Southwestern Energy Selling Fayetteville Shale for $1.865B

Southwestern Energy Selling Fayetteville Shale for $1.865B
Southwestern Energy will be exiting Fayetteville shale through a sale of its business and related midstream assets.

Southwestern Energy Company is selling its Fayetteville Shale business and related midstream assets for $1.865 billion, the company announced Sept. 4.

The company has entered into a definitive agreement with private Flywheel Energy, LLC and under the transaction will exit Fayetteville. Assets include 915,000 net acres; 4,033 operated producing wells; 3.7 Trillion cubic feet (Tcf) of proved reserves as of year-end 2017; anticipated 2019 production of 225-230 Billion cubic feet (Bcf) and associated midstream gathering infrastructure and compression.   

Southwestern president and CEO Bill Way called the transaction “a milestone” in advancing the company’s strategic plan, which was announced earlier this year.

“The sale of Fayetteville represents a pivotal and deliberate step towards fulfilling our promise to reposition Southwestern Energy to capture greater returns from our higher margin Appalachia assets,” Way said in a company statement.

Southwestern expects additional annualized interest and organizational cost reductions between $60 and $75 million as a result of the transaction.

The company also announced:

  • A conditional tender offer for up to $900 million of its Senior Notes
  • A share repurchase program of up to $200 million
  • Allocation of up to $600 million over the next two years, in aggregate, supplementing cash flow to further develop the company’s liquids-rich Appalachia assets and accelerate the path to self-funding

Southwestern also plans to deploy up to six rigs in 2019, which will generate total production growth of 8-12 percent and liquids growth of 15-25 percent. Looking ahead to 2020, the company anticipates total production growth in the mid-teens and liquids growth in the mid-twenties.

The transaction has an effective date of July 1, 2018 and is expected to close in December 2018.


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