Ranger Oil (ROCC) replacing CLR - Oct 18

[dan_s]

Ranger Oil Corp. (ROCC) will be replacing Continental Resources (CLR) in the Sweet 16 Growth Portfolio.

As posted here yesterday, CLR's board has accepted Harold Hamm's offer of $74.28 per share, taking the company private.

At $74.28, CLR has gained ~66% YTD and ~356% since 1/1/2021. Nice gains, but it is now time to harvest the gains and move on.

Ranger Oil was created by the merger of Lonestar Resources into Penn Virginia on 10-5-2021. Since I had been following both companies for many years, I have a high level of confidence in my forecast valuation model for ROCC.

My current valuation is $80.00 per share and I believe this stock has significant long-term upside for us if actual results match my forecasts for the next six quarters.
> The Company has provided detailed guidance for 2H 2022, putting them on a path to a 2022 exit rate of 46,000 Boepd; up from 38,479 Boepd in Q2 2022.
> Production mix is approximately 73.5% crude oil, 13.0% natural gas and 13.5% NGLs.
> Ranger is an Eagle Ford company with a lot of running room.
> Eagle Ford oil sells at a premium to WTI and they have plenty of pipeline access for their natural gas.
> It is now funding all growth with operating cash flow and it is generating enough free cash flow to pay a dividend and fund a stock repurchase program.
> The balance sheet is in good shape with no near-term debt problems.
> My guess is that their 12-31-2022 3rd party reserve report will show PV10 Net Asset value of just P1 reserves that is higher than $80/share.
> In addition to an active and successful drilling program, Ranger is also making accretive acquisitions.

Ranger "checks all of the boxes" for promotion to the EPG Sweet 16.

[dan_s]

Comstock Resources (CRK) will be replacing CLR in the "Elite Eight".