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Penn Buys Lonestar

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Eagle Ford driller Penn Virginia has added acreage in its chosen geography with a $370m acquisition of Fort Worth-based Lonestar, which has accumulated approximately 72,682 gross acres in the area.

Following the transaction completion, Lonestar will have the right to nominate one independent director to the Penn Virginia Board of Directors. Edward Geiser will continue to serve as chairman of the board, and Darrin Henke will continue to serve as president and CEO of the company following the closing of the transaction.

Lonestar’s CEO Frank D. Bracken commented on the merger: “In today’s environment, size and scale are paramount, both in terms of operations and in the public markets. The merger exposes Lonestar shareholders to a substantially larger, more liquid, publicly-listed platform and the combination of the two companies’ high quality, liquids-focused operations should provide significant benefit to both shareholder groups, positioning the company as a dominant force in the Eagle Ford Shale.”

The company said the transaction complements existing assets and increases estimated 2021 sales volumes and free cash flow by around 50% and increases inventory locations by 50% to 750 gross locations.

Penn Virginia expects this merger to bring expected annual synergies of over $20m; and increases market capitalization by 15%.

Edward Geiser, chairman of Penn Virginia and managing partner of Juniper Capital, added: “This is exactly the type of accretive Eagle Ford consolidation we have been targeting and creates a significant opportunity for investors. Penn Virginia and Lonestar fit well strategically, and the combined company will be stronger across key financial metrics, will operate more efficiently than each company standalone, and will continue Penn Virginia’s commitment to environmental and social stewardship.”

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