Range Resources (RRC) Q3 Update

[dan_s]

I have updated my forecast model for RRC. It will be posted to the EPG website this evening.

I am increasing my valuation to $50.70/share, compared to First Call's price target of $48.03.

RRC's Q3 production was above my forecast, primarily because they closed the merger with MRD two weeks earlier than I was expecting.
> Current production is 1.8 Bcfe per day and should increase to 1.9 Bcfe by year-end.
> Production should exceed 2.0 Bcfe per day by mid-2017
> RRC has a first class marketing team. They are able to get their gas and NGLs to good markets, so their realized prices are higher than most of the Marcellus/Utica companies.
> Realized prices (including cash settlements on their hedges) were $2.50/mcf for Ngas, $49.97/bbl for crude oil and $12.43/bbl for NGL
> Realized prices in Q4 will be higher
> Production mix is approximately 68% natural gas, 28% NGls and 4% crude oil.

Keep this in mind: The December NYMEX contract for natural gas will become the "front month" on Friday. This will be the gas price quoted in all of the business news services on Friday. The December NYMEX contract closed at $3.05 today. The January NYMEX contract, which will be the "front month" late in December, closed at $3.20 today.

If the weather in the eastern U.S. turns cold in December, I expect Ngas prices to push higher in Q1. I still think we have a good shot at seeing gas over $4.00/MMBtu in Q1.

[dan_s]

Watch the 10/26 update at http://www.weatherbell.com/premium/ and you will begin to see why Mother Nature may be just a few weeks away from giving the "gassers" and early Christmas present.

BTW a tropical wave is now entering the Gulf of Mexico which could cause some problems along the South Texas coast. This is probably the last tropical storm of the season, then the weather changes to a more winter like pattern.

[dan_s]

Good article:
http://www.oilandgas360.com/range-resou ... S_Campaign