Penn Virginia to expand Eagle Ford presence with $370MM Lonestar Resources deal

July 12, 2021

HOUSTON -- Penn Virginia Corporation and Lonestar Resources US Inc. have entered into a definitive merger agreement under which Penn Virginia will acquire Lonestar in an all-stock transaction. Under the terms of the agreement, Lonestar shareholders will receive 0.51 shares of common stock of Penn Virginia for each share of common stock of Lonestar outstanding. The transaction, which is expected to close in the second half of 2021, has been unanimously approved by the boards of directors of both companies. The closing of the transaction is subject to customary closing conditions, including the approval of Penn Virginia and Lonestar shareholders.   Shareholders holding approximately 80% of the voting power of Lonestar, and approximately 60% of the voting power of Penn Virginia, have executed binding support agreements committing them to vote their shares for the transaction.

Darrin Henke, Penn Virginia's President and Chief Executive Officer, commented, “This is an exciting time for Penn Virginia as we expand our Eagle Ford footprint with the high-quality assets of Lonestar. This transaction further solidifies the Company’s position as a premier Eagle Ford operator and provides additional scale and synergies while still delivering operational excellence. Consistent with our disciplined strategy, this transaction is expected to be accretive to free cash flow and certain other key per share metrics to deliver long-term value to shareholders. The benefits of basin consolidation are very compelling, and we strongly believe this is a value-creating opportunity for both companies. We remain steadfast in our disciplined approach to running the business and continue to be committed to free cash flow generation, capital discipline, maximizing cash-on-cash returns, and protecting the environment.”

Lonestar’s Chief Executive Officer, Frank D. Bracken, III, commented on the merger, “In today’s environment, size and scale are paramount, both in terms of operations and in the public markets. The merger exposes Lonestar shareholders to a substantially larger, more liquid, publicly-listed platform and the combination of the two companies’ high quality, liquids-focused operations should provide significant benefit to both shareholder groups, positioning the Company as a dominant force in the Eagle Ford Shale.”

Edward Geiser, Chairman of Penn Virginia and Managing Partner of Juniper Capital (“Juniper”), added, “This is exactly the type of accretive Eagle Ford consolidation we have been targeting and creates a significant opportunity for investors.  Penn Virginia and Lonestar fit well strategically, and the combined company will be stronger across key financial metrics, will operate more efficiently than each company standalone, and will continue Penn Virginia’s commitment to environmental and social stewardship.  We look forward to working with the Lonestar team to complete this transaction, and we will be actively screening for additional attractive consolidation opportunities as we move forward.  Juniper is excited about what the Penn Virginia team has been able to achieve over the six months since we closed our investment in the company, and we remain committed to its long-term success.”

Transaction Overview

Under the terms of the merger agreement, Lonestar shareholders will receive 0.51 shares of Penn Virginia for each Lonestar share. The transaction is valued at approximately $370 million as of July 9, 2021, composed of approximately 5.9 million shares of Penn Virginia common stock and the assumption of approximately $236 million of Net Debt(5). The transaction is expected to close in the second half of 2021, subject to the satisfaction of customary closing conditions, including obtaining the requisite shareholder and regulatory approvals. The transaction has been unanimously approved by the Boards of Directors of both companies. In addition, following the execution of the merger agreement, Lonestar shareholders holding approximately 80% of the voting power of Lonestar and Penn Virginia shareholders holding approximately 60% of the voting power of Penn Virginia signed binding support agreements obligating them to vote in favor of the transaction. Upon completion of the transaction, Penn Virginia shareholders will own approximately 87% of the combined company, and Lonestar will own approximately 13% of the combined company.

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