Range Resources (NYSE:RRC) Marcellus Shale Results Exceed Expectations

Drilling results for Range Resources (NYSE:RRC) in the Marcellus Shale exceeded expectations says Ticonderoga, but gas prices will keep it from having any meaningful impact on the company in 2011.

Ticonderoga says, "While we have been expecting a strong reserve report from RRC on the back of improving drilling results in the Marcellus Shale, today’s release from the company show results in the Marcellus are better than expected...Our view is that, while we were expecting a relatively strong reserve report, it would be difficult for RRC to move to a premium to the group over the next two quarters given our bearish view on gas prices. Today’s results certainly suggest that RRC’s 2010 reserve growth will be considerably higher than many of its peers, but the impact on relative valuation is unclear. RRC’s proved reserves are still 80% gas weighted and will not benefit from any price improvement as our 2011 gas price outlook is unchanged from 2010. Meanwhile our oil price deck has moved from $80/bbl to $90/bbl, meaning oil weighted E&P’s with strong reserve growth could see a stronger move in NAV."

Ticonderoga reiterates a "Neutral" rating on Range Resources (RRC), which closed Tuesday at $46.54, down $0.18, or 0.39 percent.