The acquisition is expected to allow Southwestern to build further scale in the Haynesville and increase its exposure to the LNG corridor and growing demand centres along the Gulf Coast
US-based natural gas producer Southwestern Energy Company has signed an agreement to acquire GEP Haynesville for nearly $1.85bn.
GEP Haynesville is engaged in the development of natural gas properties in the stacked Haynesville and Middle Bossier shale plays in North Louisiana.
Bbased in the Woodlands, Texas, it is joint venture formed by the principals of GeoSouthern Haynesville and a private equity firm.
The acquisition is expected to allow Southwestern to build further scale in the Haynesville with nearly 700 million cubic feet (MMcf) per day of production.
It is also anticipated enable the company to increase its exposure to the LNG corridor and growing demand centres along the Gulf Coast.
Besides, Southwestern will have 700 locations across stacked-pay Haynesville and Middle Bossier, following the acquisition.
Southwestern Energy president and CEO Bill Way said: “This strategic move positions Southwestern as the largest producer in the Haynesville and enhances our leading presence in the top two premier natural gas basins in the US.
“The Company’s increased scale from both a reserves and production perspective is expected to deliver higher margins, enhanced economic returns and improved per-share cash flow metrics.
“The transaction adds significant high-return locations to our development inventory while expanding access to premium Gulf Coast markets.”
The acquisition price consists of $1.325bn in cash and approximately $525m in Southwestern common shares.
Upon completion of the transaction, Southwestern will have a total production of 4.7Bcfe per day. The company also expects to realise at least $25m in annual synergies, with the acquisition.
Subject to customary closing conditions, the transaction is expected to be completed by year-end 2021.
Goldman Sachs served as the exclusive strategic advisor to Southwestern in connection with the transaction, while JP Morgan, Bank of America, Citigroup, RBC and Wells Fargo acted as its financing advisors.
Southwestern is a major producer of natural gas and natural gas liquids in the US, with a focus on developing large-scale energy assets in the nation’s most prolific shale gas basins.