Range Resources (RRC) Valuation Update - Feb 22

[dan_s]

At the time of this post RRC was trading for $31.73.

I have updated my forecast/valuation model for RRC and my current valuation is $31.50, so IMO RRC is a HOLD for now.

My updated forecast model will be posted to the EPG website early this afternoon.

Thanks to RRC's hedging program and rising NGL prices, they should generate ~$850 million of operating cash flow and ~$200 million of free cash flow in 2024.
> The balance sheet is in good shape with no near-term debt problems.
> They have "hunkered down" to live within operating cash flow and maintain production at about what it was in 2023, 2.14 Bcfepd.
> Production mix is approximately 70% natural gas, 28% NGLs and 2% oil.
> Most of their Tier One leasehold is HBP, which is a very good thing.

When U.S. natural gas prices do rebound, which they will eventually, RRC has a bright future.

TipRanks: "In the last 3 months, 16 ranked analysts set 12-month price targets for RRC. The average price target among the analysts is $35.00. 4 respected energy sector analysts submitted new price targets this morning that range from $32 to $42."

[uberCOAT]

Dan,

What do you think of Range's Natrual Gas Hedges for 2025?. 25% with floors at $4.11 and Ceiling of $4.18.

[dan_s]

Download my forecast model and you will see how RRC's hedges impact realized gas prices. Their hedges and rising NGL prices are why RRC will be free cash flow positive in 2024. There is still a lot of upside for RRC, but it is going to take several more months for gas market to rebalance.