Denver oil and gas explorer Antero Resources  (AR - Get Report) announced after the markets closed Thursday that it bought 55,000 net acres in Appalachia's Marcellus Shale for $450 million.

It didn't name the seller but shortly thereafter Houston-based Southwestern Energy (SWN - Get Report) said it agreed to sell the same amount of acreage in the same area in West Virginia to an unnamed third party for the same sum.

Southwestern said it would use the proceeds to reduce the principal balance of its term loan, which is due in November 2018. "We are bringing forward the value of acreage that is much longer dated in our development plans, enabling us to take action and proactively reduce outstanding debt," Southwestern CEO and president Bill Way said in a statement.

Antero said it will pay for the deal with up to $875 million in proceeds from an equity offering led by Credit Suisse and JP Morgan.

The stock of buyer Antero is down 2.2% while the shares of seller Southwestern have sunk 5%

An unnamed third party has a 30-day "tag along" option to sell the remaining 19% average working interest in the acquired properties to Antero, or an additional 13,000 net acres, under the same terms, which would bring the total purchase price to $560 million.

As a result of the deal, Antero is boosting its production target for next year by 20% to 25%. The transaction will bring its Marcellus position to 480,000 net acres and estimated proved, probable and possible reserves of 33.7 trillion cubic feet equivalent.

Antero chairman and CEO Paul Rady said the acquisition enhances the company's top position as a pure-play Appalachian operator and creates a new platform for development and consolidation.

"Similar to the successful strategy that we deployed in Tyler County, we expect to further consolidate acreage in Wetzel County and build out the necessary midstream infrastructure to move our gas to market, creating significant value for both Antero Resources and Antero Midstream," he said.

The companies hope to close the deal this quarter.

Seaport Global Securities analyst Mike Kelly said the acquisition meaningfully high-grades Antero's inventory at a fair price and improves its outlook for next year but that the share issue dilutes shareholders by as much as 11%. He said the deal also makes sense for Southwestern from a liquidity standpoint but believes it still has more work to clean up its balance sheet with shareholder dilution through a big equity raise or core asset sale "almost inevitable."

Analysts at Tudor, Pickering, Holt & Co. said they continue to think that Antero is well positioned to benefit from industry consolidation in the area given its big portfolio of midstream, or infrastructure, assets, which give it access to markets at a lower cost and at a time when new takeaway capacity in the area is being delayed.

Antero said around 75% of the 55,000 net acres contains rights for natural gas in the Utica shale. The acquisition includes undeveloped properties primarily in Wetzel, Tyler and Doddridge Counties that produce 14 million cubic feet equivalent per day.

The buyer estimates the undeveloped properties include 4.1 trillion cubic feet equivalent of proved, probable and possible reserves in the Marcellus shale and 1.8 trillion cubic feet of dry natural resource potential in the Utica, with 625 locations in which to drill.

The 33,000 net acres in Wetzel County establish a new platform for development and consolidation for Antero while the 12,000 net acres in Tyler County add to Antero's already sizeable position there.

Almost all of the 55,000 net acres involved in the deal will be dedicated to Antero Midstream for gas gathering, compression, processing and water services, Antero said.

The tag along acreage includes 1 trillion cubic feet equivalent of unaudited proved, probable and possible reserves in the Marcellus, 400 billion cubic feet of dry natural gas resource in the Utica and 3 million cubic feet per day of net production.

Rady said the deal adds or enhances 1,000 undeveloped liquid natural gas locations with similar recovery results the company has achieved this year in Tyler and Doddridge Counties and adds or enhances 225 Marcellus dry gas locations and 500 highly prospective dry Utica locations.

Antero president and CFO Glen Warren said the company expects to add another rig in Tyler County in the second half of the year while maintaining its drilling and completion budget of $1.3 billion. The rig will help it accelerate production so it can generate 20% to 25% year-over-year growth next year with a minimal increase to its 2017 drilling and completion capital budget.

"Due to our firm transportation portfolio, substantially all incremental production is expected to flow to favorably priced markets and enable us to continue delivering top tier Ebitdax margins," he said.

Warren added that there will be $500 million of additional organic growth capital opportunities over the next five years that will ultimately benefit Antero through its 62% ownership in Antero Midstream.

Vinson & Elkins LLP counseled Antero, including Bryan Loocke, Danielle Patterson, Megan Savage, Todd Way, Julia Pashin, Larry Nettles, Corinne Snow, James Olson and Chris Terhune.