Independent natural gas operator, Southwestern Energy Company (NYSE:SWN) announced that it has entered into a definitive agreement with Antero Resources Corporation (NYSE:AR) . Per the agreement, Southwestern Energy will sell approximately 55,000 net acres in West Virginia for $450 million. The transaction is expected to close in the third quarter of 2016.
The cash proceeds from the transaction are expected to be used to reduce the principal balance of the company's $750 million term loan due in Nov 2018. As of Mar 31, 2016, the company’s long-term debt was $6.4 billion, which represented a debt-to-capitalization ratio of 84.9%.
The properties to be disposed are located in Doddridge, Harrison, Marion, Monongalia, Pleasants, Ritchie, Tyler and Wetzel Counties and are currently producing from the Marcellus Shale. Net production from this acreage is approximately 14 million cubic feet of gas equivalent per day, primarily from non-operated wells. Proved reserves were 11 billion cubic feet equivalent (Bcfe) as of Dec 31, 2015. The company had no plan to drill on these properties before 2023.
Southwestern Energy Company is an independent energy company whose wholly owned subsidiaries are engaged in natural gas and oil exploration, development and production, natural gas gathering and marketing. For the second quarter of 2016, total production is expected between 210 Bcfe and 215 Bcfe. Full-year 2016 production is estimated at 815–835 Bcfe. Of the total expected production for 2016, the company anticipates approximately 364–371 Bcfe from Fayetteville Shale, about 324–332 Bcfe from Northeast Appalachia and 125–130 Bcfe from Southwest Appalachia.
Zacks Rank & Key Picks
Southwestern Energy currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the broader energy sector are Braskem S.A. (NYSE:BAK) and North Atlantic Drilling Limited (NYSE:NADL) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
SOUTHWESTRN ENE (SWN): Free Stock Analysis Report
BRASKEM SA (BAK): Free Stock Analysis Report
ANTERO RESOURCE (AR): Free Stock Analysis Report
NORTH ATL DRILG (NADL): Free Stock Analysis Report
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