$9.85
$39.41
bear $9.85
base $27.30
bull $39.41
margin of safety $12.50
market price* $43.22
Range Resources is a low-cost producer of natural gas, natural gas liquids and a little oil from the Marcellus Shale in southwestern Pennsylvania. In 2025 it produced 2.24 billion cubic feet equivalent a day from 18.1 trillion cubic feet equivalent of proved reserves, about 22 years of output at that pace, and it reports about 27 million lateral feet of remaining Marcellus drilling inventory (proved and unproved). Proved reserves were 18.1 trillion at both year-end 2024 and year-end 2025 even though roughly 0.8 trillion was produced each year, which is our evidence that the drilling program replaces what it depletes. Developing the proved undeveloped reserves is estimated at about $1.8 billion. Output is sold into the Midwest, Gulf Coast, Southeast and Northeast and to export markets, and results swing with gas prices. How we measure earnings. We start with operating cash flow, strip out the year-to-year swings in receivables, payables and accrued liabilities, deduct stock-based compensation as a real cost, and deduct all capital spending as maintenance, because volumes have been roughly flat and recent revenue changes came from gas prices rather than from more wells. On that basis owner earnings per share were $2.03 in 2021, $5.84 in 2022 (the price spike), $1.77 in 2023, $1.64 in 2024 and $2.55 in 2025. Adding back the interest the company pays, so that we value the business before its lenders, gives $2.82, $6.62, $2.27, $2.11 and $2.99. Hedging moves these numbers a lot: hedges paid out $253 million in 2023 and $432 million in 2024 but cost $520 million in 2021 and $1.19 billion in 2022. We use 2021 to 2025, which spans a spike, two trough years and a recovery, but leave out 2022 as an extreme, one-off price event. The middle of the remaining four years is about $2.54 per share, roughly $600 million a year; a cross-check with hedge results removed gives a similar middle of about $2.5. Capital spending has risen from $419 million in 2021 to $641 million in 2025 on flat to slightly higher output, and the 2026 budget is $650 to $700 million, so the earlier low-spend years are not assumed to return. An item we treat separately: when it sold its North Louisiana assets in 2020, Range kept gathering, transportation and processing contracts running into 2030 that no longer benefit it. Cash payments on them, about $90 million a year, sit inside the accrued-liabilities line we strip out of earnings, so we treat the remaining obligation (about $280 million in present value) as a debt instead of an operating cost. Debt. On January 15, 2026 Range redeemed its $600 million of 8.25% notes due 2029 using its bank credit facility. At June 30, 2026 it owed about $871 million: $500 million of 4.75% notes due 2030 and about $371 million drawn on the bank facility, which matures in October 2030 and floats at a spread over SOFR. Adding the contract obligation and subtracting about $19 million for the cheap 4.75% coupon, we count about $1.13 billion, or $4.79 per share, owed ahead of shareholders. Cash is negligible. Base case: about $2.54 per share of cash generated before lenders, held flat for 20 years and then fading to zero over the next 10. We credit no growth, because the 2025 production increase of about 2.8% and the 2026 plan for modest growth rest on spending and prices not yet proven over a full cycle. The 20-year level follows the roughly 22 years of proved reserves, and the fade reflects that nothing beyond the proved base and stated inventory is yet evidenced. The business is worth about $32.09 per share, it owes $4.79, and the difference is $27.30. Bear case: the gas market goes through the kind of downturns Appalachia has actually had in 2012, 2015 to 2016, 2019 to 2020 and 2023 to 2024, each about two years. We assume a first slump starting immediately, with cash before lenders of $1.00, then $0.30 and $0.30 per share (2020 was near zero, and 2024 without hedge gains was about $0.33), and a second two-year slump in years 9 and 10 at $0.30. In between, the normal level is only about $1.80 because capital spending stays near the 2026 budget rather than the lower 2021 level (about $0.30 per share) and the $722 million of federal tax losses are used up, so cash taxes of about $0.45 per share appear. The drilling story ends sooner, with the level held through year 15 and then fading to zero over ten years. The business is worth about $15.16 per share. It owes $5.31: the $4.79 above plus about $0.51 for refinancing the 2030 notes and bank debt at roughly 8.5% in a weak market. The difference is $9.85. Business cash flow of about $70 million a year in the slump still covers roughly $55 million of annual interest, though not the roughly $65 to $75 million a year of contract payments, which the company would fund on its bank facility. Bull case: the company's own levers execute. Cash before lenders stays at the 2025 level of $2.99 and grows 1.3% a year for ten years, which is the pace output has risen since 2020, then holds flat to year 25 and fades to zero over the following ten, in line with the 22-year reserve life plus continued replacement. The business is worth about $44.20, it owes $4.79, and the difference is $39.41. We leave out higher gas prices from export demand, because that is a market call and not something we can tie to this business. What has changed. The previous analysis used a different basis, so its figures are not comparable. In the business itself, the 2029 notes are now gone, and the first half of 2026 was strong: operating cash flow was $854 million against $666 million a year earlier, on 18% higher revenue. First-quarter net income was $342 million and second-quarter $195 million, so two quarters are not enough to move the normal level, and we have not. Margin-of-safety price. We are fairly but not highly sure of the $2.54 level: it is built from four years of reported cash flows that tie exactly to the cash flow statement, and removing hedges gives a similar number, but what the company earns is a call on gas prices and gains and losses on hedges have been very large. The worst plausible outcome is a gas glut longer than the two-year ones of the past, coinciding with the 2030 maturities. The business would survive that: output is low cost, there is a $2.0 billion bank facility, and no bond is due until 2030, but shareholders would see the shares worth under $10, and a still longer slump could erase much of that. If we are wrong about the three things we are most likely to be wrong about, which are the normal gas price, the spending needed to hold output flat, and the length of the drilling inventory, the shares are worth roughly $10 to $15 if the level is $1.80, and well under $10 if the inventory runs out in about 15 years. The price assumes a four-to-six-year holding period. During that period the business pays a small dividend and uses its cash to repay debt and buy back shares, so most of the return has to come from the value of the cash it generates, not from the dividend. The margin-of-safety price is $12.50 because from that price a repeat of the bear-case slump implies a decline of under a quarter, and a business that merely holds the middle level, with debt gradually repaid, implies 20% a year or more over a five-year holding period; a higher price leaves too little cushion for the range of outcomes this business can produce.