Range Resources Corp. and FirstEnergy Corp. announced Thursdaythe formation of a $1 billion joint venture in the AppalachianBasin. Each company will own 50% of the yet-to-be-named venture.The deal is expected to close within 60 days.

Once formed, the venture will have proved reserves of 450 Bcfe,of which roughly 90% will be natural gas, as well as 4,700 miles ofgas gathering and transportation lines and a leasehold position of980,000 gross acres.

For Range Resources, the move offers an opportunity to pay downdebt. The Texas-based energy company will contribute $300 millionin assets and $200 million in debt to the project. Half of theventure’s debt will be included as a non-recourse liability onRange’s balance sheet, decreasing its debt by $100 million.FirstEnergy declined to comment on its funding.

John Pinkerton, Range’s CEO saw benefits through “significantcost savings, and the size and efficiency of the venture should bea catalyst for continued growth. In addition, the transactionrepresents a substantial step in deleveraging Range, reducing ourrecourse bank debt by more than 50%. While the transaction isexpected to reduce cash flow modestly in the short-term, it isprojected to be immediately accretive to earnings.”

FirstEnergy, a holding company for utilities such as OhioEdison, The Illuminating Company, Pennsylvania Power, and ToledoEdison, as well as an energy-related products and services company,said the venture will create its largest Appalachian asset. “Themove allows us to market our share of the energy produced at alow-cost, more efficient rate. Being a full service energyprovider, this opportunity was too good to pass up,” said MarkDurbin, a FirstEnergy spokesman.

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