Penn Virginia Acquires Lonestar Resources U.S.
Texas-based Penn Virginia Corp. has entered into a definitive agreement to acquire 100% of the issued share capital of NASDAQ-listed Lonestar Resources US Inc. in a corporate transaction valued at approximately US$370 million, payable in stock and assumption of debt.
Under the terms of the deal, Lonestar shareholders will receive 0.51 Penn Virginia shares for each share of Lonestar common stock owned. Based on the exchange ratio, Penn Virginia will acquire Lonestar shares in exchange for approximately US$134 million, payable via the issuance of 5,900,000 Penn Virginia common shares at an implied price of approximately US$22.70. Adjusting for the assumption of approximately US$236 million of Lonestar’s reported net debt (as of June 30th, 2021), the total estimated transaction value is approximately US$370 million on an enterprise value basis.
Fort Worth-headquartered Lonestar is focused on operations in the crude oil window of the Eagle Ford shale, and currently holds a position covering approximately 53,550 net acres with around 250 estimated gross drilling locations. As of December 31st, 2020, the total proved (1P) reserves attributable to the company were approximately 82.7 million barrels of oil equivalent (MMboe), of which around 74% was oil, and current average daily production of 13 thousand barrels of oil equivalent per day (Mboe/d), of which 70% is oil.
NASDAQ-listed Penn Virginia is also primarily focused on operations in the Eagle Ford shale. Pro forma, the combined entity will have approximately 143,000 net acres of properties in the Eagle Ford shale, with 1P reserves of approximately 219 MMboe (as of December 31st, 2020), and average daily production of approximately 38 Mboe/d during Q1-2021.
“This transaction further solidifies the company’s position as a premier Eagle Ford operator and provides additional scale and synergies while still delivering operational excellence. Consistent with our disciplined strategy, this transaction is expected to be accretive to free cash flow and certain other key per share metrics to deliver long-term value to shareholders. The benefits of basin consolidation are very compelling, and we strongly believe this is a value-creating opportunity for both companies,” commented Darrin Henke, President & CEO of Penn Virginia.
Evercore, BofA Securities, and RBC Capital Markets are acting as financial advisors to Penn Virginia, while Barclays Capital is advising Lonestar.
The completion of the transaction remains subject to shareholder approvals, and is expected to occur in H2-2021.