Range Resources Corp. (NYSE:RRC) Upgraded To Buy After Memorial Resources Acquisition


Range Resources Corp. (NYSE:RRC) has completed the acquisition of Memorial Resources Development Corp in an all-stock transaction valued at $4.2 billion.  The independent oil and natural gas producer has essentially strengthened its position in the industry given the natural gas plays that will come into play with the acquisition.

Merger Terms

Memorial Resources will now cease to trade on the NASDAQ exchange its shareholders having unanimously approved the takeover. As part of an agreement reached on May 16, 2016, Range is to acquire all of the outstanding shares of MRD common stock. The agreement also called for the company to absorb MRD’s $1.1 billion debt.

The transaction should go a long way in enhancing Range Resources positions as an independent natural gas producer given the core acreage positions in the Appalachian Basin and Northern Louisiana it is set to gain access to.

Memorial Resources acquisition also provides Range Resources with more exposure to natural resources in the East and gulf coasts. Gas accounted for 71% of the company’s overall production last year with oil and other liquids accounting for 29%.

“The combination of the two highest quality natural gas plays in the United States provides Range with a strong foundation to create sustainable shareholder value,” said CEO Jeff Ventura.

 Expected Efficiencies

In addition, the chief executive expects the acquisition to help Range Resources improve its already class-leading cost structure. The same should lead to marketing and operational efficiencies. By absorbing the smaller driller, the company will also bolster its Louisiana operations as well as wells in Pennsylvania, Texas and Oklahoma.

The market is already pricing in the latest coup, brokerage firms having upped their ratings of the stock. Jefferies Group, which currently has a buy rating on the stock, has reiterated a $50 share price target for Range Resources given the opportunities that could come into being at the back of the acquisition.

The merger could not have come at a better time given that Range Resources Corp. (NYSE:RRC) and Memorial Resources have seen their shares cut into half during the energy burst period.


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