Chesapeake Energy Corporation and Vine Energy Inc. have entered into a definitive agreement pursuant to which Chesapeake will acquire Vine, an energy company focused on the development of natural gas properties in the over-pressured stacked Haynesville and Mid-Bossier shale plays in Northwest Louisiana. The acquisition is a zero premium transaction valued at approximately $2.2 billion, based on a 30-day average exchange ratio as of Tuesday’s close, equating to $15.00 per share.
Transaction highlights include:
• Vine shareholders will receive fixed consideration of 0.2486 shares of Chesapeake common stock plus $1.20 cash per share of Vine common stock, for total consideration of $15.00 per share, comprising of 92% stock and 8% cash
• Increases Chesapeake’s cumulative five-year free cash flow outlook by approximately $1.5 billion, or 68% of the transaction value, to approximately $6.0 billion, or 66% of pro forma enterprise value
• Immediately accretive to operating cash flow per share, free cash flow(1) per share, free cash flow yield(1), and GHG emissions profile
• 2022 pro forma net debt-to-EBITDAX ratio of 0.6x, preserves Chesapeake’s balance sheet strength
• Approximately $50 million in average annual savings expected from operating and capital synergies
• Expected to increase base dividend by 27% to $1.75 per share post close reflecting cash flow accretion of transaction, subject to Board approval
• Vine position consolidates Haynesville/Bossier adding approximately 370 premium 50% rate of return drilling locations at $2.50 NYMEX gas price
• Lowers Chesapeake’s pro forma total gathering, processing and transportation (GP&T) expense by approximately 15% and diversifies the company’s midstream partnerships
Mike Wichterich, Chesapeake’s Board Chairman and Interim Chief Executive Officer, commented, “This transaction strengthens Chesapeake’s competitive position, meaningfully increasing our free cash flow outlook and deepening our inventory of premium gas locations, while preserving the strength of our balance sheet. By consolidating the Haynesville, Chesapeake has the scale and operating expertise to quickly become the dominant supplier of responsibly sourced gas to premium markets in the Gulf Coast and abroad.”
Headquartered in Oklahoma City, Chesapeake Energy Corporation’s (NASDAQ: CHK) operations are focused on discovering and responsibly developing its large and geographically diverse resource base of unconventional oil and natural gas assets onshore in the United States.
Vine Energy Inc., based in Plano, Texas, is an energy company focused on the development of natural gas properties in the stacked Haynesville and Mid-Bossier shale plays in the Haynesville Basin of Northwest Louisiana.
(Source: Chesapeake Energy)