Energy Prospectus

I have listened to the replay of Range's Q3 conference call and I have updated my forecast/valuation model for Q3 actual results and their updated guidance. I will be adjusting all of my forecast models by dropping 2021 operating cash flow per share from my per share valuations and using what I believe are appropriate valuation multiples for each company based on 2022-2023 annualized operating cash flow per share. I am double weighting 2022 operating CFPS.

At the time of this post, RRC was trading at $27.96

My current valuation of RRC adjusts to $51/share; down $2 from what is in this morning's newsletter
> Q3 results came in below my forecast, primarily due to lower realized NGL prices. However, Q3 results include company record FCF.
> I lowered my CFPS valuation multiple by 0.5X to 5.5X. < I will be doing this for most companies just because more weight is now given to 2023 CFPS.
> Range has done a great job of lowering their debt, but they still have some work to do on their balance sheet. Once they get debt under $1.5 Billion, I expect them to raise their dividend.
> Their stock repurchase program is a BIG PLUS going forward. < IMO it significantly lowers risk for RRC, especially from where it trades today.
> Range also gets an A+ for "Running Room" as they have over 30 years of low-risk / high-return development drilling inventory.
> Range has a world class marketing group, especially important for LPG sales.
> Only operational negative is Appalachia's limited pipeline access, which limits Range's production growth potential.
> As they pointed out in this morning's presentation, RRC's PV10 Net Asset Value of just their proved reserves (P1) is over $60/share using SEC's conservative pricing and limit of only including P1 reserves that will be produced in the next five years.
> A 12-month price target over $60 would be reasonable if HH ngas prices average over $5.00 through 2023.

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

From Piper Sandler this morning

We reiterate our OW rating and $44 PT for RRC following 3Q22 results that were
highlighted by a $1bn increase to the buyback authorization. While the stock initially
underperformed peers on the open driven by a headline miss due to third-party
infrastructure constraints, the stronger than anticipated capital return in the quarter along
with the increased buyback authorization drove ~700 bps of outperformance on the day.

While the company is still going through the 2023 budgeting process, RRC anticipates
that it will execute a maintenance program that will imbed 20% cost inflation, which is in
line with our expectations. For FY22, RRC expects capex to be at the upper end of its
$460-480mm guidance range, while production is expected to be toward the low end of
the range (2.12-2.16 bcfe/d) and current production at ~2.2 bcfe/d.

• Maintenance in 2023. While the company expects there to be room for growth in
Appalachia long-term, 2023 will be another maintenance year for RRC. The company
has been one of the few to keep its FY22 capital budget in line with initial guidance, but
does anticipate spending to be at the upper end of the range. For FY23, the company
expects to see 20% cost inflation which assuming a similar level of activity and some
further efficiency offsets results in an estimate $550mm budget (from $516mm). On the
production front, we project RRC delivering 2.15 mmcfe/d (from our prior estimate of
2.21) which is in line with management commentary. At the strip ($4.84/MMBtu NYMEX
and ~$26.50/bbl Mt. Belvieu composite NGLs), we forecast RRC will generate ~$1.07bn
of FCF which increases to $1.25bn at the PSC NYMEX forecast ($5.50/MMBtu). We
estimate the company has 52% of 2023 gas volumes hedged with average floor/ceiling
of $4.04/$3.44 which results in a $500mm hedge loss at our $5.50 NYMEX forecast (from
a $1.25bn loss in 2022 with ~70% of volumes hedged).

• Return and Valuation. RRC increased its buyback authorization to $1.5bn having
completed $326mm of repurchases over the past two quarters. The buyback is expected
to step down in 4Q22 as a result of debt retirement, but we project the company delivering
over a 6% TSR at the strip in 2023 including the base dividend and buyback, and a
projected cash balance at YE23 that would allow the company to potentially double
return. RRC trades 4.4x FY23E strip EBITDA and with a 13% FCF/EV, premiums to our
gas coverage group at 3.4x and 15%, but in line with our broader coverage group at
4.4x and 11% as the group has started to re-rate over the past several weeks. With an
increased focus on resource depth and quality and commitment to capital return, we
anticipate investors will increasingly gravitate to RRC with decades of high return project
inventory at the current pace of development.