Energy Prospectus

RRC Q2 results beat my forecast. Best of all, they beat on production volumes and they raised production guidance for the full year. I am updating my forecast model and will post more comments tonight. - Dan

FORT WORTH, TX--(Marketwired - Jul 28, 2014) - RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its second quarter 2014 financial results.

Second Quarter Highlights -
•Production volumes reached a record high, averaging 1,105 Mmcfe per day, a 21% increase over the prior-year quarter.
•Unit costs declined $0.41 per mcfe or 11% compared to the prior-year quarter.
•Reported quarterly net income increased 19% to $171 million.
•Expanded marketing capabilities by adding 17 new customers, increasing future firm transportation capacity by 400,000 Mmbtu per day and signing two LNG supply agreements.
•Continuing improvement in well performance both in the wet and dry gas areas of the Marcellus.
•Completed the asset exchange of Permian properties for Nora Field assets in Virginia and $145 million cash giving Range operating control of 350,000 net acres in Virginia and 111 Mmcf per day of production.
•Estimated production for the year increased to 25%, the high-end of previous guidance.

Commenting on the announcement, Jeff Ventura, Range's President and CEO, said, "We have confidence in our ability to grow our net production to 3 Bcfe per day, nearly three times where we are today. The wells have been identified, the compression and plants have been scheduled, and the takeaway capacity to multiple markets has been secured. Our long range plan, based on current strip pricing, estimates our operations to be cash flow positive in 2016. We believe our growth should coincide with the increased demand for natural gas, which will further accelerate our cash flow growth as prices improve. In addition, we expect continued improvements in our operating cost structure, more efficient capital spending, greater cost efficiency on gathering as we drill in areas of existing infrastructure and better well results as we continue to drill longer laterals with enhanced completion designs.

My Fair Value Estimate for RRC is coming very close to First Call's Price Target of $101/share. It will be interesting to see how the market reacts to Range's statement that they now have a clear path to production of 3 bcf per day.

Their marketing department is doing a great job of getting them tied in to a bunch of different markets and reducing their transportation costs.

I need to double check a few line items in my forecast model. I will post it to the website on Tuesday.

Wow, I hadn't looked at this in a while or realized how bearish and washed out the chart had become. Will it be a dead cat bounce or a lasting turn up on these results? Some real storms in the GOM will help RRC and natural gas but it's early yet.

RRC is the only real "gasser" we have in the Sweet 16. The chart looks bad because of the decline in natural gas prices.

IMO the company had a fantastic quarter, especially when you consider the midstream issues they had to deal with. Now that their midstream issues are solved their liquids production will increase. Plus, I think natural gas prices will drift higher in the 4th quarter.

RRC is a "Core Holding" quality company. It holds over 80 Trillion Cubic Feet of potential gas reserves. They are now on a clear path to 3 Bcfe per day of production (compared to 1.1 Bcfpd in Q2).

BUY RRC now and you will be happy you did by Christmas.

This is why RRC is in the Sweet 16

> 20%-25% growth for many years

> Wells identified, infrastructure planned with the contracted
takeaway capacity to profitably grow production to 3 Bcfe/d (from 1.2 Bcfe/d today)

> Assuming current strip pricing, Range is projected to be cash flow
positive in 2016 (natural gas prices should be much higher in 2016 than the current strip)

> Significant growth planned in 2016 and beyond, when gas demand
is projected to grow from LNG exports, petrochemical, power
generation, manufacturing and transportation growth

> Total unit costs are projected to continue decreasing as
production grows

> Range’s well results are projected to improve as longer laterals,
improved completion technology and more frac stages are
incorporated

Those of you that own Gastar Exploration (GST) should look at the new presentation that Range just put up on their website then go look at where Gastar's acreage in the Marcellus and Utica is sitting.

Range Resources (RRC): An updated Net Income & Cash Flow Forecast has been posted under the Sweet 16 tab.

My Fair Value Estimate came down $0.80/share to $100.50/share, but I am still very bullish on RRC. We should all keep our portfolios heavily weighted to oil, but RRC is the way to have the "right kind" of exposure to natural gas. Their netbacks are very strong in the Marcellus Shale, even at today's gas price. If we do have a cold winter (expected) and natural gas prices ramp up from current levels this winter (expected) then buying RRC at today's share prices should be very rewarding within six months.