Roan Resources hires bankers to determine best path forward
Roan Resources announced Monday two firms will help it evaluate strategic alternatives that could end with its merger, sale or some other transaction that aims to boost its value to shareholders.
Officials stated Roan hired Citigroup Global Markets and Jefferies to help its board decide on best options to pursue.
The company announced April 29 it had received multiple unsolicited purchase offers for the company and had formed a transactional working committee to evaluate those.
On Monday, its release stated additional offers of interest continue to come.
A consolidation of its holdings through a divestiture of non-core acreage to boost the value of what’s left or an outright sale are among its options, the company’s top executive stated.
“This will be an ongoing process that may result in multiple strategic transactions. We do not intend to provide routine updates to the market, but we will do so when legally required or when it makes sense to do so,” Joseph A. Mills, Roan’s executive chairman, told analysts during a recent conference call.
During the call, Mills provided other operational updates.
He said Roan actively is seeking a new CEO, noting it had hired Korn Ferry to assist it in a national search. As for the mid-April departure of Tony Maranto, the company’s former chairman and CEO, he told them the board had “been less than pleased with the company’s overall performance over the past year.”
Mills said Roan’s decision to ramp up operations to eight rigs in 2018 had proved to be too aggressive “for a company of this scale and at this stage of its life cycle,” noting those resources had been squandered drilling “suboptimal” locations to keep those rigs busy.
Optimized development units are the better path forward, Mills noted.
“Going to four rigs in the first quarter of this year was clearly the right answer to allow us to better balance our activity level, adjust our cost structure more in line with the lower commodity prices and optimize our drilling and completion practices based on our learnings from our 2018 drilling program,” he said.
Mills said the company remains committed to its strategy of being a premier pure-play operator in the Anadarko Basin that continues to grow its production in a cost-effective and profitable manner.
He told analysts the company’s first optimally spaced and completed wells had started to come online, boosting average total daily production companywide to more than 53,000 barrels of oil equivalent, with 28 percent of that oil.
While Mills said the company is scaling back its 2019 production guidance, he said the company still expects its production by the middle of this year will range between 51,500 and 55,500 barrels of oil equivalent daily, with 26% to 28% being oil and 26% to 32% being natural gas liquids.
He said that still will equal a 20% to 25% growth in production, compared to the same point in time the previous year.
Finally, Mills said the company is trimming its planned 2019 capital expenditures by $15 million to a maximum of $555 million.
“Overall, my focus is to bring capital discipline back to the company and focus on our results while continuing to reduce drilling, operating and general and administrative costs and to determine the best strategic path forward for the company,” Mills told analysts.
The company’s stock, traded on the New York Stock Exchange under ticker symbol ROAN, had been trading at $5.47 a share a week ago. On Monday, it closed at $2.95 a share.