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Acquisitions and Dispositions | 9 Months Ended
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Sep. 30, 2016
Business Combinations [Abstract] |
Acquisitions and Dispositions | (4) ACQUISITIONS AND DISPOSITIONS Memorial Merger On September 16, 2016, Range Resources Corporation completed its merger with Memorial (the “Memorial Merger,”) which was accomplished through the merger of Medina Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Range, with and into Memorial, with Memorial surviving as a wholly-owned subsidiary of Range. The results of Memorial’s operations since the effective time of the merger are included in our consolidated statement of operations. The merger was effected through the issuance of approximately 77.0 million shares of Range common stock in exchange for all outstanding shares of Memorial using an exchange ratio of 0.375 of a share of Range common stock for each share of Memorial common stock. At the effective time of the merger, Memorial’s liabilities, which are reflected in Range’s consolidated financial statements, included approximately $1.2 billion fair value of outstanding debt. In connection with the Memorial Merger, we have incurred merger-related costs of approximately $36.4 million to date including consulting, investment banking, advisory, legal and other merger-related fees. Allocation of Purchase Price. The Memorial Merger has been accounted for as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total purchase price of the Memorial Merger to the assets acquired and the liabilities assumed based on the fair value at the effective time of the merger, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, valuation of pre-merger contingencies, final tax returns that provide the underlying tax basis of Memorial’s assets and liabilities and final appraisals of assets acquired and liabilities assumed. We expect to complete the purchase price allocation during the 12-month period following the merger date, in line with the acquisition method of accounting, during which time the value of the assets and liabilities, including goodwill, may be revised as appropriate. The following table sets forth our preliminary purchase price allocation (in thousands, except shares and stock price):
Purchase price: |  |  |
Shares of Range common stock issued to Memorial stockholders |  | 77,042,749 |
Range common stock price per share on September 15, 2016 (close) | $ | 39.37 |
Total purchase price | $ | 3,033,173 |
Plus fair value of liabilities assumed by Range: |  |  |
Accounts payable |  | 54,905 |
Other current liabilities |  | 96,734 |
Long-term debt |  | 1,204,449 |
Deferred taxes |  | 583,575 |
Other long-term liabilities |  | 19,169 |
Total purchase price plus liabilities assumed | $ | 4,992,005 |
Fair value of Memorial assets: |  |  |
Cash and equivalents | $ | 7,180 |
Other current assets |  | 93,911 |
Derivative instruments |  | 152,994 |
Oil and gas properties: |  |  |
Proved property |  | 1,096,035 |
Unproved property |  | 2,007,200 |
Other property and equipment |  | 3,579 |
Goodwill (a) |  | 1,630,981 |
Other |  | 125 |
Total asset value | $ | 4,992,005 |
(a) Goodwill will not be deductible for income tax purposes. The fair value measurements of derivative instruments assumed were determined based on published forward commodity price curves as of the date of the Memorial Merger and represent Level 2 inputs. Derivative instruments in an asset position include a measure of counterparty nonperformance risk and the fair values of commodity derivative instruments in a liability position include a measure of our own nonperformance risk, each based on the current published credit default swap rates. The fair value measurements of long-term debt were estimated based on published market prices and represent Level 1 inputs. The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair value of oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties include estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighted average costs of capital rate. These inputs require significant judgments and estimates by management at the time of the valuation and may be subject to change. Management utilized the assistance of a third party valuation expert to estimate the value of the oil and natural gas properties acquired. In some cases, certain amounts allocated to unproved properties are based on a market approach using third party published data which provides lease pricing information based on certain geographic areas and represent Level 2 inputs. Goodwill is attributed to net deferred tax liabilities arising from the differences between the purchase price allocated to Memorial’s assets and liabilities based on fair value and the tax basis of these assets and liabilities. In addition, the total consideration for the merger included a control premium, which resulted in a higher value compared to the fair value of net assets acquired. There are also other qualitative assumptions of long-term factors that the merger creates for Range stockholders including additional potential for exploration and development opportunities, additional scale and efficiencies in other basins in which we operate and substantial operating and administrative synergies. The results of operations attributable to Memorial are included in our consolidated statement of operations beginning on September 16, 2016. Revenues of $21.1 million and field net operating income of $12.3 million from Memorial were generated from September 16, 2016 to September 30, 2016. Pro forma Financial Information. The following pro forma condensed combined financial information was derived from the historical financial statements of Range and Memorial and gives effect to the merger as if it had occurred on January 1, 2015. The below information reflects pro forma adjustments for the issuance of Range common stock in exchange for Memorial’s outstanding shares of common stock, as well as pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including (i) the depletion of Memorial’s fair-valued proved oil and gas properties and (ii) the estimated tax impacts of the pro forma adjustments. Additionally, pro forma earnings for the three and nine months ended September 30, 2016 were adjusted to exclude $33.8 million for third quarter 2016 and $36.4 million for first nine months 2016 of merger-related costs incurred by Range and $9.3 million incurred by Memorial. The pro forma results of operations do not include any cost savings or other synergies that may result from the Memorial Merger or any estimated costs that have been or will be incurred by us to integrate the Memorial assets. The pro forma condensed combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the Memorial Merger taken place on January 1, 2015. In addition, the pro forma financial information below is not intended to be a projection of future results (in thousands, except per share amounts).
|  | Three Months Ended September 30, |  |  |  | Nine Months Ended September 30, |
| 2016 |  |  |  | 2015 |  |  |  | 2016 |  |  |  | 2015 |
Revenues | $ | 521,668 |  |  | $ | 716,753 |  |  | $ | 1,080,767 |  |  | $ | 1,667,516 |
Net loss | $ | (17,882 | ) |  | $ | (223,154 | ) |  | $ | (427,946 | ) |  | $ | (268,433 | )
Loss per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic | $ | (0.07 | ) |  | $ | (0.92 | ) |  | $ | (1.75 | ) |  | $ | (1.10 | )
Diluted | $ | (0.07 | ) |  | $ | (0.92 | ) |  | $ | (1.75 | ) |  | $ | (1.10 | )
2016 Dispositions We recognized a pretax net loss on the sale of assets of $2.6 million in third quarter 2016 compared to a pretax net loss of $681,000 in the same period of the prior year and a pretax net loss on the sale of assets of $7.5 million in the nine months ended September 30, 2016 compared to a pretax net gain of $2.1 million in the same period of the prior year. Western Oklahoma. In first six months 2016, we sold certain properties in Western Oklahoma for proceeds of $77.7 million and we recorded a loss of $6.2 million related to this sale, after closing adjustments and transaction fees. In third quarter 2016, we sold additional properties in Western Oklahoma for proceeds of $900,000 and we recorded a loss of $2.6 million. Pennsylvania. In first quarter 2016, we sold our non-operated interest in certain wells and gathering facilities in northeast Pennsylvania for proceeds of $111.5 million. After closing adjustments, we recorded a loss of $2.1 million related to this sale. Other. In third quarter 2016, we sold miscellaneous inventory and surface property for proceeds of $131,000 resulting in a gain of $30,000. In first six months 2016, we sold miscellaneous proved and unproved properties, inventory, other assets and surface acreage for proceeds of $1.7 million resulting in a loss of $198,000. Included in the $1.7 million of proceeds is $1.2 million received from the sale of proved properties in Mississippi and South Texas. 2015 Dispositions In third quarter 2015, we sold miscellaneous unproved properties and inventory for proceeds of $524,000 resulting in a loss of $681,000. In first six months 2015, we sold miscellaneous unproved property, proved property and inventory for proceeds of $14.3 million resulting in a gain of $2.7 million. Included in the $14.3 million of proceeds is $10.5 million received from the sale of certain West Texas properties which closed in February 2015.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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