Chesapeake Merger Details Are Great News for Oklahoma
This is better news for Oklahoma than Nellie Johnstone.
Oklahoma City’s Chesapeake Energy and Southwestern Energy, based in a Houston suburb, announced the merger that’s been rumored since last week. The $17 billion combined company, which will adopt a new name, will be America’s largest natural gas producer.
As the Wall Street Journal reported, the deal is in large part a bet that booming liquefied-natural-gas exports from the shores of Texas and Louisiana will allow drillers to sell more of their product to Europe, Asia and other global markets craving American fuel. It also continues a wave of consolidation that has swept across the U.S. energy industry in recent months.
“The deal is by far the biggest U.S. gas tie-up since at least 2017, according to analysts at energy analytics firm Enverus,” WSJ wrote. “It comes less than three years after Chesapeake emerged from bankruptcy, and sets up the company to leapfrog rival EQT and become the country’s top natural-gas fracker by production and market capitalization, according to analysts.”
That’s great news for shareholders who get a little synergy bump, but the good news for the rest of Oklahomans is that the newly merged company will be based in Oklahoma City.
On Wednesday, The Oklahoman’s Richard Mize published a piece contemplating what could be done with Chesapeake’s campus if the merger went through.
“If Chesapeake were to move to Texas, what would become of its 1.5 million square feet of buildings in Oklahoma City?” Mize wrote. “It would not be pretty, like the multiple Georgian-style, red brick office buildings that dominate Chesapeake’s corporate campus at NW 63 and Western Avenue.”
That pessimism was understandable. The last time two big energy companies from Houston and Oklahoma City started talking about a merger, Kerr-McGee headed to Anadarko’s space, leaving a 500,000-square-foot, 30-story tower in the heart of downtown Oklahoma City unoccupied.
That building was purchased by SandRidge Energy with Chesapeake’s help and now houses state government employees, but “here we go again” was a nearly universal reaction when the Chesapeake rumor surfaced.
Fortunately for Oklahoma, Chesapeake’s CEO, Nick Dell’Osso, will run the merged company, Chesapeake’s 1,200 employees will stay in town and the state will add some Southwestern staff to the tax rolls.
First, the deal must be cleared by regulators and approved by the companies’ shareholders. The firms said they expected the merger to be completed by the end of June.
More worth reading:
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Nine current and former Ringling High School students sued their southern Oklahoma school district Wednesday, alleging school officials failed to protect them from abuse and bullying by their hall of fame football coach Phil Koons. [The Oklahoman]
TUL to go International
A new federal Customs facility planned for Tulsa International Airport will allow for direct, international commercial flights for the first time. The first target is Cancun. [Tulsa World]
Ethics Boss Asks for 2016 Funding
On Thursday, the state Ethics Commission’s new director asked House and Senate appropriators to increase the agency’s Fiscal Year 2025 funding to the same as it was nine years ago. [Tulsa World]
Ciao for now,
Ted Streuli
Executive Director, Oklahoma Watch
