Range Resources Corporation RRC recently secured a long-term ethane supply deal. It has agreed to be an anchor supplier for PTTGC America LLC’s proposed ethylene cracker located in the Appalachian Basin.
The agreement is subject to PTTGC America reaching a final investment decision on its proposed world-scale ethylene cracker, which will be built in Belmont County, OH. The decision is expected to come in early 2021. The project can benefit from Range Resources’ low-cost natural gas resources, which can provide a safe and reliable source of ethane. The company will likely provide 15,000 barrels of ethane per day to the facility.
The facility — with ethane feed capacity of 100,000 barrels per day — will produce polyethylene, which is used in food packaging and creating medical equipment. The project will also include several units that can produce ethylene derivative products. The project is expected to generate additional jobs in the region and boost the local economy.
Range Resources will utilize its existing natural gas production in the region and natural gas liquids processing facilities to supply ethane for the cracker. No additional transportation will likely be used for the project, which will keep the costs down.
Moreover, the deal will likely boost Range Resources’ revenues. The firm expects to earn more by supplying the commodity to the ethylene cracker over selling it to the natural gas stream. This can be a beneficial move for the company as low natural gas prices are affecting its revenues. In the trailing 12-month period, the company’s revenues contracted 18.7%.
This stock has jumped 64.6% in the past year against 47.8% decline of the industry it belongs to.
Zacks Rank and Stocks to Consider
The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Equinor ASA EQNR, Pioneer Natural Resources Company PXD and Concho Resources Inc. CXO, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Equinor’s bottom line for 2021 is expected to skyrocket 118.2% year over year.
Pioneer Natural’s bottom line for 2021 is expected to surge 180.8% year over year.
Concho Resources’ bottom line for 2020 is expected to rise 34.4% year over year.
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