Range Resources Corporation RRC recently announced its decision to divest 2% overriding royalty interests in Appalachia assets. The company will likely receive a gross amount of $600 million for the resources, spread across 350,000 net acres in the southwest of the basin.
Range Resources expects the deal, which involves two separate transactions, to close by the end of July. The last time the company had announced a royalty sale in the Appalachian was in October 2018, when the upstream energy firm sold a 1% overriding royalty interest in the basin for $300 million of gross proceeds.
The latest properties that the company has agreed to sell have produced a total of 1.9 billion cubic feet equivalent per day through the March quarter of 2019.
Moreover, the company announced that it will get a total of $34 million from the closure of the divesture of several non-producing properties in Pennsylvania.
Investors should know that Range Resources expects to lower total debt by roughly 17% with the total proceeds of $634 million. With a reduced debt load, the company expects to be able to bring down its annual interest expenses by roughly $30 million. Range Resources added that the lower interest expense will considerably make up for the decline in cashflow from the sale of royalty interests. Importantly, the company believes that its divested assets over the past year will generate cash proceeds as high as 75% of the current market capitalization while affecting the cashflow annually by as low as below 4%.
Headquartered in Fort Worth, TX, Range Resources currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy space are Oceaneering International, Inc. OII, Helix Energy Solutions Group, Inc. HLX and Approach Resources Inc. AREX. While Oceaneering and Helix Energy sport a Zacks Rank #1 (Strong Buy), Approach Resources carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Oceaneering International beat the Zacks Consensus Estimate for its bottom line in the past four quarters.
Helix Energy is likely to see earnings growth of 47.4% through 2019.
Approach Resources has surpassed the Zacks Consensus Estimate for its bottom line in three of the past four quarters.
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