in a $59.5 billion all-stock deal. In the same month, Chevron struck a deal to acquire Hess Corp. HES for $53 billion.
Occidental Petroleum announced the acquisition of CrownRock for nearly $12 billion in December 2023.
Why It Matters: The Southwestern-Chesapeake merger news comes in the backdrop of the latter filing for bankruptcy in 2020. During this process, it shed over $7 billion in debt and hived off oil assets in Texas, sharpening its focus on natural gas instead.
If the merger goes through, the merged entity could become the largest gas producer in the U.S. Chesapeake reported production of 3.4 billion cubic feet of natural gas in the September 2023 quarter, while Southwestern reported production of 4 billion cubic feet.
On the other hand, EQT Corp. EQT reported production of 7 billion cubic feet of natural gas during this period.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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