Blockbuster Natural-Gas Merger Is Almost Too Perfect

Chesapeake Energy’s merger with Southwestern Energy would create the largest natural-gas-focused producer in the U.S. It also creates an investment story that is so compelling that it comes with risks of its own.

While merger-mania has swept up the energy sector since last year, natural-gas-focused producers have been relatively less active in deal making. The commodity’s price has been low and volatile, a tough combination for deals that lends itself to big bid-ask spreads, or gaps between selling and offering prices, notes Andrew Dittmar, senior vice president at Enverus Intelligence Research.