Southwestern to Acquire GEP Haynesville LLC in $1.85 Billion Deal

Southwestern Energy Co. entered an agreement to acquire GEP Haynesville LLC in a cash-and-stock transaction valued at $1.85 billion, as it continues to grow its position in the shale gas play, further expanding exposure to the LNG corridor and growing demand centers along the U.S. Gulf Coast.

GEP, the third largest private Haynesville operator, is a joint venture between GeoSouthern Energy—an E&P founded by billionaire oilman George Bishop—and Blackstone Inc.’s credit arm.

GEP, which had acquired a bulk of its position through a 2015 acquisition from Ovintiv Inc. known as Encana at the time, adds roughly 226,000 net effective acres with estimated net resource potential of 6 Tcfe. With the addition of approximately 700 MMcf/d of production and 700 locations across stacked-pay Haynesville and Middle Bossier from GEP position, Southwestern projects total company production of approximately 4.7 Bcfe/d pro forma of the transaction.

Upon closing, Southwestern expects to realize at least $25 million in annual synergies, driven by G&A and other operational savings. Further, the company projects pro forma free cash flow of approximately $2.3 billion in 2022-23.

The total consideration of $1.85 billion will be comprised of $1.325 billion in cash and approximately $525 million in Southwestern common shares. Southwestern expects to finance the cash consideration “in a manner that affords near-term and efficient debt reduction, extends its maturity runway and lowers its cost of debt,” according to the company release.

The transaction was unanimously approved by each of Southwestern Energy’s and GEP Haynesville’s boards of directors and is expected to close by year-end 2021, subject to regulatory approvals and customary closing conditions.