Texan oil and gas firms Southwestern Energy, Montage Resources to merge

Southwestern Energy Company has agreed to acquire rival  Texas-based oil and gas Montage Resources Corporation in an all-stock deal.

Montage Resources, which is presently focused on the Utica and Marcellus Shales of Southeast Ohio, West Virginia and North Central Pennsylvania, has nearly 195,000 net effective core undeveloped acres. The company was created following a merger of Eclipse Resources and Blue Ridge Mountain Resources.

Southwestern Energy Company, on the other hand, is focused mainly on the development of natural gas and natural gas liquids in the Marcellus Shale region in Appalachia Basin. Besides, the company is engaged in the exploration of oil and natural gas in other new venture plays across North America.

The combination of the two companies is expected to become the third largest producer in Appalachia Basin with an expected total equivalent production of nearly three Bcfe per day.

Bill Way – Southwestern Energy President and CEO said: “This is an exciting step for Southwestern as we expand our Appalachia footprint with the high-quality assets of Montage. As we have consistently stated, we are firm believers in the benefits of value-creating consolidation.

“This transaction further solidifies the Company’s position as a premier Appalachia operator and provides additional scale and synergies strengthened by our leading operational execution. Consistent with our strategy, this transaction is expected to deliver increased free cash flow, improved returns and long-term value to shareholders.”

As per the deal terms, Montage Resources’ shareholders will exchange each of their shares in the company for 1.8656 shares of Southwestern Energy.

John Reinhart – President and CEO of Montage Resources said: “This transaction creates a compelling opportunity for both Southwestern Energy and Montage Resources shareholders to benefit from the strength of the consolidated company. The combination creates a Company of substantial scale with capabilities to enhance cash flow generation and a strong balance sheet that provides opportunities for enhanced shareholder value creation.

“We appreciate all of the great work by Montage employees in forming a very attractive business that will continue to build upon the success of Southwestern Energy.”

The deal, which is subject to meeting of customary closing conditions, including the approval of the Montage Resources’ shareholders, is expected to close in Q4 2020.