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Range Resources announced earlier this month that it is selling its natural gas assets in the Terryville complex of northern Louisiana as it continues to work on reducing debt and improving its balance sheet.
Castleton Resources of Houston, Texas, is purchasing the acreage for $245 million, with another $90 million payment contingent on gas prices.
Range, which is one of the largest drillers in the Appalachian basin, also laid off another 40 employees at its Southpointe and Ft. Worth, Texas, headquarters, as producers have reduced costs and cut capital budgets and new wells being drilled due to low gas prices and a COVID-19 related drop in demand.
“After the sale of our North Louisiana assets, Range’s cost structure and capital productivity will take another meaningful step forward,” said CEO Jeff Ventura in a news release. In the same release, Range said that it expects to reduce its outstanding debt in 2020 for the third year in a row. “Range remains well-positioned to successfully navigate the current commodity environment and benefit from an improved outlook for natural gas and natural gas liquids,” Venture said. Natural gas prices and the demand for liquid natural gas have started to see an uptick in recent weeks.
Range acquired the Louisiana assets when it bought Memorial Resource Development Corp. in a $3.3 billion stock deal in 2016. The company has since written off more than $2 billion of the investment.
At the time of the sale, the Louisiana assets were producing about 160 million cubic feet of gas (Mmcf) a day, but Range did not plan any drilling in the area this year, the news release stated.
Castleton, which already has assets in north Texas and Louisiana, said that it will now own more than 315,000 acres with total daily production of about 500 Mmcf.
“We are very pleased to be able to purchase quality assets at a low-point in the commodity-price cycle,” Castleton CEO Craig Jarchow said in a statement. “The company is well-positioned to enhance the value of these assets through further operational enhancements.”
The Louisiana acreage is in the Terryville Complex, which is part of the Cotton Valley Formation, a tight gas play in northeast Texas and northwest Louisiana just above the Haynesville Shale.