Energy Prospectus

ZACKS Research, September 19th: "We believe that the transaction will substantially boost Range Resources’ position as a premier independent natural gas, oil and NGL producer in the United States with remarkable core acreage positions in both the Appalachian Basin and Northern Louisiana."

http://finance.yahoo.com/news/range-res ... 01098.html

In my opinion, RRC is now the #1 natural gas / NGL company in North America. They hold over a million acres in the Marcellus/Utica, the world's most important gas/NGL play. RRC should exit 2016 with production above 2.0 Bcfe per day (~66% natural gas, ~30% NGLs and ~4% crude oil).

Range Resources Corp.: Resumption of Coverage
Drew Venker, CFA – Morgan Stanley
September 20, 2016 4:01 AM GMT

Resuming coverage at Equal-weight with a $45 Price Target post the Memorial (MRD) deal closing. We see significant upside if gas and NGL prices rebound, balanced by greater balance sheet risk than peers if commodity prices remain weak in 2017.

Positively biased view post the MRD transaction. We see relatively balanced risk-reward for Range net of the balance sheet improvement: the stock offers deep NAV upside, but downside is greater than many of its Appalachia peers due to its higher leverage and premium multiple.
We are positively biased because of:
1) RRC's strong track record of driving down costs and improving well performance, which we believe will extract greater value from the MRD assets; and
2) our bullish view on gas and NGL prices.

MRD transaction has pros and cons. RRC is the only Marcellus-Utica stock that has not issued equity solely to bolster its balance sheet YTD. Its peers issued equity either simply to improve their balance sheets or to fund planned acquisitions that ultimately did not close. Reducing leverage through the merger with MRD while adding resource diversification could prove to be a wiser avenue to improve leverage than simply offering common equity. But the outcome depends largely on commodity prices.

Post the transaction we expect YE-2017 leverage to remain above peers on our strip price deck at 3.7x net debt to EBITDA vs. the Marcellus-Utica peers at 2.0x. If gas and NGL prices remain subdued next year, balance sheet concerns could quickly become investors' primary concern on RRC. However, in a higher price environment in 2017, any remaining leverage concerns will quickly dissipate.

In a 2017 bull price scenario ($60 WTI, $3.50 HH) RRC's leverage would fall substantially (2.8x by YE-2017 vs. 3.7x on base case) and pro forma production growth would accelerate to 14% vs. our base case of 6%.