Range Resources Increases Debt Offering To $600M; Shares Climb 4%

Range Resources on Jan. 5 priced an offering of senior notes due 2029 worth $600 million in aggregate principal amount. The notes carry an interest rate of 8.25%. Shares of the natural gas and natural gas liquid (NGL) producer rose 4.2% at the close on Tuesday.

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Range Resources (RRC) increased the size of the offering from the previously announced $500 million to $600 million. The company expects the net proceeds from the offering to amount to $590.8 million. Range Resources expects to close the sale of the notes on Jan. 8, 2021, subject to closing conditions.

Net proceeds from the offering for general corporate purposes, including the repayment of borrowings under its bank credit facility, the company added.

During Q3, the company issued $300 million in aggregate principal amount of 9.25% senior notes due 2026. Proceeds from the senior notes offering and the North Louisiana divestiture of assets were used to repay the $500 million aggregate principal amount of the company’s notes due 2021 through 2023.

The company’s Q3 earnings included $522 million in exit and termination costs regarding the sale of the North Louisiana assets and a $125 million non-cash derivative loss due to increases in commodity prices. Range Resources finalized the sale of its North Louisiana assets in August for gross proceeds of $245 million, with the potential for $90 million in additional proceeds subject to future commodity prices.

Stephens analyst Gail Nicholson on Nov. 16 upgraded the stock to Buy from Hold and left the price target unchanged at $10 (34.6% upside potential).

The company’s disclosure of the remaining commitment liability in Louisiana along with earnings led to “an overly punitive stock reaction,” according to Nicholson thereby creating an opportunity for investors. (See RRC stock analysis on TipRanks)

From the rest of the Street, the stock scores an analyst consensus of a Hold based on 4 Buys, 7 Holds, and 2 Sells. The average analyst price target of $8.30 implies upside potential of 11.7% to current levels.