Intrinsic value of Range Resources - RRC

Previous Close

$16.45

  Intrinsic Value

$4.22

stock screener

  Rating & Target

str. sell

-74%

Previous close

$16.45

 
Intrinsic value

$4.22

 
Up/down potential

-74%

 
Rating

str. sell

We calculate the intrinsic value of RRC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  4,178
  6,454
  9,653
  14,005
  19,760
  27,165
  36,463
  47,878
  61,608
  77,816
  96,629
  118,139
  142,397
  169,424
  199,213
  231,732
  266,936
  304,768
  345,165
  388,068
  433,420
  481,175
  531,295
  583,759
  638,557
  695,698
  755,205
  817,118
  881,494
  948,405
Variable operating expenses, $m
  1,644
  2,450
  3,583
  5,124
  7,162
  9,785
  13,078
  17,120
  21,983
  27,723
  34,221
  41,839
  50,430
  60,002
  70,551
  82,068
  94,536
  107,934
  122,240
  137,434
  153,496
  170,408
  188,158
  206,738
  226,145
  246,382
  267,456
  289,383
  312,182
  335,878
Fixed operating expenses, $m
  1,325
  1,354
  1,383
  1,414
  1,445
  1,477
  1,509
  1,542
  1,576
  1,611
  1,647
  1,683
  1,720
  1,758
  1,796
  1,836
  1,876
  1,917
  1,960
  2,003
  2,047
  2,092
  2,138
  2,185
  2,233
  2,282
  2,332
  2,384
  2,436
  2,490
Total operating expenses, $m
  2,969
  3,804
  4,966
  6,538
  8,607
  11,262
  14,587
  18,662
  23,559
  29,334
  35,868
  43,522
  52,150
  61,760
  72,347
  83,904
  96,412
  109,851
  124,200
  139,437
  155,543
  172,500
  190,296
  208,923
  228,378
  248,664
  269,788
  291,767
  314,618
  338,368
Operating income, $m
  1,209
  2,651
  4,687
  7,467
  11,153
  15,904
  21,876
  29,216
  38,049
  48,482
  60,762
  74,617
  90,247
  107,665
  126,865
  147,828
  170,524
  194,917
  220,965
  248,631
  277,878
  308,675
  340,999
  374,835
  410,179
  447,034
  485,416
  525,352
  566,877
  610,037
EBITDA, $m
  3,146
  5,553
  8,945
  13,573
  19,699
  27,591
  37,508
  49,690
  64,347
  81,656
  101,752
  124,732
  150,652
  179,535
  211,371
  246,129
  283,759
  324,199
  367,384
  413,249
  461,735
  512,789
  566,374
  622,466
  681,055
  742,149
  805,774
  871,974
  940,807
  1,012,351
Interest expense (income), $m
  160
  222
  414
  694
  1,088
  1,623
  2,331
  3,242
  4,386
  5,790
  7,479
  9,473
  11,787
  14,433
  17,417
  20,742
  24,406
  28,407
  32,737
  37,391
  42,360
  47,638
  53,217
  59,091
  65,257
  71,710
  78,451
  85,481
  92,801
  100,417
  108,336
Earnings before tax, $m
  988
  2,237
  3,992
  6,380
  9,529
  13,573
  18,634
  24,830
  32,259
  41,003
  51,289
  62,830
  75,814
  90,248
  106,123
  123,422
  142,118
  162,179
  183,574
  206,271
  230,240
  255,458
  281,908
  309,579
  338,468
  368,583
  399,936
  432,551
  466,460
  501,701
Tax expense, $m
  267
  604
  1,078
  1,723
  2,573
  3,665
  5,031
  6,704
  8,710
  11,071
  13,848
  16,964
  20,470
  24,367
  28,653
  33,324
  38,372
  43,788
  49,565
  55,693
  62,165
  68,974
  76,115
  83,586
  91,386
  99,517
  107,983
  116,789
  125,944
  135,459
Net income, $m
  721
  1,633
  2,914
  4,657
  6,956
  9,908
  13,603
  18,126
  23,549
  29,932
  37,441
  45,866
  55,344
  65,881
  77,470
  90,098
  103,746
  118,391
  134,009
  150,577
  168,075
  186,484
  205,793
  225,992
  247,082
  269,065
  291,953
  315,762
  340,516
  366,242

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,734
  28,943
  43,285
  62,804
  88,608
  121,815
  163,512
  214,701
  276,268
  348,949
  433,316
  529,770
  638,551
  759,750
  893,331
  1,039,158
  1,197,023
  1,366,671
  1,547,826
  1,740,215
  1,943,589
  2,157,735
  2,382,490
  2,617,752
  2,863,484
  3,119,721
  3,386,569
  3,664,208
  3,952,890
  4,252,937
Adjusted assets (=assets-cash), $m
  18,734
  28,943
  43,285
  62,804
  88,608
  121,815
  163,512
  214,701
  276,268
  348,949
  433,316
  529,770
  638,551
  759,750
  893,331
  1,039,158
  1,197,023
  1,366,671
  1,547,826
  1,740,215
  1,943,589
  2,157,735
  2,382,490
  2,617,752
  2,863,484
  3,119,721
  3,386,569
  3,664,208
  3,952,890
  4,252,937
Revenue / Adjusted assets
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
  0.223
Average production assets, $m
  17,721
  27,380
  40,946
  59,411
  83,820
  115,233
  154,676
  203,100
  261,340
  330,094
  409,902
  501,145
  604,048
  718,697
  845,061
  983,008
  1,132,343
  1,292,824
  1,464,190
  1,646,185
  1,838,570
  2,041,144
  2,253,754
  2,476,304
  2,708,758
  2,951,150
  3,203,579
  3,466,216
  3,739,299
  4,023,133
Working capital, $m
  -518
  -800
  -1,197
  -1,737
  -2,450
  -3,368
  -4,521
  -5,937
  -7,639
  -9,649
  -11,982
  -14,649
  -17,657
  -21,009
  -24,702
  -28,735
  -33,100
  -37,791
  -42,800
  -48,120
  -53,744
  -59,666
  -65,881
  -72,386
  -79,181
  -86,267
  -93,645
  -101,323
  -109,305
  -117,602
Total debt, $m
  7,671
  12,857
  20,143
  30,059
  43,167
  60,036
  81,218
  107,222
  138,498
  175,420
  218,278
  267,277
  322,538
  384,107
  451,966
  526,046
  606,242
  692,423
  784,449
  882,183
  985,497
  1,094,283
  1,208,459
  1,327,972
  1,452,804
  1,582,972
  1,718,531
  1,859,572
  2,006,222
  2,158,646
Total liabilities, $m
  9,517
  14,703
  21,989
  31,905
  45,013
  61,882
  83,064
  109,068
  140,344
  177,266
  220,124
  269,123
  324,384
  385,953
  453,812
  527,892
  608,088
  694,269
  786,295
  884,029
  987,343
  1,096,129
  1,210,305
  1,329,818
  1,454,650
  1,584,818
  1,720,377
  1,861,418
  2,008,068
  2,160,492
Total equity, $m
  9,217
  14,240
  21,296
  30,900
  43,595
  59,933
  80,448
  105,633
  135,924
  171,683
  213,191
  260,647
  314,167
  373,797
  439,519
  511,266
  588,935
  672,402
  761,530
  856,186
  956,246
  1,061,606
  1,172,185
  1,287,934
  1,408,834
  1,534,903
  1,666,192
  1,802,790
  1,944,822
  2,092,445
Total liabilities and equity, $m
  18,734
  28,943
  43,285
  62,805
  88,608
  121,815
  163,512
  214,701
  276,268
  348,949
  433,315
  529,770
  638,551
  759,750
  893,331
  1,039,158
  1,197,023
  1,366,671
  1,547,825
  1,740,215
  1,943,589
  2,157,735
  2,382,490
  2,617,752
  2,863,484
  3,119,721
  3,386,569
  3,664,208
  3,952,890
  4,252,937
Debt-to-equity ratio
  0.830
  0.900
  0.950
  0.970
  0.990
  1.000
  1.010
  1.020
  1.020
  1.020
  1.020
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
  1.030
Adjusted equity ratio
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492
  0.492

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  721
  1,633
  2,914
  4,657
  6,956
  9,908
  13,603
  18,126
  23,549
  29,932
  37,441
  45,866
  55,344
  65,881
  77,470
  90,098
  103,746
  118,391
  134,009
  150,577
  168,075
  186,484
  205,793
  225,992
  247,082
  269,065
  291,953
  315,762
  340,516
  366,242
Depreciation, amort., depletion, $m
  1,936
  2,902
  4,259
  6,105
  8,546
  11,687
  15,632
  20,474
  26,298
  33,174
  40,990
  50,114
  60,405
  71,870
  84,506
  98,301
  113,234
  129,282
  146,419
  164,618
  183,857
  204,114
  225,375
  247,630
  270,876
  295,115
  320,358
  346,622
  373,930
  402,313
Funds from operations, $m
  2,657
  4,535
  7,173
  10,762
  15,503
  21,595
  29,235
  38,600
  49,847
  63,106
  78,431
  95,980
  115,749
  137,751
  161,976
  188,399
  216,980
  247,673
  280,428
  315,196
  351,932
  390,599
  431,168
  473,623
  517,958
  564,180
  612,311
  662,384
  714,446
  768,555
Change in working capital, $m
  -194
  -282
  -397
  -540
  -714
  -918
  -1,153
  -1,415
  -1,702
  -2,010
  -2,333
  -2,667
  -3,008
  -3,351
  -3,694
  -4,032
  -4,365
  -4,691
  -5,009
  -5,320
  -5,624
  -5,922
  -6,215
  -6,505
  -6,795
  -7,085
  -7,379
  -7,677
  -7,983
  -8,297
Cash from operations, $m
  2,851
  4,817
  7,570
  11,302
  16,216
  22,514
  30,388
  40,015
  51,550
  65,116
  80,764
  98,648
  118,757
  141,102
  165,670
  192,431
  221,346
  252,364
  285,438
  320,516
  357,556
  396,520
  437,383
  480,128
  524,753
  571,266
  619,690
  670,061
  722,428
  776,852
Maintenance CAPEX, $m
  -1,108
  -1,772
  -2,738
  -4,095
  -5,941
  -8,382
  -11,523
  -15,468
  -20,310
  -26,134
  -33,009
  -40,990
  -50,114
  -60,405
  -71,870
  -84,506
  -98,301
  -113,234
  -129,282
  -146,419
  -164,618
  -183,857
  -204,114
  -225,375
  -247,630
  -270,876
  -295,115
  -320,358
  -346,622
  -373,930
New CAPEX, $m
  -6,646
  -9,658
  -13,567
  -18,465
  -24,409
  -31,413
  -39,443
  -48,424
  -58,240
  -68,754
  -79,808
  -91,242
  -102,903
  -114,650
  -126,363
  -137,948
  -149,335
  -160,481
  -171,366
  -181,994
  -192,385
  -202,574
  -212,610
  -222,550
  -232,454
  -242,392
  -252,429
  -262,637
  -273,083
  -283,834
Cash from investing activities, $m
  -7,754
  -11,430
  -16,305
  -22,560
  -30,350
  -39,795
  -50,966
  -63,892
  -78,550
  -94,888
  -112,817
  -132,232
  -153,017
  -175,055
  -198,233
  -222,454
  -247,636
  -273,715
  -300,648
  -328,413
  -357,003
  -386,431
  -416,724
  -447,925
  -480,084
  -513,268
  -547,544
  -582,995
  -619,705
  -657,764
Free cash flow, $m
  -4,902
  -6,613
  -8,735
  -11,257
  -14,134
  -17,282
  -20,579
  -23,876
  -27,001
  -29,772
  -32,053
  -33,585
  -34,260
  -33,952
  -32,563
  -30,022
  -26,290
  -21,351
  -15,211
  -7,897
  552
  10,089
  20,658
  32,203
  44,668
  57,998
  72,146
  87,066
  102,724
  119,088
Issuance/(repayment) of debt, $m
  3,562
  5,187
  7,285
  9,916
  13,108
  16,869
  21,182
  26,004
  31,276
  36,922
  42,858
  48,999
  55,261
  61,569
  67,859
  74,080
  80,195
  86,181
  92,027
  97,734
  103,314
  108,786
  114,175
  119,513
  124,832
  130,168
  135,559
  141,041
  146,650
  152,424
Issuance/(repurchase) of shares, $m
  2,722
  3,391
  4,142
  4,946
  5,739
  6,430
  6,912
  7,059
  6,742
  5,827
  4,067
  1,590
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  6,284
  8,578
  11,427
  14,862
  18,847
  23,299
  28,094
  33,063
  38,018
  42,749
  46,925
  50,589
  55,261
  61,569
  67,859
  74,080
  80,195
  86,181
  92,027
  97,734
  103,314
  108,786
  114,175
  119,513
  124,832
  130,168
  135,559
  141,041
  146,650
  152,424
Total cash flow (excl. dividends), $m
  1,381
  1,964
  2,692
  3,605
  4,713
  6,018
  7,514
  9,188
  11,017
  12,976
  14,872
  17,003
  21,000
  27,616
  35,296
  44,058
  53,905
  64,830
  76,815
  89,837
  103,866
  118,875
  134,834
  151,716
  169,500
  188,167
  207,705
  228,107
  249,374
  271,512
Retained Cash Flow (-), $m
  -3,443
  -5,023
  -7,056
  -9,604
  -12,695
  -16,338
  -20,515
  -25,185
  -30,291
  -35,759
  -41,508
  -47,456
  -53,520
  -59,630
  -65,722
  -71,747
  -77,670
  -83,467
  -89,128
  -94,656
  -100,060
  -105,360
  -110,579
  -115,749
  -120,900
  -126,069
  -131,289
  -136,598
  -142,031
  -147,623
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  31
  50
  77
  116
  168
  237
  326
  438
  575
  739
  934
  1,160
  1,418
  1,709
  2,033
  2,391
  2,781
  3,203
  3,657
  4,142
  4,657
  5,201
  5,774
  6,376
  7,005
  7,663
  8,348
  9,062
  9,805
  10,578
Cash available for distribution, $m
  -2,061
  -3,059
  -4,364
  -5,998
  -7,983
  -10,320
  -13,000
  -15,997
  -19,274
  -22,783
  -26,636
  -30,452
  -32,520
  -32,013
  -30,426
  -27,689
  -23,764
  -18,636
  -12,313
  -4,819
  3,806
  13,515
  24,254
  35,967
  48,599
  62,098
  76,415
  91,509
  107,343
  123,889
Discount rate, %
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
  -1,932
  -2,670
  -3,524
  -4,449
  -5,397
  -6,308
  -7,121
  -7,781
  -8,242
  -8,475
  -8,524
  -8,284
  -7,425
  -6,053
  -4,696
  -3,437
  -2,334
  -1,424
  -719
  -211
  123
  313
  395
  403
  365
  305
  239
  176
  124
  83
Current shareholders' claim on cash, %
  59.8
  39.2
  27.7
  20.8
  16.4
  13.6
  11.6
  10.3
  9.5
  8.9
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6
  8.6

Range Resources Corporation is an independent natural gas, natural gas liquids (NGLs) and oil company. The Company is engaged in the exploration and production of natural gas, NGLs and oil in the United States. It is engaged in the exploration, development and acquisition of natural gas and crude oil properties located primarily in the Appalachian and North Louisiana regions of the United States. Its principal areas of operation are the Marcellus Shale of Pennsylvania and the Lower Cotton Valley formation of North Louisiana. Its properties consist of interests in developed and undeveloped natural gas and oil leases. Its properties in the Appalachian region are located in the Appalachian Basin in the northeastern United States, predominantly in Pennsylvania. The Company's other operations include drilling, production and field operations in the Texas Panhandle, as well as in the Anadarko Basin of Western Oklahoma and the Nemaha Uplift of Northern Oklahoma and Kansas.

FINANCIAL RATIOS  of  Range Resources (RRC)

Valuation Ratios
P/E Ratio -7.8
Price to Sales 3
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow -32.3
Growth Rates
Sales Growth Rate 15.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -53.8%
Cap. Spend. - 3 Yr. Gr. Rate -16.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 69.8%
Total Debt to Equity 69.8%
Interest Coverage -4
Management Effectiveness
Return On Assets -4.6%
Ret/ On Assets - 3 Yr. Avg. -1%
Return On Total Capital -7.1%
Ret/ On T. Cap. - 3 Yr. Avg. -2.9%
Return On Equity -12.8%
Return On Equity - 3 Yr. Avg. -4.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 78.6%
Gross Margin - 3 Yr. Avg. 79.5%
EBITDA Margin -5.5%
EBITDA Margin - 3 Yr. Avg. 35.3%
Operating Margin -26.9%
Oper. Margin - 3 Yr. Avg. -25.5%
Pre-Tax Margin -58.9%
Pre-Tax Margin - 3 Yr. Avg. -32.5%
Net Profit Margin -38.3%
Net Profit Margin - 3 Yr. Avg. -22.6%
Effective Tax Rate 35%
Eff/ Tax Rate - 3 Yr. Avg. 35.2%
Payout Ratio -3.3%

RRC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RRC stock intrinsic value calculation we used $2611 million for the last fiscal year's total revenue generated by Range Resources. The default revenue input number comes from 2017 income statement of Range Resources. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our RRC stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.7%, whose default value for RRC is calculated based on our internal credit rating of Range Resources, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Range Resources.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of RRC stock the variable cost ratio is equal to 41.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1296 million in the base year in the intrinsic value calculation for RRC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Range Resources.

Corporate tax rate of 27% is the nominal tax rate for Range Resources. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the RRC stock is equal to 1.2%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for RRC are equal to 424.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Range Resources operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for RRC is equal to -12.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5774 million for Range Resources - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 245 million for Range Resources is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Range Resources at the current share price and the inputted number of shares is $4.0 billion.

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COMPANY NEWS

▶ [$$] Range Resources to Add Two Independent Directors to Board   [Jul-09-18 03:14PM  The Wall Street Journal]
▶ Range Resources names new chairman   [10:23AM  American City Business Journals]
▶ Feds approve pipeline request to ship more natural gas to Mexico   [Jul-05-18 03:42PM  American City Business Journals]
▶ Range Resources Has Been Bottoming Since February   [Jun-27-18 06:03PM  TheStreet.com]
▶ Exclusive: 2 natural gas producers cut back in Marcellus   [Jun-26-18 12:24PM  American City Business Journals]
▶ State Department OKs boosting cross-border natural gas pipeline's capacity   [Jun-13-18 10:44AM  American City Business Journals]
▶ 3 Top Oil Stocks to Buy in June   [Jun-12-18 06:05AM  Motley Fool]
▶ Range Declares Quarterly Dividend   [Jun-01-18 10:00AM  GlobeNewswire]
▶ Despite change in voting percentages, Range to continue with methane efforts   [May-24-18 04:28PM  American City Business Journals]
▶ Why shareholders' votes on methane emissions could lead to changes for drillers   [May-18-18 01:08PM  American City Business Journals]
▶ Range shareholders approve measure to require methane report   [May-17-18 08:24AM  American City Business Journals]
▶ Shareholder to vote against Range's slate of directors   [May-11-18 05:46PM  American City Business Journals]
▶ Why You Should Ditch Growth Stocks, Buy Value   [May-02-18 08:00AM  Investopedia]
▶ Range may sell off some local noncore assets by end of '18   [Apr-26-18 02:49PM  American City Business Journals]
▶ Range Resources: 1Q Earnings Snapshot   [Apr-25-18 05:17PM  Associated Press]
▶ What Is Range Resources Limiteds (ASX:RRS) Share Price Doing?   [Apr-16-18 09:50PM  Simply Wall St.]
▶ Range Resources COO to retire   [Apr-12-18 05:25PM  American City Business Journals]
▶ PUC awaits report on Mariner East pipeline   [03:03PM  American City Business Journals]
▶ Chesapeake, Range Resources Could Feel Gas-Price Squeeze   [Mar-27-18 03:12PM  Barrons.com]
▶ If you own nat gas stocks, you should be scared   [Mar-26-18 07:37PM  CNBC Videos]
▶ The Biggest Movers: Range Resources & General Mills   [Mar-21-18 04:54PM  Barrons.com]
▶ Stocks rally on quad witching as U.S. economy heats up   [Mar-16-18 01:26PM  Yahoo Finance Video]
▶ CNX outlines strategy for next few years   [Mar-14-18 03:30PM  American City Business Journals]
▶ Range Resources Corporation (NYSE:RRC): Will The Growth Last?   [Mar-11-18 08:14PM  Simply Wall St.]
▶ Range Declares Quarterly Dividend   [Mar-01-18 05:02PM  GlobeNewswire]
▶ Local Range Resources exec tapped for wider role   [Feb-28-18 12:45PM  American City Business Journals]
▶ Range Resources beats Street 4Q forecasts   [Feb-27-18 05:43PM  Associated Press]
▶ Weekly Top Insider Buys Highlight for the Week of Feb. 2   [Feb-04-18 04:10PM  GuruFocus.com]
▶ Range to spend nearly $1B in drilling in '18, mostly in southwestern Pa.   [Jan-24-18 05:40PM  American City Business Journals]
▶ US Natural Gas Futures Could End This Week on a Bullish Note   [Jan-22-18 11:50AM  Market Realist]
▶ Stocks That Fell to 3-Year Lows in the Week of Jan. 19   [Jan-20-18 04:19PM  GuruFocus.com]
▶ Whats Holding Back Natural-Gas-Weighted Stocks Returns?   [Jan-18-18 12:30PM  Market Realist]
▶ Is Oil Limiting Natural GasWeighted Stocks Fall?   [Jan-11-18 01:35PM  Market Realist]
▶ The Biggest Loser: Range Resources Drops 3.7%   [Jan-05-18 04:44PM  Barrons.com]
▶ Has Natural Gas Outperformed Natural GasWeighted Stocks?   [Jan-04-18 11:35AM  Market Realist]
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