Just an update. If you had bought RRC at the bottom of the channel at 74 as suggested, you would be up by about 8 points today. Could have also played it with options. Just saying . . .
Take away with NGLs is getting better also. SXL just the other day initiated Mariner II, NGL pipeline to Marcus Hook. The W&LE railroad NGL runs from MWE Liberty are going strong. ATEX at least form many miles to the west is complete.
You're right the ROR in the Marcellus is too good. Investors need to pay attention and ignore the analysts. They are not using the right metrics to value the company. The company has now repeatedly stated that production is going to grow 20-25% long into the future and cash flow at a faster rate-meaning thee stock price will double every 3-4 years. Only RRC with its liquid rich and stacked pay acreage will have the scale and huge advantages. Very information presentation yesterday at Cowan which is available on the RRC web.
Sec filing up to 90,000 acres for sale, Conger, Cline & Wolfberry. Appears Marcellus liquids just can't be beat. Somewhat surprised sincs Ventura not in last conf. call that they are lookoing for more oil. Anyone have any thoughts?
Appreciate your post and took a look at AR and GPOR. I like CHK better right now.. I believe it may be an easier double as a good turnaround.
Been a long time since hearing from you. I was looking over Antero (AR) which is purely a Marcellus + Utica outfit. Between them and GPOR, it appears they are the top success winners in the Utica so far. AR went public just a month or so ago.
It may not be a bad idea to hold a bit. It has a history of making quick moves in either direction.
It could likely make a good bounce after it's recent deep sell-off . However, in a general
market correction all bets are off.
Thanks for the backgound and the very timely idea. I picked up 5% in two days. Looking at the chart, I probably should hold for 20 or so.
Good to hear from you again. I have two ideas about the REXX pasting.
They had quite a run-up during the past year and IMO due for a correction,as was the NG
sector. Also off .01 in earnings report.
Chrxind-if you haven't seen it, take a look at the latest presentation on the RRC web under "presentations", where their analysis appears to confirm the resource potential of their Utica/Point Pleasant acreage-more than 550,000 acres in SW PA. This is hugely positive for RRC as they will benefit more than any other company from economies of scale having this unbelievable stacked pay area-Upper Devonian, Marcellus and now Utica. No doubt, this is why they believe they can double every 3-4 years.
Hey Yogue-the recent RRC presentation that confirms the potential of their Utica acreage is also good news for Rexx. Always good to hear from a long standing RRC/Lomak owner.
The market can be crazy at times when it values Twitter and RRC at less than 12B-ultimately the value will reach it proper level.
If you look at the RRC share prices by the metrics the analysts use, a multiple of EB/EBITDA then it would appear that it's fairly priced and even trading at a higher multiple than its peers, but for good reason. I think that the CEO is saying that may not be the best way to value RRC-especially if you look at the value of its assets per share which would be north of $200 per share, production growth. premium for wet gas and stacked pay area (really giving them 2 million Marcellus acres all de-risked), etc. So if cash flow per share for nine months is $4.28 estimate $5.75 for the year. If cash flow triples which is likely based on the company forecasts, then 12x cash flow could give you a stock price north of $200. I don't see this as an extreme valuation-that's why I'm really surprised that one of the majors or a conglomerate like GE or Berkshire doesn't just and buy RRC now for $100-120.
A little problem with Ventura's analysis. The current price already reflects lots of future growth, so I don't think you can say that cash flow going up 4 times means the share price goes up 4 times.
That being said, this is an amazing company. If gas ever goes to $6 or $7 and stays there awhile they will be printing money. This is one of the few high PE stocks that doesn't scare me. I am long and expect to hold it for years.
I've been looking at this message board for a few years. I remember when the stock was in the 20s and 30s the mb was very active. Miss those days.
Mr. Ventura summarized:
“If cash flow grows proportionately with production, the cash flow doubles in 3 -4 years, then again double again and beyond. Based on cash flow multiple for the stock, then the stock price will double in 3-4 years, and then double again thereafter”
So, my estimates and timeframe assumes at say 140 perhaps by about the end of 2015, and by say end of 2017 or perhaps less, a 280 share price. Let us hope the company does not split the stock, my opinion is it is counter- productive. Note the intrinsic value I noted in the past, multi-stack play, note the in conference call, drilling into the Utica/Point Pleasant formation in Washington County next year, and the pipeline midstream and downstream infrastructure takeaway for gas and liquids. I don’t think Range has any reason to sell out, the larger outfit simply have to pass. In fact I don’t think any major is willing to pay such a huge premium. My hope is we stay independent. At most a buy-out of the right “crude oil” outfit of equal or less the size of Range could be interesting and has my blessing provided Range does not lose its identity. However that could be accomplished by just adding/assuming additional "crude" acreage elsewhere.
Outstanding earnings and production report for RRC. Don't like to speculate, but you have to wonder why a company like CVX, looking to buy reserves, doesn't write a check for $120 and try and acquire RRC. A company growing production and cash flow at 25% a year, doubling production and cash flow every 3-4 years, with marketing agreements for ethane substantially increasing realized prices, 2 million acres equilvalent de-risked, with the benefit of the best wet acreage in the Marcellus (not to even mention their other plays) and probably the best technical team. I've always preferred that RRC remain as a stand alone because shareholders are now reaping the benefits of a decade of capital expenditures building up the Marcellus- and now the company has more potential and lesser risk than at any time in its history. But you have to wonder what these large players are thinking for their shareholders.