UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 11, 2024
SOUTHWESTERN ENERGY COMPANY
(Exact name of registrant as specified in its
charter)
Delaware |
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001-08246 |
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71-0205415 |
(State or other jurisdiction of
incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
10000 Energy Drive
Spring, TX 77389
(Address of principal executive offices) (Zip Code)
(832) 796-1000
(Registrant’s telephone number, including
area code)
Not Applicable
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, Par Value $0.01 |
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SWN |
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New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ¨
| Item 7.01 | Regulation FD Disclosure. |
On January 11, 2024, Southwestern Energy
Company, a Delaware corporation (NYSE: SWN) (“Southwestern”), and Chesapeake Energy Corporation, an Oklahoma corporation
(NASDAQ: CHK) (“Chesapeake”), issued a joint press release announcing that Chesapeake and Southwestern have entered
into an Agreement and Plan of Merger. A copy of the press release is included as Exhibit 99.1 to this Current Report on Form 8-K
and is incorporated into this Item 7.01 by reference.
The information furnished pursuant to this Item
7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), shall not otherwise be subject to the liabilities of that section and
shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”),
unless specifically identified therein as being incorporated therein by reference.
Important Additional Information Regarding
the Transaction Will Be Filed with the SEC and Where to Find It
In connection with the proposed transaction between
Southwestern and Chesapeake (the “proposed transaction”), Chesapeake intends to file with the U.S. Securities and Exchange
Commission (the “SEC”) a registration statement on Form S-4 (the “Registration Statement”)
to register the shares of Chesapeake’s common stock to be issued in connection with the proposed transaction. The Registration Statement
will include a document that serves as a prospectus of Chesapeake and joint proxy statement of Southwestern and Chesapeake (the “joint
proxy statement/prospectus”), and each party will file other documents regarding the proposed transaction with the SEC. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS, AS EACH MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, AND OTHER RELEVANT DOCUMENTS FILED BY Southwestern AND
Chesapeake WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT Southwestern
AND Chesapeake, THE PROPOSED TRANSACTION, THE RISKS RELATED THERETO AND RELATED MATTERS.
After the Registration Statement has been declared
effective, a definitive joint proxy statement/prospectus will be mailed to stockholders of Southwestern and stockholders of Chesapeake
as of the record date. Investors will be able to obtain free copies of the Registration Statement and the joint proxy statement/prospectus,
as each may be amended from time to time, and other relevant documents filed by Southwestern and Chesapeake with the SEC (when they become
available) through the website maintained by the SEC at www.sec.gov. Copies of documents filed with the SEC by Southwestern, including
the joint proxy statement/prospectus (when available), will be available free of charge from Southwestern’s website at www.swn.com
under the “Investors” tab. Copies of documents filed with the SEC by Chesapeake, including the joint proxy statement/prospectus
(when available), will be available free of charge from Chesapeake’s website at http://investors.chk.com/.
Participants in the Solicitation
Southwestern and certain of its directors, executive
officers and other members of management and employees, Chesapeake, and certain of its directors, executive officers and other members
of management and employees may be deemed to be participants in the solicitation of proxies from Southwestern’s stockholders and
the solicitation of proxies from Chesapeake’s stockholders, in each case with respect to the proposed transaction. Information about
Southwestern’s directors and executive officers is available in Southwestern’s Annual Report on Form 10-K for the 2022
fiscal year filed with the SEC on February 23, 2023 and its definitive proxy statement for the 2023 annual meeting of stockholders
filed with the SEC on April 5, 2023, and in the joint proxy statement/prospectus (when available). Information about Chesapeake’s
directors and executive officers is available in its Annual Report on Form 10-K for the 2022 fiscal year filed with the SEC on February 22,
2023 and its definitive proxy statement for the 2023 annual meeting of stockholders filed with the SEC on April 28, 2023, and the
joint proxy statement/prospectus (when available). Other information regarding the participants in the solicitations and a description
of their direct and indirect interests, by security holdings or otherwise, will be contained in the Registration Statement, the joint
proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when they become available.
Stockholders of Southwestern, stockholders of Chesapeake, potential investors and other readers should read the joint proxy statement/prospectus
carefully when it becomes available before making any voting or investment decisions.
No Offer or Solicitation
This report is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any
vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful
prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of the Securities Act.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This report includes certain statements that may
be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements, other than statements of historical fact or present financial information, included in this report that address activities,
outcomes and other matters that Southwestern or Chesapeake expects, believes or anticipates will or may occur in the future, including,
without limitation, statements regarding the proposed transaction, the expected closing of the proposed transaction and the timing thereof
and as adjusted descriptions of the post-transaction company and its operations, strategies and plans, integration, debt levels and leverage
ratio, capital expenditures, cash flows and anticipated uses thereof, synergies, opportunities and anticipated future performance, including
an expected accretion to earnings and free cash flow, dividend payments and potential repurchases, are forward looking statements. Although
Southwestern and Chesapeake believe the expectations expressed in such forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance. Southwestern and Chesapeake have no obligation and make no undertaking to publicly
update or revise any forward-looking statements, except as may be required by law.
Forward-looking statements include the items identified
in the preceding paragraph, information concerning possible or assumed future results of operations and other statements in this report
identified by words such as “anticipate,” “intend,” “plan,” “project,” “predict,”
“estimate,” “continue,” “potential,” “should,” “could,” “may,”
“will,” “shall,” “become,” “objective,” “guidance,” “outlook,”
“effort,” “expect,” “believe,” “predict,” “budget,” “projection,”
“goal,” “forecast,” “model,” “target,” or similar words. Statements may be forward-looking
even in the absence of these particular words.
You should not place undue reliance on forward-looking
statements. They are subject to known and unknown risks, uncertainties and other factors that may affect Southwestern’s operations,
markets, products, services and prices and cause Southwestern’s actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements
are based on current beliefs of the management of Southwestern and Chesapeake, based on currently available information, as to the outcome
and timing of future events. In addition to any assumptions and other factors referred to specifically in connection with forward-looking
statements, risks, uncertainties and factors that could cause actual results to differ materially from those indicated in any forward-looking
statement include, but are not limited to: the risk that Southwestern’s and Chesapeake’s businesses will not be integrated
successfully; the risk that cost savings, synergies and growth from the proposed transaction may not be fully realized or may take longer
to realize than expected; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the
companies expect; the possibility that stockholders of Chesapeake may not approve the issuance of new shares of Chesapeake common stock
in the proposed transaction or that stockholders of Chesapeake or stockholders of Southwestern may not approve the proposed transaction;
the risk that a condition to closing of the proposed transaction may not be satisfied, that either party may terminate the merger agreement
or that the closing of the proposed transaction might be delayed or not occur at all; potential adverse reactions or changes to business
or employee relationships, including those resulting from the announcement or completion of the proposed transaction; the risk the parties
do not receive regulatory approval of the proposed transaction; the occurrence of any other event, change or other circumstances that
could give rise to the termination of the merger agreement; the risk that changes in Chesapeake’s capital structure and governance
could have adverse effects on the market value of its securities; the ability of Southwestern and Chesapeake to retain customers and retain
and hire key personnel and maintain relationships with their suppliers and customers and on Southwestern’s and Chesapeake’s
operating results and business generally; the risk the proposed transaction could distract management from ongoing business operations
or cause Southwestern and/or Chesapeake to incur substantial costs; the risk of any litigation relating to the proposed transaction; the
risk that Chesapeake may be unable to reduce expenses or access financing or liquidity; the impact of COVID-19 or other diseases; the
impact of adverse changes in interest rates and inflation; and the risk of changes in governmental regulations or enforcement practices,
especially with respect to environmental, health and safety matters. All such factors are difficult to predict and are beyond Southwestern’s
and Chesapeake’s control, including those detailed in Southwestern’s Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K that are available on Southwestern’s website at www.swn.com and on the website
of the SEC at www.sec.gov, and those detailed in Chesapeake’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K that are available on Chesapeake’s website at http://investors.chk.com/ and on the website
of the SEC.
Should one or more of the risks or uncertainties
described above or elsewhere in this report occur, or should underlying assumptions prove incorrect, actual results and plans could differ
materially from those expressed in any forward-looking statements. Southwestern specifically disclaims all responsibility to update publicly
any information contained in a forward-looking statement or any forward-looking statement in its entirety and therefore disclaim any resulting
liability for potentially related damages.
All forward-looking statements attributable to
Southwestern are expressly qualified in their entirety by this cautionary statement.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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SOUTHWESTERN ENERGY COMPANY |
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Dated: January 11, 2024 |
By: |
/s/ CHRIS LACY |
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Name: |
Chris Lacy |
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Title: |
Senior Vice President, General Counsel & Secretary |
Exhibit 99.1
FOR IMMEDIATE RELEASE
JANUARY 11, 2024
CHESAPEAKE ENERGY CORPORATION AND SOUTHWESTERN
ENERGY TO
COMBINE TO ACCELERATE AMERICA’S ENERGY
REACH
OKLAHOMA CITY
/ SPRING, Texas – January 11, 2024 – Chesapeake Energy Corporation (NASDAQ:CHK) and Southwestern Energy Company
(NYSE:SWN) today announced that they have entered into an agreement to merge in an all-stock transaction valued at $7.4 billion, or $6.69
per share, based on Chesapeake’s closing price on January 10, 2024. Under the terms of the agreement, Southwestern shareholders
will receive 0.0867 shares of Chesapeake common stock for each share of Southwestern common stock outstanding at closing.
The strategic combination will create a premier
energy company underpinned by a leading natural gas portfolio adjacent to the highest demand markets, premium inventory, resilient free
cash flow, and an Investment Grade quality balance sheet. The combined company, which will assume a new name at closing, will be uniquely
positioned to deliver affordable, lower carbon energy to meet growing domestic and international demand with significant, sustainable
cash returns to shareholders through cycles.
Transaction Highlights:
| · | Establishes
industry’s premier natural gas portfolio: By combining high quality, large
scale acreage in Appalachia and Haynesville, the pro forma company has current net production
of approximately 7.9 Bcfe/d(1) with more than 5,000 gross locations and 15
years of inventory. |
| · | Annual
operational and overhead synergies of approximately $400 million: Identified synergies
will enhance shareholder value through improved capital efficiencies and operating margins
driven by longer laterals, lower drilling and completion costs, G&A reductions, and the
utilization of shared operational infrastructure. |
| · | Accretive
to all key financial metrics: The combination is expected to be immediately accretive
to all key per share financial metrics including operating cash flow, free cash flow, cash
dividends, and net asset value, as well as ROCE. |
| · | Creates
global platform to expand marketing and trading business, reaching more markets, mitigating
price volatility and increasing revenue: In order to maximize value of the combined
company’s scale of production, Investment Grade quality capital structure and
100% certified Responsibly Sourced Gas, the company will build a global marketing and trading
presence in Houston to supply lower-cost, lower carbon energy to meet increasing domestic
and international LNG demand. |
| · | Increases
shareholder value through synergy enhanced, best-in-class return framework: Through
Chesapeake’s existing shareholder return framework, the combined company expects an
approximate 20% improvement in dividends per share over five years due to significant synergies
and greater pro forma free cash flow generation. |
| (1) | Third quarter 2023 actual
production for CHK and SWN from public filings; Excludes Eagle Ford |
CHK
INVESTOR CONTACT: |
CHK
MEDIA CONTACT: |
SWN
INVESTOR CONTACT: |
SWN
MEDIA CONTACT: |
Chris
Ayres
(405) 935-8870
ir@chk.com |
Brooke
Coe
(405) 935-8878
media@chk.com |
Brittany
Raiford
(832) 796-7906
brittany_raiford@swn.com |
Andrew
Siegel/Jed Repko
Joele Frank Wilkinson Brimmer Katcher
(212) 355-4449 |
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| · | Investment
Grade quality capital structure: The combined company remains committed to maintaining
a net leverage ratio below one times and Investment Grade metrics resulting in a lower cost
of capital and improved credit profile. These attributes will increase access to and returns
from marketing and LNG opportunities. |
| · | Sustainability
leadership: The combined company will maintain its low natural gas emissions profile,
commitment to achieving net zero Scope 1 and 2 GHG emissions by 2035, transparent disclosure
on measurable targets, investment in low-carbon solutions, and social and governance excellence. |
“This powerful combination redefines the
natural gas producer, forming the first U.S. based independent that can truly compete on an international scale. The union creates a
deep inventory of advantaged assets adjacent to high demand markets, allowing for the application of proven operational practices and
the power of an Investment Grade quality balance sheet to drive significant synergies benefiting energy consumers and shareholders alike,”
said Nick Dell’Osso, Chesapeake’s President and Chief Executive Officer. “The world is short energy and demand for
our products is growing, both in the U.S. and overseas. We will be positioned to deliver more natural gas at a lower cost, accelerating
America’s energy reach and fueling a more affordable, reliable, and lower carbon future. I look forward to leading the talented
workforce of the combined organization to accelerate the long-term value opportunity for our shareholders, employees, and all stakeholders.”
Southwestern President and Chief Executive Officer
Bill Way added, “I want to thank the entire Southwestern team for positioning the company to be part of this transformational combination.
Together, Southwestern and Chesapeake can drive improved margins and returns from our highly complementary portfolios through enhanced
scale, capital allocation flexibility, and access to premium markets to supply growing global natural gas demand. Most importantly, both
sets of shareholders are able to participate in the substantial value creation and future growth opportunities of the combined company,
with one of the top shareholder return frameworks in the sector.”
Transaction Details:
Under the terms of the agreement, Southwestern
shareholders will receive a fixed exchange ratio of 0.0867 shares of Chesapeake common stock for each share of Southwestern common stock
owned at closing. At this exchange ratio and the respective share prices on January 10, 2024, the combined company would have an
enterprise value of approximately $24 billion. Pro forma for the transaction, Chesapeake shareholders will own approximately 60% and
Southwestern shareholders will own approximately 40% of the combined company, on a fully diluted basis.
The combination has been approved by the boards
of directors of both companies. The transaction, which is subject to customary closing conditions, including approvals by Chesapeake
and Southwestern shareholders and regulatory clearances, is targeted to close in the second quarter of 2024.
Governance:
Following the merger, the board of directors
of the combined company will increase to 11 members and will initially be comprised of seven representatives from Chesapeake and four
representatives from Southwestern. Mike Wichterich will serve as Non-Executive Chairman and Nick Dell’Osso as President and Chief
Executive Officer of the combined company. The combined company will be headquartered in Oklahoma City while maintaining a material presence
in Houston and will assume a new name upon closing.
Advisors:
Evercore is serving
as lead financial advisor, J.P. Morgan Securities LLC as financial advisor, Latham & Watkins LLP and Wachtell,
Lipton, Rosen & Katz as legal advisors, and DrivePath Advisors as communications advisor to Chesapeake. Morgan Stanley
also advised Chesapeake.
Goldman Sachs & Co. LLC. is serving
as lead financial advisor and RBC Capital Markets, LLC along with BofA Securities and Wells Fargo Securities, LLC as financial advisors.
Kirkland & Ellis LLP is serving as legal advisor, and Joele Frank as communications advisor to Southwestern Energy.
Conference Call Details:
The companies plan
to host a joint conference call and webcast on January 11 at 9:00 a.m. EST to discuss the transaction. Institutional investors
and analysts are invited to participate in the call by dialing 1-888-317-6003, or 1-412-317-6061 for international calls, using conference
ID 5257732. Other parties are encouraged to participate through each company’s website: chk.com, or swn.com.
About the Companies:
Headquartered
in Oklahoma City, Chesapeake Energy Corporation is powered by dedicated and innovative employees who are focused on discovering
and responsibly developing leading positions in top U.S. oil and gas plays. With a goal to achieve net zero GHG emissions (Scope 1 and
2) by 2035, Chesapeake is committed to safely answering the call for affordable, reliable, lower carbon energy.
Southwestern Energy Company (NYSE:SWN) is a leading
U.S. producer and marketer of natural gas and natural gas liquids focused on responsibly developing large-scale energy assets in the
nation’s most prolific shale gas basins. SWN’s returns-driven strategy strives to create sustainable value for its stakeholders
by leveraging its scale, financial strength, and operational execution.
IMPORTANT
INFORMATION FOR INVESTORS AND STOCKHOLDERS;
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction between
Chesapeake and Southwestern, Chesapeake intends to file with the U.S. Securities and Exchange Commission (the “SEC”) a registration
statement on Form S-4 (the “registration statement”) to register the shares of Chesapeake’s common stock to be
issued in connection with the proposed transaction. The registration statement will include a joint proxy statement of Chesapeake and
Southwestern and will also constitute a prospectus of Chesapeake (the “joint proxy statement/prospectus”). Each of Chesapeake
and Southwestern may also file other documents regarding the proposed transaction with the SEC. This document is not a substitute for
the joint proxy statement/prospectus or the registration statement or any other document that Chesapeake or Southwestern may file with
the SEC. BEFORE MAKING ANY VOTING DECISION, INVESTORS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT, THE JOINT PROXY
STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT MAY BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION,
AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT CHESAPEAKE, SOUTHWESTERN, THE PROPOSED TRANSACTION, THE RISKS RELATED THERETO AND RELATED MATTERS.
After the registration
statement has been declared effective, a definitive joint proxy statement/prospectus will be mailed to the stockholders of Chesapeake
and Southwestern. Investors will be able to obtain free copies of the registration statement and joint proxy statement/prospectus and
other relevant documents containing important information about Chesapeake, Southwestern and the proposed transaction, once such documents
are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with
the SEC by Chesapeake may be obtained free of charge on Chesapeake’s website at https://investors.chk.com/. Copies of the
documents filed with the SEC by Southwestern may be obtained free of charge on Southwestern’s website at https://ir.swn.com/CorporateProfile/default.aspx.
Participants
in THE Solicitation
Chesapeake and Southwestern and certain of their
respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation
of proxies in connection with the proposed transaction contemplated by the joint proxy statement/prospectus. Information regarding Chesapeake’s
directors and executive officers and their ownership of Chesapeake’s securities is set forth in Chesapeake’s filings with
the SEC, including Chesapeake’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and its Proxy
Statement on Schedule 14A, which was filed with the SEC on April 28, 2023. To the extent such person’s ownership of Chesapeake’s
securities has changed since the filing of Chesapeake’s proxy statement, such changes have been or will be reflected on Statements
of Change in Ownership on Form 4 filed with the SEC thereafter. Information regarding Southwestern’s directors and executive
officers and their ownership of Southwestern’s securities is set forth in Southwestern’s filings with the SEC, including
Southwestern’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and its Proxy Statement on Schedule
14A, which was filed with the SEC on April 5, 2023. To the extent such person’s ownership of Southwestern’s securities
has changed since the filing of Southwestern’s proxy statement, such changes have been or will be reflected on Statements of Change
in Ownership on Form 4 filed with the SEC thereafter. Additional information regarding the interests of those persons and other
persons who may be deemed participants in the proxy solicitations may be obtained by reading the joint proxy statement/prospectus and
other relevant materials that will be filed with the SEC regarding the proposed transaction when such documents become available. You
may obtain free copies of these documents as described in the preceding paragraph.
No
Offer or Solicitation
This communication relates to the proposed transaction
between Chesapeake and Southwestern. This communication is for informational purposes only and shall not constitute an offer to sell
or exchange, or the solicitation of an offer to buy or exchange, any securities or a solicitation of any vote or approval, in any jurisdiction,
pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred
to in this document in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
FORWARD-LOOKING STATEMENTS
This communication contains “forward-looking
statements” within the meaning of the federal securities laws. Forward-looking statements may be identified by words such as “anticipates,”
“believes,” “cause,” “continue,” “could,” “depend,” “develop,”
“estimates,” “expects,” “forecasts,” “goal,” “guidance,” “have,”
“impact,” “implement,” “increase,” “intends,” “lead,” “maintain,”
“may,” “might,” “plans,” “potential,” “possible,” “projected,”
“reduce,” “remain,” “result,” “scheduled,” “seek,” “should,”
“will,” “would” and other similar words or expressions. The absence of such words or expressions does not necessarily
mean the statements are not forward-looking. Forward-looking statements are not statements of historical fact and reflect Chesapeake’s
and Southwestern’s current views about future events. These forward-looking statements include, but are not limited to, statements
regarding the proposed transaction between Chesapeake and Southwestern, the expected closing of the proposed transaction and the timing
thereof and the proforma combined company and its operations, strategies and plans, integration, enhancements to investment grade credit
profile, emissions profile, debt levels and leverage ratio, capital expenditures, liquidity, return on capital employed, net asset value,
cost of capital, operating cash flows, cash flows and anticipated uses thereof, synergies, opportunities and anticipated future performance,
capital structure, achievement of investment-grade credit rating, expected accretion to earnings NAV, ROCE, cash flow and free cash flow,
anticipated dividends, and natural gas portfolio, demand for products, quality of inventory and ability to deliver affordable lower carbon
energy. Information adjusted for the proposed transaction should not be considered a forecast of future results. Although we believe
our forward-looking statements are reasonable, statements made regarding future results are not guarantees of future performance and
are subject to numerous assumptions, uncertainties and risks that are difficult to predict. Forward-looking statements are based on current
expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially
from those projected.
Actual outcomes and results may differ materially
from the results stated or implied in the forward-looking statements included in this communication due to a number of factors, including,
but not limited to: the occurrence of any event, change or other circumstances that could give rise to the termination of the merger
agreement; the possibility that Chesapeake stockholders may not approve the issuance of Chesapeake’s common stock in connection
with the proposed transaction; the possibility that the stockholders of Southwestern may not approve the merger agreement; the risk that
Chesapeake or Southwestern may be unable to obtain governmental and regulatory approvals required for the proposed transaction, or required
governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to
abandon the merger; the risk that the parties may not be able to satisfy the conditions to the proposed transaction in a timely manner
or at all; risks related to disruption of management time from ongoing business operations due to the proposed transaction; the risk
that any announcements relating to the proposed transaction could have adverse effects on the market price of Chesapeake’s common
stock or Southwestern’s common stock; the risk of any unexpected costs or expenses resulting from the proposed transaction; the
risk of any litigation relating to the proposed transaction; the risk that the proposed transaction and its announcement could have an
adverse effect on the ability of Chesapeake and Southwestern to retain and hire key personnel, on the ability of and Southwestern to
attract third-party customers and maintain its relationships with derivatives counterparties and on Chesapeake’s and Southwestern’s
operating results and businesses generally; the risk that problems Chesapeake may arise in successfully integrating the businesses of
the companies, which may result in the combined company not operating as effectively and efficiently as expected; the risk that the combined
company may be unable to achieve synergies or other anticipated benefits of the proposed transaction or it may take longer than expected
to achieve those synergies or benefits and other important factors that could cause actual results to differ materially from those projected;
the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves; the ability to
replace reserves; environmental risks, drilling and operating risks, including the potential liability for remedial actions or assessments
under existing or future environmental regulations and litigation; exploration and development risks; the effect of future regulatory
or legislative actions on the companies or the industry in which they operate, including the risk of new restrictions with respect to
oil and natural gas development activities; the risk that the credit ratings of the combined business may be different from what the
companies expect; the ability of management to execute its plans to meet its goals and other risks inherent in Chesapeake’s and
Southwestern’s businesses; public health crises, such as pandemics and epidemics, and any related government policies and actions;
the potential disruption or interruption of Chesapeake’s or Southwestern’s operations due to war, accidents, political events,
civil unrest, severe weather, cyber threats, terrorist acts, or other natural or human causes beyond Chesapeake’s or Southwestern’s
control; and the combined company’s ability to identify and mitigate the risks and hazards inherent in operating in the global
energy industry. Other unpredictable or unknown factors not discussed in this communication could also have material adverse effects
on forward-looking statements.
All such factors
are difficult to predict and are beyond Chesapeake’s or Southwestern’s control, including those detailed in Chesapeake’s
annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K that are available on its
website at http://investors.chk.com/ and on the SEC’s website at http://www.sec.gov, and those detailed in
Southwestern’s annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K that
are available on Southwestern’s website at https://ir.swn.com/CorporateProfile/default.aspx and on the SEC’s website
at http://www.sec.gov. Forward-looking statements are based on the estimates and opinions of management at the time the statements
are made. Chesapeake and Southwestern undertake no obligation to publicly correct or update the forward-looking statements in this communication,
in other documents, or on their respective websites to reflect new information, future events or otherwise, except as required by applicable
law. All such statements are expressly qualified by this cautionary statement. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date hereof.
This presentation contains certain financial
measures that are not prepared or presented in accordance with generally accepted accounting principles (“GAAP”). These non-GAAP
financial measures include EBITDAX and net debt. Non-GAAP financial measures are not measurements of financial performance under GAAP
and should not be alternatives to amounts presented in accordance with GAAP. Chesapeake and Southwestern view these non-GAAP financial
measures as supplemental and they are not intended to be a substitute for, or superior to, the information provided by GAAP financial
results.
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