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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Southwestern Energy | NYSE:SWN | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 7.11 | 0 | 00:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) |
Name of Each Exchange on Which Registered | ||
(1) The registrant’s common stock ceased being traded as of the close of the market on September 30, 2024 in connection with the closing of the Mergers described herein and will no longer be listed on the 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. ¨
Introductory Note
On October 1, 2024 (“Closing Date”), Southwestern Energy Company, a Delaware corporation (“Southwestern” or the “Company”), completed its previously announced merger with Chesapeake Energy Corporation, an Oklahoma corporation (“Chesapeake”), pursuant to the terms of that certain Agreement and Plan of Merger, dated as of January 10, 2024 (the “Merger Agreement”), by and among Southwestern, Chesapeake, Hulk Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Chesapeake (“Merger Sub”) and Hulk LLC Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of Chesapeake (“Merger Sub LLC”). Pursuant to the Merger Agreement, immediately following the Effective Time, Chesapeake changed its name to “Expand Energy Corporation” (the “Company” or “Expand Energy”). In addition, Chesapeake changed its NASDAQ ticker symbol “CHK” to “EXE” and expects to begin trading under the “EXE” trading symbol effective as of the open of trading on the NASDAQ on October 2, 2024.
The Mergers
Pursuant to the Merger Agreement, at the Effective Time (as defined below), Merger Sub merged with and into Southwestern (the “First Merger”), with Southwestern surviving the First Merger as a direct wholly owned subsidiary of Chesapeake, and, subsequently, Southwestern merged with and into Merger Sub LLC, with Merger Sub LLC continuing as the surviving entity (the “Surviving LLC”) and as a direct, wholly owned subsidiary of Chesapeake (the “Second Merger”), and, subsequently, the Surviving LLC merged with and into Chesapeake, with Chesapeake continuing as the surviving entity (together, with the First Merger and Second Merger, the “Mergers”), and each eligible share of common stock of Southwestern, par value $0.01 per share (the “Southwestern Common Stock”) issued and outstanding immediately prior to the Effective Time was converted automatically into the right to receive 0.0867 (the “Exchange Ratio”) shares of Chesapeake Common Stock, with cash paid in lieu of the issuance of any fractional shares, in each case, as provided in the Merger Agreement.
In addition, at the Effective Time:
| · | each outstanding and unexercised option award of Southwestern as of immediately prior to the Effective Time ceased to represent a right to acquire shares of Southwestern Common Stock and was automatically canceled and terminated without consideration payable or owed thereto; |
| · | each outstanding restricted stock award of Southwestern was automatically fully vested and each such restricted stock award was converted into the right to receive a number of shares of Chesapeake Common Stock equal to (i) the Exchange Ratio, multiplied by (ii) the total number of shares of Southwestern Common Stock attributable to such restricted stock award; |
| · | each outstanding restricted stock unit award of Southwestern under Southwestern’s Nonemployee Director Deferred Compensation Plan was automatically fully vested, canceled, and converted into the right to receive a number of shares of Chesapeake Common Stock equal to (i) the Exchange Ratio, multiplied by (ii) the total number of shares of Southwestern Common Stock subject to such restricted stock unit award, together with accrued dividend equivalent payments in each case issuable and payable at the times specified in Southwestern’s Nonemployee Director Deferred Compensation Plan and in accordance with such director’s deferral elections as set forth in the applicable Deferred Compensation Agreement; |
| · | each outstanding restricted stock unit award of Southwestern that (i) was granted pursuant to Southwestern’s 2013 Incentive Plan, or (ii) was granted prior to the date of the Merger Agreement and was held by an employee of Southwestern or its Subsidiaries (as defined in the Merger Agreement) who was terminated upon or immediately after the Effective Time, and was subject only to time-based vesting conditions, was fully vested, canceled and converted into the right to receive a number of shares of Chesapeake Common Stock equal to (A) the Exchange Ratio, multiplied by (B) the total number of shares of Southwestern Common Stock subject to each such restricted stock unit award, together with accrued dividend equivalent payments, in each case issuable and payable in accordance with the terms of the applicable award agreement; |
| · | each outstanding restricted stock unit award that was granted pursuant to Southwestern’s 2022 Incentive Plan (and not described above) and that was subject only to time-based vesting conditions was canceled and converted into an award of restricted stock units in respect of shares of Chesapeake Common Stock (rounded to the nearest whole share) equal to the product of (i) the total number of shares of Southwestern Common Stock subject to such restricted stock unit award immediately prior to the Effective Time multiplied by (ii) the Exchange Ratio. Such restricted stock unit award shall vest and become payable on the same terms and conditions (including “double-trigger” vesting provisions) as are set forth in the corresponding award agreement (except that such award will be payable in Chesapeake Common Stock); |
| · | each outstanding performance unit award that (i) was granted pursuant to the Southwestern’s 2013 Incentive Plan, or (ii) was granted prior to the date of the Merger Agreement and was held by an employee of Southwestern or its Subsidiaries (as defined in the Merger Agreement) that was terminated upon or immediately after the Effective Time was (A) automatically fully vested and became payable at the greater of (1) the level based on actual performance determined as of immediately prior to the Effective Time in accordance with the terms of the applicable award agreement and (2) the target level (the number of shares of Southwestern Common Stock payable pursuant to the foregoing, the “Earned Company Performance Shares”), and (B) canceled and converted into the right to receive a number of shares Chesapeake Common Stock equal to (1) the Exchange Ratio, multiplied by (2) the number of Earned Company Performance Shares, together with accrued dividend equivalent payments, in each case issuable and payable in accordance with the terms of the applicable award agreement; |
| · | each outstanding performance unit award of Southwestern that was granted pursuant to Southwestern’s 2022 Incentive Plan (and not described above) was deemed to correspond to a number of Earned Company Performance Shares, and was canceled and converted into an award of time-based vesting restricted stock units in respect of that number of shares of Chesapeake Common Stock (rounded to the nearest whole share) equal to (i) the number of Earned Company Performance Shares with respect to such performance unit award multiplied by (ii) the Exchange Ratio. Such restricted stock units shall time-vest at the end of the original performance period and are otherwise subject to and payable on the same terms and conditions (including “double-trigger” vesting provisions) as are set forth in the corresponding award agreement (except that such award will be payable in shares of Chesapeake Common Stock); |
| · | each outstanding performance cash unit award of Southwestern that (i) was granted pursuant to Southwestern’s 2013 Incentive Plan, or (ii) was granted prior to the date of Merger Agreement and was held by an employee of Southwestern or its Subsidiaries (as defined in the Merger Agreement) who was terminated upon or immediately after the Effective Time was automatically fully vested and payable in cash in an amount equal to $1.00 per unit granted under such performance cash unit award multiplied by the greater of (A) the percentage earned based on actual performance determined as of immediately prior to the Effective Time in accordance with the terms of the applicable award agreement and (B) 100%; and |
| · | each outstanding performance cash unit award of Southwestern that was granted pursuant to Southwestern’s 2022 Incentive Plan (other than those described above) was deemed earned at a level equal to $1.00 per unit granted under such performance cash unit award multiplied by the greater of (i) the percentage earned based on actual performance determined as of immediately prior to the Effective Time in accordance with the terms of the applicable award agreement and (ii) 100%. Such amount will vest and become payable in cash at the end of the original performance period associated with the corresponding performance cash unit award of Southwestern and was otherwise subject to and payable on the same terms and conditions (including “double-trigger” vesting provisions) as are set forth in the corresponding award agreement. |
The foregoing description of the Mergers and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
| Item 1.01 | Entry into a Material Definitive Agreement |
The information set forth in the Introductory Note of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.
| Item 1.02 | Termination of a Material Definitive Agreement |
Southwestern Credit Agreement
In connection with the closing of the Mergers, prior to the Effective Time, Southwestern terminated all outstanding lender commitments, including commitments of the lenders to issue letters of credit, under that certain Amended and Restated Credit Agreement, dated as of April 8, 2022, by and among Southwestern, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto, as amended by that certain Amendment No. 1 to Amended and Restated Credit Agreement, dated as of August 4, 2022 (as further amended, amended and restated, supplemented or otherwise modified from time to time, the “Southwestern Credit Agreement”). In connection with the termination of the Southwestern Credit Agreement, on the Closing Date, all outstanding obligations for principal, interests and fees under the Southwestern Credit Agreement were paid off in full, and all liens securing such obligations and any letter of credit or hedging obligations permitted by the Southwestern Credit Agreement to be secured by such liens and guarantees of such obligations were released.
| Item 2.01 | Completion of Acquisition or Disposition of Assets |
As discussed in the Introductory Note to this Current Report on Form 8-K, on October 1, 2024, Southwestern completed its previously announced merger with Chesapeake pursuant to the terms of the Merger Agreement.
The foregoing description of the Merger Agreement and the transactions contemplated thereby is a summary only, does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Merger Agreement. The information set forth in the Introductory Note of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
| Item 3.01 | Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing |
Prior to the completion of the Mergers, shares of Southwestern Common Stock were listed and traded on the New York Stock Exchange (the “NYSE”) under the trading symbol “SWN.” Pursuant to the Merger Agreement, Southwestern notified the NYSE of the Mergers and requested that the NYSE withdraw the listing of Southwestern Common Stock. Upon Southwestern’s request, on October 1, 2024, the NYSE filed a notification of removal from listing on Form 25 with the SEC with respect to the delisting of the Southwestern Common Stock and the deregistration of the Southwestern Common Stock under Section 12(b) of the Exchange Act. The trading of Southwestern Common Stock on the NYSE was suspended before the opening of the market on October 1, 2024, and the Southwestern Common Stock is no longer listed on the NYSE.
In addition, Chesapeake, as successor in interest to Merger Sub LLC, as successor in interest to Southwestern, intends to file with the SEC a Form 15 requesting that the reporting obligations of Southwestern under Sections 13(a) and 15(d) of the Exchange Act be suspended.
| Item 3.03 | Material Modification to Rights of Security Holders |
The information set forth in the Introductory Note and Item 3.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03.
| Item 5.01 | Changes in Control of Registrant |
As a result of the consummation of the First Merger (the “Effective Time”), Southwestern became a wholly-owned subsidiary of Chesapeake. Immediately following the First Merger, Southwestern merged with and into Merger Sub LLC, with Merger Sub LLC continuing as the surviving entity and a wholly owned subsidiary of Chesapeake, and subsequently, Merger Sub LLC merged with and into Chesapeake, with Chesapeake continuing as the surviving entity.
The information set forth under the Introductory Note and Items 2.01, 3.03 and 5.02 of this Current Report on Form 8-K is incorporated by reference into this Item 5.01.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
Pursuant to the Merger Agreement, all of the directors and officers of Southwestern, other than the General Counsel, ceased serving in such capacities, immediately prior to the Effective Time. Each of the former named executive officers of Southwestern and the principal accounting officer of Southwestern whose employment is also being terminated in connection with the Mergers will receive the following severance benefits pursuant to their respective executive severance agreements: (i) a lump sum payment equal to the sum of any annualized bonus accrued to such officer through such officer’s termination date and unpaid as of such date, plus the product of (a) 2.99 (for William J. Way, Carl F. Giesler, Jr. and Clayton A. Carrell) or 2.0 (for John P. Kelly and Colin P. O’Beirne) and (b) the sum of (1) the executive’s base salary as of the executive’s termination date plus (2) the maximum bonus opportunity available to the executive under the annual incentive bonus program and (ii) continued participation in certain health and welfare benefits from the employment termination date until the earliest of (x) the expiration of three years, (y) death or (z) the date he or she is afforded a comparable benefit at comparable cost by a subsequent employer. Additionally, the long-term incentive awards held by such officers will fully vest. The former directors of Southwestern will receive vested shares pursuant to their respective award agreements.
In addition, as contemplated by the Merger Agreement, effective as of the Effective Time, Catherine A. Kehr, John D. Gass, Shameek Konar and S. P. “Chip” Johnson IV, who were members of the board of directors of Southwestern, immediately prior to the Effective Time, were appointed to Chesapeake’s board of directors. Chris Lacy, who was Senior Vice President, General Counsel and Secretary of Southwestern prior to the Effective Time, was appointed as Chesapeake’s Executive Vice President, General Counsel and Corporate Secretary, as of the Effective Time.
| Item 7.01 | Regulation FD Disclosure |
On October 1, 2024, Chesapeake issued a press release announcing the completion of the Mergers and other matters.
The full text of the press release is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.
In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to Item 7.01 and the press release attached hereto as Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits |
| Exhibit Number |
Description | |
| 2.1* | Agreement and Plan of Merger, dated January 10, 2024, by and among Southwestern Energy Company, Chesapeake Energy Corporation, Hulk Merger Sub, Inc. and Hulk LLC Sub, LLC (incorporated by reference to Exhibit 2.1 to Southwestern Energy Company’s Current Report on Form 8-K filed on January 11, 2024). | |
| 99.1 | Press Release, dated October 1, 2024. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
* Annexes, schedules and certain exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted annexes, schedules and exhibits upon request by the SEC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SOUTHWESTERN ENERGY COMPANY | ||
| Date: October 1, 2024 | By: | /s/ Christopher Lacy |
| Name: | Christopher Lacy | |
| Title: | Senior Vice President, General Counsel and Secretary | |
[Signature Page to Closing 8-K]
Exhibit 99.1
 |
NEWS RELEASE |
Chesapeake Energy and Southwestern Energy
Complete Merger and Provide Third Quarter Earnings Conference Call Information,
Company Rebranded as Expand Energy
OKLAHOMA CITY, October 1, 2024 – Chesapeake Energy Corporation (NASDAQ: CHK) and Southwestern Energy Company (NYSE: SWN) today closed on their previously announced combination. The combined company has been rebranded as Expand Energy Corporation. Expand Energy’s common stock will commence public trading on the NASDAQ under the ticker “EXE” at the open of trading on October 2, 2024, and will continue to trade today under the symbol “CHK”.
“As America’s largest natural gas producer and a top producer globally, Expand Energy is built to disrupt the industry’s traditional cost and market delivery model,” said Nick Dell’Osso, Expand Energy’s President and Chief Executive Officer. “Behind our advantaged portfolio, peer-leading returns program and resilient financial foundation, we are poised to capture the significant synergies provided by this powerful combination. We will expand opportunity for shareholders and consumers alike by enhancing margins and reaching more markets, reducing the overall cost of energy. The world needs more energy, and our team is committed to sustainably delivering it to consumers.”
In connection with its rebranding, Expand Energy launched a new website, which can be found at www.expandenergy.com.
The company will release its 2024 third quarter operational and financial results as well as provide certain preliminary information regarding its 2025 capital and operational plan after market close on October 29, 2024. A conference call to discuss the results and preliminary 2025 plan has been scheduled for October 30, 2024 at 9:00 a.m. EDT. Participants can view the live webcast here. Participants who would like to ask a question, can register here, and will receive the dial-in info and a unique PIN to join the call. Links to the conference call will be provided on Expand Energy's website. A replay will be available on the website following the call.
About Expand Energy
Expand Energy Corporation (NASDAQ: EXE) is the largest independent natural gas producer in the United States, powered by dedicated and innovative employees focused on disrupting the industry’s traditional cost and market delivery model to responsibly develop assets in the nation’s most prolific natural gas basins. Expand Energy’s returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution. Expand Energy is committed to expanding America’s energy reach to fuel a more affordable, reliable, lower carbon future.
Forward-Looking Statements
This press release 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 the current views of Expand Energy. These forward-looking statements include, but are not limited to, Expand Energy’s operations, strategies and plans, synergies and anticipated future performance. 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.
| INVESTOR CONTACT: | MEDIA CONTACT: | EXPAND ENERGY CORPORATION |
Chris Ayres (405) 935-8870 ir@expandenergy.com |
Brooke Coe (405) 935-8878 media@expandenergy.com |
6100 North Western Avenue P.O. Box 18496 Oklahoma City, OK 73154 |
Actual outcomes and results may differ materially from the results stated or implied in the forward-looking statements included in this press release due to a number of factors, including, but not limited to: the risk that the business combination could have an adverse effect on the ability of Expand Energy to retain and hire key personnel, on the ability of Expand Energy to attract third-party customers and maintain its relationships with derivatives counterparties and on Expand Energy’s operating results and businesses generally; the risk that problems may arise in successfully integrating the businesses of the companies, which may result in Expand Energy not operating as effectively and efficiently as expected; the risk of any unexpected costs or expenses resulting from the business combination; the outcome of existing litigation and the risk of any further litigation relating to the business combination; the risk that Expand Energy may be unable to achieve synergies or other anticipated benefits of the business combination 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 Expand Energy or the industry in which it operates, including the risk of new restrictions with respect to oil and natural gas development activities; the risk that the credit ratings of Expand Energy may be different from what Expand Energy expects; the ability of management to execute its plans to meet its goals and other risks inherent in Expand Energy’s business; public health crises, such as pandemics and epidemics, and any related government policies and actions; the potential disruption or interruption of Expand Energy’s operations due to war, accidents, political events, civil unrest, severe weather, cyber threats, terrorist acts, or other natural or human causes beyond Expand Energy’s control; and Expand Energy’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 press release could also have material adverse effects on forward-looking statements. Such factors are difficult to predict and may be beyond the control of Chesapeake Energy Corporation (“Chesapeake”), Southwestern Energy Company (“Southwestern”) and Expand Energy, and may also include other risks and uncertainties 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 Expand Energy’s website at http://investors.expandenergy.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 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. Expand Energy undertakes no obligation to publicly correct or update the forward-looking statements in this press release, 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.
2
Cover |
Oct. 01, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Oct. 01, 2024 |
| Entity File Number | 001-08246 |
| Entity Registrant Name | SOUTHWESTERN ENERGY COMPANY |
| Entity Central Index Key | 0000007332 |
| Entity Tax Identification Number | 71-0205415 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | 10000 Energy Drive |
| Entity Address, City or Town | Spring |
| Entity Address, State or Province | TX |
| Entity Address, Postal Zip Code | 77389 |
| City Area Code | 832 |
| Local Phone Number | 796-1000 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, Par Value of $0.01 |
| Trading Symbol | SWN |
| Security Exchange Name | NYSE |
| Entity Emerging Growth Company | false |
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