Range Resources Corp. has agreed to add two independent directors to its board with the oversight and approval of one of the largest shareholders, SailingStone Capital Partners LLC.
SailingStone owns 17% of Range’s outstanding shares and cut a similar deal two years ago, when it owned 11% of the stock, to help appoint board member Steffen Palko, who co-founded XTO Energy Inc. The latest agreement announced on Monday would find SailingStone with a mark on three of the independent directors. The new appointments would stand for election at next year’s stockholder meeting, when the investment firm and the company have agreed to cut the board from 10 to nine members.
Range has also launched an external search for an executive vice president (EVP) to “supplement and strengthen” the management team. Longtime CFO Roger Manny and COO Ray Walker, who also served as EVP, recently retired. The company has also agreed to separate the chairman and CEO roles. Former Phillips 66 CFO Greg Maxwell, who has been a board member since 2015, has been appointed chairman. Jeff Ventura will continue as CEO.
“Our agreement with SailingStone reflects our mutual alignment on realizing the full value creation potential for all shareholders of the company,” Maxwell said.
The moves come at a time when institutional investors are pushing unconventional exploration and production companies to generate more value for shareholders as their management teams look ahead to the next phase of the shale revolution. Shareholders have pushed executives to change performance metrics and focus more on investor returns, rather than the rapid growth that has defined some of the country’s leading independents for the last several years.
Two years ago, SailingStone pushed Range to establish a shareholder engagement program and more aggressively address executive compensation. The firm, which also owns about 11% of shares in Antero Resources Corp., more recently sent a letter to that company pushing it to focus on lifting its low stock price and accelerating debt reduction, among other things.
For Range, the new directors would also come aboard at a time when the company has re-focused its efforts on the Appalachian Basin. After spending more than $4 billion in 2016 to take over Memorial Resource Development Corp. and enter North Louisiana’s Cotton Valley Sands Terryville Complex, Range has so far reported disappointing results. Earlier this year, the company said it would scale back operations there to learn more about the play and double down in Appalachia, where it’s long been a Marcellus Shale juggernaut.
“We believe that the strategic changes previously announced by the company, combined with the new initiatives outlined in this agreement, will serve shareholders well as Range shifts its focus back toward developing the Marcellus Shale, reducing leverage and employing its ”Shale 2.0’ business model,” said SailingStone Managing Partner Ken Settles.
Range’s stock was up nearly 3% on Monday, during a day of broader gains across the market.
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