Tuesday, July 8, 2014

Seeking Alpha: Range Resources Another Growth-Oriented Marcellus Play

Within the world of natural gas-weighted E&P companies, Cabot Oil & Gas (COG), Southwestern Energy (SWN), and Range Resources (RRC) often seem to get grouped together in coverage and analysis. Along with other names like Chesapeake Energy (CHK), Ultra Petroleum (UPL), and EQT (EQT) these are some of the more interesting names leveraged to the expansion on shale gas production from the United States.

Even moreso than for Southwestern, Cabot, and Ultra Petroleum, Range Resources' value seems skewed toward ongoing drilling and production/reserve growth. With over 10,000 drilling locations in the Marcellus alone and a very interesting position in Oklahoma and Kansas, that forward-looking skew to the valuation doesn't seem unreasonable. I am concerned about the returns on capital here, though, as well as the balance sheet-adjusted production growth and while the valuation is interesting, I wouldn't recommend ignoring those concerns.

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Range Resources Another Growth-Oriented Marcellus Play

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