Natural gas producer Chesapeake Energy Corp. (CHK - Get Report) said Tuesday, Oct. 30, it will acquire peer WildHorse Resource Development Corp. (WRD) for roughly $3.05 billion in cash and stock, throwing its hat in the ring for top oil producer in the Eagle Ford shale formation of south Texas. 

Oklahoma City-based Chesapeake Energy said it will exchange either 5.989 of its common shares, or a combination of 5.336 shares of its common shares and $3 in cash, in exchange for each common share of WildHorse. The company will also assume WildHorse's $930 million in net debt, giving the deal a total enterprise value of almost $4 billion. 

After a years-long restructuring that saw Chesapeake Energy pare hundreds of thousands of acres of natural gas-bearing properties in an effort to reduce a massive debt load built up through various acquisitions leading into the commodity downturn, the company is making a play on oil in a region that has seen revitalized deal activity over the past 12 to 18 months. 

Chesapeake said the deal is expected to double its adjusted oil production by 2020, increasing its projected range of 125,000 to 130,000 barrels of oil per day in 2019 and 160,000 to 170,000 barrels per day in 2020. The company's production mix will increase to about 30% oil versus 19% oil today. 

Shareholders of Chesapeake will wind up with about 55% of the combined company's stock, while Houston-based WildHorse's shareholders will own the remaining 45%. WildHorse's largest shareholder, NGP Energy Capital Management LLC, which took the target public in December 2016, have agreed to vote in favor of the transaction. 

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