Range Resources Corp., a Fort Worth, Texas, natural-gas producer, on Monday said it agreed to buy rival energy company Memorial Resource Development Corp. in an all-stock deal valued at $3.3 billion.

The agreement also calls for Range to take on $1.1 billion in debt owed by Memorial. Range will absorb the smaller driller, adding its Louisiana operations to existing acreage and wells across Pennsylvania, Texas and Oklahoma.

Once it closes, the transaction will rank as one of just a handful of deals executed between sizable independent U.S. energy producers during the oil-and-gas downturn.

When Whiting Petroleum Corp. announced its acquisition of Kodiak Oil & Gas Corp. in mid-2014, the deal was valued at $3.8 billion, plus $2.2 billion in debt. Noble Energy Inc.'s acquisition of Rosetta Resources Inc., announced a year ago, was valued at $2.1 billion, plus $1.8 billion in debt.

Jeff Ventura, chief executive of Range, said integrating Houston-based Memorial's assets will give Range a strategic position on the East and Gulf coasts, and more exposure to natural gas demand. Gas accounted for 71% of the Range's production last year, while oil and other liquids accounted for 29%, company filings show.

Both Range and Memorial have seen the value of their shares cut in half during the energy bust, as the price of oil has dropped from more than $100 to under $50 today. In that time, the benchmark U.S. natural gas price has fallen from more than $4.50 per million British thermal units to just over $2. Range shares closed at $42.01 Friday, down from more than $90 just before oil prices peaked in late June 2014. Shares of Memorial have fallen from nearly $30 in September 2014 to $13.45 a share as of Friday.

Range will issue 0.375 shares, worth $15.75 based on Friday's closing price, for each share of Memorial, a 17% premium to the Memorial's closing price on Friday. Memorial shareholders will own 31% of the combined company, and Memorial will have the right to nominate one of its independent directors to Range's board.

The companies expect the deal to close in the second half of the year.

Write to Erin Ailworth at Erin.Ailworth@wsj.com

(END) Dow Jones Newswires

May 16, 2016 06:55 ET (10:55 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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