Energy Prospectus

Range's Q3 results were close to my forecast and the Company continues to generate strong free cash flow despite realized natural gas prices of just $2.47/mcf during the quarter. This company has massive proved + probable reserves in the most important natural resource play in North America.

My valuation increases by $2 to $37 per share just because I have raised my valuation multiple to 6.25 X annualized operating cash flow.
The 0.25 increase is justified because 2024 keeps looking better. If their realized natural gas price just averages $3.00/mcf next year, Range should generate over $1.4 billion of operating cash flow ($6.00/share). With D&C capital expenditures of $650 million next year, Range should be able to increase production by ~6% and generate over $750 million of free cash flow.

Range has super low cash expenses per boe of production.

Key to the higher price targets below is Range's massive reserve base, much of which is held by production.
I cannot stress enough how valuable leasehold is that is HBP'd. < We discussed this on today's webinar.

7 respected energy sector analysts have updated their price targets for RRC and submitted them to TipRanks.
The 7 new price targets average $40.71 and range from $37 to $48.

For those of you interested in learning more about the natural gas and NGL markets, Range has a lot of good slides in their updated presentation that show an improving outlook of natural gas and NGLs.

From Truist Financial

Range Resources Corporation (RRC)
Good Problem To Have

Range beat 3Q estimates on efficiencies/timing of activity, and highlighted its decision to
potentially build a few DUCs after efficiencies pulled forward some activity in late '23,
but more importantly threaded the needle on guidance keeping change-adverse investors
pleased. We expect 4Q23 Street production estimates to move down slightly, and for the
1Q24 trajectory to remain flat/down q/q, however FY24 plans remain largely intact. With our
FCF estimate approaching ~$1b for '24 we expect share repurchases and debt reduction
to move to center stage next year.

Unwavering Plans Drive Efficiencies
While we did not expect many changes to RRC's plans, the company's efficiency gains
forced their hand on the decision to lay down their rig or build a few extra DUCs into
their backlog, with the latter making the most sense given the contango in the gas strip.
Additionally, as the company moves to longer laterals (and less wells/year to maintain the
same production) we expect we could see investors better appreciate the longevity of RRCs
inventory, providing a reprieve from what we have seen from some less fortunate Permian
operators, which instead look to costly M&A. We expect these efficiencies to drive a much
stronger FCF program in '24 which will likely lean on the company's share repurchase
program.

Utica Catalyst Flying Under The Radar
While we don't expect the company to commit capital to a development program anytime
soon, we feel it is prudent to start highlighting RRC's Utica inventory upside, which normally
only garners a single question each quarter. With 400k net acres prospective in SWPA, and
another 220k with potential in NWPA if a >$4/m gas environment becomes a reality and
liquids prices are challenged we would not be surprised to see the company reexamine these
projects. While not directly adjacent to RRC's assets, as we have outlined (see note), we
anticipate positive developments from EOG Resources (EOG, Buy) on their Utica acreage in
the coming quarters, which should be a positive read through to RRC's geologically similar
rock, which importantly has a strong liquids component.

Reiterating $32 Price Target
Range turned in a 3Q23 FCF beat versus our/Street estimates given lower capital spending
in the quarter. While operational efficiencies drove some of the beat, timing of activity did
the heavy lifting here, as FY23 capital guidance remains on track. Other guidance items
were mostly unchanged, with improved transportation expense netting out against lower
realizations. We have adjusted our estimates for 3Q23 actuals along with updated guidance.
Our $32 price target is derived from two equally weighted methodologies, with the first being
our ’23 EV/EBITDAX multiple of 5.0x applied to our 2024E EBITDAX estimate of $1,729MM
(consensus of $1,514MM) and the second being a FCF/EV Yield assumption of 11.0%.