Jan 11 Reuters Chesapeake Energy said on Thursday it would buy smaller rival Southwestern Energy in an allstock transaction valued at 7.4 billion, a deal that would enable the secondlargest U.S. natural gas producer to take the top spot.

The move extends a recent spate of multibillion deals in the U.S. energy sector including Exxon Mobil39;s 60billion Pioneer Natural Resources offer and Chevron39;s 53billion agreement for Hess, as companies seek lucrative acreage to rebuild depleting assets.

Chesapeake has offered 6.69 per Southwestern share held, representing a discount of about 3 to the stock39;s last close, according to Reuters calculation.

Southwestern39;s shares fell 5.8 in premarket trading. The stock had gained 7.7 since the Wall Street Journal reported on the deal talks last week.

U.S. natural gas prices are expected to tick higher from a jump in exports, analysts have said, after a gloomy 2023 due to record production, ample inventories and a mild winter.

The 40 plunge in prices in 2023 from a year earlier also weighed on profits at natural gas producers. Southwestern reported thirdquarter net income that was a tenth of its yearearlier earnings.

The Southwestern bid is the biggest in Chesapeake39;s efforts to add heft to a pivot to natural gas assets since emerging from bankruptcy in 2021. Last year, it beefed up its position in the gasrich shale plays of the U.S. northeast with its 2.5 billion buyout of Chief ED.

Oklahoma Citybased Chesapeake exited Eagle…