Penn Virginia Corp. has agreed to acquire Lonestar Resources US Inc. in an all-stock transaction, adding to its existing South Texas Eagle Ford position.
Lonestar’s position lies across 11 Texas counties divided into three regions: Western (Dimmit, La Salle, and Frio Counties), Central (Gonzales, Karnes, Fayette, Wilson, DeWitt, and Lavaca Counties), and Eastern (Brazos and Robertson Counties). As of Dec. 31, 2020, Lonestar operated 97% of its Eagle Ford position and some 94% of the net acreage was held by production.
The deal gives Penn Virginia 143,000 net acres, 38,000 boe/d, and 219 MMboe in proved reserves, with an estimated 750 combined gross well locations with adjacent acreage allowing for longer laterals, Penn Virginia said in a July 12 statement.
Operational and G&A synergies are expected to exceed $20 million/year.
Lonestar shareholders will receive 0.51 shares of Penn Virginia common stock for each share of Lonestar common stock outstanding. The deal is valued at $370 million as of July 9, comprised of 5.9 million shares of Penn Virginia common stock and Penn Virginia’s assumption of $236 million of outstanding net debt.
Following the closing of the deal, Penn Virginia’s existing shareholders and Lonestar’s existing stockholders will own 87% and 13%, respectively, of the combined company.
The deal, which is expected to close in second-half 2021, remains subject to customary closing conditions, including shareholder approvals.
Darrin Henke will continue to serve as president and chief executive officer. Lonestar will have the right to nominate one independent director. Edward Geiser, managing partner of Juniper Capital Advisors, will continue to serve as chairman of the board.
In January 2021, Penn Virginia and Juniper closed a $188.4-million investment deal intended to improve Penn Virginia’s balance sheet and liquidity position, extend its second-lien term loan maturity, and increase cash flow and drilling inventory with bolt-on assets in Lavaca and DeWitt counties from Juniper portfolio company Rocky Creek Resources.