Fitch eyes Chesapeake Energy positively

Fitch Ratings said it placed Chesapeake Energy Corp.'s BB+ long-term issuer default rating and all issue ratings on rating watch positive following the announced acquisition of Southwestern Energy Co.

“The rating watch reflects the reasonable valuation of the all-equity transaction, the conservative proforma capital structure and the increased scale of the combined company, which will be the largest North American natural gas producer and third-largest public producer globally. The scale and metrics of the combined entity are commensurate with an investment-grade rating. The combined company will have very strong gas positions in the Marcellus and Haynesville plays,” Fitch said in a press release.

The agency estimates that “the combined entity to maintain a sub 1.5x EBITDA leverage after closing, as well as strong liquidity and a back-end maturity profile.”

Resolving the RWP may take longer than six months, the agency said.

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