RRC

[dan_s]

RRC beat my 2nd quarter forecast in several key areas and they have some midstream assets coming on-line soon that will significantly increase their realized commodity prices in the 4th quarter. I think there is a good chance we see a much stronger gas market this winter than Wall Street believes today. RRC is definitely a "Core Holding" company and one of our Elite Eight. - Dan

FORT WORTH, TX--(Marketwired - Jul 28, 2015) - RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its second quarter financial results.

Highlights --
•Production volumes reached a record high, averaging 1,373 Mmcfe per day, a 24% increase over the prior-year quarter.
•Unit costs declined $0.36 per mcfe, or 11% compared to the prior-year quarter.
•Two Marcellus dry gas wells in southwest Pennsylvania were turned in line, each at 34.2 Mmcf per day, 1.8 Bcf per well of cumulative production in 90 days.
•Full-year 2015 capital budget of $870 million is on track to deliver 20% annual growth.
•Spectra's Uniontown to Gas City project is anticipated to open ahead of schedule allowing Range as anchor shipper to move approximately 170 Mmcf per day of net natural gas production, or approximately 28% of its average net second quarter production in the southwest Marcellus, to Midwest markets with improved realized prices.
•Mariner East I expected to start the commissioning process in late third quarter expanding Range's access to NGL markets outside the Appalachian basin with Range being the only producer directly holding capacity on the project.



Commenting, Jeff Ventura, Range's Chairman, President and CEO, said, "Operational results in the second quarter continued to be excellent, as we lowered costs, improved capital efficiencies, exceeded production guidance and achieved great drilling results, especially in the dry gas area. Conversely, the oversupply of natural gas and NGLs in Appalachia challenged commodity prices during the quarter. Importantly, Range expects relief later this year as two key marketing events are projected to commence -- Mariner East I which is expected to improve our NGL pricing in the fourth quarter and Spectra's Uniontown to Gas City project which is expected to improve our natural gas pricing is anticipated to commence ahead of schedule on August 1st. The Spectra project is expected to be impactful since that capacity would equate to about 28% of our second quarter average net production in our Southern Marcellus Division when it comes on line, while Mariner East I is expected to cover almost all of our propane production and add a major ethane market to our already industry-leading ethane sales portfolio. Both projects are expected to provide substantial pricing improvements for Range.

"Range is on track to spend $870 million in 2015, approximately $700 million less than 2014, while still generating 20% year-over-year production growth. We believe this makes Range one of the most capital efficient producers in the industry. This capital efficient growth combined with our dry, wet and super-rich drilling inventory across the Marcellus, Utica and Upper Devonian give us great optionality to maximize returns throughout any commodity cycle. We believe this inventory, coupled with our capital discipline and diversified portfolio of marketing arrangements, allows Range to create value as we move forward into an expected better market that balances supply, demand and infrastructure."

[dan_s]

I have updated my RRC forecast model and it will be posted to the EPG website this afternoon.

I am lowering my valuation by $8.20/share to $60.00/share. This compares to First Call's price target of $64.49.

RRC is a "Core Holding" quality company and one of our Elite Eight. If you have an investment horizon of more than six months, RRC is a SCREAMING BUY at today's share price. It is heavily weighted to natural gas. In fact, 94% of this year's crude oil production is hedged at $85.87/bbl, so the recent drop in the oil price has almost no impact on RRC.

I believe natural gas prices could be much higher in six months. Natural gas trades on regional markets and the North American gas market is going to be much tighter this winter. The market is now focused on oil, but the traders will begin to think about natural gas in a few months.

RRC's realized price for natural gas was $4.13/mcf in 2014. If gas gets anywhere close to that level again (and I think it will), then RRC's valuation goes to $80/share.

[dan_s]

More good stuff on RRC:

http://www.oilandgas360.com/range-resou ... 2-26401157