Southwestern Energy Co.'s office in Conway.
Southwestern Energy Co. of Houston announced Tuesday that it would sell its remaining assets in central Arkansas’ Fayetteville Shale to Flywheel Energy LLC for $1.9 billion in cash.
As part of the deal, expected to close in December, Flywheel will take on about $438 million in future contractual liabilities. The move comes as publicly traded Southwestern (NYSE: SWN) moves its focus to higher-margin assets in West Virginia.
“This transaction is a significant milestone in advancing our strategic plan,” Southwestern CEO Bill Wray said in a news release. “Our shareholders will benefit from an optimized portfolio, stronger balance sheet including improved financial flexibility and the return of capital to all shareholders through a share repurchase program. I am grateful for the tireless work of our entire dedicated and talented SWN team that sets the stage for a stronger future.”
Flywheel Energy is a private company backed by Kayne Private Energy Income Funds, which is controlled by Kayne Anderson Capital Advisors L.P. Founded in 1984, Kayne Anderson Capital is an investment management firm with holdings in upstream oil and gas companies, energy infrastructure, specialized real estate, middle market credit and growth private equity.
Southwestern said it will use part of the proceeds from the sale “to replace cash flow that would otherwise have been generated by the Fayetteville assets and reinvested” into its liquids-rich assets in West Virginia.
Southwestern has more than 475,000 net acres in the Appalachia Basin, which runs from West Virginia through Pennsylvania to New York.
In Arkansas, Southwestern has about 915,000 net acres and more than 4,000 operated producing wells in Fayetteville Shale. It has a regional office in Conway as, as of last spring, about 600 workers in the area.
Flywheel CEO Justin Cope told Arkansas Business in an email that the company does not have an operations team coming in from elsewhere, so it “will largely need everyone in Conway for the asset to continue performing at a high level. We are committed to getting all job offers extended by the end of October.”
Cope also said, “The Southwestern Energy workforce in Conway has an outstanding reputation in the industry. We are excited about all they have accomplished. They have set the bar incredibly high, and we’re thrilled to come in and keep this asset going.”
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