Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Jon Cave who wrote (49913)	8/26/1999 12:18:00 PM
From: SliderOnTheBlack	Read Replies (1) of 95453

RRC - NOW is the best buying opp that I have seen of ANY stock in the Nat Gas cycle... ...using the excellent Deutsche Bank analysis - synopsis: Ahead of schedule in deleveraging the balance sheet. JV is great news: - JV further deleverages balance sheet, reducing debt by over another $100 Million. - JV is expected to be accretive to EPS - increasing 2000 eps from $.93 to $1.05 (now selling a PE of less than 5 x 2000 est). - JV should only be mildly dilutive, initially to cash flow; however with added debt reduction the Enterprise Value/2000 EBIDTA multiple is more attractive - 5.2 vs. 5.6 previously. - JV puts Range in a more competitive position to capitalize on consolidation opps in the Appalachia region - which is THE most profitable Nat Gas market. - Based on new Net Asset Value estimate - Raising 12 mo target price to $10 from $9. - JV cost savings will be over $2 Million for each company ------------------------------------------------------------------------------------------------ 2000 cpfs estimates at $3.00 at a historic multiple range of 3-5 x cfps; this gives a valuation of $$9 to $15 for RRC. RRC is selling for less than 65-70% of its present $7.40 net asset value - with historic sector/peer multiple being 120% to 130% of net asset value. 120% being $8.80 presently. They are virtually the most undervalued Nat Gas pure play at present prices ! -------------------------------------------------------------------------------------------------- Total Assets now approx $916 Million minus Total Liabilities of $652 Million = $265 Million net asset value ! $265 Million divided by 36 million outstanding shares = $7 .41 per share net asset value. Todays price of $4 9/16ths is only 62% of net asset value - A GIFT BUYING OPP ! ... don't forget the short interest catalyst either (VBG). Also, no other company has the upside increase to present nat gas prices for Q3-4 given their underwater hedges coming off the end of Oct. This is the sweetspot buying opp of the entire Nat Gas cycle imho and RRC is the BEST BUY in the entire Nat Gas sector imho. Anytime we have rising Nat Gas fundamentals & a sector selloff based on Crude prices where the nat gas pure plays sell off in lockstep - that is an early Xmas Gift. Buy It and Buy it NOW ! Loading up and not waiting ...

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