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Range Resources (RRC—$58) is a domestic natural gas exploration and production company. Its "crown jewel" is in the Southwest Pennsylvania portion of the Marcellus field. New techniques for producing oil and gas from shale have led to a several-fold increase in the U.S.'s estimated gas reserves and a temporary glut in available gas across the country. As a result, gas prices have plunged to 10+ year lows and gas producers' stocks are out of favor. Range has a very low cost of production, is increasing its natural gas liquids and oil production, and can continue to reinvest at attractive returns, even at today's very low gas prices. For a variety of both supply- and demand-related reasons, we would expect gas prices to rise from today's depressed $2.15 per mcf in future years. Change happens slowly for both producers and consumers of energy, but over the next 5-10 years, we believe Range can produce very good returns for us. (We also own Southwestern Energy (SWN—$31), a stock with a similar investment thesis.)
Wallace Weitz Comments on Range Resources
Wallace Weitz commented on Range Resources (RRC) in his first-quarter letter:
Range Resources (RRC—$58) is a domestic natural gas exploration and production company. Its "crown jewel" is in the Southwest Pennsylvania portion of the Marcellus field. New techniques for producing oil and gas from shale have led to a several-fold increase in the U.S.'s estimated gas reserves and a temporary glut in available gas across the country. As a result, gas prices have plunged to 10+ year lows and gas producers' stocks are out of favor. Range has a very low cost of production, is increasing its natural gas liquids and oil production, and can continue to reinvest at attractive returns, even at today's very low gas prices. For a variety of both supply- and demand-related reasons, we would expect gas prices to rise from today's depressed $2.15 per mcf in future years. Change happens slowly for both producers and consumers of energy, but over the next 5-10 years, we believe Range can produce very good returns for us. (We also own Southwestern Energy (SWN—$31), a stock with a similar investment thesis.)
Range Resources (RRC—$58) is a domestic natural gas exploration and production company. Its "crown jewel" is in the Southwest Pennsylvania portion of the Marcellus field. New techniques for producing oil and gas from shale have led to a several-fold increase in the U.S.'s estimated gas reserves and a temporary glut in available gas across the country. As a result, gas prices have plunged to 10+ year lows and gas producers' stocks are out of favor. Range has a very low cost of production, is increasing its natural gas liquids and oil production, and can continue to reinvest at attractive returns, even at today's very low gas prices. For a variety of both supply- and demand-related reasons, we would expect gas prices to rise from today's depressed $2.15 per mcf in future years. Change happens slowly for both producers and consumers of energy, but over the next 5-10 years, we believe Range can produce very good returns for us. (We also own Southwestern Energy (SWN—$31), a stock with a similar investment thesis.)
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