Range Resources (RRC) Q1 Results - April 27

[dan_s]

Range's Q1 operating cash flow beat my forecast and they should continue to generate lots of free cash flow. We will be publishing an updated profile on the company tomorrow.

FORT WORTH, Texas, April 24, 2023 (GLOBE NEWSWIRE) -- RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its first quarter 2023 financial results.

First Quarter 2023 Highlights –

Cash flow from operating activities of $475 million
Cash flow from operations, before working capital changes, of $400 million
Capital spending was $152 million, approximately 26% of the 2023 budget
Repurchased 400,000 shares at an average of $24.16 per share
Accumulated cash balance of $228 million
Price realizations including hedges of $4.00 per mcfe – premium of $0.54 over NYMEX natural gas
NGL realizations of $27.60 per barrel – premium of $1.63 over Mont Belvieu equivalent
Natural gas differentials, including basis hedging, averaged ($0.14) per mcf to NYMEX
Production averaged 2.14 Bcfe per day, approximately 70% natural gas

Commenting on the quarter, Jeff Ventura, the Company’s CEO said, “Today, Range is in the best operational and financial shape in Company history and the future of the Marcellus is bright as we sit at the very low end of the global cost curve with one of the lowest emissions intensities of any play. Range’s multi-decade inventory, efficient operations and access to diversified markets place our business in a desirable position to deliver significant long-term value and competitive returns to shareholders. The Range team remains focused on efficiently developing our Marcellus assets to bring that value to shareholders and I believe our first quarter results demonstrate continued success in achieving corporate objectives.”

[dan_s]

TipRanks: "In the last 3 months, 20 ranked analysts set 12-month price targets for RRC. The average price target among the analysts is $31.20."

At the time of this post, RRC was trading at $25.12

[dan_s]

Note from our friends at Raymond James

Range Resources Corporation
Updating Estimates; Reiterate Market Perform
RRC-NYSE | $24.75
John Freeman , CFA (RJA)

We're updating estimates post 1Q23 earnings. As a reminder, RRC beat during the quarter
thanks in large part to pricing surprising to the upside, particularly on the liquids front
coming in a full $1/bbl over Mont Belvieu, the very high end of the range. RRC is still front-
loading capex, with TILs ramping in the back half of the year, production should peak in 4Q
when natural gas prices will theoretically be at their highest. For the second quarter, we do
have capex trending higher, still assuming a ~55%/45% split from 1H23 to 2H23. Production
will be down in 2Q by 100mmcfe/d as management mentioned on the call due to planned
downtime due to midstream maintenance. Total capex for the year coming out to $607M,
near the midpoint of guidance at $610M. We are estimating FCF yield of 7.5% and a 2023
EV/EBITDA Multiple of 6.4x. Our bearish view on gas keeps us on the sideline with a
Market Perform rating.

[dan_s]

I have updated my forecast/valuation model for RRC for their outstanding Q1 results and fresh guidance.
My current valuation increases by $2 to $31 per share. Looking past the recent dip in natural gas prices, if natural gas prices do continue to rebound and move back to $5.00/MMBtu in 2025 (Raymond James new forecast), RRC should be a $50 stock.

The Company's realized natural gas price in Q1 2023, net of cash settlements on their hedges, was $3.58/mcf. Range's realized natural gas prices will dip in Q2, but the Company is still on-track to generate over $500 million of free cash flow this year just by holding production flat. This year's drilling program is back end loaded, so production should ramp up into year-end.

RRC has a strong balance sheet and a massive amount of proved reserves (~18 Tcfe).

We will be publishing an updated profile on RRC tomorrow morning. I have already posted the updated forecast model to the EPG website home page.