Streetview: Chesapeake Energy-Southwestern deal focuses on LNG, Haynesville Basin strength

CHK Oil

12/01/2024 14:57

(Updates)
     ** Chesapeake Energy  CHK.O  on Thursday agreed to buy
Southwestern Energy  SWN.N  in an all-stock transaction valued
at $7.4 bln, a deal that will make it the largest independent
U.S. natural gas producer
        ** CHK up 4.1% at $82.79, while natgas futures  NGc1  up
nearly 8%  NGA/ 
  
    
    LNG, HAYNESVILLE BASIN STRENGTH
    
    ** Mizuho Securities upgrades stock to "buy" from "neutral,
raises PT to $104 from $96; says currently ~22% of pro forma
volumes are sold to LNG corridor
    ** Both companies have shown better well productivity than
Haynesville Basin average since 2021; gives combined entity ~16
years of total inventory - Mizuho
    ** "Target to link ~20% of production to international
pricing. CHK currently has agreements for ~8% of the production
tied to international pricing" - Jefferies 
    ** Focus will be on regulatory approval, which is likely to
be reviewed by FTC but expect it to go through - Jefferies
    ** Gerdes Energy Research ("buy") raises PT on CHK to $123
from $105; combined company should generate ~$10 bln of free
cash flow from 2024 through 2028, if deal closes by mid-year
    ** Citigroup Research upgrades CHK to "buy" from "neutral",
raises PT to $95 from $82; says further consolidation across the
natural gas space is likely
    

 (Reporting by Seher Dareen in Bengaluru)
 ((Seher.Dareen@thomsonreuters.com; If in India call +91 74832
70128, if within U.S. call +1 646 223 8780;))