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Chesapeake Energy To Acquire WildHorse Resource In $3.98 Bln Deal, Incl. Debt

Chesapeake Energy Corp. (CHK) has agreed to acquire WildHorse Resource Development Corp. (WRD) in a transaction valued at about $3.98 billion, based on yesterday's closing price, including the value of WildHorse's net debt of $930 million as of June 30, 2018.

WildHorse Resource is an oil and gas company with operations in the Eagle Ford Shale and Austin Chalk formations in southeast Texas.

At the election of each WildHorse common shareholder, the consideration will consist of either 5.989 shares of Chesapeake common stock or a combination of 5.336 shares of Chesapeake common stock and $3 in cash, in exchange for each share of WildHorse common stock.

The transaction, unanimously approved by the board of directors of each company, is expected to close in the first half of 2019.

According to Chesapeake, the acquisition is projected to double its adjusted oil production by 2020 from stand-alone adjusted 2018 estimates, increasing to a projected range of 125,000 to 130,000 barrels or bbls of oil per day in 2019, and 160,000 to 170,000 bbls of oil per day in 2020.

The transaction is also expected to result in $200 million to $280 million in projected average annual savings, totaling $1 billion to $1.5 billion by 2023.

Upon closing, Chesapeake shareholders will own approximately 55 percent of the combined company, while WildHorse shareholders will own the remaining 45 percent, depending on the consideration elected.

Prior to closing, WildHorse will designate two individuals, presently expected to be Jay Graham and current WildHorse Director David Hayes to be added to Chesapeake's Board of Directors.

Brad Martin and Doug Lawler will continue to serve as Chesapeake's Chairman of the Board of Directors and President, CEO and Director, respectively.

Chesapeake noted that investment funds managed by NGP Energy Capital Management, LLC, collectively WildHorse's largest shareholder, have entered into a voting and support agreement in support of the transaction.

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