The Safest Bet in Natural Gas

ExxonMobil's (NYSE: XOM  ) revenue is 400 times more than that of Range Resources (NYSE: RRC  ) . Chesapeake Energy (NYSE: CHK  ) has half a million more acres in the Marcellus Shale as Range Resources. And yet, when it comes down to it, Range is the company it's easiest to get behind.

Range is arguably the most visible operator in the Marcellus Shale right now -- and with good reason. The company goes out of its way to establish itself as a positive presence, doing everything from using billboards to wax poetic about safe drilling to sponsoring the Pittsburgh Pirates' strike zone. Range has been in the Marcellus since day one, drilling one of the first vertical wells in 2004 and with its 2007 publicly reported findings kicking off the land-grab frenzy that quickly turned the Marcellus region into the hottest U.S. natural gas play.

Range does it first. Always.
Keeping with its first mover tradition, Range recently sealed the deal for the first ethane contract coming out of the Marcellus Shale. Through a partnership with pipeline operators Sunoco Logistics (NYSE: SXL  ) and MarkWest Energy (NYSE: MWE  ) , Canada's NOVA Chemicals will begin to receive deliveries from Range by the end of 2013.

Range also lays claim to a few other important firsts:

  • First horizontal driller in the Marcellus
  • First to recycle water used in fracking
  • First to disclose chemicals in fracking water

The last two bullets are increasingly important these days with all the controversy about hydraulic fracturing. The EPA is gently encouraging drillers to reveal the chemicals that go into fracking water, but Range has already done it. When I say "first to disclose," I don't mean a special report written just for the government; I mean that you or I can go to Range's website and look up exactly what chemicals, and in what amounts, go into their fracking solution.

Black sheep? Try green sheep.
In fact, Range's outlook toward the environment really goes against the grain relative to other drillers in the Marcellus. Take, for example, Cabot Oil & Gas (NYSE: COG  ) . Fifteen families in Pennsylvania sued the driller last year, claiming the company was responsible for explosions and the presence of methane in tap water. Industry experts say Cabot handled the battle with homeowners and state investigators so poorly that it has hurt the entire industry.

On the flip side, this past May, Range Resources ceased the legal practice of discharging waste saltwater into rivers and streams because the company recognized it could have a negative effect over time. Range recycles the water instead, which, as it happened, turned out to be economical anyway. You know what else is economical? Avoiding lawsuits.

Don't worry, there's more
On top of that, Range discovered that if it skips weekend drilling, dedicating Saturdays to maintenance and taking Sundays off, the neighbors don't complain and worker efficiency improves. Ray Walker, a senior vice president at Range, sums up the mission nicely: "We understand that our greatest responsibility is continued environmental stewardship, transparency and providing a safe workplace for our employees and the community."

Fools, this is a gas company even the socially responsible Alyce Lomax could love.

Foolish bottom line
Range Resources' success ultimately boils down to the future price of natural gas in the U.S. Though it's expected to rise eventually, there can't be any guarantees that will happen anytime soon. Range's innovation in the Marcellus and dedication to "doing the right thing" sets it apart from other oil and gas companies -- and makes it a great long-term pick.

Click here to add Range Resources to My Watchlist and stay current on all company updates and analyses.

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article.Yet. If you have the energy, check out what she's keeping an eye on by following her on Twitter @TMFDuffy.

The Motley Fool owns shares of Range Resources. Motley Fool newsletter services have recommended buying shares of Range Resources and Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 14, 2011, at 5:18 PM, drsl wrote:

    A look at net profit, PE, debt, ROE makes me pause.

  • Report this Comment On September 15, 2011, at 2:24 PM, Sgeol wrote:

    Aimee Duffy; where did you get the information COG handled the tap water issue poorly? I am in the industry and have the impression COG protected their interest and their shareholder interest correctly, identifing a lawyer driven attempted payday that did not work. Here is your quote.

    "Take, for example, Cabot Oil & Gas (NYSE: COG ) . Fifteen families in Pennsylvania sued the driller last year, claiming the company was responsible for explosions and the presence of methane in tap water. Industry experts say Cabot handled the battle with homeowners and state investigators so poorly that it has hurt the entire industry".

  • Report this Comment On September 21, 2011, at 11:27 AM, tpbco wrote:

    Ms. Duffy, Why have you not responded to Sqeol's question?

  • Report this Comment On September 26, 2011, at 5:13 PM, XMFAimeeD wrote:

    @sgeol

    My source was a Pittsburgh Post-Gazette report from a 12-person panel regarding issues in the Marcellus Shale. My intention wasn’t to address the validity of the lawsuit, but to illuminate how important PR is when it comes to fracking, which is why I think Range will ultimately be more successful than most. Next time I will be more clear.

    http://www.post-gazette.com/pg/11058/1128035-85.stm#ixzz1XrO...

    more PR/lawsuit issues here:

    http://www.nytimes.com/2011/09/23/nyregion/hydrofracking-lea...

    Fool on,

    Aimee

  • Report this Comment On September 26, 2011, at 5:14 PM, XMFAimeeD wrote:

    @tpbco

    My apologies!

    Welcome to The Fool,

    Aimee

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