Navigating Natural Gas: Range Resources Impresses with Q1 Earnings, Attracts Analyst Upgrades - Range Resources (NYSE:RRC)

Range Resources Corp RRC is gaining analysts' confidence post reporting strong Q1 2023 results yesterday.
Benchmark Company analyst Subash Chandra upgraded RRC to Buy from Hold at a price target of $32.
Stephens & Co analyst Mike Scialla initiated coverage of Range Resources at Overweight at a price target of $34.
RRC reported Q1 adjusted EPS of $0.99 (above the consensus, and Benchmark's estimate of $0.86), EBITDA of $424 million (consensus $390 million, Benchmark's estimate $402 million), and FCF of $238 million (consensus $195 million, Benchmark's estimate $206 million).
RRC's realized natural gas (post-hedge) was $3.58, ahead of bidweek HH prices ($3.46) and liquids realizations of $27.60 were above consensus.
RRC's accumulated cash balance stood at $228 million at the end of Q1. The company repurchased shares of around $10 million ($1.1 billion remaining under buyback authorization).
The company largely maintained 2023 guidance, except for a slight reduction in net marketing expense to $9 million from $12 million.
Benchmark's analyst Chandra raised the 2023 FCF outlook to $546 million from $500 million and believes FCF is sufficient for line-of-sight to a $1.5 billion debt target (currently $1.83 billion) and share repurchases.
Stephens analyst Scialla believes that RRC is well-positioned to endure near-term gas price weakness, given that 67% of 2023 natural gas production is hedged and 36% of output is in the form of liquids. The analyst is bullish on RRC's strong capital intensity on lower production decline rate and well costs and expects it to drive FCF growth and facilitate share repurchases.
Stephens analyst is concerned that RRC is exposed to a potential price rebound in 2025, when its volumes are unhedged and may not respond to higher U.S. LNG export demand.
Price Action: RRC shares are trading lower by 2.80% at $24.97 on last check Tuesday.

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