Chesapeake Energy Corp. is banking on Vine Energy’s Haynesville and Mid-Bossier shale plays as it looks to acquire the Plano-based public company.
Chesapeake, which is based in Oklahoma City, plans to purchase the Blackstone-backed natural gas exploration and production company for a consideration of about $2.2 billion, or a fixed exchange ratio of 0.2486 Chesapeake shares of common stock and $1.20 of cash for each share of Vine common stock owned.
Chesapeake selected Latham & Watkins and Richards Layton & Finger as legal counsel and JPMorgan Securities as financial advisor (Michael Johnson and Jonathan Cox).
Latham partners Bill Finnegan and Kevin Richardson led a Houston-based team along with associates Thomas Verity, Bryan Ryan, Jordan Mack, Ben Marek and Austin Johnson.
Other Texas-based counseled came from Houston partner Michael King, who advised on energy and infrastructure matters; Houston partners Tim Fenn and Jim Cole with associate Christine Mainguy, who advised on tax matters; Houston partner Joel Mack, who counseled on on environmental matters; and Houston partner Craig Kornreich and counsel Natalie McFarland with associate Whitley Johnson, who advised on finance matters.
Chesapeake Energy’s legal team was led by Ben Russ, the company’s executive vice president – general counsel and corporate secretary.
Kirkland & Ellis represented Vine on legal matters while Citi acted as financial advisor (Steve Trauber, Claudio Sauer and James Jackson).
Partners Andy Calder of Houston, Doug Bacon of Houston and New York, and Bill Benitez of Houston led the deal team for Kirkland along with associates Josh Teahen of Houston and Patrick Salvo of Austin. Additional assistance came out of Houston from capital markets partner Michael Rigdon; debt finance partner Andy Veit; tax partner Mark Dundon; executive compensation partner Rob Fowler; and oil & gas partner Rahul Vashi.
Houlihan Lokey provided financial advice to the Vine board of directors, including JP Hanson, Rick Lacher, Rob Teigman, Youmna Salameh, Jerry Eumont and Manny Vedi.
Jonathan Curth serves as executive vice president, general counsel and corporate secretary at Vine. Before joining the company, Curth practiced at Willkie Farr & Gallagher after gaining experience at Brown & Fortunato, Baker & McKenzie, Vanguard Natural Resources and Newfield Exploration Co.
Weil, Gotshal & Manges advised Blackstone, which owns about 70% of outstanding shares of Vine common stock, on legal matters.
New York partner Raymond Gietz led the Weil corporate team along with Houston partner Jeffery Malonson and associates Scott Bailey of Dallas and Joseph Cho of New York.
Vine began as a partnership formed by Blackstone Energy Partners, along with funds managed by Blackstone Group Inc., as the entities sought to create a significant shale developer. Accordingly, Vine made a splash back in 2014 when it acquired about $1.2 billion in Haynesville assets from affiliates of Shell.
The company began to trade on the New York Stock Exchange earlier this year. Kirkland advised Vine on its registration.
The Chesapeake-Vine transaction, which has already been approved by both boards of directors and is expected to close in the fourth quarter, marks yet another strategic consolidation among players based in the area.
In an investor presentation, Chesapeake, which reemerged from Chapter 11 bankruptcy earlier this year, touted Vine’s existing adjacent rigs and over-pressured stacked gas opportunities. It additionally stated the pro forma company would be the largest Haynesville producer.
The combination is expected to be immediately accretive to cash flows.
Upon close, Chesapeake shareholders will hold about 86% of the combined company with Vine shareholders owning approximately 14%.