U.S. gas producer Southwestern Energy Co (SWN.N) on Wednesday agreed to buy privately held Indigo Natural Resources LLC for about $2.7 billion, bulking up its operations to take advantage of rising gas prices.
Dealmaking has risen in the energy sector as increased vaccinations boosted travel demand, and as producers look to scale up to cut costs after the COVID-19 pandemic caused one of the industry's worst downturns.
Southwestern-Indigo has become the largest pure-play deal in Louisiana's Haynesville basin since 2008, topping Comstock's $2.2 billion acquisition of Covey Park in 2019, Enverus analyst Andrew Dittmar said.
Southwestern, the third-largest U.S. gas producer spread across Pennsylvania, West Virginia and Ohio, adds Indigo's net production of 1 billion cubic feet (bcf) of gas per day from the Haynesville basin, diversifying its asset base.
The deal also gives Southwestern access to the premium Gulf Coast export market at a time when demand for super-cooled liquefied natural gas is booming, as large energy-consuming nations like China and India wean themselves off dirtier coal.
"The industry is overall bullish on the outlook for gas, and Haynesville provides one of the two major sources of low-cost supply along with the Appalachian Basin," Dittmar said.