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Gold/Mining/Energy : Range Resources (RRC)
RRC 37.85+1.1%Jan 30 9:30 AM EST
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To: Bucky Katt who wrote (17)12/15/1998 8:53:00 AM
From: doug doan  Read Replies (1) of 82
 
Big Changes loom

Looks to me like we are in for some interesting times:

Gas and oil prices are now at 20 year lows.
storage tanks are full (95%) in the US,
small producers are in real trouble
weather is so unusually warm (East Coast sets 100yr record)

Still, I for one am very optimistic about natural gas. The situation will change and when it does we should do very well, having bought at prices near historic lows. Will Range profit, I hope so but here is what I hope they will do:

1. Stop exploration efforts now. It is simply too expensive to prospect for gas and oil. Better to save the cash and retire debt.

2. Be prepared for a 2 year cycle. It might take much longer for prices to recover. We should be one of the few that Companies prepared to ride this problem out.

3. Get that debt down now. We must improve our financial position immediately. buying down debt seems the best place for our cash

4. Be opportunistic. I think in 12-18 months we could be in a postion to pick up some struggling smaller fish that are strategicly placed to help us at rock bottom prices. Lets get ready to do so. It was poor timing that the Domain Lomak deal happened at the time. We paid way to much for it given the current prices of natuaral gas and oil. Let's not make that mistake again.

5. Sell of the non natural gas core holding now and pocket the cash for the above.

While I am very bullish on Range, Should I see large amounts of our cash going to exploration in the next quarterly report it will be a very bad omen. Management may not fully understand the predicament and will position the company so poorly that someone else will come along and the best we can hope for will be a buy under.
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