Range Resources CorporationNYSE
Range Resources: A Marcellus Shale, Pure-Play Valuation
Donovan Schafer • 18 Comments
Donovan Schafer • 18 Comments
Thu, Dec. 1, 5:40 PM
Thu, Dec. 1, 10:21 AM
- The price of oil pushed through $50 per barrel today, and is currently posting a 2.9% advance on the session at $50.91.
- The S&P 500 is flat and Nasdaq is down 0.45%, but the XLE has tacked on another 1.8% to yesterday's big rise.
- Mid-cap movers: Enerplus (ERF +8.2%), Southwestern Energy (SWN +7.9%), Range Resources (RRC +5.3%), Weatherford (WFT +7.1%), Ensco (ESV +8.2%), Crescent Point (CPG +6.3%).
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Mon, Oct. 31, 2:57 PM
- Range Resources (RRC -1.8%) is lower despite earning an upgrade to Conviction Buy from Neutral with a $47 price target at Goldman Sachs, which highlights the company's exposure to gas and natural gas liquids, underappreciated production growth and valuation.
- Relative to other gassy E&Ps, RRC is more favorably exposed to Henry Hub and NGL prices, where the firm sees near-term upside, and less exposed to local Appalachia prices.
- Goldman also says RRC’s recent acquisition of Louisiana assets adds ability to flex production between Appalachia and Louisiana to mitigate risk of pipeline delays and/or regional price differences.
- The firm adds that RRC’s EV/EBITDA multiple reflects a below-historical premium, particularly on 2018 estimates despite continued superior resource life.
Wed, Oct. 26, 3:58 PM
- Range Resources (RRC -2.6%) is lower despite posting a narrow than expected Q3 loss on better than expected revenues, as the company says it believes it has turned the corner.
- CFO Roger Manny tells analysts during today's earnings conference call that Q3 "appears to mark a financial turning point" for the company, citing rising prices for natural gas, natural gas liquids and oil, higher cash flow and margins, as well as the start of efforts to diversify its pipeline transportation to get gas to various points outside of Appalachia.
- RRC's acquisition of Memorial Resource barely closed before the end of the quarter, but RRC still saw a slight increase in its realized gas price from a year ago, of $0.17/MMcf vs. just a $0.10 bump in the average for Henry Hub; looking ahead, RRC expects its average discount to headline gas prices to narrow from ~$0.46 to $0.30-$0.35 cents in 2017.
- On cost cutting, RRC expects a 10% organic increase in production growth in 2017 while continuing to cut down on unit costs; in the Marcellus Shale, for instance, RRC says it has enjoyed a 35% decrease in costs in 2016 compared to 2013.
- RRC says it plans to drill as many as a third of its new wells on existing pads in 2017 and could make that as many as half in 2018, saving $200K-$500K per well.
Tue, Oct. 25, 5:17 PM
Mon, Oct. 24, 5:35 PM
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Wed, Sep. 28, 2:47 PM
- Range Resources (RRC +3.1%) resumed with an Underweight rating and $34 price target at Barclays, citing premium valuation and high leverage.
- The firm believes RRC is trading at a 35-40% premium to peers on the basis of mid-cycle debt-adjusted cash flow estimate, noting that an increase in its mid-cycle gas price estimate to $3.50/MMBtu from $3.00 would raise RRC's cash flow ~20% and decrease the premium to ~20%.
- Separately, GMP Securities assumed coverage of RRC with a Buy rating and $47 price target.
Tue, Sep. 27, 8:16 AM
- Britain's first shale gas delivery from the U.S. arrived today at the Ineos refinery and petrochemicals plant at Grangemouth in east Scotland.
- The gas is being supplied by Range Resources (NYSE:RRC), which has a 15-year supply contract with Ineos.
- The delivery has been surrounded by controversy; Scotland's devolved government imposed a moratorium on fracking last year, but the industry is backed by the Conservative government led by Prime Minister May.
- Ineos Chairman Jim Ratcliffe, one of the U.K.'s richest men, says that as the North Sea is unable to keep supplying the base ingredients to make chemicals at Grangemouth, shale gas will be an important future energy resource.
Tue, Sep. 20, 10:58 AM
- Range Resources (RRC +0.5%) is resumed with an Equal Weight rating and $45 price target at Morgan Stanley following the closing of its $4.2B merger with Memorial Resource Development.
- The acquisition provides RRC with core acreage positions in the Appalachian Basin and northern Louisiana, and the firm believes RRC should extract greater value from Memorial's assets due to its strong track record of cutting costs and improving well performance.
- Stanley says it sees "significant upside if gas and NGL prices rebound, balanced by greater balance sheet risk than peers if commodity prices remain weak in 2017."
Fri, Sep. 16, 12:35 PM
- Range Resources (RRC -5.7%) is sharply lower after announcing the completion of the merger agreement in which RRC will acquire all of MRD's outstanding shares in an all-stock deal valued at ~$4.2B, including debt.
- RRC says the deal enhances its position as an independent producer of natural gas, oil and natural gas liquids with strong core acreage positions in the Appalachian Basin and northern Louisiana.
Fri, Sep. 2, 6:14 AM
Thu, Aug. 25, 10:51 AM
- Natural gas production from the Marcellus and Utica shales remains surprisingly strong and defying predictions that output would fall, averaging 22.63B cf/day so far in August, up 2% from last month and the most since February’s all-time high of 22.78B cf/day.
- Even though the number of drilling rigs has declined, new production per rig now averages ~11.4M cf of gas in the Marcellus, up 18% Y/Y, as producers have managed to maintain volumes by tapping inventories of drilled but uncompleted wells and burrowing deeper, longer wells that yield more gas.
- Production has been strong despite regional prices at ~$1.2757/MMBtu, less than half the price for benchmark gas in Louisiana.
- Top Marcellus/Utica producers include EQT, RRC, RICE, CVX, CNX, VTG, REXX, XOM, NBL, COG, CHK.
Wed, Jul. 27, 3:44 PM
- Range Resources (RRC -3.1%) is lower after swinging to a Q2 loss but still beating analyst estimates, and revenue slipped 10% Y/Y but also topped expectations.
- RRC says Q2 production averaged 1.42B cfe/day of natural gas, up 4% Y/Y, and included a record 1.38B cfe/day from its properties in the Marcellus shale formation in Pennsylvania and West Virginia.
- For the full year, RRC reiterates guidance at the high end of its prior outlook for 1.41B-1.42B cfe/day while averaging 1.43B cfe/day during the current quarter and consisting of 32%-35% natural gas liquids.
- RRC also says the proposed merger with Memorial Resource Development (MRD -3%) remains on track, with closing estimated to occur late in the third quarter.
Tue, Jul. 26, 4:44 PM
Mon, Jul. 25, 5:35 PM
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Thu, Jul. 14, 11:36 AM
- Range Resources (RRC -2.4%) is upgraded to Outperform from In-line with a $55 price target, raised from $45, at Imperial Capital, which believes that the recent improvement in natural gas pricing is not a fleeting event.
- With production at 67% natural gas, RRC looks well positioned to benefit from stronger pricing even if differentials take quarters to further improve, the firm says.
- The firm notes that RRC has achieved low basis differentials in Appalachia and has strong well results in the Marcellus and some of the best dry Utica wells in the play.