Appalachian Producer to Enter Haynesville in $2.7B Deal
Southwestern Energy Co. (NYSE: SWN) reported Wednesday that it has agreed to acquire Haynesville Shale producer Indigo Natural Resources, LLC for approximately $2.7 billion.
“This acquisition enhances Southwestern’s position as a leading natural gas producer and aligns with our disciplined strategy to generate free cash flow, enhance our balance sheet, optimize performance, and build scale,” Bill Way, Southwestern’s president and CEO, remarked in a written statement emailed to Rigzone. “Indigo has done a terrific job building its business, and its balance sheet strength, low-cost structure, and high-quality acreage position in the core of the Haynesville play accelerates the delivery of our strategic goals.”
According to Southwestern, Indigo is one of the largest private natural gas producers in the United States and holds core dry gas assets across the Haynesville and Bossier formations in northern Louisiana – accessible to growing Gulf Coast LNG demand. Indigo produces 1 billion cubic feet per day (Bcf/d) of gas and expects to product approximately 1.1 Bcf/d upon closing, anticipated in the fourth quarter of this year, Southwestern added.
The transaction will expand Southwestern portfolio by adding more than 1,000 locations to the firm’s dry gas inventory, the acquiring firm stated. Also, it pointed out the deal will boost its net production to more than 4 billion cubic feet equivalent per day (85% natural gas).
Currently, Southwestern operates primarily in the Marcellus, Utica, and Upper Devonian plays in Ohio, Pennsylvania, and West Virginia, according to the company’s website.
“Our footprint now extends across the two premier natural gas basins in the country and includes top-tier dry gas and liquids rich inventory,” commented Way. “The value of this high-quality inventory is further enhanced by our diverse transportation portfolio providing access to premium markets in the Gulf Coast and within Appalachia.”
Southwestern stated that it plans to run a four-rig drilling program on its newly acquired acreage in 2022, placing 30 to 40 wells to sales. The firm added that it expects to invest at “maintenance capital levels” again next year throughout its operating areas.
The $2.7 billion Indigo transaction will consist of $400 million in cash, roughly $1.6 billion in SWN common stock (approximately 339 million shares), and $700 million in assumed 5.375% senior notes due in 2029, Southwestern noted.
Southwestern and Indigo’s respective boards of directors have already unanimously approved the transaction, which awaits regulatory approvals, closing conditions, and the approval of SWN shareholders, the acquiring company stated.
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