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Telling it like it is
Posted: Sat Jul 27, 2019 7:41 am
by petrohawk
Re: Telling it like it is
Posted: Sat Jul 27, 2019 11:58 am
by dan_s
I agree that share buybacks make a lot of sense, but several companies are doing it already and the market doesn't seem to notice. CLR and GPOR have large stock repurchase programs underway. I also like the idea of paying down debt, which is what Range Resources (RRC) is doing.
See my recent profile on MGY. They limit capex spending to 60% of cash flow from operations.
Re: Telling it like it is
Posted: Sat Jul 27, 2019 1:25 pm
by dan_s
As the article points out, the good upstream companies (like our Sweet 16) are trading at 50% of any reasonable net asset valuation. I just finished updating my forecast valuation for Range Resources (RRC). Based on its year-end 3rd party reserve report, it has a net asset value of $24/share.
My updated valuation (based on what I believe are conservative commodity price assumptions) is $11.70/share. The most recent analyst's report (from Piper Jaffray) has a valuation of $11.00/share.
RRC closed at $5.17 on July 26, after reported Q2 EPS of $0.46 and Q2 operating CFPS of $0.58.
My forecast for full-year CFPS is $2.88, which compares to First Call's CFPS estimate of $3.29 for 2019.
Despite the good numbers, I don't expect RRC or any of the gassers to move higher unless there is a "Paradigm Shift" among the Wall Street Gang. These companies are in the dog house until the outlook for natural gas prices improves. On that front, there is hope. See the July 25th presentation that the company spoke from on their Q2 conference call.