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Here's Why Range Resources (RRC) Stock Surges 144.8% in a Year
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Range Resources Corporation’s (RRC - Free Report) shares have jumped 144.8% in the past year compared with 67.1% growth of the composite stocks belonging to the industry.
The Zacks Rank #3 (Hold) company, with a market cap of $6.7 billion, has witnessed a rise in the Zacks Consensus Estimate for 2022 earnings per share in the past 30 days.
Image Source: Zacks Investment Research
Let's delve deeper into the factors behind the stock's price appreciation.
What's Favoring the Stock?
The price of natural gas has skyrocketed almost 50% in the past year. Being a leading producer of natural gas and natural gas liquids (NGLs) in the United States, the massive improvement in the commodity price is a boon for Range Resources' upstream operations.
Global growth prospects have improved significantly as vaccination rollouts led to increased fuel demand in a few large economies. As most of its production comprises natural gas, Range Resources is well-positioned to capitalize on the mounting clean energy demand. In 2021, the company’s total production was 2,130.2 million cubic feet equivalent per day, of which 69.6% was natural gas.
Range Resources primarily sells its produced natural gas to midstream firms, utilities, marketing companies and industrial users. It also sells NGLs and crude oil to clients. In the prolific Appalachian Basin, RRC has a multi-decade inventory of premium drilling locations, signaling a bright production outlook. As of Dec 31, 2021, the company’s total proved reserves were 17.8 trillion cubic feet equivalent (Tcfe), higher year over year. About 95% of the total proved reserves are located in the Marcellus region.
Range Resources is focusing on cost improvement and marketing strategies to increase its margins. Since 2018, RRC’s annual capital expenditure has reduced almost 50%, while Appalachia production has increased more than 10%. It has lower well costs per lateral foot than many other upstream players.
On a positive note, RRC has the lowest emission intensity among the upstream companies in the United States. Thus, Range Resources, one of the most attractive players in the exploration and production space, is poised for further upside in the coming days.
Drawbacks in Development Path
However, there are certain concerning factors.
Explorers and producers are not getting enough incentives to ramp up hydrocarbon production as the pandemic is still affecting major economies in Asia. Russia’s invasion of Ukraine could send gas prices soaring, bring more uncertainty in the energy sector. Due to the surging gas pricing, RRC might face additional service cost inflation in the future, which might increase costs to drill, complete, equip and operate wells.
EOG Resources Inc. (EOG - Free Report) primarily engages in the exploration and production of oil and natural gas. At 2021-end, EOG reported net proved reserves of 1,948 million barrels of oil equivalent (MMBoe), representing an improvement from 1,649 MMBoe a year ago.
EOG Resources’ earnings for 2022 are expected to increase 39.7% year over year. EOG declared a special dividend of $1 per share. The special dividend is likely to be paid out on Mar 29 to stockholders of record as of Mar 15.
Viper Energy Partners LP (VNOM - Free Report) is a variable distribution MLP and is a subsidiary of Diamondback Energy. VNOM estimated its proved reserves at 128 MMBoe as of 2021-end, reflecting a year-over-year increase of 29%.
Viper Energy’s earnings for 2022 are expected to grow 77.6% year over year. The partnership was authorized by the board of directors of its general partner to make a cash distribution of 47 cents per common unit. The metric increased almost 24% from the prior-quarter figure of 38 cents per common unit.
SM Energy Company (SM - Free Report) is one of the most attractive players in the exploration and production space. SM estimated its proved reserves at 2021-end at 492 MMBoe, increasing 22% year over year.
SM Energy’s earnings for 2022 are expected to jump 261% year over year. As of Dec 31, 2021, SM had cash and cash equivalents of $332.7 million. The company had net debt of $2,081.2 million. SM Energy had total liquidity of more than $1.43 billion and long-term debt to capital of 50.2%.
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Here's Why Range Resources (RRC) Stock Surges 144.8% in a Year
Range Resources Corporation’s (RRC - Free Report) shares have jumped 144.8% in the past year compared with 67.1% growth of the composite stocks belonging to the industry.
The Zacks Rank #3 (Hold) company, with a market cap of $6.7 billion, has witnessed a rise in the Zacks Consensus Estimate for 2022 earnings per share in the past 30 days.
Image Source: Zacks Investment Research
Let's delve deeper into the factors behind the stock's price appreciation.
What's Favoring the Stock?
The price of natural gas has skyrocketed almost 50% in the past year. Being a leading producer of natural gas and natural gas liquids (NGLs) in the United States, the massive improvement in the commodity price is a boon for Range Resources' upstream operations.
Global growth prospects have improved significantly as vaccination rollouts led to increased fuel demand in a few large economies. As most of its production comprises natural gas, Range Resources is well-positioned to capitalize on the mounting clean energy demand. In 2021, the company’s total production was 2,130.2 million cubic feet equivalent per day, of which 69.6% was natural gas.
Range Resources primarily sells its produced natural gas to midstream firms, utilities, marketing companies and industrial users. It also sells NGLs and crude oil to clients. In the prolific Appalachian Basin, RRC has a multi-decade inventory of premium drilling locations, signaling a bright production outlook. As of Dec 31, 2021, the company’s total proved reserves were 17.8 trillion cubic feet equivalent (Tcfe), higher year over year. About 95% of the total proved reserves are located in the Marcellus region.
Range Resources is focusing on cost improvement and marketing strategies to increase its margins. Since 2018, RRC’s annual capital expenditure has reduced almost 50%, while Appalachia production has increased more than 10%. It has lower well costs per lateral foot than many other upstream players.
On a positive note, RRC has the lowest emission intensity among the upstream companies in the United States. Thus, Range Resources, one of the most attractive players in the exploration and production space, is poised for further upside in the coming days.
Drawbacks in Development Path
However, there are certain concerning factors.
Explorers and producers are not getting enough incentives to ramp up hydrocarbon production as the pandemic is still affecting major economies in Asia. Russia’s invasion of Ukraine could send gas prices soaring, bring more uncertainty in the energy sector. Due to the surging gas pricing, RRC might face additional service cost inflation in the future, which might increase costs to drill, complete, equip and operate wells.
Key Picks
Investors interested in the energy sector can look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
EOG Resources Inc. (EOG - Free Report) primarily engages in the exploration and production of oil and natural gas. At 2021-end, EOG reported net proved reserves of 1,948 million barrels of oil equivalent (MMBoe), representing an improvement from 1,649 MMBoe a year ago.
EOG Resources’ earnings for 2022 are expected to increase 39.7% year over year. EOG declared a special dividend of $1 per share. The special dividend is likely to be paid out on Mar 29 to stockholders of record as of Mar 15.
Viper Energy Partners LP (VNOM - Free Report) is a variable distribution MLP and is a subsidiary of Diamondback Energy. VNOM estimated its proved reserves at 128 MMBoe as of 2021-end, reflecting a year-over-year increase of 29%.
Viper Energy’s earnings for 2022 are expected to grow 77.6% year over year. The partnership was authorized by the board of directors of its general partner to make a cash distribution of 47 cents per common unit. The metric increased almost 24% from the prior-quarter figure of 38 cents per common unit.
SM Energy Company (SM - Free Report) is one of the most attractive players in the exploration and production space. SM estimated its proved reserves at 2021-end at 492 MMBoe, increasing 22% year over year.
SM Energy’s earnings for 2022 are expected to jump 261% year over year. As of Dec 31, 2021, SM had cash and cash equivalents of $332.7 million. The company had net debt of $2,081.2 million. SM Energy had total liquidity of more than $1.43 billion and long-term debt to capital of 50.2%.