Fort Worth-based driller Range Resources is takeover target

On February 22, 2012 — No comments

Fort Worth-based Range Resources Corp.’s drilling operations in Pennsylvania’s Marcellus Shale are so coveted that even with its shares at unusually high valuations, the natural gas producer is now a takeover target.

Range is trading at 56 times estimated 2012 earnings, the highest multiple of any U.S. exploration and production company worth more than $5 billion. The company owns the second-most leases in the Marcellus, according to data compiled by Bloomberg. With that region estimated to contain enough gas to supply the U.S. for six years, analysts say Range’s profits will triple over the next three years, the data show.

Raymond James Financial says Range may now be a logical target for BP Plc. or Irving-based Exxon Mobil Corp., which snapped up Fort Worth-based XTO Energy in 2010. The $10.2 billion company may fetch at least $78 a share in a takeover, according to Morningstar Inc. Range’s stock (ticker: RRC) closed Friday at $65.72.

“The rationale for any [merger] candidate is, do you have access to top-quality resource plays, and do you have size in those plays?” Andrew Coleman, a Houston-based analyst at Raymond James, said in a telephone interview. “Range definitely checks both of those boxes. It’s a relatively expensive stock with a well-defined track record of growth and a very large acreage position in the Marcellus.”

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