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Why Roan Resources Stock Is Skyrocketing Today

Matthew DiLallo, The Motley Fool

What happened

Shares of Roan Resources (NYSE: ROAN) skyrocketed nearly 40% by 10:30 a.m. EDT on Monday. The surge came after the STACK-focused driller disclosed that multiple parties are interested in doing a deal with the company.

So what

Roan Resources said that it had received several unsolicited indications of interest to purchase the company. On top of that, others have inquired about potential in-basin consolidation opportunities. Roan's board responded by forming a committee to evaluate a possible sale or merger of the company and plans to hire an investment bank to assist it with the process.

Pump Jack with the sun setting in the background.

Image source: Getty Images.

The company currently controls more than 170,000 net acres in the heart of Oklahoma's STACK shale play. Roan has drilled several highly productive wells in the region, including 15 during the fourth quarter that have produced an average of 1,036 barrels of oil equivalent per day over their first 120 days. The company's large, undeveloped acreage position and strong well results make it an attractive acquisition target.

The interest in the company comes shortly after the unexpected departure of its CEO Tony Maranto, who resigned for personal reasons. While Roan is looking for a replacement, it could opt for a sale or merger instead of finding someone to lead the stand-alone company.

Now what

Mergers and acquisitions activity in the oil patch has started picking up thanks to higher oil prices. While there's no guarantee that Roan will find an acceptable deal, it controls prime drillable land attractive to rivals in the region. Because of that, there's a high probability the company will strike a deal, especially since it's currently without a CEO.

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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.