Range Resources (RRC) Stock Gains on Asset Sale
NEW YORK (TheStreet) -- Shares of Range Resources (RRC) - Get Report were gaining 9.1% to $33.80 on Wednesday after the oil and gas company announced it signed an agreement to sell its Nora assets for $876 million in an effort to reduce its debt.
The assets in the sale include about 2,500 operated wells and about 460,000 net acres in the Nora/Haysi combined fields that are mostly located in southwestern Virginia. The assets produced 109 million cubic feet of natural gas in the third quarter, which represented 7.5% of the company's net production.
The sale is expected to close by the end of the year.
Range Resources will use proceeds from the sale to reduce is total debt by 24%. The sale will also help reduce the company's direct operating expenses, brokerage natural gas, and marketing expenses for 2016.
"Using our consistent, return-focused capital allocation process, we will continue to review our portfolio for opportunities to bring value forward where other assets cannot compete for capital in comparison to our 1.6 million stacked-pay acreage position in the Marcellus, Utica and Upper Devonian," President and CEO Jeff Ventura said in a statement. "We believe that Range can continue to drive down costs, improve capital efficiencies and enhance netback pricing in our core Marcellus areas, all of which should further enhance our results in 2016."
TheStreet Ratings team rates RANGE RESOURCES CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate RANGE RESOURCES CORP (RRC) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 305.5% when compared to the same quarter one year ago, falling from $146.42 million to -$300.95 million.
- The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, RANGE RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $145.42 million or 31.86% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 310.46% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: RRC
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.