Range: Marcellus Shale Update – Analyst Blog

The long-term upstream prospect of Range Resources Corporation (RRC) is gaining momentum with superb drilling results in the Marcellus Shale play.

 

Range’s large acreage holdings will support several years of oil and gas drilling in this fast-growing field. In its recent Marcellus play update, the company stated that it currently owns a total of approximately 900,000 net acres in this play.

 

With southwest-weighted acreage holdings, Range intends to give more focus over the next few years on the development of this area. The high liquids content in the production profile of this part with positive oil outlook favorably impacts the company’s overall return. The economics of this play becomes even more attractive due to its proximity to the local market.

 

The company said that results of its longer lateral wells are very encouraging. Range has been involved in optimizing well designs in this play to drive down the unit cost and increase overall returns.

 

Given its dominant position in the Marcellus Shale play and its continuous endeavor to control costs, we believe that Range will be capable of organizational sustainability and long-term shareholder value creation. However, our unchanged Neutral recommendation for the stock reflects its natural gas weighted reserves (about three fourths of the entire reserve base) and production profile.