Oklahoma City natural gas company Chesapeake Energy Corporation and Texas-based Southwestern Energy are merging to create one of the largest natural gas companies in the U.S.

The agreement has an all-stock valued at $7.4 billion and the new company will take on a different name once the merger is complete.

The headquarters will be in Oklahoma City and the company will maintain a presence in the Houston area.

Nick Dell’Osso, Chesapeake’s president and CEO, will be the president and chief executive of the new company. Dell’Osso said in a press release there is growing demand for the company’s products in the U.S. and overseas.

“We will be positioned to deliver more natural gas at a lower cost, accelerating America's energy reach and fueling a more affordable, reliable and lower-carbon future,” Dell’Osso said. “I look forward to leading the talented workforce of the combined organization to accelerate the long-term value opportunity for our shareholders, employees, and all stakeholders."

Bill Way, Southwestern’s president and CEO, thanked the Texas-based energy company’s team for positioning Southwestern for the deal.

“Together, Southwestern and Chesapeake can drive improved margins and returns from our highly complementary portfolios through enhanced scale, capital allocation flexibility, and access to premium markets to supply growing global natural gas demand,” Way said. “Most importantly, both sets of shareholders are able to participate in the substantial value creation and future growth opportunities of the combined company, with one of the top shareholder return frameworks in the sector."

This comes at a time when natural gas prices have been in decline, according to the U.S. Energy Information Administration. The deal is targeted to close in the second quarter of 2024.