Blockbuster Pure-Fuel Merger Is Virtually Too Excellent

Chesapeake Vitality’s merger with Southwestern Vitality would create the most important natural-gas-focused producer within the U.S. It additionally creates an funding story that’s so compelling that it comes with dangers of its personal.

Whereas merger-mania has swept up the power sector since final 12 months, natural-gas-focused producers have been comparatively much less lively in dealmaking. The commodity’s worth has been low and risky, a tricky mixture for offers that lends itself to large bid-ask spreads, or gaps between promoting and providing costs, notes Andrew Dittmar, senior vp at Enverus Intelligence Analysis.