Energy Prospectus

I can never understand why the market sells the stock of the buyer in a big merger. Do investors just think the Buyer woke up one morning and said, "what the hell, let's roll the dice and spend several $billion on this other company."

Today's selloff of RRC is a buying opportunity. IMHO of course. They know the MRD assets have HUGE upside.

I say this because I consider RRC one of the best run upstream companies that I have EVER followed, and I follow a lot of them. RRC has one of the best technical teams and one of the best marketing groups on this planet. If they think they got MRD at a good price, they did. Plus, natural gas prices are not going to stay this low much longer. Supply & demand for gas should be back in balance by year-end and that means Ngas will be selling for over $3.00/mcf by Christmas.

Jeff Ventura talked about the combination in the conference call today: “Finding an accretive transaction that competes with our results in the Southwest Marcellus is not a small hurdle. Therefore, any potential transaction has to start with high quality assets. The Terryville assets particularly the Upper Red are highly prolific well developed by a high quality technical team was evidenced by their industry leading production rates per well. Similar to the Marcellus, the Upper Red is relatively low risk, highly repeatable, high quality rock.

“Terryville is a stack pay area that provides future upside and the ability to drive operational efficiencies and improvements to our cost structures in the months and years ahead. Terryville also has the advantage of being in close proximity the growing demand and the higher prices near the Gulf Coast, boosting relative returns. When closed this transaction will be immediately accretive to cash flow per share as a result of Memorial’s high margin production.”

Ventura went on to point out that on a pro forma basis, Range will “improve its 2016 margins by approximately $0.45 per Mcfe based on analyst consensus. Memorial also has hedges in place to cover approximately 270 million per day of 2017 production at an average floor price of $3.50, securing a significant portion of the expected cash flow next year.”

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