Range Resources RRC is set to make steady profits in 2023, as the outlook for the medium term suggests that energy prices will remain high. The strong commodity prices will likely drive the financial success of the company.
Although global commodity prices tumbled in the second half of 2022, natural gas prices are expected to remain elevated this year. The strong commodity price will likely aid RRC’s operations, as it is among the leading natural gas producers in the United States.
Range Resources is an Appalachian explorer, one of the largest natural gas producers in the United States. In the prolific Appalachian Basin, it has a strong focus on stacked-pay gas projects. In the Marcellus formation of the basin, it has a multi-decade inventory of premium drilling locations. It has 3,000 undrilled wells in the region, signaling a bright production outlook.
For 2023, Range Resources expects total production of 2.12-2.16 billion cubic feet equivalent per day (Bcfe/d), the mid-point of which suggests an improvement from 2.12 Bcfe/d reported last year. Higher production will boost the company’s bottom line. As most of its production comprises natural gas (almost 69% in Q4), RRC is well-positioned to capitalize on the mounting demand for clean energy.
The company is focusing on cost improvement and marketing strategies to increase its margins. Owing to the peer-leading well cost and low maintenance capital requirements, RRC is likely to generate free cash flow in the near term. Also, the company has the lowest emission intensity among the upstream companies in the United States.
Higher natural gas investments are expected in 2023. In the United States, excess natural gas is being produced in order to reduce emissions and export additional supplies to Europe. Certified natural gas and carbon-neutral LNG are expected to gain momentum in 2023.
The favorable outcomes are set to improve this year, owing to a perfect storm of factors pushing profits. Companies like EQT Corporation EQT, Antero Resources AR and Cheniere Energy Inc. LNG will continue to witness gains as the commodity price trajectory is expected to remain healthy.
EQT has lower exposure to debt capital than composite stocks belonging to the industry. Hence, the upstream energy player can rely on its strong balance sheet to sail through the volatility in commodity prices. Apart from reducing its debt load, EQT is focused on generating strong free cash flows and rewarding its shareholders.
Moreover, of the total greenhouse-gas emission reductions in the United States since 2005, the contribution of EQT is roughly 5%. EQT aims to achieve net-zero Scope 1 and Scope 2 emissions by 2025.
Antero Resources has positioned itself among the fast-growing natural gas producers in the United States. AR boasts 451,000 and 91,000 net acres in Marcellus and Utica, respectively, which will likely boost its production. Its core acreage position allows for significant long lateral drilling opportunities and capital efficiencies.
Antero Resources has been benefiting from declining well costs in the Marcellus play. Being a leading natural gas producer, the firm emits lower greenhouse gases than other oil majors. It is prioritizing reducing debt. From 2019 through 2022, AR successfully managed to lower the absolute debt load by more than $2.5 billion.
Although Cheniere does not primarily produce natural gas, it is a global provider of clean, secure and affordable liquefied natural gas. Given the first-mover advantage in the LNG export market, Cheniere is primed for significant revenue and earnings growth on the back of long-term contracts and solid operations.
LNG shipments for export from the United States have been robust for months on the back of environmental reasons and record higher prices of the super-chilled fuel elsewhere. Most analysts believe that deliveries are poised for further gains this year on surging consumption in Europe and Asia. This augurs well for Cheniere Energy, the dominant LNG exporter in the United States.
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