Friday, May 30, 2014

Range Resources Corp: Too Many Hedges?


With natural gas inventories close to decade lows, investors would probably prefer an exploration and production firm with limited hedges to participate in the potential price appreciation of the commodity. It is a double-edged sword to risk production and long-term capital investments without knowing the future price, but in the current market it's undoubtedly disappointing to invest in a firm with extensive hedges at lower prices.

Range Resources Corp (NYSE: RRC  ) is one of the largest and fastest-growing producers in the Marcellus Shale. The company has some of the most prolific wells helping it produce growth in excess of 20%. Unfortunately, the company is heavily hedged and not fully participating in the suddenly higher natural gas prices. It also will not benefit in a meaningful way in future price spikes over the next couple of years.

Read the full article here.


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