Independent natural gas operator, Southwestern Energy Company SWN has entered into a definitive agreement to divest its conventional oil and gas assets to a private buyer. The assets, located in East Texas and the Arkoma Basin, are expected to fetch about $218 million.
The amount generated from the transaction will be utilized to reduce the company's debt. Subject to customary closing conditions, the transaction is expected to close by the second quarter of 2015.
Southwestern has met its requirement for the sum needed from net divestiture as part of the acquisition financing plan. The latest agreement, along with the previously announced divestiture of its northeast Pennsylvania gathering system, helped meet the target.
Southwestern engages in the exploration, development and production of natural gas and crude oil in the United States. The company operates in two segments – Exploration and Production, and Midstream Services. The Exploration and Production segment is involved in the development of the unconventional gas reservoir located on the Arkansas side of the Arkoma Basin, as well as exploration and production activities in Oklahoma, Texas and Pennsylvania. This segment also engages in conventional drilling programs in the Arkansas part of the Arkoma Basin, and conducts development drilling and exploration programs in the Oklahoma portion of the Arkoma Basin, Texas and Pennsylvania. It also operates drilling rigs in the Fayetteville Shale play and in East Texas.
The company is investing heavily in the development of the fertile Marcellus play, where it holds leases for approximately 337,300 net acres. Consequently in May 2014, the company had acquired approximately 162,000 net acres in the Marcellus Shale in Pennsylvania from Chesapeake Energy Corporation. The company expects to spend approximately $705 million to drill 86–88 gross wells in Marcellus. Southwestern has almost doubled its expected gas production to 160–165 gross Bcf in 2013 from that in 2012. This will provide the company exposure to a play with a low cost structure and additional acreage.
Southwestern currently carries a Zacks Rank #3 (Hold). Better-ranked stocks from the oil and gas sector include Valero Energy Partners L.P. VLP, Western Gas Equity Partners, L.P WGP and Hallador Energy Company HNRG. Each of these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment