Range Resources (RRC) Q1 Preview - April 5
Posted: Wed Apr 05, 2023 1:00 pm
Note received from Mizuho Securities 4-5-2023
1Q23 Preview: Modest EBITDA miss, but steady operating model gives
flexibility to maintain activity. Although not immune from lower natural gas
prices, we expect RRC to maintain its 2023 operating plan. This is partly driven
by their more optimistic macro view that expects a supply response from private
producers in 2H23, but it also reflects the steady cadence of operations, low
balance sheet leverage, low base decline and deep inventory of Appalachia well
locations. We model an ~8% miss on EBITDA and ~5% miss on CFPS versus
relatively stale Street estimates. But RRC should still generate ~$185mm of FCF
in 1Q23, based on our updated model.
Our NAV-based price target moves to $30/sh
My current valuation for RRC is $29 < RRC is a "gasser", but ~30% of production is liquids that now generate over 50% of their revenue.
1Q23 Preview: Modest EBITDA miss, but steady operating model gives
flexibility to maintain activity. Although not immune from lower natural gas
prices, we expect RRC to maintain its 2023 operating plan. This is partly driven
by their more optimistic macro view that expects a supply response from private
producers in 2H23, but it also reflects the steady cadence of operations, low
balance sheet leverage, low base decline and deep inventory of Appalachia well
locations. We model an ~8% miss on EBITDA and ~5% miss on CFPS versus
relatively stale Street estimates. But RRC should still generate ~$185mm of FCF
in 1Q23, based on our updated model.
Our NAV-based price target moves to $30/sh
My current valuation for RRC is $29 < RRC is a "gasser", but ~30% of production is liquids that now generate over 50% of their revenue.