Southwestern Energy Co. has completed its $2.7 billion takeover of Haynesville Shale pure-play Indigo Natural Resources LLC.

Southwestern Indigo Acreage Map

The deal completed last Wednesday gives Southwestern a sizable footprint in the resurgent Louisiana play, improving the firm’s access to Gulf Coast liquefied natural gas (LNG) export markets.

“This acquisition materially expands our opportunity set, adding high-margin Haynesville production and substantial core drilling inventory while providing additional global market access through the LNG corridor,” said Southwestern CEO Bill Way. “It also further de-risks our enterprise, increases free cash flow, extends our maturity profile and accelerates our deleveraging goals.

Upon announcing the close, Southwestern updated its guidance for the rest of the year.

The Houston-based firm now expects to produce 3.3-3.4 Bcfe/d in the third quarter and 4-4.1 Bcfe/d in 4Q2021.

Liquids are expected to account for about 18% of production in the third quarter and 14% in the final three months.

Southwestern said it expects to complete the 2021 Haynesville capital investment program currently in progress. The company plans to average six rigs and two completion crews in the play, and to place 15-20 gross wells to sales.

Capital investment guidance has been increased to $1.085-1.145 billion in order to incorporate the Haynesville investment.

Although Southwestern worked in the East Texas portion of the Haynesville during the mid-2000s, the firm had sold off those assets and become an Appalachian pure-play prior to the Indigo deal.

Way indicated that Southwestern would continue to eye acquisition opportunities.

“Looking ahead, we will continue to pursue opportunities to further increase our scale and enhance our ability to responsibly and sustainably drive additional value for our shareholders,” the CEO said. 

For full-year 2021, Southwestern expects to realize a 57-cent to 67-cent discount to New York Mercantile Henry Hub prices for its natural gas production, including basis hedges.

The gassy Haynesville has generated renewed interest amid the current bull cycle for gas prices.

Williams CEO Alan Armstrong said in August he expected the Haynseville to see “the quickest response” to higher prices.

Chesapeake Energy Corp., meanwhile, placed a $2.2 billion bet on the area with its acquisition of Haynesville pure-play Vine Energy Inc. announced last month. Vine, for its part, has said it plans to certify all of its gas output as responsibly sourced, presumably anticipating more stringent environmental requirements from LNG buyers overseas.