Southwestern Energy Extends Gas-Buying Spree With $1.85 Billion Deal
Southwestern Energy Extends Gas-Buying Spree With $1.85 Billion Deal
(Bloomberg) -- Southwestern Energy Co. agreed to buy GEP Haynesville LLC for about $1.85 billion in cash and stock to add natural gas production close to Louisiana export hubs.
GEP is a joint venture between billionaire George Bishop’s GeoSouthern Energy Corp. and the credit arm of Blackstone Group LP. The deal adds about 700 million cubic feet of daily gas production in the Haynesvillle shale play, making Southwestern the largest producer in the basin, the company said Thursday in a statement. Talks between Southwestern and GeoSouthern were first reported by Bloomberg.
The agreement brings the value of takeovers in the gas-rich Haynesville Shale to more than $9 billion since mid-2019, according to figures compiled by Bloomberg Intelligence. It’s Southwestern’s second acquisition in the region this year. Chesapeake Energy Corp. and Comstock Resources Inc. have also been recent asset buyers in the area.
The Haynesville, which spans northeast Texas and northwest Louisiana, is the second-biggest shale gas deposit in the U.S. and its proximity to key pipeline and export infrastructure enhances its value to drillers.
The GEP deal comes two months after Spring, Texas-based Southwestern purchased gas producer Indigo Natural Resources for $2.7 billion.
The drilling rights being acquired from GEP fit “pretty nicely in and around” the assets purchased from Indigo, Southwestern Chief Executive Officer William J Way said during a conference call with analysts.
Southwestern shares were down 0.5% at 12:19 p.m. in New York. The stock has advanced almost 70% this year.
Goldman Sachs Group advised Southwestern. JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., RBC and Wells Fargo & Co. were financing advisers and provided $1.33 billion in committed financing for the deal. Intrepid Partners LLC provided a fairness opinion to Southwestern. Credit Suisse Group AG was strategic and financial adviser to GEP. Skadden, Arps, Slate, Meagher & Flom LLP was Southwestern’s legal adviser and Kirkland & Ellis LLP was GEP’s legal adviser.
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