American oil and natural gas company Flywheel Energy has announced the closure on its acquisition of Southwestern Energy’s Fayetteville Shale Business for $1.865bn.
Flywheel Energy, based in Oklahoma City, Oklahoma, is backed by the Kayne Private Energy Income Funds platform.
The acquisition includes 716mmcf/d of net production from 4,033 producing wells across 900,000 net acres and an integrated midstream gathering system with 2,000 miles of gathering pipelines and over 50 compressor stations, all located in central Arkansas.
Flywheel CEO Justin Cope said: “Flywheel Energy is pleased to announce the closing of our second acquisition since the Company’s inception in 2017.
“We believe this is a great step forward as we work to deliver reliable, affordable and plentiful energy while generating attractive risk-adjusted returns for our investors.”
Wells Fargo Bank, along with Citibank, has provided an underwritten debt financing commitment to Flywheel.
Wells Fargo Securities served as lead arranger and bookrunner and Citigroup Global Markets, BMO Capital Markets, Capital One, National Association, Royal Bank of Canada and TD Securities (USA) served as joint lead arrangers and bookrunners on the company’s $1.425bn credit facility.
Wells Fargo Securities also served as financial and technical advisor to Flywheel.
Vinson & Elkins provided legal counsel to Flywheel, Mobius Risk Group served as marketing and derivates advisor and Alvarez & Marsal North America provided transaction due diligence and integration services.
The sale of the Fayetteville exploration, production and midstream assets fetched net proceeds of $1.65bn for Southwestern Energy.
Southwestern Energy will use the proceeds to retire senior notes of $900m, retire outstanding balance under the company’s revolving credit facility, repurchase stock up to the remainder of the company’s $200m stock buyback program and invest in Appalachia assets over the next two years.
Southwestern Energy president and CEO Bill Way said: “This strategic transaction represents a further significant step in the transformation of the Company.
“We’re now better positioned to leverage our leading technical and operating capabilities to drive greater value from our highly attractive and significant asset base in Appalachia, pay down debt and create even greater financial flexibility.”