Range Resources to acquire Memorial Resource Development

Range Resources Corp. (NYSE: RRC) has agreed to acquire Memorial Resource Development Corp. (NASDAQ: MRD). Range will acquire all of the outstanding shares of common stock of MRD in an all-stock transaction valued at $4.4 billion. This valuation includes the assumption of MRD's net debt, which was $1.1 billion as of March 31, 2016.

Jeff Ventura, Range's CEO, said, "This acquisition will give Range strategic positioning in both the Appalachian and Gulf Coast regions, providing greater marketing capabilities and opportunities, with added beneficial exposure to growing natural gas demand. The transaction is also accretive to our cash flow, bolsters our credit profile and enhances the overall portfolio."

The deal includes 220,000 net acres in North Louisiana Terryville Field with stacked pay potential, 420 MMcfe/d 1Q 2016 production primarily from the Upper Red, and the assets are located near the Gulf Coast with significant existing pipeline infrastructure, noted Cowen and Company analysts Monday.

For Range, the deal is positive as it adds a "strong economic play outside the Marcellus," the analysts continued. "MRD has proven the Upper Red LCVS as a low risk repeatable formation," the analysts continued, noting "the deal is immediately accretive to 2016 as well as delevering."

Under the definitive agreement, MRD shareholders will receive 0.375 shares of Range common stock for each share of MRD common stock held. Based on the Range closing price on May 13, 2016, the transaction has an implied value to MRD shareholders of $15.75 per share, representing a 17% premium to the closing price of MRD stock. Following the transaction, shareholders of MRD are expected to own approximately 31% of the outstanding shares of Range. MRD will have the right to nominate an independent director from MRD to a seat on Range's board. Range's current senior management team will lead the combined company.

The boards of both companies have unanimously approved the terms of the agreement, and have recommended that both shareholder groups approve the transaction. Completion of the transaction is subject to the approval of the respective companies' shareholders, certain regulatory approvals and customary closing conditions. The transaction is expected to close in the second half of 2016.

Credit Suisse Securities (USA) LLC acted as exclusive financial advisor and Sidley Austin LLP acted as legal advisor to Range for the transaction. Morgan Stanley & Co LLC and Barclays Capital Inc. acted as financial advisors and Vinson & Elkins LLP and Akin Gump Strauss Hauer & Feld LLP acted as legal advisor to MRD and Natural Gas Partners, respectively.

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