HOUSTON, Oct. 16, 2014 /PRNewswire/ -- Southwestern
Energy Company (NYSE: SWN) today announced that it has signed a
purchase and sale agreement with Chesapeake Energy Corporation
(NYSE: CHK) to acquire certain oil and gas assets covering
approximately 413,000 net acres in West
Virginia and southwest Pennsylvania targeting natural gas, natural
gas liquids and crude oil contained in the Upper Devonian,
Marcellus and Utica shales for
approximately $5.375
billion. The acquired assets include 256 operated and
producing Marcellus and Utica
horizontal wells and an additional 179 non-operated or
non-producing Marcellus and Utica
horizontal wells, bringing the total horizontal well count to 435
wells with net production in September
2014 of approximately 336 million cubic feet of gas
equivalent per day (55% gas, 36% NGL and 9% oil). The average
working interest of the operated properties is 67.5%, and the
transaction is subject to consent of the principal co-owner of this
acreage, which also has a 30-day preferential right to purchase.
The transaction is subject to other customary conditions and is
currently expected to close by year-end.
"We are very excited to announce this transaction," remarked
Steve Mueller, President and Chief
Executive Officer of Southwestern Energy. "Southwestern
already has leading positions in two world class projects in our
Fayetteville shale and
northeastern Pennsylvania Marcellus assets and both will continue
delivering highly economic production and reserve growth for many
years. With this acquisition, we will have secured a
complementary third premier acreage position. The early
drilling in both the liquids-rich Marcellus and emerging
Utica plays has confirmed the
resource potential and the economic strength of a long-term
development program. Furthermore, this transaction fits
perfectly with Southwestern's vertical integration strategy and,
through our operational strengths and core competencies, we expect
to drive exceptional future value from these assets."
The largely contiguous acreage position lies almost exclusively
in northern West Virginia in the
counties shown in yellow on the map below. The majority of the
acreage is either held by production or has lease commitments
through 2018 that average less than 20,000 acres per year. Average
net revenue on the leases is approximately 86%.
As part of the transaction, Southwestern will assume a portion
of Chesapeake's firm
transportation and processing capacity commitments. Based on
that capacity and expected future commitments, Southwestern's
preliminary plans are to begin with four to six rigs in 2015 and
increase to 11 rigs by 2017. We estimate that we can drill
for a minimum of 20 years maintaining that 11-rig pace. By the
end of 2017, the reserve mix for the company is estimated to
be approximately one third each for the Fayetteville, northeast Marcellus and the
newly acquired West Virginia and
Pennsylvania properties as
compared to the roughly two thirds for the Fayetteville and one third northeast Marcellus
today.
"Our patience and disciplined approach to investing every dollar
we spend has led to this outstanding opportunity," added
Mueller. "We remain committed to providing long-term value to
our shareholders and believe that part of that value is maintaining
our investment grade profile."
Southwestern has also received financial advisory services and a
commitment from Bank of America, N.A. for a $5.0 billion 364-day senior unsecured bridge term
loan credit facility that, together with the company's existing
revolving credit facility, will be available to fund the
transaction. The company plans to access the debt and equity
capital markets in advance of or following closing, depending on
market conditions, to raise the permanent financing for the
transactions. The company is also considering dispositions of
certain non-strategic assets. The company plans to provide
more details about its permanent financing plans and 2015 budget
later in the fourth quarter closer to the closing date.
Conference Call Today
Southwestern will discuss this transaction today on a conference
call at 10 a.m. Central Time
(11 a.m. Eastern Time). The
toll-free number to call is 877-407-8035 and the
international dial-in number is 201-689-8035.
Southwestern Energy Company is an independent energy company
whose wholly-owned subsidiaries are engaged in natural gas and oil
exploration, development and production, natural gas gathering and
marketing. Additional information on the company can be found at
http://www.swn.com.
All statements, other than historical facts and financial
information, may be deemed to be forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements that address activities, outcomes and other
matters that should or may occur in the future, including,
without limitation, statements regarding the financial position,
business strategy, production and reserve growth and other plans
and objectives for the company's future operations, are
forward-looking statements. Although the company believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ
materially from those in the forward-looking statements. The
company has no obligation and makes no undertaking to publicly
update or revise any forward-looking statements, other than to the
extent set forth below. You should not place undue reliance on
forward-looking statements. They are subject to known and unknown
risks, uncertainties and other factors that may affect the
company's operations, markets, products, services and prices and
cause its actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. In addition to any assumptions and other factors
referred to specifically in connection with forward-looking
statements, risks, uncertainties and factors that could cause the
company's actual results to differ materially from those indicated
in any forward-looking statement include, but are not limited to:
the timing and extent of changes in market conditions and prices
for natural gas and oil (including regional basis differentials);
the ability to receive required consents, waivers and financings to
effect the acquisition from Chesapeake; the company's ability to transport
its production to the most favorable markets or at all; the timing
and extent of the company's success in discovering, developing,
producing and estimating reserves; the economic viability of, and
the company's success in drilling, the company's large acreage
position in the Fayetteville Shale play, overall as well as
relative to other productive shale gas areas; the company's ability
to fund the company's planned capital investments; the impact of
federal, state and local government regulation, including any
legislation relating to hydraulic fracturing, the climate or over
the counter derivatives; the company's ability to determine the
most effective and economic fracture stimulation for the
Fayetteville Shale play and the Marcellus Shale play; the costs and
availability of oil field personnel services and drilling supplies,
raw materials, and equipment and services; the company's future
property acquisition or divestiture activities; increased
competition; the financial impact of accounting regulations and
critical accounting policies; the comparative cost of alternative
fuels; conditions in capital markets, changes in interest rates and
the ability of the company's lenders to provide it with funds as
agreed; credit risk relating to the risk of loss as a result of
non-performance by the company's counterparties and any other
factors listed in the reports the company has filed and may file
with the Securities and Exchange Commission (SEC). For additional
information with respect to certain of these and other factors, see
the reports filed by the company with the SEC. The company
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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SOURCE Southwestern Energy Company