Energy Prospectus

FORT WORTH, Texas, April 26, 2022 (GLOBE NEWSWIRE) -- RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its first quarter 2022 financial results.

First Quarter 2022 Highlights –

Realizations before NYMEX hedges of $5.63 per mcfe, approximately $0.74 above NYMEX natural gas

Natural gas differentials, including basis hedging, averaged a $0.03 premium per mcf above NYMEX

Pre-hedge NGL realization of $40.03 per barrel, a premium of $0.74 per barrel above Mont Belvieu equivalent

Production averaged 2,071 Mmcfe per day, approximately 70% natural gas < Compares to my forecast of 2,151 Mmcfe per day. Slightly lower because of some well freeze offs.

Financial Results:
> Non-GAAP revenues for first quarter 2022 totaled $987 million < Compares to my forecast of $866.9 million
> Cash flow from operations before changes in working capital, a non-GAAP measure, was $489 million. < Compares to my forecast of $449.1 million. This is the KEY STAT for my valuations.
> Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $297 million ($1.18 per diluted share) in first quarter 2022. < Compares to my forecast of $245.6 million net income.
> Realized prices net of cash settlements on their hedges were $4.04/mcf for natural gas (my forecast was $3.70/mcf) and their realized NGL price net of cash settlements on their hedges was $35.57/bbl (my forecast was $35.00/bbl).

First quarter capital spending was $117 million, approximately 25% of the 2022 budget

Reduced outstanding debt by $350 million following redemption of 2026 senior notes in January < GOOD

In March, repurchased 600,000 shares at an average of $27.00 per share < GOOD

In April, Range’s $3.0 billion borrowing base was reaffirmed with a $1.5 billion elected commitment

Commenting on the quarter, Jeff Ventura, the Company’s CEO said, “Improved commodity pricing and efficient operations drove record free cash flow and cash flow per share in the first quarter. Recent tragic geopolitical events have made it more apparent than ever that the world requires ethical, safe, secure, reliable, and abundant fuel sources. We believe Range is well positioned to help fulfill this energy need. Range is at the low-end of the global cost curve for natural gas as the most capital efficient operator in the largest natural gas field in the world. Range also has an advantaged emissions intensity profile relative to production from other basins in the U.S. and abroad, given the prolific nature of the shales we are developing, stringent drilling standards and our daily focus on operational efficiencies.

In order for the industry to meet growing demand for natural gas in the U.S. and worldwide, there will need to be support for additional infrastructure, including pipelines, compression, processing facilities and LNG export terminals in the months and years ahead. In the meantime, Range has access to multiple domestic and international markets for natural gas and NGLs, which drives our competitive realized pricing compared to other natural gas producers. Range’s capital efficiency is industry-leading, which is reflected in our peer-leading capital spending per mcfe metric and sustaining capital requirements. Most importantly, despite having drilled a large number of wells since discovering the Marcellus Shale, Range has a multi-decade core inventory life that is unmatched among natural gas producers in the U.S. It is this core inventory that allows for repeatable capital efficiencies in the years ahead. We remain focused on realizing the value of this world class, world-scale asset base by consistently delivering value to our shareholders through disciplined capital allocation.”

This should also be very good news for AR and EQT.

"Pre-hedge NGL realizations were $40.03 per barrel, an improvement of $3.77 per barrel compared to the fourth quarter of 2021 and a $0.74 premium over Mont Belvieu equivalent. First quarter NGL realizations were driven by higher ethane prices and an improving market for propane and heavier NGL products. Range continues to see strong NGL export premiums at Marcus Hook because of the Company’s access to international markets and diversified portfolio of sales agreements. The Company expects a pre-hedge premium differential to Mont Belvieu equivalent of $0.00 - $2.00 per barrel for calendar 2022."

"Based on recent strip pricing, Range’s expected pre-hedge NGL price realization in 2022 has increased by approximately $6.00 per barrel relative to strip pricing in February, resulting in a projected increase of over $200 million in annual pre-hedge revenue. As previously disclosed, these higher realized NGL prices will result in slightly higher processing costs, as Range’s processing costs are based on the price received. Net of price-linked processing costs, the increase in forecasted NGL prices is expected to add approximately $170 million in cash flow versus prior expectations, demonstrating continued strong margin expansion with rising NGL prices."

My valuation of RRC will be going up from $47/share, but I want to listen to their conference call and spend more time tweaking the model. Just putting in their Q1 results raised the valuation to $49/share.

Their marketing group got about 10% better prices for their natural gas and NGLs. Range has access to some premium markets that are hard to estimate.

The continued improvement in the balance sheet deserves a higher valuation multiple.

As I posted here earlier. Much higher coal prices and coal shortages have pushed the based price for U.S. natural gas much higher. At today's coal price, the base price for fuel switching from gas to coal for power generation is well over $7.00/mcf. That will become a much bigger deal during the summer when demand for electricity goes much higher.

slide deck

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