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Penn Virginia (PVAC), Lonestar Complete All-Stock Merger Deal
Penn Virginia Corporation completed its previously announced all-stock merger deal with Lonestar Resources US Inc.
The company aims to officially rebrand itself as Ranger Oil Corporation, which will be in effect from Oct 18, 2021. The merged entity will begin trading under the ticker symbol of ROCC. The official rebranding is expected to complete by the end of 2021.
Per the terms of the deal, Penn Virginia shareholders will now own 87% of the merged entity, while Lonestar shareholders will own the rest. The transaction strengthens Penn Virginia’s position as a leading Eagle Ford operator and will provide additional scale and synergies.
The resources of both companies will create a consolidated asset position, which spreads about 140,000 net acres placed in the core of the Eagle Ford shale in South Texas. It is expected to have a production capacity of 40,000 barrels of oil equivalent per day.
Penn Virginia has been identified among the Eagle Ford operators with a lower carbon footprint. The company currently plans to target further developments as it integrates the Lonestar assets. In addition, the company will continue to develop its diverse and inclusive environment, and increase its community engagement efforts.
In fourth-quarter 2021, the new company will proceed with the ongoing development operations planned for both Penn Virginia and Lonestar, which include the continuation of the two currently operating rigs and ongoing completion activities. Total capital expenditure for fourth-quarter 2021 is expected to be $65-$75 million.
The merged entity’s impressive financial position and additional scope are expected to provide potential consolidation opportunities. Penn Virginia expects the combined company Ranger to produce more than $200 million of free cash flow in 2022.
Company Profile & Price Performance
Headquartered in Houston, TX, Penn Virginia is an upstream company that engages in the exploration, development, and production of oil, NGLs and natural gas.
Shares of the company have outperformed the industry in the past six months. The stock has gained 146.1% compared with the industry’s 38.2% growth.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Penn Virginia currently has a Zack Rank #2 (Buy).
Some other top-ranked players in the energy space are Cheniere Energy, Inc. (LNG - Free Report) , Tullow Oil plc (TUWOY - Free Report) and Enbridge Inc. (ENB - Free Report) , each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cheniere’s 2021 earnings are expected to surge 119.7% year over year.
Tullow’s 2021 earnings are expected to increase 33.3% year over year.
Enbridge’s 2021 earnings are expected to rise 13.4% year over year.