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There is a new guy on the block: Penn Virginia rebrands to Ranger Oil10/11/2021
Following the close of the Lonestar acquisition, Penn Virginia Corp. plans to rename the combined company to Ranger Oil Corp., shifting its energy development in Texas towards safer and more efficient oil and gas operations.
This Texas oil & gas giant emerged as an Appalachian coal company in the late 1800s. Over time, the company evolved into a gas and oil manufacturer with assets largely in shale basins. And after the acquisition of Lonestar and Rocky Creek Resources within the past year, they decided to concentrate on Eagle Ford shale, reinventing itself and its values under the new name — Ranger Oil.
The company's consolidated assets now amount to over 140,000 net acres strategically positioned in the Eagle Ford play of south Texas.
It is expected that the company will continue with the two rig programs it operated before the signing of the $370 million merger agreement with Lonestar. Taking this rapid rate of development into account, CapEx is expected to be between $65 million and $75 million in the fourth quarter.
Along with Virginia's expansion through acquisitions, the management team also made a few changes, which positively impacted the company's operational and financial strength. Therefore, from early 2020 through the first half of 2021, Penn Virginia achieved the highest EBITDA margin per boe among all U.S. independent oil and gas companies.
This majorly happened because of the companies balance sheet extensive transformation: by bringing in significant equity capital from an experienced oil and gas equity group and issuing senior unsecured notes to extend maturities. Thus helping Virginia to create an estimated 1.5x LTM leverage.
It is anticipated that Ranger Oil Corp. will rebrand officially on Oct. 18, with the full rebranding to be complete by the year-end of 2021.
Concerning the strategy, the company will continue to leverage operational and capital efficiency to generate superior returns and continue its long-term free cash flow generation track record, which it has maintained every quarter since fourth-quarter 2019. At current strip prices, Ranger is projected to produce over $200 million in free cash flow in the next 12 months.
As Ranger, the company also plans to continue its disciplined approach to potential consolidation opportunities while maintaining an extremely liquid balance sheet, all the while pledging to achieve a leverage ratio of at least 1.0 times in the next four quarters.
In addition to these operational improvements, Ranger plans to grow its dominance by drilling longer laterals, creating more wells per pad, and utilizing enhanced completions techniques, hoping to grow in dominance and establish itself as an ESG leader in the industry.
Additionally, due to the merger closing, Lonestar's swapped hedge volumes will be assumed by the company, and most of them will be reset to reflect current market pricing. Although there may be no material impact on the Ranger's leverage metrics, the reset is expected to increase the company's free cash flow and adjusted EBITDAX going forward.
Starting Oct. 18, Ranger Oil will trade under the NASDAQ ticker ROCC.
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