Range Resources is buying fellow oil and gas producer Memorial Resource Development for $3.3 billion plus $1.1 billion of debt, expanding operations in the Appalachian Basin and U.S. Gulf Coast regions.
Range will absorb the smaller Houston, Texas-based driller, adding its Louisiana operations to existing acreage and wells across Pennsylvania, Texas and Oklahoma.
“This acquisition will give Range strategic positioning in both the Appalachian and Gulf Coast regions, providing greater marketing capabilities and opportunities, with added beneficial exposure to growing natural gas demand,” said Range CEO Jeff Ventura. “The transaction is also accretive to our cash flow, bolsters our credit profile and enhances the overall portfolio.”
Memorial Resource Development’s shareholders will receive 0.375 of a Range share for each share they hold, Kallanish Energy understands.
The all-stock deal is valued at $15.75 per share, a 17% premium to Memorial Resource Development’s Friday close.
“This transaction combines two complementary companies with a deep, stacked pay portfolio of assets in two leading unconventional resource basins,” said Jay Graham, Memorial Resource’s CEO.
About 95% of Range’s production comes from its Appalachian operations. The Fort Worth, Texas-based producer is considered by many the Godfather of Marcellus Shale development.
Memorial Resource Development’s shareholders are expected to own about 31% of Range after the deal closes, expected in the second half of the year.
Memorial Resource Development will also have the right to nominate an independent director to the Range board.
Per Cramer on CNBC, this deal allows Range to purchase NatGas in Louisiana where the economic activity can use NatGas. Also there are exporting opportunities for NatGas in Louisiana.
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