Range Resources (RRC) Valuation Update - Feb 2

[dan_s]

Of the four gassers in the Sweet 16, RRC is the "Safe Bet" because they have the most gas hedged for 2024.

Range's realized natural gas price in 2023 net of cash settlements on their hedges was approximately $2.80/mcf and the Company generated over $400 million of free cash flow from operations, most of it was used for debt repayment and stock buybacks. Range pays a small dividend.

Based on my updated forecast, Range's realized natural gas price should be approximately $2.71/mcf in 2024, net of cash settlement on their hedges. Higher realized NGL prices this year, should allow Range to actually generate more operating cash flow in 2024 than they did in 2023.

My current valuation declines by $4.25 to $30.75 per share. RRC is currently trading for $28.87

TipRanks: "In the last 3 months, 12 ranked analysts set 12-month price targets for RRC. The average price target among the analysts is $35.00. The 12 price targets range from $30 to $42."

Range holds a lot of valuable leasehold in Appalachia, so it has significant upside for us in a "Future World" where U.S. natural gas is firmly over $3.00.

Range's Q4 2024 reported EPS should beat the current First Call EPS forecast by a wide margin.