Range Resources plans to sell assets for total proceeds of $600m. Credit: Imahornfan.

Range Resources has agreed to sell a 2% proportionately reduced overriding royalty interest in 350,000 net surface acres in south-west Appalachia for $600m.

The company also completed the sale of certain non-producing acreage in Pennsylvania for $34m. The properties sold included more than 20,000 acres in north-west Armstrong County.

Effective 1 March this year, the two separate transactions are applicable to existing and future Marcellus, Utica and Upper Devonian development on the subject leases. The agreements exclude shallower and deeper horizons.

The properties to be sold produced more than 1.9Bcf/d in the first quarter this year and annualised cash flow associated with these overriding royalty sales is expected to exceed $48m, based on first-half pricing this year.

According to the company, sale processes to monetise additional non-core assets are in progress.

The royalty interest transactions are scheduled to close in this month. The proceeds are intended to be used to repay amounts outstanding under the company’s revolving credit facility.

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The combined gross proceeds of $634m will reduce the company’s total debt to nearly 17%.

Range Resources CEO and president Jeff Ventura said: “Following the expected closing of these transactions, Range will have executed a $1bn reduction in absolute debt over the past 12 months as the company strengthens the business through organic free cash flow generation and asset sales.

“These asset sales once again highlight the significant intrinsic value of our assets.  Over the past year, Range will have generated asset sale proceeds that equate to approximately 75% of our current market cap through the divestment of assets with a net impact to annual cash flow of less than 4%.

“Harvesting value from our asset base through these divestitures coupled with capital-efficient operations positions Range for future success through commodity price cycles.”