Hey Yogue, Saw some recent analyst notes on RRC-Breen Cap just upped target price to 114, Canacord at 107, Cantor Fitz at 98, Deutch Bank at 100 and Morningstar just gave it a 4 Star rating and increased fair value by $10 to $89. I agree natural gas prices and liquids prices having their effect here. Still RRC selling at too big a discount to its asset value along with all the other attributes we often discuss here. Been buying a some shares at these levels.I think we have to look forward longer term to the natural gas exports, utility switching and increasing demand.
Looks like about a 20% correction off the RRC high, painful to watch. Haven't seen anything company specific to justify the decline. Appears to result from the decline natural gas prices and the storage numbers. but at some point the company needs to address this substantial loss in market cap as it declines again today. RRC appears to be doing very well on all metrics but when it drops 20% the company needs to get in front of it.
Yogue, I agree, looked at natural gas prices and the sector, clearly in oversupply mode now with gas prices down sharply. Nonetheless, did not expect RRC to drop this sharply with the anticipated Utica well, marketing announcements and their hedge positions, outstanding asset base, low cost production and the efficiencies they have from the stacked pay. I see it got a Buy rating and 107 target this morning from Cannacord. Actually, bought a some shares this morning. I think we may be getting close to some deals in the E&P sector with the low interest rates, recent correction in the sector and opportunity for the major players to get ahead of the natural gas exports-COG and RRC definitely have an outstanding asset base.
Yeah-good luck with your purchase. Used to be more activity on the RRC board, thought there might be some interest and insights here with the stock declining almost 16% percent in a very short time. If there was any material reason I expect the company would have commented-but a sharp drop in any event. I think there is a lot of value here for some of the reasons I cited, but in the end, the market makes that decision, and doesn't seem to like it now. RRC down for the year in a record market.
Impressive Utica Shale results announced by CNX, bodes well for RRC which appears to have better acreage:
In the Utica Shale, CONSOL's 3-well NBL19 pad in Noble County, OH, was completed using RCS/SSL with an average of 64 stages per well and had an average lateral length of 9,510 feet. The pad, which had a controlled drawdown in pressure, yielded 24-hour average rates over 23 MMcfe per day, which included condensate yields of 70 barrels per million cubic feet of gas and an estimated NGL yield of 55 barrels per million cubic feet of gas. CONSOL is optimizing production facilities, midstream liquids handling and managing the reservoir pressure, and the company believes that the pad has the potential to produce at much higher rates. Each of the three wells achieved peak flow rates of approximately 18 MMcf per day, which would equate to 33.4 MMcfe per day. In the Ohio Dry Gas area, CONSOL has started drilling the top-hole on one dry Utica and one Marcellus in Monroe County, OH and expects to drill the horizontal for each well early in the fourth quarter in 2014.
That's an excellent purchase, which is about a 50% discount to the current value of the company, just for its Pennsylvania assets alone. RRC has 1.9 million PA acres, all of which are in reality proved. So if you assume 20% of those acres will never be drilled, you have 1.5 million acres. If you conservatively value 10% of those acres at 152,000 at $22,000 (approximate amount of acreage drilled to date) and the remaining 1.4 million acres at $15,000 with 160 mil shares you get an approximate $148 per share value. In reality, those acres will be proved so the share price is $210, without calculating for the other company assets. Like I say, any major player interested in RRC would have to pay north of $150 today and only significantly more later. This is a simple calculation but gives you an idea of the company's real value. No one can predict the share price near term and of course analysts do a different model computation, but it seems that you made a smart purchase, and ultimately you will receive its true value per share, as they continue to develop these assets.
The other day CHK announced the sale of 22,000 undeveloped acres in Green County to rice for 336 mil or about 15K per acre. RICE also announced their Bigfoo9H Utica well came in at 41 mmcf/d. Repeating myself, but RRC has 1.9 million Marcellus, Utica and Devonian share acres which are in more productive locations-just using the undeveloped acreage cost that RICE paid that equates to an approximate $190 per share value for RRC; using a more reasonable value of 22,000 for proved acreage the share price value jumps to $275-this is excluding other asset plays they have. Obviously, it will take time to develop their assets, but the value for RRC going forward is tremendous. Always said that I prefer RRC to remain a stand alone company, but if any major player is paying attention the price will only get higher. With RRC I think investors should just stay focused on the value of its underlying assets, and with their proven track record, the stock price will take care of itself.
Ohio regulators reported today that Utica Shale drilling has doubled Ohio production in the past year. RRC contends they have the best Utica acreage and are drilling what will likely be a huge impact well in the Utica Point Pleasant with over 500,000 acres. Not sue why the stock has drifted down the past few weeks, but a good opportunity to buy some RRC before they announce the Utica results this year. If you go back and read some of the earnings transcripts you can see that RRC is very optimistic and confident about their Utica acreage. Something to think about...
Audrey McClendon new company American Energy said it plans to acquire 48,000 acres of Marcellus Shale leases in five counties in West Virginia and 27,000 acres of Utica Shale leases in Monroe County, Ohio, from East Resources Inc. and an unidentified private company for $1.75 billion. That equates to about $23,000 per acrce. RRC has 540,000 Utica Shale acres which are not included in reserves, likely better acreage than that purchased by McClendon, at the same price that equates to about $90 per shares just for the RRC Utica Pt Pleasant acreage-just something to think about when you value your RRC shares.
Was very impressed with the analyst presentation and CIE management, they clearly have a lot of expertise and have done much strategic planning inn finding reserves and planning for development. Excellent results in a relative short time and a tremendous accomplishment for the CEO starting this company from zero. The long term future for CIE should be exciting. Also felt optimistic that CIE will ultimately benefit from all of the natural gas reserves off Angola. No question a lot of challenges but great opportunity here- seems they are on top of it.
Nice vote of confidence in Cobalt by Paulson:
The firm also increased its holdings in General Motors(GM) by 115% (taking a $138 million position by the end of the quarter); Cobalt International Energy Inc.(CIE) by 108% (owning $499.3 million in shares) and American Airlines Group Inc.(AAL) by 43% (a $445.2 million stake).
This may be another topic at analyst day.
Three companies previously named as among the winners in an offshore oil licensing round in Gabon have been dropped from the list, the country's oil minister said on Wednesday."The offshore requires huge investment and the companies turned down did not meet those requirements," oil minister Etienne Ngoubou told reporters. The three were Noble Energy Inc(NBL) , Cobalt International Energy Inc(CIE) and a company called Elenilto.Gabon awarded 13 oil and gas blocks to 11 companies in October 2013 as part of a major deepwater licensing round, which the central African country hopes will double its output to 500,000 barrels per day.
Lufkinunit-heard the same comments but would urge you to hold your shares. Seems like you've been in cobalt for awhile and probably have long term shares. While the bonds may be dilutive it's going to be after 2019 and only after a 30 price. Better than issuing shares outright. The results with cameia, lontra and orca suggests we may have something special here and an extra $1 b to fund new projects increasing the value of reserves may work in the longer term. Also should they work out an arrangement on the gas rights with angola we would have a doubling of reserves with over 5T in gas reserves. Like you I would like to hear some more detail on the offering but I don't see it as negative with the huge amount of prospects they have. The offering in addition to their existing liquidity suggests a lot of confidence in their existing acreage.
I agree. This is a terrific company. Although we have not been provided with any information the results from Deep Nansen well in the GOM should be imminent and, if successful, would be impactful to the stock price. I was looking for results last month so it should be very soon.