Range Resources announced the closing of the first phase of its sale of tight gas sand properties in Ohio for a purchase price of approximately $300 million. As further consents to lease assignments are obtained, subsequent closings are expected to take place covering the remaining approximately $23 million of properties. In total, the properties include approximately 3,300 producing wells with net production of approximately 25 Mmcfe per day.
Range also announced that its bank group has reaffirmed the $1.5 billion borrowing base on its revolving credit facility at the regularly scheduled semi-annual redetermination. The reaffirmation of the borrowing base fully reflected the asset sales, including the Ohio properties. Notwithstanding the $1.5 billion approved borrowing base, Range elected to maintain the $1.25 billion lender commitment amount. The Range bank group consists of 26 financial institutions with no single bank holding more than 5% of the total commitment. There was no change in interest rates, fees or repayment terms. Currently, Range has more than $1 billion of available liquidity. The credit facility maturity date remains October 2012. Under terms of the credit facility, the borrowing base is determined twice each year by the bank group utilizing bank estimates of reserves and future oil and gas prices. The next redetermination is scheduled for October 1, 2010.
Commenting on the announcements, Range’s Chairman and CEO, John H. Pinkerton, said, "Since early 2009, we have sold properties containing approximately 6,200 wellbores. This represents roughly 50% of our well count, but less than 10% of our production and reserves. During this period, we have continued to drive up production and reserves by focusing on our lower cost, higher return plays. Not only do these plays have much lower finding cost, our operating costs are decreasing significantly with the reduction in well count. Our higher return plays allow us to do more with less, as we are continuing to increase production with fewer rigs. In this low gas price environment, we are focusing our capital on those plays where we can achieve attractive returns. Given the recent asset sales, we are also pleased that our bank group has chosen to maintain our $1.5 billion borrowing base, providing us with more than sufficient liquidity. Despite low natural gas prices, we are extremely well positioned to continue to build per share value."
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