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Southwestern Energy to pay $2.7 billion for privately held natural gas producer Indigo Natural Resources

Economy, Finance

Shares of Southwestern Energy Co. rose 0.9% in premarket trading Wednesday, after the oil and gas production company announced an agreement to buy Indigo Natural Resources LLC for $2.7 billion. The deal for Indigo, which is the third largest private natural gas producer in the U.S., is expected to close in the fourth quarter of 2021. The total cost of the deal will include $400 million in cash, $1.6 billion in Southwestern stock and $700 million of assumed 5.375% senior debt due 2029. Southwestern said the deal will increase cumulative free cash flow to $1.2 billion from 2021 to 2023 and increase net production to over 4 billions of cubic feet equivalent (Bcfe) per day, consisting of 85% natural gas. The company expects cost synergies of about $20 million. Southwestern shares have run up 93.0% year to date through Tuesday, while the S&P 500 has gained 11.9%.

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