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Range Resources announces asset sales in Appalachia

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Oilfield Technology,

Range Resources Corp. has agreed to sell a 2% proportionately reduced overriding royalty interest in 350 000 net surface acres in southwest Appalachia, US, for gross proceeds totalling US$600 million.

The two separate transactions are effective as of 1 March 2019 and apply to existing and future Marcellus, Utica and Upper Devonian development on the subject leases, while excluding shallower and deeper horizons. The properties produced approximately 1.9 billion ft3/d net in 1Q19 and annualised cash flow associated with these overriding royalty sales is expected to approximate US$48 million, based on 1H19 pricing.

Range also completed the sale of certain non-producing acreage in Pennsylvania for gross proceeds of US$34 million that closed in June 2019. The properties sold included approximately 20 000 acres in northwest Armstrong County. Sale processes to monetise additional non-core assets remain underway.

The royalty interest transactions are scheduled to close during July 2019 with proceeds utilised to repay amounts outstanding under the company’s revolving credit facility. The combined gross proceeds of US$634 million will reduce total debt by approximately 17%. Annual interest expense is expected to decline by approximately $30 million and offset a significant amount of the cash flow reduction associated with the royalty sales.

“Following the expected closing of these transactions, Range will have executed a US$1 billion reduction in absolute debt over the past 12 months as the Company strengthens the business through organic free cash flow generation and asset sales”, said Jeff Ventura, CEO and President of Range Resources. “These asset sales once again highlight the significant intrinsic value of our assets. Over the past year, Range will have generated asset sale proceeds that equate to approximately 75% of our current market cap through the divestment of assets with a net impact to annual cash flow of less than 4%. Harvesting value from our asset base through these divestitures coupled with capital efficient operations positions Range for future success through commodity price cycles.”

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