Marcellus Leases Make Range Resources (RRC) an Attractive M&A Target
Tweet
Share
E-mailGet Alerts RRC Hot Sheet
Join SI Premium – FREE
Range Resources (NYSE: RRC) shares are moving a little higher Wednesday following reports the company may be an attractive takeover target.
According to Bloomberg, even though Range is the most expensive U.S. exploration and production company -- trading at 56 times expected 2012 earnings -- it's operations in the coveted Marcellus Shale field make it worth the cost. Bloomberg data shows Range leases in the region hold enough nat gas to supply the U.S. for six years, leading many analyst to see Range's profits tripling over the next three years.
Raymond James throws Exxon Mobil (NYSE: XOM) and BP plc (NYSE: BP) as two likely candidates. Range might also get $78 per share, which is a 23 percent premium to Tuesday's closing price.
Range has leases on 1.2 million acres in the Marcellus shale, second only to Chesapeake Energy (NYSE: CHK) with 1.78 million acres leased. Last year, Range sold much of its Barnett Shale assets in order to concentrate on the Marcellus play, which has better formations of ethane and other petroleum derivatives sought by chemical makers.
Those following the industry know nat gas prices haven't exactly skyrocketed amid what can best be described as an "unusually warm" winter, preventing many consumers from cranking thermostats to stay warm. As a result, stockpiles are well above one- and five-year averages, while prices of nat gas plummeted to $2.30 per mmBtu. Range's shares have also slumped, falling 15 percent from highs of $74.40 last October. That drop might be the catalyst for a bid as energy companies look for better positioning with a potential surge in nat gas prices.
According to Bloomberg, even though Range is the most expensive U.S. exploration and production company -- trading at 56 times expected 2012 earnings -- it's operations in the coveted Marcellus Shale field make it worth the cost. Bloomberg data shows Range leases in the region hold enough nat gas to supply the U.S. for six years, leading many analyst to see Range's profits tripling over the next three years.
Raymond James throws Exxon Mobil (NYSE: XOM) and BP plc (NYSE: BP) as two likely candidates. Range might also get $78 per share, which is a 23 percent premium to Tuesday's closing price.
Range has leases on 1.2 million acres in the Marcellus shale, second only to Chesapeake Energy (NYSE: CHK) with 1.78 million acres leased. Last year, Range sold much of its Barnett Shale assets in order to concentrate on the Marcellus play, which has better formations of ethane and other petroleum derivatives sought by chemical makers.
Those following the industry know nat gas prices haven't exactly skyrocketed amid what can best be described as an "unusually warm" winter, preventing many consumers from cranking thermostats to stay warm. As a result, stockpiles are well above one- and five-year averages, while prices of nat gas plummeted to $2.30 per mmBtu. Range's shares have also slumped, falling 15 percent from highs of $74.40 last October. That drop might be the catalyst for a bid as energy companies look for better positioning with a potential surge in nat gas prices.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
- Advance Auto Parts (AAP) PT Lowered to $43 at Truist Securities
- Bernstein SocGen on Meta Platforms Inc. (META): 'Risk-reward remains attractive'
Create E-mail Alert Related Categories
Mergers and Acquisitions, RumorsRelated Entities
Raymond James, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
