With its E&P peers buying and proving up the Stack play, Range Resources Corp. (NYSE: RRC) has agreed to sell part of its holdings there and wait for acreage in the northern extension of the play to prove up.

Range, based in Fort Worth, Texas, doesn’t intend to do any of the proving on its remaining acreage, however. It will wait for offset operators’ results to entice potential buyers.

The company, which delivered a strong start in first-quarter 2016, said April 28 it agreed to sell about 9,200 net acres of scattered assets in Oklahoma. Range signed a purchase and sale agreement for proceeds of about $77 million for holdings in Kingfisher, Canadian and Blaine counties, Okla.

That’s the same area where Devon Energy (NYSE: DVN) increased acreage in the Woodford Shale and Meramec plays by acquiring 80,000 net acres in the Stack.

Range’s transaction is expected to close in May. Combined with its recent Marcellus sale, the company should have enough money to keep it from needing to take on additional debt in 2016.

In March, the company closed a deal to sell a 23% average working interest in 10,900 acres in Bradford County, Pa., for about $110 million. The company retains large holdings in the Marcellus.

“With these two asset sales of about $190 million, we see no increase in absolute debt in 2016 compared to year end 2015, based on current prices,” said Jeff Ventura, Range’s CEO, said during an April 29 conference call.

As of January, Range subsidiary Range Production Co. LLC operated 78 Oklahoma wells in Blaine, Kingfisher and Canadian counties, according to state records.

The Right Time

Oklahoma has become something of a real estate investment for Range. The company’s 19,000 net acres north of the Stack, in central Oklahoma, will wait for now.

“We have eight rigs drilling in and around us,” Ventura said, adding that because Range’s acreage is HBP, it has time to wait for the market to improve. “Our thoughts are to just wait, watch some of the drilling results that we expect will be good and just sell into a better price.”

Ventura said Range is basically waiting for offset operators’ results to stir more interest in its remaining acreage.

The acreage also has potential in the emerging Osage play.

Ventura said that other noncore asset sales may include the Texas panhandle either “later this year or at an optimum time.”

In December, Range sold its Nora Field assets in southwest Virginia for about $876 million. In the third quarter of 2015, the assets produced 109 MMcf/d, or about 7.5% of Range's net production.

Post-Op

Range’s April deal will give an unnamed party interest in 200 legacy vertical wells in Blaine, Canadian and Kingfisher. Collectively the assets have production of about 5 million cubic feet equivalent per day (MMcfe/d).

Ventura said Range had shopped two packages in Oklahoma—the April package that sold and another that may have been the Osage acreage.

As of December, Range was actively marketing 28,493 net leasehold acres in Blaine, Canadian, Kingfisher and Major counties in in the Stack petroleum system.

“We marketed that in two pieces. The southern package was actually in the Stack play, it was about 9,000 acres scattered across three counties,” he said.

Tudor, Pickering, Holt & Co. (TPH) said in a report that it was underwhelmed by Range’s Stack deal.

TPH estimated that the core piece of the position was worth $6,750 per acre assuming $3,000 per Mcfe.

Mike Kelly, analyst with Seaport Global Securities LLC, said in a report that the price seemed reasonable given the “choppy nature of the assets.”

Kelly said it was noteworthy that Range has established a $300 million capex for fiscal year 2017, which “we think could result in $100 million in free cash flow” base on strip pricing.

The company also increased its first-quarter 2016 guidance by 1% to about 1,410 MMcfe/d from about 1,390 MMcfe/d.

Darren Barbee can be reached at dbarbee@hartenergy.com.

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