Dealmaking in the gas space heated up this year as prices jumped on a vaccine-led economic recovery and after the Texas freeze in February, with shale operators pitching scale as a way to reduce duplications and costs.
Top gas producer EQT Corp (EQT.N) in May agreed to buy Appalachian basin rival Alta Resources for $2.93 billion, while Southwestern Energy Co (SWN.N) in June said it will acquire privately held Indigo Natural Resources LLC for about $2.7 billion.
The purchase will help Chesapeake consolidate in the Haynesville basin in Louisiana and add about 370 drilling locations, betting on the field’s proximity to the growing U.S. Gulf Coast export hub.
Vine shareholders will receive 0.2486 shares of Chesapeake and $1.20 in cash for each unit held, implying a per-share value of $15.
The deal, which has an enterprise value of about $2.2 billion, represents a less than 1% premium to Vine’s Tuesday close of $14.88.
It will also immediately add to Chesapeake’s cash flow and generate $50 million in average annual savings.
Funds managed by The Blackstone Group (BX.N) own about 70% of Vine stock and have agreed to vote in favor of the deal, the companies said.
Chesapeake, which on Tuesday raised its full-year forecasts for adjusted income and production after beating second-quarter estimates, expects to increase its base dividend by 27% to $1.75 per share after the deal closes, expected in the fourth quarter. read more
The company plans to operate 10 to 12 rigs in 2022, and expects 2022 oil production to be flat to 2021 fourth-quarter levels at its preliminary capital plans.