The transaction was structured as a merger with Stroud shareholders electing to receive either cash, Range stock or a combination of both cash and stock. In the transaction, Range issued 6.4 million shares of stock and paid $168.2 million in cash in exchange for all of Stroud's outstanding shares. As a result, Range now has 137.9 million shares outstanding. Range also assumed $107.2 million of debt in the transaction.
Range estimates it acquired 171 Bcfe of net proved reserves in the transaction and increased its leasehold position by 87,200 gross (67,000 net) acres. As a result, 2006 production growth targets have been increased from 11% to 15%, and 2007 production growth targets have been increased from 10% to 15%. Range has identified 236 drilling locations on the Stroud leasehold, of which 182 are attributable to the Barnett Shale acreage. More than 90% of Stroud's Barnett Shale acreage is located in the core or expanding core portions of the Barnett Shale play.
Including the Stroud properties, Range now owns approximately 46,000 gross (40,000 net) acres in the Barnett Shale play. Range plans to continue to build as well as develop its leasehold position over the next several years. Currently, Range has three drilling rigs running in the Barnett Shale play. Three additional rigs are scheduled to arrive in the third and fourth quarters, increasing the total Barnett rig count to six by year-end.
"With this transaction, Range now has 40,000 net acres in the Barnett Shale play, substantially all of which is in the high-quality portion of the play," said John Pinkerton, Range's president and CEO. "Organizationally, our shale play team benefits from the addition of the Stroud employees, who are highly regarded. We anticipate the expanded Barnett team will enhance and accelerate our shale effort. We believe that Range's acreage position in the Barnett Shale has unrisked reserve potential in excess of 1 Tcfe. In summary, the transaction expands our leasehold position with high-quality Barnett acreage, increases our drilling inventory and provides us with a number of additional top-tier people. Importantly, it continues Range's strategy of growing production and reserves at a 'top quartile' cost structure."
Range Resources Corp. is an independent oil and gas company operating in the Southwestern, Appalachian, and Gulf Coast regions of the United States.
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