On Jul 1, 2014, Zacks Investment Research issued an updated
Range Resources Corporation
Range Resources' revenues and earnings grew on an annual basis.
However, revenues failed to meet the Zacks Consensus Estimate.
The company has a track record of increasing production at a
double-digit rate while reducing its finding and development
(F&D) costs and sustaining an industry leading low-cost
structure. This can be attributed to increased production from the
low-cost Marcellus region. Additionally, the sale of higher cost
related assets, like Ohio properties in 2010, Barnett in the first
half of 2011 and the New Mexico assets in 2013, further reduced the
company's overall costs. The Permian Basin properties in southeast
New Mexico and West Texas produced 18 million cubic feet equivalent
per day of oil and gas.
Range Resources remains focused on five liquid-rich plays that
include the super-rich Marcellus, the super-rich Upper Devonian,
the wet Utica, the horizontal Mississippian and the Cline Oil shale
play to drive its liquids production. Its primary activity is
centered on the super-rich area of southwestern Pennsylvania. For
2014, Range Resources expects to generate 20-25% annualized
production growth with its focus on liquid-rich opportunities
mostly in the Marcellus Shale and Horizontal Mississippian plays
that have a combined acreage of about 500,000.
However, as a company operating in the oil and gas industry, Range
Resources remains susceptible to volatile
, an imbalance between supply and demand for products, and rising
interest rates. The company's 2013 total reserve comprises 69%
natural gas. Such factors could hurt the company's volumes and
In our opinion, the Marcellus Shale properties are much pressured,
with some areas containing rich gas that needs to be processed
further. As such, Range Resources requires more capital and new
high-pressured lines to gather Marcellus gas.
Key Picks in the Sector
Range Resources has a Zacks Rank #3 (Hold). Currently, we prefer to
remain at the periphery regarding the stock. However, better-ranked
players in the energy sector like
Magellan Midstream Partners LP
), all sporting a Zacks Rank #1 (Strong Buy), are worth
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