According to a report from Reuters, citing people familiar with the matter, Chesapeake Energy (NYSE:CHK) has approached Southwestern Energy (NYSE:SWN) for a potential acquisition. Southwestern Energy, which has a market valuation of around $12 billion including debt, saw its shares surge by over 8% today.
Should this merger go through, the combined entity would surpass EQT Corp. (NYSE:EQT) to become the largest natural gas-focused exploration and production company in the U.S. by market capitalization.
However, it's important to note that discussions between Chesapeake and Southwestern remain at an early stage, according to the sources. There's no guarantee that an agreement will materialize. In fact, Chesapeake might also consider other potential takeover candidates and could eventually opt for an alternative target.
For Chesapeake, buying Southwestern would mark a significant shift. Over the past couple of years, Chesapeake has been on an acquisition spree, targeting smaller competitors. Both companies have operational overlaps, with Southwestern majorly producing in the shale formations of Appalachia and the Haynesville basin in Louisiana, areas where Chesapeake also has a presence.