The deal will help Southwestern Energy increase its net production to more than 4Bcfe per day
Indigo Natural Resources produces 1Bcf per day of gas from the Haynesville and Bossier zones. (Credit: Anita starzycka from Pixabay)
Southwestern Energy has agreed to acquire Texas-based natural gas producer Indigo Natural Resources for about $2.7bn in a cash-cum-stock deal.
The total consideration for the deal will be made up of $400m in cash, around $1.6bn worth shares of Southwestern Energy, and $700m of assumed 5.375% senior notes due 2029.
Indigo Natural Resources a natural gas producer operating in the Haynesville Shale. Claimed to be among the top three private natural gas producers in the US, the company is focused on northern Louisiana.
Currently, the company produces one billion cubic feet (Bcf) per day of gas from its net core dry gas assets in the stacked pay Haynesville and Bossier zones, located near the Gulf Coast LNG corridor.
As of 31 March 2021, and after adjustments made for the recent sale to Diversified Gas & Oil of its non-core assets in the Cotton Valley, Indigo Natural Resources had net debt of $631m.
Southwestern Energy, which is also based in Texas, is engaged in the production of natural gas, oil, and natural gas liquids in the Appalachia Basin. The company has an acreage of over 786,000 net acres.
The company said that the acquisition will complement its existing portfolio and boost its high-return dry gas inventory with more than 1,000 locations.
The deal will help Southwestern Energy increase its net production to more than four billion cubic feet equivalent (Bcfe per day), of which nearly 85% is natural gas.
The company plans to undertake a four-rig programme next year on the acquired acreage to place 30 to 40 wells to sales.
Southwestern Energy president and CEO Bill Way said: “This acquisition enhances Southwestern’s position as a leading natural gas producer and aligns with our disciplined strategy to generate free cash flow, enhance our balance sheet, optimize performance and build scale.
“Indigo has done a terrific job building its business, and its balance sheet strength, low cost structure and high-quality acreage position in the core of the Haynesville play accelerates the delivery of our strategic goals.”
The deal, which is subject to regulatory approvals, Southwestern Energy’s shareholders’ approval, and customary closing conditions, is expected to be wrapped up early in Q4 2021.