"Range Resources reports SEC pv10 of $29.6 billion
To put in context: at 9/30 Range had a book value of $2.1 billion, or $8.93 per share. Not great considering today's stock price of $23.60. But consider that natural gas assets were carried at $5.9 billion. So the step up based on SEC regs adds $23.7 billion in NAV to $25.8 billion. That gives an NAV per share of $107.
Fuss all you might about how nat gas prices have dropped since year end. But also consider that the SEC rules only allow nat gas assets proved up over the next 5 years. There are way more locations to be added in the out years."
Range
Re: Range
Those numbers are grossly overstated
As RRC, stated in their press release
As shown in the table below, the present value (PV10) of reserves under SEC methodology was $29.6 billion at
December 31, 2022. For comparison, the PV10 using January 31, 2023 strip prices equates to $15.1 billion using the same proven reserve volumes
> So if they used strip prices as of 1/31/2023 the number would be half of the 29.6. The SEC method looks backwards, the strip looks forward. So yeah if ng averages 6, the reserves are worth 29 b. If they are 12 the number is 50 b. But if you use 3 its 15
And even the 1/31/2023 number is stale as NG has fallen another 10 % in the first 8 days of February!!
So the real number is roughly 13 b
https://ir.rangeresources.com/node/27561/pdf
One final point, the calculation is cash flows discounted at 10 %. Who wants to earn 10 %? I want a 20 % return minimum to compensate for the risks. Whats NPV20 using the strip. You would be lucky if it equates to the carrying cost of 5 b.
And the sec methodology doesn't use the 3 dollar hedges they have which lowers the net realized value
Short all gassers, imho, or stay out until pricing improves
As RRC, stated in their press release
As shown in the table below, the present value (PV10) of reserves under SEC methodology was $29.6 billion at
December 31, 2022. For comparison, the PV10 using January 31, 2023 strip prices equates to $15.1 billion using the same proven reserve volumes
> So if they used strip prices as of 1/31/2023 the number would be half of the 29.6. The SEC method looks backwards, the strip looks forward. So yeah if ng averages 6, the reserves are worth 29 b. If they are 12 the number is 50 b. But if you use 3 its 15
And even the 1/31/2023 number is stale as NG has fallen another 10 % in the first 8 days of February!!
So the real number is roughly 13 b
https://ir.rangeresources.com/node/27561/pdf
One final point, the calculation is cash flows discounted at 10 %. Who wants to earn 10 %? I want a 20 % return minimum to compensate for the risks. Whats NPV20 using the strip. You would be lucky if it equates to the carrying cost of 5 b.
And the sec methodology doesn't use the 3 dollar hedges they have which lowers the net realized value
Short all gassers, imho, or stay out until pricing improves