Southwestern to Acquire Montage Resources in All-Stock Deal
NYSE-listed Southwestern Energy Co. has entered into a definitive merger agreement to acquire 100% of the outstanding share capital of Irving, Texas-based E&P company Montage Resources Corp., in an all-stock corporate transaction valued at approximately US$982.2 million on an enterprise value basis.
Under the terms of the agreement, Montage shareholders will receive 1.8656 shares of Southwestern for each Montage share held, valued at US$3.04 per share based on Southwestern’s closing share price on August 11th, the last trading day prior to the announcement of the deal. Adjusting for Montage’s reported debt of ~US$661.9 million and a working capital deficit of ~US$115.9 million (as of 30-Jun-2020), the total implied transaction value is ~US$982.2 million on an enterprise value basis.
Montage is engaged operations in the Appalachian basin, with a primary focus on the Utica and Marcellus shale formations. The company currently holds interests in approximately 324,500 net acres of Appalachian properties across south-eastern Ohio, West Virginia and north-central Pennsylvania, and reported proven reserves of 2,730 billion cubic feet equivalent (Bcfe) as of December 31st, 2019, of which approximately 78% was gas.
The combined entity will be the third-largest producer in Appalachia, with expected daily production of approximately 3.0 Bcfe/d upon completion of the transaction, and total proved reserves of around 15.5 trillion cubic feet equivalent (Tcfe) of gas.
“This is an exciting step for Southwestern as we expand our Appalachia footprint with the high-quality assets of Montage. 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,” said Bill Way, Southwestern’s President & CEO.
Citi and Goldman Sachs are acting as financial advisors to Southwestern on the deal, while Barclays is acting as financial advisor to Montage.
The transaction is expected to close in Q4-2020, subject to customary closing conditions, including the receipt of shareholder approvals.