Corrects gas prices in final paragraph.
Southwestern Energy agreed to acquire producer GEP Haynesville for $1.85bn in cash and stock, extending its footprint in the prolific Haynesville natural gas field in east Texas and northern Louisiana.
The deal would give Southwestern another 700mn cf/d (20mn m³/d) of gas production across 120,000 acres in the Haynesville and would boost the company's total output to about 4.7 Bcf/d. The acquisition would be Southwestern's second in the Haynesville. It completed the 2.7bn acquisition of Indigo Natural Resources in September. The GEP Haynesville deal is expected to close by the end of this year.
"This strategic move positions Southwestern as the largest producer in the Haynesville and enhances our leading presence in the top two premier natural gas basins in the US," said Bill Way, Southwestern's chief executive.
Southwestern's operations were concentrated in the Marcellus shale in Pennsylvania and the surrounding states. The Marcellus is the largest US gas field by volume. Large Marcellus producers such as Southwestern and Chesapeake Energy have expanded into the Haynesville in the past year because of its proximity to premium markets and LNG export facilities along the Gulf Coast.
In addition, companies in the Marcellus are facing more challenges to production growth as pipeline operators cope with delays and uncertainty surrounding expansion projects. Southwestern, following the acquisition of GEP, plans to sell 65pc of its gas production on the US Gulf coast.
Southwestern Energy's output surged in the third quarter as the company completed the acquisition of Indigo Natural Resources.
Third quarter output rose to 3.4 Bcf/d of natural gas equivalent (Bcfe/d), up by 42pc from a year earlier. Most of that production, or 81pc, was gas. Production during that quarter included one month of Haynesville output from the Indigo assets.
Southwestern, though, reported a larger net loss during the quarter related to its derivatives contracts as Nymex gas prices rose sharply year over year. Nymex gas prices have rallied to more than $5/mmBtu from the sub-$2/mmBtu levels that dominated the first half of last year as economic activity rebounded from the depths of the Covid-19 pandemic and lifted gas demand.
The company's average realized gas price, including derivatives, was $2.15/mmBtu, while its average realized price excluding those contracts was $3.18/mmBtu. The company reported a net loss of $1.86bn, compared with a year-earlier loss of $593mn.
