Chesapeake Energy Corp. completed its acquisition of Vine Energy Inc. on Nov. 1, making Chesapeake the largest producer in the Haynesville Shale, according to the Oklahoma City-based company.
“We are pleased to integrate the outstanding Vine operations and assets into our portfolio, strengthening our position in the Haynesville Shale with over 900 additional drilling locations, immediately improving our free cash flow profile and accelerating a significant return of capital to our shareholders at a time of favorable natural gas prices,” commented Nick Dell’Osso, Chesapeake’s newly appointed president and CEO, in a company release.
Chesapeake had previously announced the acquisition of Vine in August in what the company called a “zero premium” transaction valued at approximately $2.2 billion. The deal was expected to increase Chesapeake’s Haynesville exposure to 348,000 net acres with pro forma second-quarter net production of 1.58 Bcf/d, according to a research note by Tudor, Pickering, Holt & Co.
Based in Plano, Texas, Vine Energy first entered the Haynesville in 2014 through the acquisition of Royal Dutch Shell Plc’s position by its predecessor, which was backed by private equity firm Blackstone Energy Partners. According to its website, Vine held 227,000 net effective acres in the Haynesville Basin in northwest Louisiana at the time of the announced agreement with Chesapeake.
![Chesapeake Energy Map of Vine Energy Acquisition](/sites/default/files/inline-images/Chesapeake%20Energy%20Map%20of%20Vine%20Energy%20Acquisition.png)
The acquisition of Vine also adds roughly 370 premium drilling locations with greater than a 50% rate of return at $2.50 gas, Chesapeake said in its August release. The company added it expects the deal will be accretive to operating cash flow per share and free cash flow per share, with $50 million in savings projected on operating and capital synergies.
As part of the agreement, Vine stockholders were set to receive fixed consideration of 0.2486 of a share of Chesapeake common stock plus $1.20 cash for each share of Vine common stock issued and outstanding immediately prior to the closing of the merger, with cash to be received in lieu of any fractional shares.
Upon closing, Chesapeake shareholders were projected to own approximately 86% of the combined company with Vine shareholders holding the remaining 14%. Additionally, Chesapeake’s board had approved an increase on the common dividend of 27% to $1.75 per share on expected cash flow accretion, an August company release said.
As a result of the merger, Vine common stock will no longer be listed for trading on the New York Stock Exchange and its reporting obligations under the Securities Exchange Act of 1934 will be suspended.
J.P. Morgan Securities LLC was financial adviser to Chesapeake for the transaction. Latham & Watkins LLP and Richards Layton & Finger served as its legal adviser and DrivePath Advisors was the company’s communications adviser. Citi served as lead financial adviser to Vine and Kirkland & Ellis LLP was its legal adviser. Weil, Gotshal & Manges LLP is Blackstone’s legal advisers. Houlihan Lokey also served as a financial adviser to the Vine board of directors.
Recommended Reading
EIA NatGas Storage Report Comes in at 10 Bcf Above Forecast
2024-08-22 - Most of the additional gas in storage came from the Appalachian Basin. The Midwest added 19 Bcf and the East added 12 Bcf, according to the EIA.
Oil Settles $1 Down After US Job Data Revised Significantly Lower
2024-08-21 - U.S. employers added far fewer jobs than originally reported in the year through March, the Labor Department said on Aug. 21.
US Gasoline Margins Slump on Lackluster Summer Demand
2024-08-21 - Gasoline futures were last down about 2.8% and their premium over West Texas Intermediate crude oil futures shrank to their weakest since Nov. 7, 2023.
Caliche Receives Investment from Sixth Street for Expansion of Storage Facilities
2024-08-20 - The bulk of Sixth Street’s investment is focused on Caliche’s Golden Triangle Storage project in Beaumont, Texas, and its Central Valley Gas Storage in Princeton, California.
One Killed in Offshore Natural Gas Pipeline Explosion in Louisiana
2024-08-20 - An offshore natural gas pipeline that exploded near Venice, Louisiana, on Aug. 17, killing one person, was owned by Whitney Oil and Gas, the U.S. Coast Guard said on Aug. 19.