Lomak Petroleum and Domain Energy Corp. said they will merge toform a company with a reserve base of nearly 1 Tcf in gasequivalents, reserve life of 12 years and extensive development andexploration opportunities. The company to be created will be calledRange Resources Corp. and will have total assets exceeding $1.1billion.
“This transaction provides our shareholders an interest in alarger, more diverse asset base,” said Domain CEO Michael V. Ronca.”Lomak’s high-margin onshore operations give Range a degree ofcritical mass important in pursuing higher risk opportunities inthe Gulf of Mexico. As a billion-dollar company, Range will be ableto maintain larger interests in the prospects it generates, andincrease its operational control offshore. Domain’s explorationprojects are an excellent fit with Lomak’s longer-lived, morestable onshore assets.”
On a combined basis, daily production rates in the first quarterof 1998 averaged 8,169 barrels of crude oil and liquids and 163MMcf of gas, or 212 MMcf of gas equivalents. The combined reservebase totals about 960 Bcf of gas equivalents, about 73% of whichare natural gas. More than 80% are operated by the company. At theend of 1997, adjusted for subsequent acquisitions and divestitures,Range’s proved reserves had a pre-tax present value of about $830million.
The merger combines an inventory of more 1,500 developmentprojects in the Permian Basin, Midcontinent and Appalachia with ahigh-impact exploration and development program in the Gulf Coastand offshore Gulf of Mexico. Range expects to expand internationalexposure, initially through its 50% ownership of Domain ArgentinaS.A. Range also plans to aggressively expand Domain’s independentproducer finance subsidiary, which provides acquisition anddevelopment capital to small producers through the acquisition ofoverriding royalty interests.
John Pinkerton, Lomak president and CEO, will hold the sameposition in the new company. Ronca will be chief operating officerof Range.
Domain’s shareholders will receive $14.50 worth of Lomak commonstock for each Domain share.
Domain Energy was created in December 1996, after Ronca and hismanagement team, along with partner, First Reserve Corp., boughtthe domestic assets of Tenneco Ventures when Tenneco Inc. divestedits energy holdings in late 1996. In June 1997, Domain held aninitial public offering (IPO) of 6 million shares at $13.50 pershare.
“From the Domain perspective, we have been focused onaggressively growing our company since the IPO and have beenlooking at ways, in addition to acquisitions, to get ourselves to ahigher level of size, critical mass, increase our reserve life to amuch more substantial level, and of course, find a way to be ableto take advantage of the exploration prospects.,” Ronca toldreporters and analysts during a Tuesday conference call.
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