Questions? +1 (202) 335-3939 Login
Trusted News Since 1995
A service for energy industry professionals · Friday, March 29, 2024 · 699,690,863 Articles · 3+ Million Readers

Range Announces Third Quarter 2018 Financial Results

FORT WORTH, Texas, Oct. 23, 2018 (GLOBE NEWSWIRE) -- RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its third quarter 2018 financial results. 

Highlights –

  • Net income of $48.5 million ($0.19 per diluted share), non-GAAP net income of $63.9 million ($0.26 per diluted share)
  • Cash provided from operating activities of $229 million, non-GAAP cash flow of $260 million
  • Production averaged a record 2,267 Mmcfe per day, an increase of 14% compared to third quarter 2017
  • Southwest Pennsylvania production increased 29% over the prior-year period to 1,872 Mmcfe per day
  • Liquids production averaged a record 122,783 barrels per day, an 11% increase over the prior-year period, and contributed 47% of total product revenues before hedging
  • Pre-hedge NGL realizations were $27.16 per barrel, a 60% increase over the prior-year third quarter
  • Natural gas differentials, including basis hedging, of $0.15 below NYMEX, a $0.36 improvement over the prior-year third quarter
  • Pre-hedge crude oil and condensate realizations of $64.57, a 49% increase over the prior-year quarter
  • Signed and closed the sale of a proportionately reduced 1% overriding royalty in Range’s Washington County, Pennsylvania leases for gross proceeds of $300 million       

Commenting, Jeff Ventura, the Company’s CEO said, “Range continues to successfully execute on the plan outlined in the beginning of this year, delivering another quarter of record production and increasing cash flow by 27% compared to the prior-year third quarter. Following the recently-announced royalty sale, coupled with our exposure to improved liquids pricing, Range now expects leverage to be under 3.0x debt to EBITDAX at the end of this year, accelerating the de-levering process outlined in our five-year outlook by two years. Range continues to pursue additional accretive asset sales that will reduce leverage closer to our longer-term target of under 2.0x. At the same time, Range, as a leading NGL producer in Appalachia, is uniquely positioned to continue to benefit from improved domestic and international markets for NGL purity products.”

Financial Discussion

Except for generally accepted accounting principles (“GAAP”) reported amounts, specific expense categories exclude non-cash impairments, unrealized mark-to-market adjustment on derivatives, non-cash stock compensation and other items shown separately on the attached tables.  “Unit costs” as used in this release are composed of direct operating, transportation, gathering, processing and compression, production and ad valorem taxes, general and administrative, interest and depletion, depreciation and amortization costs divided by production.  See “Non-GAAP Financial Measures” for a definition of each of the non-GAAP financial measures and the tables that reconcile each of the non-GAAP measures to their most directly comparable GAAP financial measure.

Third Quarter 2018

GAAP revenues for third quarter 2018 totaled $811 million (a 68% increase compared to third quarter 2017), GAAP net cash provided from operating activities (including changes in working capital) was $229 million, compared to $189 million in third quarter 2017, and GAAP income was $48.5 million ($0.19 per diluted share) versus a net loss of $127.7 million ($0.52 per diluted share) in the prior-year third quarter.  Third quarter earnings results include a $34.6 million derivative loss due to increases in future commodity prices compared to an $88.4 million derivative loss in the prior-year third quarter and a $0.2 million mark to market loss related to the deferred compensation plan compared to a $9.2 million gain in the prior-year third quarter.

Non-GAAP revenues for third quarter 2018 totaled $811 million, an increase of 38% compared to third quarter 2017, and cash flow from operations before changes in working capital, a non-GAAP measure, was $260 million, compared to $204 million in third quarter 2017.  Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $63.9 million ($0.26 per diluted share) in third quarter 2018, compared to $11.6 million ($0.05 per diluted share) in the prior-year third quarter, an increase of 420%.

The following table details Range’s average production and realized pricing for third quarter 2018:

Net Production
 
  Natural Gas
(Mmcf/d)
  Oil (Bbl/d)   NGLs
(Bbl/d)
  Natural Gas
Equivalent (Mmcfe/d)
 
         
                 
  1,530   11,314   111,469   2,267  


Realized Pricing
                     
    Natural Gas
($/Mcf) 
  Oil ($/Bbl)    NGLs
($/Bbl) 
  Natural Gas
Equivalent ($/Mcfe)

                     
                                           
Average NYMEX price   $2.91     $69.49                                    
Differential, including basis hedging   (0.15 )     (4.92 )                                  
Realized prices before NYMEX hedges   2.75       64.57     $27.16       $3.52                        
Settled NYMEX hedges   0.06       (12.24 )     (2.73 )     (0.16 )                      
Average realized prices after hedges   $2.82     $52.33     $24.43       $3.36                        
                                           
*May not add due to rounding                                          

Third quarter 2018 natural gas, NGLs and oil price realizations (including the impact of cash-settled hedges and derivative settlements which correspond to analysts’ estimates) averaged $3.36 per mcfe, a 17% increase from the prior-year third quarter.  Additional detail on commodity price realizations can be found in the Supplemental Tables provided on the Company’s website.   

  • The average Company natural gas price, including the impact of basis hedging, was $2.75 per mcf (or $0.15 per mcf below NYMEX) for third quarter 2018, which was significantly better than the $0.51 negative differential to NYMEX in the prior-year third quarter.  The improvement in natural gas differentials compared to last year is primarily a result of increased pipeline connectivity, seasonally low storage levels and compressed basis across the Appalachian and Midwest regions.
     
  • Pre-hedge NGL realizations were $27.16 per barrel, or 39% of WTI, in third quarter 2018.  Realized NGL price was above the high-end of guidance as a result of NGL component price improvements late in third quarter 2018.  Range expects similar pricing strength through the fourth quarter of 2018, resulting in an increase to full-year 2018 NGL pricing guidance from 35%-36% to 37%-38% of WTI.
     
  • Crude oil and condensate price realizations, before realized hedges, for the third quarter 2018 averaged $64.57 per barrel, or $4.92 below WTI, a 49% improvement in realized price over the prior-year third quarter.

Unit Costs

The following table details Range’s unit costs per mcfe(a):

Expenses   3Q 2018
($/Mcfe)
    3Q 2017
($/Mcfe)
     Increase (Decrease)      
                       
Direct operating $ 0.15   $ 0.20     (25%)      
Transportation, gathering, processing and compression   1.46(b)     1.05     39%      
Production and ad valorem taxes   0.05     0.07     (29%)      
General and administrative(a)   0.18     0.20     (10%)      
Interest expense   0.25     0.26     (4%)      
Total cash unit costs(c)   2.09     1.77     18%      
Depletion, depreciation and
amortization (DD&A)
  0.79     0.87     (9%)      
Total unit costs plus DD&A(c) $ 2.87   $ 2.65     8%      

(a) Excludes stock-based compensation, legal settlements and amortization of deferred financing costs.
(b) Third quarter 2018 transportation, gathering, processing and compression expense reflects the change in accounting method made earlier this year.  As a result of adopting the new accounting standard, expenses increased by approximately $0.23 per mcfe in third quarter 2018.  There was an equal increase to NGL revenue, resulting in zero net impact to cash flow as a result of the change in accounting method. See page 8 in Range’s third quarter 2018 Form 10-Q.
(c) May not add due to rounding.

Capital Expenditures

Third quarter 2018 drilling expenditures of $191 million funded the drilling and completion of 24 (24 net) wells.  A 100% success rate was achieved.  In addition, during third quarter 2018, $12.5 million was spent on acreage purchases and $1.5 million on gathering systems.  Total capital expenditures year to date were $726 million.  Range remains on target with its $941 million total capital budget for 2018 which is expected to be funded within cash flows, excluding asset sale proceeds.

Asset Sale

Following third quarter 2018, Range signed and closed the sale of a proportionately reduced 1% overriding royalty in its Washington County, Pennsylvania leases for gross proceeds of $300 million.

Range’s Washington County properties encompass approximately 300,000 net surface acres that produced 1.8 Bcfe per day in the third quarter of 2018. The overriding royalty applies to existing and future Marcellus, Utica and Upper Devonian development on the subject leases, while excluding shallower and deeper formations. Post-close, Range maintains a net revenue interest of approximately 82% on the subject Washington County acreage. Cash flow to the buyer, after paying applicable transport costs, is expected to be approximately $25 million in 2019. The net proceeds were used to reduce total debt by an expected 7%, which lowers annualized interest expense by approximately $15 million, resulting in a net reduction in estimated 2019 cash flow of $10 million.

Operational Discussion

Range’s net production for third quarter 2018 averaged 2,267 Mmcfe per day, consisting of 1,530 Mmcf per day of natural gas, 111,469 barrels per day of NGLs and 11,314 barrels per day of condensate and oil.  This makes Range one of the top 10 natural gas producers in the U.S. and a top three NGL producer amongst E&P companies. 

The table below summarizes wells turned to sales and the estimated activity for the remainder of the year.  As a result of drilling longer laterals, Range has reduced the number of wells being turned to sales in the Marcellus from 100 down to 92.  The total lateral feet and number of stages expected to be completed in 2018 remains approximately the same.

    Wells TIL
1H 2018
  Wells TIL
3Q 2018
  Calendar 2018 Planned TIL   Planned 4Q
2018
     
SW PA Super-Rich   5   8   13   0      
SW PA Wet   15   8   38   15      
SW PA Dry   28   6   41   7      
Total Appalachia   48   22   92   22      
                       
Total N. LA.   8   2   11   1      
 Total   56   24   103   23      

Appalachia Division

Production for third quarter 2018 averaged approximately 1,988 net Mmcfe per day from the Appalachia division, a 24% increase over the prior-year third quarter.  The southwest area of the division averaged 1,872 net Mmcfe per day during third quarter 2018, a 29% increase over third quarter 2017.  This was achieved through continued operational improvements, exceptional well results across Range’s acreage position and additional outlets for ethane during the quarter.  The northeast Marcellus properties averaged 98 net Mmcf per day and legacy acreage produced approximately 18 net Mmcf per day during the third quarter 2018.

In southwest Pennsylvania, Range recently drilled a lateral length of 18,566 feet, making it the longest lateral Marcellus well in the basin to date.  Additionally, Range recently completed two 18,000 foot laterals that were drilled earlier this year and expects to announce results from these wells with year-end earnings.

North Louisiana

Production for the division in third quarter 2018 averaged approximately 278 net Mmcfe per day.  The division brought on line two wells during the quarter, and expects to bring on line one additional well during the remainder of the year for a total of 11 wells in 2018.

Marketing and Transportation

As highlighted on the second quarter 2018 earnings call, Appalachia has in-basin fractionation and control of purity products with access to international markets.  Range expects the unique nature of the Appalachia NGL model will become evident over the next year, as purity products with access to international markets should garner premiums.  Range, the only producer with propane capacity on Mariner East 1, has been able to capture above Mont Belvieu prices, on average, by exporting the majority of its propane to international markets since early 2016.  In addition, the Company has been sending normal butane and remaining propane volumes this summer via local rail to Marcus Hook for export.  In total, Range marketed approximately 80% of its corporate NGL production into purity markets during the third quarter.  As a result of the Company’s current arrangements and the improved NGL market fundamentals, fourth quarter 2018 pre-hedge NGL differentials should improve to approximately 40% of WTI.  

Energy Transfer’s Rover project, which is the last major natural gas transportation project for which Range has contracted capacity, received approval during third quarter 2018 for both the Majorsville and Burgettstown laterals, allowing Range to begin flowing volumes in September.  The project enables Range to access additional Midwest and Gulf Coast markets, which should help reduce corporate basis volatility over the coming years.

Guidance – 2018 

Production per day Guidance

Production for the fourth quarter of 2018 is expected to be approximately 2,255 to 2,265 Mmcfe per day.  This excludes all Appalachia volumes associated with the 1% overriding royalty sale.

Production expectations for the full year 2018 remain approximately 11% year-over-year growth. 

4Q 2018 Expense Guidance 

Direct operating expense:    $0.15 − $0.17 per mcfe    
Transportation, gathering, processing and compression expense:    $1.52 − $1.56 per mcfe    
Production tax expense:    $0.05 − $0.06 per mcfe    
Exploration expense:    $7.0 − $10.0 million    
Unproved property impairment expense:    $8.0 − $10.0 million    
G&A expense:    $0.18 − $0.20 per mcfe    
Interest expense:    $0.24 − $0.26 per mcfe    
DD&A expense:    $0.78 − $0.82 per mcfe    
Net brokered gas marketing expense:    ~$3.0 million    


4Q 2018 Natural Gas Price Differentials (including basis hedging):      NYMEX minus $0.12  
4Q 2018 NGL Differentials:       39% − 40% of WTI                                                                                                                    


Based on current market indications, Range expects to average the following pre-hedge differentials for calendar 2018 production. 

  New FY 2018 Guidance   Prior FY 2018 Guidance      
Natural Gas: NYMEX minus $0.08   NYMEX minus $0.10      
Natural Gas Liquids (including ethane): 37% − 38% of WTI   35% − 36% of WTI      
Oil/Condensate: WTI minus $5.00 to $6.00   WTI minus $5.00 to $6.00      

Hedging Status

Range hedges portions of its expected future production volumes to increase the predictability of cash flow and to help maintain a more flexible financial position. Range currently has over 80% of its expected fourth quarter 2018 natural gas production hedged at a weighted average floor price of $2.98 per Mmbtu.  Similarly, Range has hedged over 75% of its fourth quarter 2018 projected crude oil production at a floor price of $53.20 and over 60% of its composite NGL production.  Please see Range’s detailed hedging schedule posted at the end of the financial tables below and on its website at www.rangeresources.com

Range has also hedged Marcellus and other basis differentials to limit volatility between NYMEX and regional prices.  The fair value of the basis hedges was a loss of $1.3 million as of September 30, 2018.  The Company also has propane basis swap contracts which lock in the differential between Mont Belvieu and international propane indices.  The fair value of these contracts was a loss of $2.0 million on September 30, 2018.  

Conference Call Information

A conference call to review the financial results is scheduled on Wednesday, October 24 at 9:00 a.m. ET. To participate in the call, please dial 866-900-7525 and provide conference code 8399762 about 10 minutes prior to the scheduled start time.

A simultaneous webcast of the call may be accessed at www.rangeresources.com. The webcast will be archived for replay on the Company's website until November 24, 2018.

Non-GAAP Financial Measures

Adjusted net income comparable to analysts’ estimates as set forth in this release represents income or loss from operations before income taxes adjusted for certain non-cash items (detailed in the accompanying table) less income taxes.  We believe adjusted net income comparable to analysts’ estimates is calculated on the same basis as analysts’ estimates and that many investors use this published research in making investment decisions and evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Diluted earnings per share (adjusted) as set forth in this release represents adjusted net income comparable to analysts’ estimates on a diluted per share basis.  A table is included which reconciles income or loss from operations to adjusted net income comparable to analysts’ estimates and diluted earnings per share (adjusted).  The Company provides additional comparative information on prior periods along with non-GAAP revenue disclosures on its website. 

Cash flow from operations before changes in working capital (sometimes referred to as “adjusted cash flow”) as defined in this release represents net cash provided by operations before changes in working capital and exploration expense adjusted for certain non-cash compensation items.  Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company’s ability to generate cash to internally fund exploration and development activities and to service debt.  Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry.  In turn, many investors use this published research in making investment decisions.  Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operations, investing, or financing activities as an indicator of cash flows, or as a measure of liquidity.  A table is included which reconciles net cash provided by operations to cash flow from operations before changes in working capital as used in this release.  On its website, the Company provides additional comparative information on prior periods for cash flow, cash margins and non-GAAP earnings as used in this release.

The cash prices realized for oil and natural gas production, including the amounts realized on cash-settled derivatives and net of transportation, gathering, processing and compression expense, is a critical component in the Company’s performance tracked by investors and professional research analysts in valuing, comparing, rating and providing investment recommendations and forecasts of companies in the oil and gas exploration and production industry.  In turn, many investors use this published research in making investment decisions.  Due to the GAAP disclosures of various derivative transactions and third-party transportation, gathering, processing and compression expense, such information is now reported in various lines of the income statement.  The Company believes that it is important to furnish a table reflecting the details of the various components of each line in the statement of operations to better inform the reader of the details of each amount and provide a summary of the realized cash-settled amounts and third-party transportation, gathering, processing and compression expense which historically were reported as natural gas, NGLs and oil sales.  This information is intended to bridge the gap between various readers’ understanding and fully disclose the information needed.

The Company discloses in this release the detailed components of many of the single line items shown in the GAAP financial statements included in the Company’s quarterly report on Form 10-Q.  The Company believes that it is important to furnish this detail of the various components comprising each line of the Statements of Operations to better inform the reader of the details of each amount, the changes between periods and the effect on its financial results.

RANGE RESOURCES CORPORATION (NYSE: RRC) is a leading U.S. independent oil and natural gas producer with operations focused in stacked-pay projects in the Appalachian Basin and North Louisiana. The Company pursues an organic growth strategy targeting high return, low-cost projects within its large inventory of low risk development drilling opportunities.  The Company is headquartered in Fort Worth, Texas.  More information about Range can be found at www.rangeresources.com.

Included within this news release are certain “forward-looking statements” within the meaning of the federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Range’s current beliefs, expectations or intentions regarding future events.  Words such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “outlook,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” and similar expressions are intended to identify such forward-looking statements.

All statements, except for statements of historical fact, made within regarding activities, events or developments the Company expects, believes or anticipates will or may occur in the future, such as those regarding future well costs, expected asset sales, well productivity, future liquidity and financial resilience, anticipated exports and related financial impact, NGL market supply and demand, improving commodity fundamentals and pricing, future capital efficiencies, future shareholder value, emerging plays, capital spending, anticipated drilling and completion activity, acreage prospectivity, expected pipeline utilization and future guidance information are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and Range's future performance are subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements.  Further information on risks and uncertainties is available in Range's filings with the Securities and Exchange Commission (SEC), including its most recent Annual Report on Form 10-K.  Unless required by law, Range undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date they are made.

The SEC permits oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions as well as the option to disclose probable and possible reserves.  Range has elected not to disclose its probable and possible reserves in its filings with the SEC.  Range uses certain broader terms such as "resource potential,” “unrisked resource potential,” "unproved resource potential" or "upside" or other descriptions of volumes of resources potentially recoverable through additional drilling or recovery techniques that may include probable and possible reserves as defined by the SEC's guidelines.  Range has not attempted to distinguish probable and possible reserves from these broader classifications. The SEC’s rules prohibit us from including in filings with the SEC these broader classifications of reserves.  These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of actually being realized.  Unproved resource potential refers to Range's internal estimates of hydrocarbon quantities that may be potentially discovered through exploratory drilling or recovered with additional drilling or recovery techniques and have not been reviewed by independent engineers.  Unproved resource potential does not constitute reserves within the meaning of the Society of Petroleum Engineer's Petroleum Resource Management System and does not include proved reserves.  Area wide unproven resource potential has not been fully risked by Range's management.  “EUR”, or estimated ultimate recovery, refers to our management’s estimates of hydrocarbon quantities that may be recovered from a well completed as a producer in the area. These quantities may not necessarily constitute or represent reserves within the meaning of the Society of Petroleum Engineer’s Petroleum Resource Management System or the SEC’s oil and natural gas disclosure rules. Actual quantities that may be recovered from Range's interests could differ substantially.  Factors affecting ultimate recovery include the scope of Range's drilling program, which will be directly affected by the availability of capital, drilling and production costs, commodity prices, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals, field spacing rules, recoveries of gas in place, length of horizontal laterals, actual drilling results, including geological and mechanical factors affecting recovery rates and other factors.  Estimates of resource potential may change significantly as development of our resource plays provides additional data. 

In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases. Investors are urged to consider closely the disclosure in our most recent Annual Report on Form 10-K, available from our website at www.rangeresources.com or by written request to 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102.  You can also obtain this Form 10-K on the SEC’s website at www.sec.gov or by calling the SEC at 1-800-SEC-0330.

 

Investor Contacts:

Laith Sando, Vice President – Investor Relations
817-869-4267
lsando@rangeresources.com

Michael Freeman, Director – Investor Relations & Hedging
817-869-4264
mfreeman@rangeresources.com

John Durham, Senior Financial Analyst
817-869-1538
jdurham@rangeresources.com

Media Contact:

Michael Mackin, Director of External Affairs
724-743-6776
mmackin@rangeresources.com

www.rangeresources.com


RANGE RESOURCES CORPORATION

STATEMENTS OF OPERATIONS                                              
Based on GAAP reported earnings with additional                                              
details of items included in each line in Form 10-Q                                              
(Unaudited, in thousands, except per share data)                                              
                                               
  Three Months Ended September 30,     Nine Months Ended September 30,  
    2018       2017       %       2018       2017       %  
                                               
Revenues and other income:                                              
Natural gas, NGLs and oil sales (a) $ 736,431     $ 507,541             $ 2,094,450     $ 1,573,128          
Derivative fair value (loss)/income   (34,591 )     (88,426 )             (151,890 )     188,326          
Brokered natural gas, marketing and other (b)   109,111       61,145               266,774       168,742          
ARO settlement gain (loss) (b)         104               (12 )     64          
Other (b)   274       1,868               686       1,738          
Total revenues and other income   811,225       482,232       68 %     2,210,008       1,931,998       14 %
                                               
Costs and expenses:                                              
Direct operating   30,389       36,371               102,469       94,768          
Direct operating – non-cash stock-based compensation (c)   537       517               1,667       1,563          
Transportation, gathering, processing and compression    304,562       191,645               819,100       560,883          
Production and ad valorem taxes    9,427       11,993               29,493       31,125          
Brokered natural gas and marketing   115,677       59,384               273,420       168,140          
Brokered natural gas and marketing – non-cash
stock-based compensation (c)
  403       389               1,001       1,040          
Exploration   7,894       22,206               21,990       44,173          
Exploration – non-cash stock-based compensation (c)    405       561               1,527       1,596          
Abandonment and impairment of unproved properties    6,549       42,568               73,244       52,181          
General and administrative    37,812       36,461               121,255       109,619          
General and administrative – non-cash stock-based
compensation (c)
  5,607       9,959               38,332       35,156          
General and administrative – lawsuit settlements   53       5,865               1,385       7,028          
General and administrative – bad debt expense    250       750               (1,250 )     1,050          
Termination costs   (336 )     (16 )             (373 )     2,384          
Termination costs – non-cash stock-based compensation (c)         (31 )                   1,665          
Deferred compensation plan (d)   223       (9,203 )             (559 )     (36,838 )        
Interest expense   53,063       47,366               155,733       138,821          
Interest expense – amortization of deferred financing costs (c)   1,738       1,813               5,315       5,385          
Depletion, depreciation and amortization    164,266       159,749               487,558       462,074          
Impairment of proved properties and other assets         63,679               22,614       63,679          
Gain on sale of assets   30       (102 )             (149 )     (23,509 )        
Total costs and expenses   738,549       681,924       8 %     2,153,772       1,721,983       25 %
                                               
Income (loss) before income taxes   72,676       (199,692 )     136 %     56,236       210,015       -73 %
                                               
Income tax expense (benefit):                                              
Current                                      
Deferred   24,137       (71,992 )             38,295       98,054          
    24,137       (71,992 )             38,295       98,054          
                                               
Net income (loss) $ 48,539     $ (127,700 )     138 %   $ 17,941     $ 111,961       -84 %
                                               
Net Income (Loss) Per Common Share:                                              
Basic $ 0.19     $ (0.52 )           $ 0.07     $ 0.45          
Diluted $ 0.19     $ (0.52 )           $ 0.07     $ 0.45          
                                               
Weighted average common shares outstanding, as reported:                                              
Basic   246,451       245,244       0 %     246,016       245,027       0 %
Diluted   247,166       245,244       1 %     246,879       245,280       1 %

(a)  See separate natural gas, NGLs and oil sales information table.
(b)  Included in Brokered natural gas, marketing and other revenues in the 10-Q.
(c)  Costs associated with stock compensation and restricted stock amortization, which have been reflected in the categories associated
          with the direct personnel costs, which are combined with the cash costs in the 10-Q.
(d)  Reflects the change in market value of the vested Company stock held in the deferred compensation plan.


RANGE RESOURCES CORPORATION

BALANCE SHEETS              
(In thousands)   September 30,       December 31,  
    2018       2017  
    (Unaudited)       (Audited)  
Assets              
Current assets $ 422,381     $ 370,627  
Derivative assets   1,217       58,880  
Goodwill   1,641,197       1,641,197  
Natural gas and oil properties, successful efforts method   9,714,136       9,566,737  
Transportation and field assets   11,002       14,666  
Other   76,203       76,734  
  $ 11,866,136     $ 11,728,841  
               
Liabilities and Stockholders’ Equity              
Current liabilities $ 650,284     $ 704,913  
Asset retirement obligations   6,327       6,327  
Derivative liabilities   97,256       44,233  
               
Bank debt   1,257,199       1,208,467  
Senior notes   2,855,048       2,851,754  
Senior subordinated notes   48,653       48,585  
Total debt   4,160,900       4,108,806  
               
Deferred tax liability   731,723       693,356  
Derivative liabilities   11,751       9,789  
Deferred compensation liability   86,794       101,102  
Asset retirement obligations and other liabilities   303,813       286,043  
               
Common stock and retained earnings     5,818,816       5,776,203  
Other comprehensive loss   (1,124 )     (1,332 )
Common stock held in treasury stock   (404 )     (599 )
Total stockholders’ equity   5,817,288       5,774,272  
  $ 11,866,136     $ 11,728,841  


RECONCILIATION OF TOTAL REVENUES AND OTHER INCOME TO TOTAL REVENUE EXCLUDING CERTAIN ITEMS, a non-GAAP measure                            
(Unaudited, in thousands)                            
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
   
    2018       2017       %       2018       2017       %  
                                               
Total revenues and other income, as reported $ 811,225     $ 482,232       68 %   $ 2,210,008     $ 1,931,998       14 %
Adjustment for certain special items:                                              
Total change in fair value related to derivatives
prior to settlement (gain) loss
  (331 )     105,283               111,618       (172,264 )        
ARO settlement (gain) loss         (104 )             12       (64 )        
Total revenues, as adjusted, non-GAAP $ 810,894     $ 587,411       38 %   $ 2,321,638     $ 1,759,670       32 %


RANGE RESOURCES CORPORATION

CASH FLOWS FROM OPERATING ACTIVITIES                              
(Unaudited in thousands)                              
                               
  Three Months Ended September 30,     Nine Months Ended September 30,  
    2018       2017       2018       2017  
                               
Net income (loss) $ 48,539     $ (127,700 )   $ 17,941     $ 111,961  
Adjustments to reconcile net cash provided from continuing operations:                              
Deferred income tax expense (benefit)   24,137       (71,992 )     38,295       98,054  
Depletion, depreciation, amortization and impairment   164,266       223,428       510,172       525,753  
Exploration dry hole costs   2       9,005       4       9,166  
Abandonment and impairment of unproved properties   6,549       42,568       73,244       52,181  
Derivative fair value loss (income)   34,591       88,426       151,890       (188,326 )
Cash settlements on derivative financial instruments that do not qualify for hedge
  accounting
  (34,922 )     16,856       (40,272 )     16,062  
Allowance for bad debts   250       750       (1,250 )     1,050  
Amortization of deferred issuance costs, loss on extinguishment of debt, and other   1,787       1,627       4,163       4,184  
Deferred and stock-based compensation   7,085       1,985       41,252       3,937  
Loss (gain) on sale of assets and other   30       (102 )     (149 )     (23,509 )
                               
Changes in working capital:                              
Accounts receivable   (35,288 )     (26,084 )     (49,713 )     (39,694 )
Inventory and other   (1,618 )     (5,220 )     (822 )     (1,504 )
Accounts payable   (21,144 )     26,289       (6,529 )     44,715  
Accrued liabilities and other   35,168       9,368       36,721       (13,498 )
Net changes in working capital   (22,882 )     4,353       (20,343 )     (9,981 )
Net cash provided from operating activities $ 229,432     $ 189,204     $ 774,947     $ 600,532  
                               
                               
                               
RECONCILIATION OF NET CASH PROVIDED FROM OPERATING ACTIVITIES, AS REPORTED, TO CASH FLOW FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL, a non-GAAP measure                              
(Unaudited, in thousands)                              
                               
  Three Months Ended September 30,     Nine Months Ended September 30,  
    2018       2017       2018       2017  
Net cash provided from operating activities, as reported $ 229,432     $ 189,204     $ 774,947     $ 600,532  
Net changes in working capital   22,882       (4,353 )     20,343       9,981  
Exploration expense   7,892       13,201       21,986       35,007  
Lawsuit settlements   53       5,865       1,385       7,028  
Termination costs   (336 )     (16 )     (373 )     2,384  
Non-cash compensation adjustment   41       290       1,880       1,382  
Cash flow from operations before changes in working capital – non-GAAP measure $ 259,964     $ 204,191     $ 820,168     $ 656,314  
                               
                               
                               
ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING                              
(Unaudited, in thousands)                              
                               
  Three Months Ended September 30,     Nine Months Ended September 30,  
    2018       2017       2018       2017  
Basic:                              
Weighted average shares outstanding   249,482       248,133       249,131       247,794  
Stock held by deferred compensation plan   (3,031 )     (2,889 )     (3,115 )     (2,767 )
Adjusted basic   246,451       245,244       246,016       245,027  
                               
Dilutive:                              
Weighted average shares outstanding   249,482       248,133       249,131       247,794  
Dilutive stock options under treasury method   (2,316 )     (2,889 )     (2,252 )     (2,514 )
Adjusted dilutive   247,166       245,244       246,879       245,280  
                               
                               


RANGE RESOURCES CORPORATION

RECONCILIATION OF NATURAL GAS, NGLs AND OIL SALES AND DERIVATIVE FAIR VALUE INCOME (LOSS) TO CALCULATED CASH REALIZED NATURAL GAS, NGLs AND OIL PRICES WITH AND WITHOUT THIRD PARTY TRANSPORTATION, GATHERING AND COMPRESSION FEES, a non-GAAP measure          
(Unaudited, in thousands, except per unit data)          
  Three Months Ended September 30,     Nine Months Ended September 30,  
    2018       2017       %       2018       2017       %  
Natural gas, NGL and oil sales components:                                              
Natural gas sales $ 390,656     $ 301,114             $ 1,182,580     $ 1,008,980          
NGL sales   278,563       150,593               705,793       412,440          
Oil sales   67,212       55,834               206,077       151,688          
Total oil and gas sales, as reported $ 736,431     $ 507,541       45 %   $ 2,094,450     $ 1,573,108       33 %
                                               
Derivative fair value (loss) income, as reported: $ (34,591 )   $ (88,426 )           $ (151,890 )   $ 188,326          
Cash settlements on derivative financial instruments – (gain) loss:                                              
Natural gas   (5,845 )     (26,250 )             (56,466 )     (34,647 )        
NGLs   28,023       15,995               63,435       33,459          
Crude Oil   12,744       (6,602 )             33,303       (14,874 )        
Total change in fair value related to derivatives prior to settlement, a
non-GAAP measure
$ 331     $ (105,283 )           $ (111,618 )   $ 172,264          
                                               
Transportation, gathering, processing and compression components:                                              
Natural gas $ 176,271     $ 133,019             $ 497,569     $ 384,769          
NGLs   128,291       58,626               321,531       176,114          
Total transportation, gathering, processing and compression, as reported $ 304,562     $ 191,645             $ 819,100     $ 560,883          
                                               
Natural gas, NGL and oil sales, including cash-settled derivatives: (c)                                              
Natural gas sales $ 396,501     $ 327,364             $ 1,239,046     $ 1,043,627          
NGL sales   250,540       134,598               642,358       378,981          
Oil sales   54,468       62,436               172,774       166,562          
Total $ 701,509     $ 524,398       34 %     2,054,178       1,589,170       29 %
                                               
Production of oil and gas during the periods (a):                                              
Natural gas (mcf)   140,757,676       121,644,949       16 %     411,769,576       357,389,113       15 %
NGL (bbl)   10,255,159       8,892,778       15 %     29,009,100       25,953,773       12 %
Oil (bbl)   1,040,891       1,288,303       -19 %     3,314,704       3,406,373       -3 %
Gas equivalent (mcfe) (b)   208,533,976       182,731,435       14 %     605,712,400       533,549,989       14 %
                                               
Production of oil and gas – average per day (a):                                              
Natural gas (mcf)   1,529,975       1,322,228       16 %     1,508,313       1,309,118       15 %
NGL (bbl)   111,469       96,661       15 %     106,260       95,069       12 %
Oil (bbl)   11,314       14,003       -19 %     12,142       12,478       -3 %
Gas equivalent (mcfe) (b)    2,266,674       1,986,211       14 %     2,218,727       1,954,396       14 %
                                               
Average prices, excluding derivative settlements and before third party transportation costs:                                              
Natural gas (mcf) $ 2.78     $ 2.48       12 %   $ 2.87     $ 2.82       2 %
NGL (bbl) $ 27.16     $ 16.93       60 %   $ 24.33     $ 15.89       53 %
Oil (bbl) $ 64.57     $ 43.34       49 %   $ 62.17     $ 44.53       40 %
Gas equivalent (mcfe) (b) $ 3.53     $ 2.78       27 %   $ 3.46     $ 2.95       17 %
                                               
Average prices, including derivative settlements before third party transportation costs: (c)                                              
Natural gas (mcf) $ 2.82     $ 2.69       5 %   $ 3.01     $ 2.92       3 %
NGL (bbl) $ 24.43     $ 15.14       61 %   $ 22.14     $ 14.60       52 %
Oil (bbl) $ 52.33     $ 48.46       8 %   $ 52.12     $ 48.90       7 %
Gas equivalent (mcfe) (b) $ 3.36     $ 2.87       17 %   $ 3.39     $ 2.98       14 %
                                               
Average prices, including derivative settlements and after third party transportation costs: (d)                                              
Natural gas (mcf) $ 1.56     $ 1.60       -2 %   $ 1.80     $ 1.84       -2 %
NGL (bbl) $ 11.92     $ 8.54       40 %   $ 11.05     $ 7.82       41 %
Oil (bbl) $ 52.33     $ 48.46       8 %   $ 52.12     $ 48.90       7 %
Gas equivalent (mcfe) (b) $ 1.90     $ 1.82       5 %   $ 2.04     $ 1.93       6 %
                                               
Transportation, gathering and compression expense per mcfe $ 1.46     $ 1.05       39 %   $ 1.35     $ 1.05       29 %

(a)  Represents volumes sold regardless of when produced.
(b)  Oil and NGLs are converted at the rate of one barrel equals six mcfe based upon the approximate relative energy content of oil to natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices.
(c)  Excluding third party transportation, gathering and compression costs.
(d)  Net of transportation, gathering and compression costs.

RANGE RESOURCES CORPORATION

RECONCILIATION OF INCOME BEFORE INCOME TAXES
AS REPORTED TO INCOME BEFORE INCOME TAXES EXCLUDING CERTAIN ITEMS, a non-GAAP measure
       

 
 
(Unaudited, in thousands, except per share data)          
  Three Months Ended September 30,     Nine Months Ended September 30,  
    2018       2017       %       2018       2017       %  
                                               
Income (loss) from operations before income taxes, as reported $ 72,676     $ (199,692 )     136 %   $ 56,236     $ 210,015       73 %
Adjustment for certain special items:                                              
Loss (gain) on sale of assets   30       (102 )             (149 )     (23,509 )        
(Gain) loss on ARO settlements         (104 )             12       (64 )        
Change in fair value related to derivatives prior to settlement   (331 )     105,283               111,618       (172,264 )        
Abandonment and impairment of unproved properties   6,549       42,568               73,244       52,181          
Impairment of proved property         63,679               22,614       63,679          
Lawsuit settlements   53       5,865               1,385       7,028          
Termination costs   (336 )     (16 )             (373 )     2,384          
Termination costs – non-cash stock-based compensation         (31 )                   1,665          
Brokered natural gas and marketing – non-cash stock-based
compensation
  403       389               1,001       1,040          
Direct operating – non-cash stock-based compensation   537       517               1,667       1,563          
Exploration expenses – non-cash stock-based compensation   405       561               1,527       1,596          
General & administrative – non-cash stock-based compensation   5,607       9,959               38,332       35,156          
Deferred compensation plan – non-cash adjustment   223       (9,203 )             (559 )     (36,838 )        
                                               
Income before income taxes, as adjusted   85,816       19,673       336 %     306,555       143,632       113 %
                                               
Income tax expense, as adjusted                                              
Current                                      
Deferred (a)   21,869       8,042               79,617       55,292          
Net income excluding certain items, a non-GAAP measure $ 63,947     $ 11,631       452 %   $ 226,938     $ 88,340       157 %
                                               
Non-GAAP income per common share                                              
Basic $ 0.26     $ 0.05       420 %   $ 0.92     $ 0.36       156 %
Diluted $ 0.26     $ 0.05       420 %   $ 0.92     $ 0.36       156 %
                                               
Non-GAAP diluted shares outstanding, if dilutive   247,166       245,309               246,879       245,280          
                                               

(a)  Deferred taxes for 2017 to be approximately 38% and 26% for 2018.

    

RANGE RESOURCES CORPORATION

RECONCILIATION OF NET INCOME (LOSS), EXCLUDING
CERTAIN ITEMS AND ADJUSTMENT EARNINGS PER SHARE, non-GAAP measures
                                 
(In thousands, except per share data)                                  
  Three Months Ended
September 30,
      Nine Months Ended
  September 30,
   
    2018       2017         2018       2017    
                                   
Net income (loss), as reported $ 48,539     $ (127,700 )     $ 17,941     $ 111,961    
Adjustment for certain special items:                                  
Loss (gain) on sale of assets   30       (102 )       (149 )     (23,509 )  
(Gain) loss on ARO settlements         (104 )       12       (64 )  
Change in fair value related to derivatives prior to settlement   (331 )     105,283         111,618       (172,264 )  
Impairment of proved property         63,679         22,614       63,679    
Abandonment and impairment of unproved properties   6,549       42,568         73,244       52,181    
Lawsuit settlements   53       5,865         1,385       7,028    
Termination costs   (336 )     (16 )       (373 )     2,384    
Non-cash stock-based compensation   6,952       11,395         42,527       41,020    
Deferred compensation plan   223       (9,203 )       (559 )     (36,838 )  
Tax impact   2,268       (80,034 )       (41,322 )     42,762    
                                   
Net income (loss) excluding certain items, a non-GAAP measure $ 63,947     $ 11,631       $ 226,938     $ 88,340    
                                   
Net income (loss) per diluted share, as reported $ 0.19     $ (0.52 )     $ 0.07     $ 0.45    
Adjustment for certain special items per diluted share:                                  
(Gain) loss on sale of assets                       (0.10 )  
Loss (gain) on ARO settlements                          
Change in fair value related to derivatives prior to settlement         0.43         0.45       (0.70 )  
Impairment of proved property         0.26         0.09       0.26    
Abandonment and impairment of unproved properties   0.03       0.17         0.30       0.21    
Lawsuit settlements         0.02         0.01       0.03    
Termination costs                       0.01    
Non-cash stock-based compensation   0.03       0.05         0.17       0.17    
Deferred compensation plan         (0.04 )             (0.15 )  
Adjustment for rounding differences         0.01               0.01    
Tax impact   0.01       (0.33 )       (0.17 )     0.17    
                                   
Net income (loss) per diluted share, excluding certain items, a non-GAAP measure $ 0.26     $ 0.05       $ 0.92     $ 0.36    
                                   
Adjusted earnings per share, a non-GAAP measure:                                  
Basic $ 0.26     $ 0.05       $ 0.92     $ 0.36    
Diluted $ 0.26     $ 0.05       $ 0.92     $ 0.36    
                                   


RANGE RESOURCES CORPORATION

RECONCILIATION OF CASH MARGIN PER MCFE, a non-GAAP measure                                  
(Unaudited, in thousands, except per unit data)                                  
  Three Months Ended
September 30,
      Nine Months Ended
  September 30,
   
    2018       2017         2018       2017    
                                   
Revenues                                  
Natural gas, NGL and oil sales, as reported $ 736,431     $ 507,541       $ 2,094,450     $ 1,573,128    
Derivative fair value (loss) income, as reported   (34,591 )     (88,426 )       (151,890 )     188,326    
  Less non-cash fair value (gain) loss   (331 )     105,283         111,618       (172,264 )  
Brokered natural gas and marketing and other, as reported   109,385       63,117           267,448       170,544    
  Less ARO settlement and other (gains) losses   (274 )     (1,972 )       (674 )     (1,802 )  
  Cash revenue applicable to production   810,620       585,543         2,320,952       1,757,932    
                                   
Expenses                                  
Direct operating, as reported   30,926       36,888         104,136       96,331    
  Less direct operating stock-based compensation   (537 )     (517 )       (1,667 )     (1,563 )  
Transportation, gathering and compression, as reported   304,562       191,645         819,100       560,883    
Production and ad valorem taxes, as reported   9,427       11,993         29,493       31,125    
Brokered natural gas and marketing, as reported   116,080       59,773         274,421       169,180    
  Less brokered natural gas and marketing stock-based
  compensation
    (403 )     (389 )       (1,001 )     (1,040 )  
General and administrative, as reported   43,722       53,035         159,722       152,853    
  Less G&A stock-based compensation   (5,607 )     (9,959 )       (38,332 )     (35,156 )  
  Less lawsuit settlements   (53 )     (5,865 )       (1,385 )     (7,028 )  
Interest expense, as reported   54,801       49,179         161,048       144,206    
  Less amortization of deferred financing costs   (1,738 )     (1,813 )       (5,315 )     (5,385 )  
  Cash expenses   551,180       383,970         1,500,220       1,104,406    
                                   
Cash margin, a non-GAAP measure $ 259,440     $ 201,573       $ 820,732     $ 653,526    
                                   
Mmcfe produced during period   208,534       182,732         605,712       533,550    
                                   
Cash margin per mcfe $ 1.24     $ 1.10       $ 1.35     $ 1.22    
                                   
                                   
RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES TO CASH MARGIN                                  
(Unaudited, in thousands, except per unit data)                                  
  Three Months Ended
September 30,
      Nine Months Ended
  September 30,
   
    2018       2017         2018       2017    
                                   
Income (loss) before income taxes, as reported $ 72,676     $ (199,692 )     $   56,236     $ 210,015    
Adjustments to reconcile income (loss) before income taxes to cash margin:                                  
ARO settlements and other (gains) losses   (274 )     (1,972 )       (674 )     (1,802 )  
Derivative fair value loss (income)   34,591       88,426         151,890       (188,326 )  
Net cash receipts on derivative settlements   (34,922 )     16,857         (40,272 )     16,062    
Exploration expense   7,894       22,206         21,990       44,173    
Lawsuit settlements   53       5,865         1,385       7,028    
Termination costs   (336 )     (16 )       (373 )     2,384    
Deferred compensation plan   223       (9,203 )       (559 )     (36,838 )  
Stock-based compensation (direct operating, brokered natural gas
  and marketing, general and administrative and termination costs)
  6,952       11,395         42,527       41,020    
Interest – amortization of deferred financing costs   1,738       1,813         5,315       5,385    
Depletion, depreciation and amortization   164,266       159,749         487,558       462,074    
(Gain) loss on sale of assets   30       (102 )       (149 )     (23,509 )  
Impairment of proved property and other assets         63,679         22,614       63,679    
Abandonment and impairment of unproved properties   6,549       42,568         73,244       52,181    
Cash margin, a non-GAAP measure $ 259,440     $ 201,573       $ 820,732     $ 653,526    
                                   


RANGE RESOURCES CORPORATION

HEDGING POSITION AS OF September 30, 2018 – (Unaudited)  

          Daily Volume       Hedge Price  
  Gas  1                  
                     
  4Q 2018 Swaps       1,380,000 Mmbtu       $2.97  
                     
  4Q 2018 Sold Calls       70,000 Mmbtu         $3.10 2  
                     
  2019 Swaps       892,603 Mmbtu       $2.83  
                     
  2020 Swaps       10,000 Mmbtu       $2.75  
                     
                     
  Oil                  
                     
  4Q 2018 Swaps       8,500 bbls       $53.20  
                     
  2019 Swaps       7,000 bbls       $55.26  
                     
  2019 Collars       1,000 bbls       $63.00 x $73.03  
                     
  2020 Swaps       1,500 bbls       $60.63  
                     
                     
  C3 Propane 3                  
                     
  4Q 2018 Swaps       11,668 bbls       $0.74/gallon  
                     
  4Q 2018 Collars       5,000 bbls       $0.95 x $1.04/gallon  
                     
  1H 2019 Swaps       7,500 bbls       $0.92/gallon  
                     
  1Q 2019 Collars       6,500 bbls       $0.92 x $1.02/gallon  
                     
  C4 Normal Butane                  
                     
  4Q 2018 Swaps       5,500 bbls       $0.91/gallon  
                     
  1Q 2019 Swaps       2,250 bbls       $1.22/gallon  
                     
  C5 Natural Gasoline                  
                     
  4Q 2018 Swaps       5,402 bbls       $1.24/gallon  
                     
  2019 Swaps       2,178 bbls       $1.42/gallon  
                     
  1. Range also sold call swaptions of 345,000 Mmbtu/d for calendar 2019, and 160,000 Mmbtu/d for calendar 2020 at average strike prices of $2.97 and $2.81 per Mmbtu, respectively
  2. Sold Calls have an average deferred Premium of +$0.16 per Mmbtu
  3. Swaps incorporate international propane hedges

SEE WEBSITE FOR OTHER SUPPLEMENTAL INFORMATION FOR THE PERIODS AND ADDITIONAL HEDGING DETAILS

New Logo2.jpg

Powered by EIN News


EIN Presswire does not exercise editorial control over third-party content provided, uploaded, published, or distributed by users of EIN Presswire. We are a distributor, not a publisher, of 3rd party content. Such content may contain the views, opinions, statements, offers, and other material of the respective users, suppliers, participants, or authors.

Submit your press release