Southwestern and Chesapeake Energy ‘close to $17bn merger’

Bengaluru/New York — US natural gas producer Chesapeake Energy and peer Southwestern Energy are nearing a merger that would create a nearly $17bn company, a person familiar with the matter said.

The deal could come together as soon as this week, provided the talks do not fall apart, the source said, requesting anonymity since talks are private.

A potential deal could create a company that would overtake EQT as the largest natural gas-focused exploration and production firm in the US by market value, while shale companies seeking scale and efficiencies are fuelling a rapid consolidation in the energy sector.

Shares of Southwestern and Chesapeake closed up more than 7% and 3%, respectively, after the Wall Street Journal reported the talks earlier in the day. The companies did not immediately respond to requests for comment.

The deal talks come against the backdrop of sluggish US natural gas prices. US natural gas futures ended 2023 with the biggest percentage decline since 2006 due to record production, ample inventories and a mild winter.

Chesapeake has been shedding oil-producing assets to focus on its competence in natural gas since emerging from bankruptcy in 2021.

The two companies are neighbours; most of Southwestern’s production is in Appalachia’s shale formations and the Haynesville basin in Louisiana, where Chesapeake also operates.

Reuters