Chesapeake to buy Southwestern for $7.4 billion in all-stock deal
(Reuters) — Chesapeake Energy (NYSE:CHK) said on Thursday it would buy smaller rival Southwestern Energy (NYSE:SWN) in an all-stock transaction valued at $7.4 billion, a deal that would enable the second-largest U.S. natural gas producer to take the top spot.
COMMENTS:
MICHAEL AINGE, RATINGS ANALYST, FITCH RATINGS
«Chesapeake is committed to maintaining an investment grade balance sheet following the acquisition, and an investment grade capital structure is integral to Chesapeake's strategy as it looks to enter into long-term LNG supply agreements for up to 20% of its production, which would allow for higher international pricing.»
«However, international contracts would expose Chesapeake to fixed charges that may be burdensome in periods with low differentials between Henry Hub and overseas LNG markets.»
ZHEN ZHU, MANAGING CONSULTANT, C.H. GUERNSEY AND CO
«From the production side, the merger could lead to more efficient E&P activities and lower production costs overall, contributing to more competitive U.S. gas prices domestically as well as internationally in the longer term.»
«While the merger creates one of the largest independent gas producers in the United States, I am not concerned with the anti-trust implication of it as Chesapeake still needs to match the gas productions from some of the large integrated oil companies.»
ANDREW DITTMAR, DIRECTOR, ENVERUS
«Low and volatile gas prices have been a significant hindrance to gas M&A… Chesapeake's use of stock in the deal, as compared to a cash buyout, helps reduce the commodity price risk for the buyer while allowing the seller to participate in upside.»
NEAL DINGMANN, MANAGING DIRECTOR — ENERGY RESEARCH, TRUIST SECURITIES
«Optimistic that the pro forma company will
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