Southwestern agrees to buy Marcellus shale properties from Chesapeake
BY SAABIRA CHAUDHURI
HOUSTON -- Southwestern Energy has agreed to buy natural gas properties in Pennsylvania's Marcellus Shale from Chesapeake Energy and its partners for about $93 million, enhancing the energy company's footprint in the region.
The acquisition of about 162,000 net acres is in Susquehanna, Wyoming, Tioga and Sullivan counties. Current net production from the properties is about two million cubic feet per day from 17 gross wells.
When the deal closes, Southwestern will have about 337,000 net acres in the Marcellus Shale.
Southwestern said it will use its revolving credit facility to finance the deal, which will likely close on or around May 15.
Declining natural-gas prices, partly stemming from the U.S. energy industry's success with new exploration techniques such as fracking, weighed on Southwestern's revenue throughout 2012. However, the company's bottom line has been helped by its Fayetteville and Marcellus Shale properties.
In February, Southwestern reported it had swung to a fourth-quarter loss as lower natural-gas prices cost the oil-and-gas company a significant impairment charge, although revenue during the period beat analysts' expectations.
Meanwhile Chesapeake, the country's second-largest gas producer after ExxonMobil, has been hurt by a natural-gas glut that has caused prices to collapse and its revenue to shrink. Like many other energy companies, Chesapeake has been shifting its focus to more profitable liquids-rich plays from natural-gas plays.
In February, Chesapeake agreed to sell a stake in its Mississippi Lime play in northern Oklahoma to Sinopec International Petroleum Exploration & Production Corp. for $1.02 billion in cash.
Shares of Southwestern closed Friday at $35.48 and were inactive in recent premarket trading, while shares of Chesapeake edged down by six cents to $19.19.
Dow Jones Newswires