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August 12, 2021

Chesapeake to purchase Vine Energy in $2.2bn deal

The deal is expected to boost Chesapeake’ five-year free cash flow outlook by about $1.5bn to approximately $6bn.

By Archana Rani

Chesapeake Energy has agreed to acquire US-based natural gas producer Vine Energy in a zero-premium cash-and-stock transaction worth approximately $2.2bn.

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Under the deal, shareholders of Vine Energy will receive 0.2486 shares of Chesapeake common stock and $1.20 cash for each share held in Vine, implying a per share value of $15.

Chesapeake board chairman and Interim CEO Mike Wichterich 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.”

Vine Energy owns assets in the Haynesville and Mid-Bossier shale plays in the Haynesville Basin of north-west Louisiana.

Wichterich added: “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.”

Upon the completion of the deal, Chesapeake shareholders will own approximately 86% stake in the combined company while the remaining 14% stake will be held by Vine shareholders.

The deal is expected to more than double Chesapeake’s gas output from the Haynesville shale field in Louisiana and boost its free cash flow outlook for a five-year period by $1.5bn to approximately $6bn.

It is also expected to generate about average annual savings of $50m for Chesapeake from operating and capital synergies.

Additionally, the acquisition is anticipated to increase Chesapeake’s total production from over 400,000 barrels of oil equivalent per day (boed) to approximately 600,000boed.

Vine chairman, president, and CEO Eric Marsh 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 transaction is planned to be completed in the fourth quarter of this year, subject to receipt of regulatory approvals.

Funds managed by The Blackstone Group, which owns about 70% of outstanding shares of Vine common stock, agreed to vote in favour of the transaction.

In February 2021, Chesapeake emerged from bankruptcy after concluding its restructuring process.

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Free Report
img

2022: So far In Venture Capital

Global investment in 2022 has been majorly dominated by North America, Europe, and Asia Pacific, whereas the Middle East, and South and Central America have recorded low investments comparatively. In light of this, Europe and North America have been identified as the major destinations for Private Equity and Venture Capital (PE/VC) investments.   GlobalData’s whitepaper analyzes which sectors PE/VC firms have been investing in, looking at Technology, Media, and Telecom, with these sectors recording $356 billion and a deal volume of over 10,000 deals in 2022. Healthcare, Financial Services, Business & Consumer Services, and Construction sectors have also seen high investment activity by PE/VC firms, recording a deal value of over $70 billion each.   But what can this mean for you?   Understand how the Deals Database on GlobalData Explorer can be leveraged to:  
  • Track the Aggregate Investment Volumes in PE/VC-Stage firms across geographies and sectors, in addition to viewing the specific deals that drove these volumes
  • Identify the top investors already active in any sector-Geography combinations
  • Assess the Performance of Financial and Legal Advisors, supporting the Dealmaking in any segment of choice (Customizable League tables)
  • Understand what is driving the PE/VC fundraising (Deal Rationale)
  Consult our full report here and optimize your business strategy.
by GlobalData
Enter your details here to receive your free Report.

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