Montage Resources shareholders will receive 1.8656 shares of Southwestern for each share held
Southwestern Energy, a US-based natural gas exploration and production company, has signed a definitive merger agreement to acquire Montage Resources.
Under the terms of the agreement, Montage Resources shareholders will receive 1.8656 shares of Southwestern for each share held.
Expected to become the third-largest producer in Appalachia, the combined entity will have total equivalent production of approximately three billions of cubic feet equivalent (Bcfe) per day.
Southwestern Energy president and CEO Bill Way said: “This is an exciting step for Southwestern as we expand our Appalachia footprint with the high-quality assets of Montage.
“This transaction further solidifies the Company’s position as a premier Appalachia operator and provides additional scale and synergies strengthened by our leading operational execution.”
Deal to deliver $100m free cash flow annually for Southwestern
Southwestern Energy expects the deal to deliver approximately $100m of annual free cash flow, lead to synergies of approximately $30m, and improve operational efficiencies while maintaining a strong balance sheet.
Montage Resources president and CEO John Reinhart said: “The combination creates a Company of substantial scale with capabilities to enhance cash flow generation and a strong balance sheet that provides opportunities for enhanced shareholder value creation.”
The transaction also provides the combined entity with investment opportunities in Utica and Marcellus Shales of Southeast Ohio, West Virginia and North Central Pennsylvania.
Planned to be completed in the fourth quarter of 2020, the transaction is subject to customary closing conditions, including the approval of the Montage Resources shareholders.
Meanwhile, Southwestern Energy has commenced an underwritten public offering of 55,000,000 shares of its common stock.
The firm plans to use the proceeds to retire a part of Montage’s issued and outstanding senior notes, that Southwestern will assume upon completion of the deal with Montage.
In 2018, Southwestern Energy divested its Fayetteville Shale Business to Flywheel Energy for $1.865bn.