Energy Prospectus

Capital One Securities 2-10-2023
Our target price is based on 100% of our 2022E NAV. Risks that may impede achievement of our price target include: dependence on individual well performance, the potential for unsuccessful wells, leverage to the company's drilling pace, and leverage to natural gas and crude oil prices.

RRC: 4Q Production and Pricing in Line, 2022 Proved Reserves +2% Y/Y
$23.60, Overweight, $48.00 Target

Neutral update. Range's fourth quarter production was in line with expectations and put the full-year average at the low end of the company's guided range. Management previously telegraphed that the low end was likely due to 3rd party infrastructure issues earlier in the year.

Post-hedge realized prices for the quarter were $4.06/Mcf for natural gas, $27.83/bbl for NGLs, and $55.83/bbl for condensate. The weighted average equivalent price of $4.34/Mcfe was less than 1% below our modeled $4.37/Mcfe.

2022 proved reserves totaled 18.1 Tcfe at the end of 2022, representing an increase of +2% y/y. Range's 2022 PV-10 value on SEC pricing of $6.36/Mcf gas, $94.13/bbl oil, and $38.35/bbl NGLs is $29.6B.
For perspective, Range's 2021 PV-10 value on SEC pricing of $3.60/Mcf gas, $66.34/bbl oil, and $31.75/bbl NGLs was $14.9B. A nearly 2-fold increase in PV-10 value year over year. < PV10 NAV BASED ON 2021 NATURAL GAS PRICES IS OVER $40/SHARE.

Fourth quarter CAPEX spending and FY22 guidance were not included in the release. Based on prior commentary we do expect FY22 production guidance to match, or be close to, the 2.12 - 2.16 Bcfe/d pace set last year. FY23 CAPEX is expected to be impacted by y/y inflationary pressure of ~20% to put the total in the neighborhood of ~$575MM. We expect formal guidance to be detailed with RRC's 4Q results on 2/27 after market close.

>$6.36/Mcf gas, $94.13/bbl oi

When the strip gets to 6.36, remind me. It would then only yield 10 %. Doesn't impress me much

I can't understand your post. Please show your calculation of "10% yield".

NPV10 means the cash flows net present value = 10 % , no?

NPV10 = Net Present Value discounted at 10%

NPV10 of Proved Reserves (P1) is a very conservative number based on SEC guidelines since it only uses estimated production over the next five years. CRK has decades of production ahead.

Net Present Value per share based only on P1 reserves is (NPV10 + current assets - total debit) / the number of shares.

Using the VERY CONSERVATIVE 2021 reserve report, CRK's net present value per share at a 10% discount rate is $41/share.

In a report released 2-9-2022, Scott Hanold from RBC Capital reiterated a Buy rating on Range Resources (RRC), with a price target of $40.00.
The company’s shares closed at $25.51 on February 10.
Hanold covers the Utilities sector, focusing on stocks such as Matador Resources, Northern Oil & Gas, and APA. According to TipRanks, Hanold has an average return of 21.0% and a 59.04% success rate on recommended stocks.
Scott Hanold has a 5-Star rating from TipRanks.

I have updated my forecast/valuation model for RRC. My current valuation is $33.00.

Range generated $1.9 billion of operating cash flow in 2022, which compares to their capex budget of $480 million.

Based on my forecast, Range should generate over $1.3 billion of operating cash flow in 2023.

The Company's balance sheet is in good shape and they have very long-lived proven and probable reserves in Appalachia (Marcellus and Utica Shale). Their ongoing hedging program reduces commodity price risk, locking in free cash flow. It deserves to trade at a high multiple of CFPS because most of the Company's Tier One leasehold is now held by production.

Range is free cash flow positive as long as Henry Hub natural gas prices are over $1.50/mcf since they have very low cash expenses per mcfe.