Range Resources Corp. (NYSE:RRC) — This oil exploration company drills and develops oil and gas properties in the Marcellus Shale of the Appalachian Basin in the U.S.
For the last two years, RRC has reported losses of $4.29 and $2.75. However, for 2017 Standard & Poor’s predicts that production will grow at between 33% and 35% at current oil/gas price levels, especially in the “super-rich” wet gas areas of the Marcellus, Utica and Mississippi areas.
S&P also projects that overall dry gas could have a 30%-plus lift with exposure to the Gulf Coast. Costs, too, are falling, as noted by a $1M reduction in costs in North Louisiana in Q4.
In 2016, proven reserves increased 11%, and with RRC’s efficiencies any increase in prices could quickly increase drilling, and thus earnings. In late February S&P Capital IQ published a note in which they increased their 2017 EPS estimate to 62 cents from 31 cents and initiated an earnings per share estimate for 2018 of $1.04. Their 12-month price target is $40 per share.
Technically, RRC stock is in a downtrend since topping at over $40 last June. However, both fundamental and technical analyses appear to confirm that a reversal is in progress. A cluster of CBR buy signals from my internal indicator and a recent buy signal from the longer-term MACD indicator could be preparation for a penetration of the 50-day moving average. However, note that this is a “bottom-fisher’s” speculation with higher-than-average risk. The proposed target of $36 would, if achieved, provide a 22%-plus return and thus warrants consideration by speculators.
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