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Southwestern Energy Co. (SWN) - Get Southwestern Energy Company Report said Thursday, Oct. 16, it agreed to pick up properties in the Marcellus and Utica shales from Chesapeake Energy Corp. (CHK) - Get Chesapeake Energy Corporation Report for $5.4 billion, adding a third key area for the Houston oil and gas explorer.

The properties cover 413,000 net acres in West Virginia and southwest Pennsylvania and 1,500 wells targeting natural gas, natural gas liquids and crude oil contained in the Upper Devonian, Marcellus and Utica.

The assets include 256 operated and producing Marcellus and Utica horizontal wells and 179 non-operated or non-producing Marcellus and Utica horizontal wells that produced 336 million cubic feet of gas equivalent per day, 55% of which is gas, 36% natural gas liquids and 9% oil. The operated properties have an average working interest of 67.5%, so the transaction must clear the main co-owner of the acreage, who has a 30-day preferential right to purchase it.

Southwestern expects the deal to close by year-end.

Tudor, Pickering, Holt & Co. Securities Inc. wrote in a note that it looks like Southwestern paid $8,500 to $9,000 per acre.

Oklahoma City-based Chesapeake has been selling assets as part of a reorganization after its CEO Aubrey McClendon was forced out.

"Today's announcement marks a major step in Chesapeake's transformation and a dramatic improvement in our financial strength as we seek to maximize value for our shareholders," Chesapeake CEO Doug Lawler said in a statement.

Lawler reassured investors that the deal shouldn't affect its production growth targets, with are estimated at 7% to 10%.

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Southwestern CEO Steve Mueller said the acquisition adds a promising new area to its already top positions in the Fayetteville shale and northeastern Pennsylvania Marcellus.

"The early drilling in both the liquids-rich Marcellus and emerging Utica plays has confirmed the resource potential and the economic strength of a long-term development program," he said. "This transaction fits perfectly with Southwestern's vertical integration strategy and, through our operational strengths and core competencies, we expect to drive exceptional future value from these assets."

The largely contiguous acreage position lies almost exclusively in northern West Virginia and is held by production or has lease commitments through 2018 that average less than 20,000 acres per year. Average net revenue on the leases is 86%.

As part of the deal, Southwestern will assume part of Chesapeake's firm transportation and processing capacity commitments.

Southwestern plans to begin with four to six rigs next year and increase to 11 rigs by 2017. The company estimates it can drill for at least 20 years maintaining the 11-rig pace.

By the end of 2017, Southwestern expects its reserve mix to be one third from each of the three areas, versus two-thirds for the Fayetteville and one third for the northeast Marcellus right now.

Bank of America Merrill Lynch advised Southwestern and provided it a commitment for a $5 billion, 364-day senior unsecured bridge term loan credit facility, which, combined with its existing revolver, will be able to fund the transaction, Southwestern said.

The company plans to access the debt and equity capital markets for permanent financing, depending on market conditions. It also is considering selling unspecified non-core assets.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.