https://kimmeridge.com/wp-content/uploads/2023/07/I-Still-Havent-Found-What-Im-Looking-For.pdf
There are too many public companies relative to the degree of investor interest.
This imbalance results in depressed valuations as investors arbitrage away small
differences amongst increasingly commoditized business models. Scarcity value
drives equity market premiums but the only observable scarcity premium is found in
companies over $20 billion of market capitalization.
Chesapeake Energy Corporation is sniffing around Southwestern Energy, looking to buy out and merge in its closest O&G peer. Both Chesapeake and Southwestern have significant, long-time Marcellus assets (in Pennsylvania), and both have added new assets in the Louisiana Haynesville in recent years. They are on parallel tracks with their strategy of using Marcellus assets as a cash cow to fund more drilling in Haynesville, with an eye on grabbing higher prices in foreign markets by exporting Haynesville gas as LNG. It certainly makes sense that one company would be interested in combining with the other. If the two do combine, it would become the #1 shale gas driller in the U.S., surpassing EQT (in market value).