Southwestern Energy spends $5.38 billion for drilling assets in Pennsylvania and West Virginia

HOUSTON – Southwestern Energy will spend about $5.38 billion to acquire drilling assets in West Virginia and southwest Pennsylvania now owned by Chesapeake Energy.

The acquisition includes 256 operated and producing horizontal wells in the Marcellus and Utica shale regions, and an additional 179 non-operated or non-producing wells in the same areas.

Southwestern said Thursday that by 2017’s end it estimates the reserve mix to be approximately one third each for the Fayetteville, northeast Marcellus and the newly acquired West Virginia and Pennsylvania properties. That compares with the roughly two thirds for the Fayetteville and one third northeast Marcellus currently in the reserve mix.

Southwestern will also assume part of the transportation and processing capacity commitments from Chesapeake Energy Corp.

Southwestern Energy Co. said that it has a commitment from Bank of America for a $5 billion senior unsecured bridge term loan credit facility that, combined with the company’s existing revolving credit facility, will be available to fund the deal. The Houston company is also considering the sale of some non-core assets.

The acquisition, expected to close by year’s end, is subject to consent of the principal co-owner of the acreage, which also has a 30-day preferential right to purchase.

Shares of Chesapeake Energy Corp., based in Oklahoma City, rose $1.28, or 7.2 per cent, to $19.05 in premarket trading.