Southwest Energy (SWN) announced Tuesday, Sept. 4, that it had “entered into a definitive agreement” to sell its Fayetteville Shale E&P to Flywheel Energy, LLC for $1.865 billion. As part of the sale, Flywheel has agreed to assume $438 million of “future contractual liabilities” as part of the sale. The sale has an effective date of July 1, with a Dec. 2018 close expected.
Oklahoma City based Flywheel Energy stated in its announcement of the purchase: “The assets include 716 mmcf/d of net production from 4,033 producing wells across over 900,000 net acres and an integrated midstream gathering system with over 2,000 miles of gathering pipelines and more than 50 compressor stations, all located in central Arkansas.”
In its announcement, Bill Way, President and CEO of Southwestern Energy, was quoted, “The sale of Fayetteville represents a pivotal and deliberate step towards fulfilling our promise to reposition Southwestern Energy to capture greater returns from our higher margin Appalachia assets. We are pleased with the process, the outcome and the resulting valuation of this significant asset. I’d like to thank the employees of Fayetteville for their years of extraordinary service to the Company and its shareholders, particularly during this process.
“This transaction is a significant milestone in advancing our strategic plan. Our shareholders will benefit from an optimized portfolio, stronger balance sheet including improved financial flexibility and the return of capital to all shareholders through a share repurchase program. I am grateful for the tireless work of our entire dedicated and talented SWN team that sets the stage for a stronger future.”
Flywheel Energy, in its announcement: “Flywheel Energy is proud to join the Arkansas community as an operator in the historic Fayetteville Shale,” commented Justin Cope, Chief Executive Officer of Flywheel. “We believe this is another great step as we work to execute our long term strategy and achieve superior risk-adjusted returns for our investors. The Fayetteville Shale has played a prominent role in the American shale revolution. We look forward to being a part of its next chapter and to providing affordable energy to the U.S. gas market for decades to come.”