Range Resources Corp. (NYSE: RRC) has announced the execution of an agreement to exchange producing properties and other assets with EQT Corp. (NYSE: EQT).
Range will transfer to EQT ownership of approximately 73,000 net acres and related assets in Glasscock and Sterling Counties, Texas comprising all of Range's Conger properties, which are largely held by production. The Conger properties are currently producing approximately 28 Mmcfe per day with 62% being liquids primarily from the Cisco/Canyon. These Permian Basin properties have multiple horizontal and vertical stacked pay drilling opportunities in the Wolfcamp, Cline and Wolfberry horizons.
EQT will transfer to Range ownership of EQT's operated interest covering 138,000 net acres and their 50% interest in 1,200 miles of gathering pipelines and compression in the Nora Field of Virginia, giving Range 100% ownership of that asset. In addition, Range will receive $145 million in cash. The Nora properties Range will receive are currently producing approximately 41 Mmcf per day. These properties have multiple vertical and horizontal stacked pay drilling opportunities in the coalbed methane, conventional tight gas intervals and Devonian shale horizons. Range's 2014 capital expenditure budget will remain unchanged at $1.52 billion.
The exchange is subject to satisfaction of customary closing conditions, final due diligence and customary post closing adjustments. The transaction is anticipated to be completed in the second quarter of 2014.
The transactions highlights include:
- Increasing Range's net Virginia production from 70 Mmcf per day to 111 Mmcf per day at closing from the new combined 385,000 gross and net acres owned by Range in Virginia.
- Range will now have full ownership and operation of the approximately 1,530 miles of gathering and 83,000 hp of compression in the Nora/Haysi combined fields.
- Multiple stacked pay opportunities include coalbed methane, tight gas intervals and Devonian shales.
- All property is held by production with Range owning the majority of the minerals across the area.
- The property is significantly under-developed compared to the surrounding fields in Kentucky, West Virginia and Virginia.
- Range estimates that the exchanged property comprises a net unproved resource potential of 2 Tcfe increasing Range's net unproved resource potential in the Virginia properties to 5 Tcfe which is largely de-risked from the historical drilling.
- The Nora/Haysi combined properties are strategically located along the East Tennessee pipeline which interconnects with the Atlantic coastal Transco pipeline segment through the Patriot pipeline system to Transco Zone 5.
- 3 Bcf per day of new natural gas demand is expected in the southeast area of the United States in the next four to five years.
Range is based in Fort Worth, Texas and EQT is based in Pittsburgh.
- The Commonwealth of Virginia alone is expected to add 1 Bcf per day of demand from new natural gas generated power plants in the near future.
- Nora is strategically positioned to provide natural gas to these growing markets while allowing Range to market Marcellus natural gas through additional market contacts, exchange gas agreements and having access to two additional direct market pipelines.
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