Independent oil and gas company Range Resources Corp. RRC recently announced that it has completed the merger with Memorial Resource Development Corp. The all-stock transaction valued at $4.2 billion included the assumption of Memorial Resource's net debt worth $1.1 billion as of Mar 31, 2016.
Per the agreement, Memorial Resource shareholders will receive 0.375 shares of Range Resources’ common stock for each share held. After the merger, Memorial Resource’s shareholders would own approximately 31% stake of the new entity. The transaction has already been approved by the boards of both companies.
We believe that the transaction will substantially boost Range Resources’ position as a premier independent natural gas, oil and NGL producer in the United States with remarkable core acreage positions in both the Appalachian Basin and Northern Louisiana.
Range Resources’ diversified asset portfolio is spread between low-risk/long reserve-life Appalachian assets and large-volume/rapid-payout Gulf Coast properties. The company has an impressive inventory in the Marcellus Shale, one of the prominent emerging shale plays in the U.S. Lower 48. The company is advantageously positioned to benefit in the long run from these projects. Given its dominant position in the Marcellus Shale play and its continuous endeavor to control costs, we believe that Range Resources will be capable of long-term shareholder value creation.
For the third quarter, the company estimates production of 1.430 billion cubic feet equivalent (Bcfe) per day. Of this, the company expects liquids in the 32–35% range. The company anticipates direct operating expenses in the range of 18–19 cents per Mcfe. Transportation, gathering and compression expenses are expected in the range of $1.05–$1.06 per Mcfe, while exploration expenses are projected in the $5–$7 million range.
The remarkable prowess of the integration teams of the Range Resources and Memorial ensured that operations remained efficient over the period of the merger.
As a result of the merger, Memorial Resource’s common stock will no longer be listed for trading on Nasdaq. Pursuant to the terms of the merger, each share of the company’s common stock has been exchanged for 0.375 shares of Range Resources common stock.
Range Resources currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are Enbridge Inc. ENB, NGL Energy Partners LP NGL and Murphy USA Inc. MUSA. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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