Page 9 - NorthAmOil Week 28 2021
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NorthAmOil                                   INVESTMENT                                          NorthAmOil










































       Penn Virginia to acquire Lonestar for $370mn





        TEXAS            PENN Virginia announced this week that it  additional scale, and would also put it in a strong
                         had agreed to acquire Lonestar Resources US  financial position to potentially pursue further
                         for $370mn in an all-stock transaction in Texas’  consolidation in the future.
                         Eagle Ford shale play. The move comes as the   Both companies talked up the additional
                         US shale industry continues its consolidation in  scale the deal is expected to provide in state-
                         pursuit of greater scale, among other goals.  ments from their executives.
                           Under the terms of the agreement, Lonestar   “This transaction further solidifies the com-
                         shareholders will receive 0.51 shares of common  pany’s position as a premier Eagle Ford opera-
                         stock of Penn Virginia for each share of Lonestar  tor and provides additional scale and synergies
                         common stock. The acquisition also includes  while still delivering operational excellence,”
                         the assumption of around $236mn worth of  said Penn Virginia’s president and CEO, Darrin   Both companies
                         net debt. The purchase price represents a 17%  Henke. “The benefits of basin consolidation are
                         premium to Lonestar’s closing price of $10 per  very compelling, and we strongly believe this is a   talked up the
                         share on July 9, according to KeyBanc analyst  value-creating opportunity for both companies.
                         Leo Mariani.                         We remain steadfast in our disciplined approach   additional
                           The transaction is expected to close in the  to running the business and continue to be com-
                         second half of 2021 and has already been unan-  mitted to free cash flow generation, capital dis-  scale the deal
                         imously approved by the boards of directors of  cipline, maximising cash-on-cash returns, and   is expected
                         both companies, Penn Virginia said in a July 12  protecting the environment.”
                         statement.                             “In today’s environment, size and scale are   to provide in
                           The acquisition is anticipated to complement  paramount, both in terms of operations and
                         Penn Virginia’s existing assets, raising inventory  in the public markets,” added Lonestar’s CEO,  statements from
                         locations by 50% to 750 gross locations. Sales  Frank Bracken. “The merger exposes Lonestar
                         volumes for 2021 and free cash flow (FCF) are  shareholders to a substantially larger, more   their executives.
                         also expected to be increased by around 50% as  liquid, publicly listed platform and the com-
                         a result of the transaction. Penn Virginia also  bination of the two companies’ high-quality,
                         anticipates that the deal will result in annual  liquids-focused operations should provide sig-
                         synergies worth over $20mn.          nificant benefit to both shareholder groups, posi-
                           The company currently produces roughly  tioning the company as a dominant force in the
                         25,000 barrels of oil equivalent per day (boepd)  Eagle Ford Shale.”
                         in the Eagle Ford, while Lonestar said this week   Lonestar emerged from bankruptcy protec-
                         that its output had reached 12,750 boepd in June.  tion in late 2020, having completed its financial
                         Penn Virginia said the acquisition would give it  restructuring.™



       Week 28   15•July•2021                   www. NEWSBASE .com                                              P9
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