Range Resources Corp., a Fort Worth, Texas-based oil and gas company, increased its borrowing capacity and cut pricing on its credit facility. Roger Manny, senior v.p. and cfo, said the company has an evergreen facility led by JPMorgan, so the company looks at the loan every six months, usually extending it each year. With the adjustments the company now has more $330 million of available liquidity.
"We felt like it was a great opportunity to make those changes," said Manny. "Credit quality is improving....and with the Fed pushing up short term rates steadily in the last year, it was a good time to reduce borrowing costs to the extent that we could." Manny said the facility will be used for working capital and acquisitions, although the company has no specific targets in mind.
Range had three large acquisitions in 2004. In December, it purchased 205 billion cubic feet (Bcfe) of net proven resources for $222 million and in June 2004 it purchased the remaining 50% of the Great Lakes Energy Partners joint venture it did not previously own for $298 million. In April it bought 22 Bcfe in reserves from a privately held company for $23 million.
The loan comprises a $600 million revolver, increased from $575 million. The date of maturity was increased one year to January 2009. Pricing, which is determined by usage, was decreased. With 90% of usage or above, pricing was reduced from LIBOR plus 1 7/8% to LIBOR plus 1 3/4%. At the bottom tier, for usage under 50%, pricing was cut from LIBOR plus 1 1/4% to LIBOR plus 1%.
Bank One had been the company's agent since 1988, with JPMorgan serving a role in the syndicate for a number of years. Following the Bank One/JPMorgan merger, JPMorgan became the sole agent and Manny said the company is working with basically the same team it had before. "It was very well received in the market," said one banker, noting that the deal was oversubscribed. "It's a reflection of the strong fundamental progress the company has made over the last three or four years. It reflects their growth and development."