Southwestern Energy Co. reported Wednesday that it has reached a definitive agreement to acquire Montage Resources in an all-stock transaction, expanding its presence in the Marcellus and Utica shale plays.
“This is an exciting step for Southwestern as we expand our Appalachia footprint with the high-quality assets of Montage,” Bill Way, Southwestern’s president and CEO, remarked in a written statement. “This transaction further solidifies the company’s position as a premier Appalachia operator and provides additional scale and synergies strengthened by our leading operational execution. Consistent with our strategy, this transaction is expected to deliver increased free cash flow, improved returns and long-term value to shareholders.”
Under the deal, Montage shareholders will receive 1.8656 shares of Southwestern for each Montage share based on the three-day average closing share prices of the companies as of Aug. 11, 2020, Southwestern stated. In addition, it stated that it expects the deal, which awaits Montage shareholder approval, to close in the fourth quarter of this year.
- Southwestern noted that acquiring Montage will:
- Generate approximately $100 million in annual free cash flow starting next year, based on current strip pricing
- Create operational efficiencies and roughly $30 million in annual general and administrative savings
- Turn Southwestern into the third-largest producer in Appalachia, with expected total expected production of approximately 3 billion cubic feet equivalent per day
- Offer investment opportunities in “proven, high-return” Marcellus rich and core Utica dry gas windows.
“This transaction creates a compelling opportunity for both Southwestern Energy and Montage Resources shareholders to benefit from the strength of the consolidated company,” commented John Reinhart, Montage’s president and CEO. “The combination creates a company of substantial scale with capabilities to enhance cash flow generation and a strong balance sheet that provides opportunities for enhanced shareholder value creation.”
This map, supplied by Business Wire, shows the companies’ acreage position by county. It presents Southwestern acreage in blue, Montage acreage in orange and overlapping acreage in a striped pattern.
To contact the author, email firstname.lastname@example.org.