Energy Prospectus

ROCC closed at $42.42 on November 4th.

Ranger was promoted to the Sweet 16 on October 18, replacing Continental Resources (CLR) that is going private. Their Q3 results were outstanding and they have raised their production guidance. Plus, they have decided to add a 3rd operated drilling rig that should push production over 46,000 Boepd by year-end (compared to 42,624 Boepd in Q3) and set them up for strong production growth in 1H 2023.

I have updated my forecast/valuation model which increases my current valuation by $4 to $86/share, despite lowering my valuation multiple to 4.5 X operating cash flow per share (annualized for 2022+2023).

Ranger is an "Aggressive Growth" company that has a lot of "Running Room" with over 700 net HZ development drilling locations.
> 14.9% production growth in 2021, on-track for over 48% production growth in 2022 and my forecast assumes 52% production growth in 2023.
> The Company's strong growth is fully funded by operating cash flow AND they are returning free cash flow to shareholders as dividends and stock repurchase program. Management believes their share prices is more than 50% below NAV (see slide 10 of their recent presentation).
> Ranger is an Eagle Ford company, so it has plenty of pipeline access to the Gulf Coast markets.
I believe that Ranger's 12-31-2022 year-end reserve report will show a PV10 Net Asset Value of just their P1 reserves over my $86 valuation.

You pay "Big Bucks" for your EPG membership, so that I can find companies like Ranger Oil before the majority of the Wall Street Gang discovers them. Ranger was created by the merger of Lonestar Resources into Penn Virginia. I had followed both companies for over five years, so I have a HIGH level of confidence in my model for Ranger.
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Note from Neal Dingmann at Truist Financial dated 11-3-2022. IMO Neal is one of the top energy sector analysts.

Ranger Oil Corporation (ROCC)
Setting Up for Record Year Yet Still Under Market Radar

Ranger continues to pull the right levers to position the company for record 2023 production/
earnings/FCF versus many other E&Ps who will see results trail off. Most recently the
company added a third rig and acquired a significant working interest in pads that will soon
be drilled, both helping drive absolute production growth. We expect ROCC will judiciously
use its potential record future FCF to scale the business and provide shareholder returns
(specifically share buybacks) depending on which selection provides the highest near-term
returns.

We believe most investors missed the similarities between Ranger and the pure Eagle Ford
operator Ensign Natural Resources (private), who was recently acquired for $3.0b despite
having less assets than ROCC.

4Q Capex Ramp With Additional Rig, Initial FY23 Guide on Growth
With sequential QoQ production growth, ROCC is carrying that momentum forward in adding
a third rig to its 4Q guidance. In a number of ways, the additional rig sets the company up
for a strong year-end production exit and sets the stage for an excellent growth story for
FY23. For 4Q, the ~$55mm of capex - $30mm of which would be allocated for the third
rig - leads to a low double-digit QoQ growth rate that is further supplemented by ROCC’s
low-cost operational leadership. Optionality for 2023 is clear as ROCC can deploy a 2-rig
program that supports a ~10% production growth plan, or carry the 3-rig program forward to
reap the rewards of a high-teen's or greater production ramp that potentially hits the 50,000
boe/d milestone.

Updating Estimates, Price Target Increased to $57 from $55 < Neal's 2023 forecast uses oil, gas and NGL prices 10% to 20% below what I am using.
Ranger reported 3Q22 earnings as expected versus Truist Securities/consensus estimates
given the pre-release with adjusted FCF also in-line. The company boosted 2022 CAPEX
due primarily to incremental working interests and an additional rig running through the
remainder of this year, though simultaneously, ROCC suggested production in 1H23 would
exceed 50 mboepd versus street estimates of ~47 mboepd in 2Q23. We believe the company
continues to do one of the best jobs of combining production growth with shareholder returns
favoring whichever form allows the lowest investment cost. Hopefully investors recognize
how the higher 4Q22 capital spend notably sets ROCC up for solid 2023 upside. We
have updated our model for the 3Q22 earnings report, along with updated guidance, which
resulted in increased production and capex in FY22 and lower pricing going forward, with
FCF increasing. Our $57 price target derived from two equally weighted methodologies,
with the first being our ’23 EV/EBITDAX multiple of 3.5x (3.5x prior and 3.1x peer group
average) applied to our 2023E EBITDAX estimate of $975MM ($863MM prior and $891MM
consensus) and the second being a FCF/EV Yield assumption of 12.0%.