Chesapeake Energy to buy WildHorse in $3.98bn deal
Chesapeake Energy has agreed to buy oil and gas company WildHorse - which has operations in the Eagle Ford Shale and Austin Chalk formations in southeast Texas - in a deal valued at around $3.98bn.
Chesapeake Energy Corp.
$11.85
11:10 26/06/20
Under the terms of the deal, WildHorse shareholders will receive either 5.989 Chesapeake shares or a combination of 5.336 shares and $3 in cash, for each of their shares.
Chesapeake said the deal expands its oil growth platform and accelerates progress toward its strategic and financial goals of enhancing margins, achieving sustainable free cash flow generation, and reducing the net debt to EBITDA ratio.
The company also highlighted $200m to $280m in projected average annual savings, totalling $1bn to $1.5bn by 2023. In addition, the deal 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 in 2020.
Chesapeake's president and chief executive officer Doug Lawler said: "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.
"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."
Upon closing of the deal, which is expected in the first half of next year, Chesapeake shareholders will own around 55% of the combined company, while WildHorse shareholders will own the rest.
At 1230 GMT, Chesapeake shares were down 18% to $3.06.