Energy Prospectus

Range is the first Sweet 16 company to release first quarter results. I hope they are all this good. - Dan

Range Announces First Quarter 2019 Financial Results
FORT WORTH, Texas, April 22, 2019 (GLOBE NEWSWIRE) -- RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its first quarter 2019 financial results.

Highlights –

GAAP cash flow provided from operating activities of $261 million, and non-GAAP cash flow of $269 million < Compares to my forecast of $192 million cash flow from operations.

GAAP net income of $1.4 million ($0.01 per diluted share), and non-GAAP net income of $90.7 million ($0.36 per diluted share) < Non-GAAP net income compares to my forecast of $30.3 million ($0.12/share).

Utilized free cash flow to reduce borrowings on credit facility by approximately $48 million

Production averaged 2,256 Mmcfe per day, including approximately 31% liquids < Compares to my production forecast of $2,225 MMcfe per day, 30.5% liquids.

Southwest Pennsylvania production increased 14% over the prior-year period to 1,915 Mmcfe per day

Natural gas differentials, including basis hedging, averaged $0.04 per mcf above NYMEX < Differentials in Appalachia have come way down thanks to increased pipeline takeaway capacity.

Natural gas, NGLs and oil price realizations before NYMEX hedging averaged $3.31 per mcfe, a $0.17 premium to NYMEX natural gas

Commenting on the quarter, Jeff Ventura, the Company’s CEO said, “Range is off to a great start in 2019, exceeding production guidance for the first quarter and paying down $48 million in debt with organically-generated free cash flow. Importantly, we remain on track to deliver on our annual production target while spending at or below budget for the year. Operationally, Range continues to focus on translating our best-in-class inventory and well-level returns into corporate-level returns in the form of significant free cash flow generation in 2019 and beyond, as we improve the balance sheet towards our longer-term target of under 2x debt-to-EBITDAX. Additionally, Range is actively pursuing multiple asset sales as we remain committed to accelerating our debt reduction timeline.”

Prior to the release of their outstanding Q1 results, First Call's target price for RRC was $15.17. It should be going up.

My valuation is now $22.00/share.

Note that RRC has ~80% of their natural gas volumes for 2019 hedged at $2.86/mcf. 30% of their production is liquids which will be selling at higher prices going forward.

TPH note on 4-23-2019

RRC Q1'19 Quick Look
Neutral as strong Q1 offset by weak Q2 guide, but FY'19 outlook unchanged
Sector: NAm E&P | Ticker: RRC | Recommendation: HOLD | Target: $25.00 | Close: $9.83

Range's production of 2,256mmcfed beats TPHe 2,219 / Street 2,233 and pre-hedge equivalent realizations come in +4% vs our model, driving a solid EBITDA beat of $319MM vs TPHe $289MM / Street $286MM. Total capex of $226MM comes in below TPHe $248MM / Street $255MM and the FY'19 budget of $756MM was reiterated. Q2 midpoint of 2,275mmcfed compares to TPHe 2,280 / Street 2,315, likely due to timing in our view, with FY'19 guidance midpoint unchanged at 2,335mmcfed (TPHe 2,331 / Street 2,347). NGL pricing expectations slightly lowered at the midpoint from 37% to 36% of WTI, but absolute price expectations have slightly improved given WTI strength. On the marketing front, RRC has successfully navigated recent Mariner East I downtime while taking advantage of attractive in-basin pricing for gas and export pricing for NGLs. Company also paid down $48MM of debt during the quarter. On the call, looking for color on implied asset sale targets from the recent proxy statement and thoughts on how to address G&A given broader investor focus in the E&P space. Clean EPS of 36c compares to TPHe 24c / Street 23c on better than expected realizations and operating costs.

Stifel: Range Resources Corporation (RRC, $9.83, Buy; Target $18.00) - Not as Bad as Feared; Stellar Execution in Shaky NGL Macro Environment - Jane Trotsenko

We view yesterday's earnings release as positive. Coming into the quarter, RRC had the highest short-interest of 18% of the float compared to the peer group average of 14%. The stock was heavily shorted on an NGL thesis based on NGL pricing lagging the improvement in crude oil prices. This thesis was proven partially wrong as NGL price realizations came in on the high-end of the full-year guidance range of 38%. That said, the company did revise its full-year NGL guidance wider to the downside. On an absolute basis, NGL remained roughly unchanged. While NGL guidance might be slightly disappointing, what matters is that the company beat Consensus estimates across the board, delivering an adj. EBITDA beat of 10%, while underspending capex and generating FCF. Successful asset sales and continued execution should help change the narrative for the stock.

PPS can't even hold $10. Market is apparently focused on future natgas prices amid supply picture and cares little about 2019 and 2020 hedges. Maybe asset sales, resulting in further deleveraging, will help.

On April 24, 2019 Mark Lear at Jefferies rated RRC a BUY with a $17.00 price target.

The "gassers" are "out-of-season" and probably won't draw much attention from the Wall Street Gang until we get a HOT SUMMER or mid-November.

Breaking down Range's Q1 to as simple as I can make it: The sold their production for $3.43/mcfe and their cash expenses (net of Brokered natural gas and marketing net income) were $2.15/mcfe. That is a very healthy profit margin no matter what business your in.

Since most of their natural gas production is hedged at above market prices and liquids prices are going up (30% of their production on a boe basis), their profit margin should grow over the next three quarters. Based on my forecast (and very close to what First Call now forecasts), RRC should generate approximately $3.85 operating cash flow per share. An upstream company that is growing production and proven reserves AND GENERATING FREE CASH FLOW TO PAY DOWN DEBT should be trading at around 6X operating cash flow per share.