Chesapeake Buys WildHorse for Almost $4B
Chesapeake Energy Corporation will acquire WildHorse Resource Development Corporation for close to $4 billion, the companies announced Oct. 30.
The two companies entered into a definitive agreement that will have Chesapeake acquiring Houston-based oil producer WildHorse, which has operations in the Eagle Ford and Austin Chalk. The deal is valued at $3.977 billion which includes $930 million of WildHorse’s debt.
The acquisition is expected to double adjusted oil production by 2020 from stand-alone adjusted 2018 estimates, increasing to a projected range of 125,000 to 130,000 barrels of oil per day in 2019, and 160,000 to 170,000 barrels of oil per day in 2020.
The deal will also see Chesapeake add 420,000 net acres in the Eagle Ford and Austin Chalk – of which 80 to 85 percent are undeveloped. Cost savings are expected to average $200 to $280 million annually, which would total to $1 to $1.5 billion savings by 2023.
“This transaction accelerates Chesapeake’s strategic plan and expands the value-creation opportunities for our shareholders by adding a premier asset at an attractive valuation, significantly boosting oil production, EBITDA margins and cash flow growth, while improving our leverage metrics,” Chesapeake’s CEO Doug Lawler said in a company statement. “The addition of WildHorse, together with our substantial growth profile in the Powder River Basin, advances our transformation into a highly competitive company with a diverse portfolio of high-quality assets, a stronger balance sheet and meaningful oil-growth potential.”
The transaction is expected to close the first half of 2019.
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