Texas-based Range Resources has reportedly agreed to buy its smaller rival, Memorial Resource Development Corp., in an all-stock deal valued at U.S. $3.3 billion.
According to the deal, expected to close by the end of the year, the company will also take on $1.1 billion in debt owed by Memorial Resource. Memorial shareholders will own 31 percent of Range after the deal is closed.
Range Resources is one of the biggest gas producers in Appalachia's Marcellus shale, which generates some 95 percent of the company's total production.
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The purchase is significantly strategic as it gives Range Resources access to what is viewed as an emerging gas export market and to additional properties in northern Louisiana, adding to its portfolio in Oklahoma, Pennsylvania and Texas.
Range is particularly eyeing the assets in northern Louisiana in light of increasing gas exports to Mexico via pipeline and also as liquefied natural gas (LNG) shipments by tanker. The company is also hoping to take advantage of the growing demand from Gulf Coast power producers and petrochemical plants.
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Memorial Resource Development has licensed more than 500 wells in North Louisiana has seen total revenues drop some 40 percent over last year despite cost-cutting measures.
Last month, Range Resources caused a public outrage after a senior manager suggested that the company avoided operating in neighborhoods where residents had the financial means to challenge them.
Terry Bossert, the Range executive responsible for the comments later apologized for his "attempt to interject dry sarcasm" into a presentation on oil and gas well siting".
By Charles Kennedy of Oilprice.com
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