Don't remember seeing this on the thread:
Lomak and Domain to Merge; Merger Creates $1.1 Billion Energy Company; Large Development Inventory Combined With High Impact Exploration
FORT WORTH and HOUSTON, Texas--(BUSINESS WIRE)--May 12, 1998--LOMAK PETROLEUM, INC. and DOMAIN ENERGY CORPORATION today announced that they have entered into a definitive agreement to merge. The combined company, to be called Range Resources Corporation, will benefit from the complementary strengths of Lomak's and Domain's assets, technical staffs and managements. Range will have a high margin reserve base of nearly one trillion cubic feet of natural gas equivalents, a reserve life index of 12 years, an extensive development inventory and a high impact exploration program. The new company's total assets will exceed $1.1 billion. Range's common stock is expected to trade on the New York Stock Exchange.
Pursuant to the merger agreement, Domain's shareholders will receive $14.50 worth of Lomak common stock for each Domain share. The final exchange ratio will be determined based on the market price of Lomak's shares during the 15 day period prior to completion of the merger. The exchange ratio is subject to a maximum and minimum of 1.2083 and 0.8529 Lomak shares, respectively. As a condition to the merger, an affiliate of First Reserve Corporation has agreed to sell to Lomak 3.3 million Domain shares (22% of the total outstanding) for $43.9 million in cash ($13.50 per share). As required by the merger agreements, First Reserve has voted all of its shares (52% of the total outstanding) in favor of the merger. As a result, no further Domain shareholder approval is necessary. Completion of the transaction is subject to approval by Lomak's shareholders and to customary regulatory approvals.
The merger combines an inventory of over 1,500 development projects in the Permian Basin, Midcontinent and Appalachia with a high impact exploration and development program in the Gulf Coast and offshore Gulf of Mexico. In addition, Range expects to expand its international exposure, initially through its 50% ownership of Domain Argentina S.A. Range also plans to expand Domain's independent producer finance subsidiary ("IPF") aggressively. IPF provides acquisition and development capital to small producers through the acquisition of overriding royalty interests.
On a combined basis, daily production rates in the first quarter of 1998 averaged 8,169 barrels of crude oil and liquids and 163 million cubic feet of natural gas, or 212 million cubic feet of natural gas equivalents. The combined reserve base totals approximately 960 billion cubic feet of natural gas equivalents. At year end 1997, adjusted for subsequent acquisitions and divestitures, Range's proved reserves had a pre-tax present value of approximately $830 million. The combined reserves are 73% natural gas and over 80% operated.
Domain's Houston-based staff will manage all of Range's Gulf Coast and Gulf of Mexico properties, international operations and the IPF business. Domain's West Texas properties will be transferred to Lomak's Permian business unit. John H. Pinkerton, Lomak's President and Chief Executive Officer, will continue in that capacity at Range, while Domain's Chief Executive Officer, Michael V. Ronca, will be Chief Operating Officer. Jonathan S. Linker, Chairman of Domain, and Mr. Ronca will join the board of directors of Range, and Thomas J. Edelman, Lomak's Chairman, will serve as Range's Chairman.
Commenting on the merger, Mr. Ronca stated, "This transaction provides our shareholders an interest in a larger, more diverse asset base. Lomak's high margin onshore operations give Range a degree of critical mass important in pursuing higher risk opportunities in the Gulf of Mexico. As a billion-dollar company, Range will be able to maintain larger interests in the prospects it generates, and increase its operational control offshore. Domain's exploration projects are an excellent fit with Lomak's longer-lived, more stable onshore assets. While Lomak and Domain each have impressive growth records, we are convinced that the combination will enhance our performance."
"Range's larger asset base, capital budget and shareholder base place the combined company solidly in a new peer group of larger independent oil and gas producers," noted Mr. Pinkerton. "With six fully staffed business units, and 50 petroleum engineers, geologists and geophysicists, Range will have greatly enhanced growth opportunities onshore and offshore in the U.S., and will provide us an entry into international operations. The new company's expanded management will have substantial equity ownership and a wide variety of experience. We expect the Domain team to enhance the performance of Lomak's Gulf Coast assets in the near term, while their international effort and independent producer finance have excellent longer-term prospects. We are extremely excited about the combination of two such complementary asset bases and teams. Range will benefit from a long reserve life and steady cash flow, while exhibiting substantial exploration potential."
Lomak and Domain will hold a joint teleconference to discuss the merger at 1:30 p.m. Central time today. Call (800) 289-0437 by 1:20 p.m. to participate. The confirmation code is 476547.
LOMAK PETROLEUM, INC. (NYSE:LOM) is engaged in the development, exploration and acquisition of oil and gas in the Permian, Midcontinent, Gulf Coast and Appalachia regions.
DOMAIN ENERGY CORPORATION (NYSE:DXD) is an independent energy company focused on building value primarily in the Gulf Coast region through a combination of exploration, development and acquisitions, as well as IPF.
Statements concerning results of future capital expenditures, production volumes, proved reserves, total assets and debt levels are forward-looking statements. These statements are based on assumptions concerning commodity prices, drilling results, acquisition opportunities, production, lease operating expenses, administrative and interest costs that management believes are reasonable based on currently available information; however, management's assumptions and the Companies' future performance are both subject to a wide range of business risks and there is no assurance that these goals and projections can or will be met. Further information is available in the Companies' filings with the Securities and Exchange Commission, which are incorporated by reference. |
