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Chesapeake Buys Vine

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Chesapeake Energy Corporation is to acquire rival Vine Energy, 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 $2.2bn, based on a 30-day average exchange ratio as of Tuesday’s close, equating to $15.00 per share.

Headquartered in Oklahoma City, Chesapeake’s 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 US.

Vine Energy, 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. The company is listed on the New York Stock Exchange.

Eric Marsh, Vine’s CEO said, “We firmly believe that the quality of our assets, combined with the scale, depth and diversity of Chesapeake’s portfolio, and our shared unwavering commitment to ESG excellence, provides significant opportunity to accelerate the return of capital to our combined shareholders.”

The acquisition will create approximately $50m in average annual savings expected from operating and capital synergies. It is 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 Energy’s position consolidates Haynesville/Bossier adding approximately 370 premium 50% rate of return drilling locations at a $2.50 NYMEX gas price.  The deal also lowers Chesapeake’s pro forma total gathering, processing and transportation expense by approximately 15% and diversifies the company’s midstream partnerships.

Mike Wichterich, Chesapeake’s interim CEO, said: “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.”

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