Range Resources Corporation
) intends to act as the anchor shipper for the next 15 years on the
Mariner East Project − which aims to ship natural gas liquids (NGL)
resources to a Philadelphia-area terminal for U.S. and
ENTERPRISE PROD (EPD): Free Stock Analysis
MARKWEST EGY PT (MWE): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
SUNOCO LOGISTIC (SXL): Free Stock Analysis
To read this article on Zacks.com click here.
Mariner East is a pipeline venture between
Sunoco Logistics Partners L.P.
) − which is the owner of the line − and
MarkWest Energy Partners, L.P.
). The venture is set to transport propane and ethane from the
liquid-rich Marcellus Shale region in western Pennsylvania to
Sunoco's facilities at Marcus Hook, Pennsylvania for processing,
storing and distribution.
This project aims to transport 65,000 barrels daily of ethane and
propane to the terminal in Philadelphia region for carrying to U.S.
and international users. Range is one of the major producers in the
Marcellus Shale in Pennsylvania and West Virginia and it commits to
provide 40,000 barrels a day to the pipeline comprising 20,000
barrels of ethane and 20,000 barrels of propane.
NGL resources like ethane and propane serve as the feedstocks for
petrochemical plants that produce plastics and other associated
products. In response to the growing supply of NGLs, U.S. chemical
manufacturers are now busy adding capacity to take advantage of the
This Mariner project expects to start deliveries of propane in the
second half of 2014, with ethane deliveries slated to commence in
the first half of 2015 to Sunoco's Marcus Hook terminal.
Meanwhile, Range has also inked a 15-year ethane sales agreement
with a petrochemical manufacturer, INEOS Europe AG, subject to
regulatory approval of Mariner East. Range will start delivering
10,000 barrels per day to INEOS in the first half of 2015 that will
eventually increase to 20,000 barrels daily.
Earlier, the company signed two deals to ship its liquid. One is
with NOVA Chemicals Corp. for its Corunna Cracker in Sarnia,
Ontario, and the other with
Enterprise Products Partners L.P.
), whose ATEX pipeline will distribute ethane to the Gulf Coast.
For Range, all these ventures will aid the company to drill more of
its southwestern Pennsylvania acreage in the wet gas portion of the
Marcellus. The company believes that it will be able to add 35
cents to 45 cents per thousand cubic feet (Mcf) more when these
liquids are sold separately. During the second quarter, Range
received an average of $3.66 per Mcf for its natural gas.
Currently, Range's estimated recoverable resource is 1 million
barrels of ethane in its 335,000 liquids-rich acres in southwest
Pennsylvania and 30% of it is under contract.
With a leading acreage position in the Appalachian Basin, Range's
operations remain largely geared toward accelerating production
while maintaining a low-cost structure. We believe the rich gas
play in southwest Pennsylvania offers attractive project returns
even in a low gas price environment. Again, its increasing focus on
liquids (like Marcellus, Upper Devonian, wet Utica, Mississippian,
and Cline oil shale) and divestitures of higher cost assets will
also help the company to further streamline its overall cost
However, we remain on the sidelines as the company is still exposed
to a low natural gas price environment, interest rate risks and an
uncertain macro backdrop. Additionally, Range is governed by
several stringent regulations, especially in the Marcellus Shale,
the Appalachian Basin and the southwestern U.S., where it has an
extensive asset base.
The company retains a Zacks #3 Rank, which is equivalent to a Hold
rating for a period of one to three months. For the long term, we
maintain our Neutral recommendation.