Chesapeake Adds to Southeast Texas Holdings with WildHorse Buy

(Bloomberg) -- Chesapeake Energy’s acquisition of WildHorse Resource Development for about $3.977 billion will add operations in the Eagle Ford Shale and Austin Chalk formations of southeast Texas.

  • Chesapeake would assume WildHorse’s $930 million of net debt, and the company projects the deal improving its 2019 net debt to EBITDA ratio to about 3.6x, based on current strip prices
  • Each WildHorse common shareholder will have the choice of either 5.989 shares of Chesapeake common stock or a combination of 5.336 shares of Chesapeake common stock and $3 in cash,
  • Both boards of directors have unanimously approved the deal
  • Chesapeake expects the deal to double its adjusted oil production by 2020 from stand-alone adjusted 2018 estimates, to 125,000 to 130,000 barrels of oil per day in 2019 & 160,000 to 170,000 bbls of oil per day in 2020, while adding to EBITDA per barrel by about 35% and 50% in those respective periods
  • The cash portion of the deal, worth between $275 million and about $400 million, is expected to be financed through Chesapeake’s revolving credit facility, and deal close is targeted in the first half of 2019
  • Goldman Sachs acted as financial advisor to Chesapeake and Guggenheim Securities acted as financial advisors to WildHorse and its largest shareholder, NGP Energy Capital Management
  • CHK stock down 5.91% pre-market

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