RRC
$3.96
Range Resources
($.40)
(9.17%)
Earnings Details
3rd Quarter September 2019
Wednesday, October 23, 2019 5:00:00 PM
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Summary

Range Resources Misses

Range Resources (RRC) reported a 3rd Quarter September 2019 loss of $0.07 per share on revenue of $622.4 million. The consensus estimate was a loss of $0.09 per share on revenue of $612.9 million. The Earnings Whisper number was for a loss of $0.06 per share. Revenue fell 23.3% compared to the same quarter a year ago.

Range Resources Corp is a Texas-based independent natural gas, natural gas liquids & Oil company engaged in the exploration, development and acquisition of primarily gas properties, in the Southwestern & Appalachian regions of the United States.

Results
Reported Earnings
($0.07)
Earnings Whisper
($0.06)
Consensus Estimate
($0.09)
Reported Revenue
$622.4 Mil
Revenue Estimate
$612.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Range Announces Third Quarter 2019 Results

FORT WORTH, Texas, Oct. 23, 2019 (GLOBE NEWSWIRE) -- RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its third quarter 2019 financial results. 

Highlights –

  • Sold 2.5% overriding royalty in southwest Appalachia leases for gross proceeds of $750 million
  • Total asset sales of approximately $1.1 billion in the last 12 months
  • Increased credit facility commitment from $2.0 billion to $2.4 billion in October
  • Expected 2019 capital spending reduced to $736 million, $20 million below budget
  • Board of Directors approved a $100 million share repurchase program, effective October 2019
  • Third quarter production averaged 2,244 Mmcfe per day
  • Third quarter cash unit costs of $2.02 per mcfe, an improvement of 7% since year-end 2018
  • Third quarter NGL differential of $0.29 below Mont Belvieu equivalent, best in recent Company history

Commenting on the quarter, Jeff Ventura, the Company’s CEO and President said, “In third quarter 2019, Range delivered on several initiatives: improving our cost structure, enhancing balance sheet strength and delivering on our operational plans for less capital than originally budgeted.  Our financial position has materially improved over the last year with over $1 billion in asset sales being put toward debt reduction.  Maintaining financial strength and flexibility is a core principle of Range’s strategy and the recent increase in bank commitments not only enhances liquidity but demonstrates the durability of Range’s assets and business.  While Range has made progress so far this year, we remain committed to positioning the Company for success through the commodity cycles.”

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 2019 Results

GAAP revenues for third quarter 2019 totaled $622 million, GAAP net cash provided from operating activities (including changes in working capital) was $104 million, and GAAP net income was a loss of $28 million ($0.11 per diluted share).  Third quarter earnings results include a $75 million derivative gain due to decreases in commodity prices and a $36 million loss related to asset sales.

Non-GAAP revenues for third quarter 2019 totaled $628 million, and cash flow from operations before changes in working capital, a non-GAAP measure, was $128 million.  Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was a loss of $18 million ($0.07 per diluted share) in third quarter 2019.

Capital Expenditures

Third quarter 2019 drilling and completion expenditures were $148 million.  In addition, during the quarter, $9 million was spent on acreage purchases and $1 million on gathering facilities.  Total capital expenditures year to date in 2019 were $576 million.  Range is reducing its expected 2019 capital spending by $20 million to $736 million as a result of continued efficiency gains, water savings, and service cost improvements.

Asset Sales and Bank Credit Facility

During the quarter, Range sold 2.5% proportionately reduced overriding royalty interests in 350,000 net surface acres in southwest Appalachia for gross proceeds totaling $750 million.  The royalty sales were effective as of March 1, 2019, and apply to existing and future Marcellus, Utica and Upper Devonian development on the subject leases.  Sale processes to monetize additional non-core assets remain underway. 

Separately during the third quarter, Range divested of certain legacy dry gas assets in Appalachia that were producing approximately 3 Mmcfe per day.  The divestiture is modestly accretive to cash flow.  Range maintains the rights to develop deeper horizons including Marcellus, Utica and Upper Devonian.

In October, the Company increased its credit facility commitment from $2.0 billion to $2.4 billion.

Repurchase Programs

Range repurchased and retired approximately $94 million in principal amount of its senior notes during the quarter for a total cash spend of approximately $90 million

Range’s Board of Directors approved the initiation of a $100 million equity repurchase program, beginning October 2019.  The share repurchase program will be executed at times deemed appropriate by the Company.

Third Quarter Unit Costs and Realized Pricing

The following table details Range’s unit cost trend since year-end 2018 (a):

Expenses 3Q 2019
($/Mcfe)
  2Q 2019
($/Mcfe)
  1Q 2019
($/Mcfe)
  4Q 2018
($/Mcfe)
            
Direct operating(a)$0.17 $0.16 $0.16 $0.18
Transportation, gathering, processing and compression 1.43  1.45  1.49  1.51
Production and ad valorem taxes 0.04  0.05  0.06  0.08
General and administrative(a) 0.16  0.18  0.18  0.16
Interest expense(a) 0.22  0.24  0.25  0.25
Total cash unit costs(b) 2.02  2.08  2.13  2.18
Depletion, depreciation and amortization (DD&A) 0.67  0.68  0.68  0.75
Total cash unit costs plus DD&A(b)$2.68 $2.76 $2.82 $2.93
            
(a)  Excludes stock-based compensation, legal settlements, rig release penalties, termination costs and amortization of deferred financing costs.
(b)  May not add due to rounding.
 

Third quarter 2019 cash unit costs totaled $2.02 per mcfe, an improvement of $0.16 per mcfe compared to fourth quarter 2018.  This improvement was primarily driven by lower transportation, gathering, processing and compression (GP&T), interest and production tax expenses per mcfe.  Range expects an additional 2% reduction in cash unit costs during fourth quarter 2019, primarily driven by additional improvements in GP&T and interest expense per mcfe.  Range anticipates further unit cost improvement in 2020 and beyond to be driven by lower GP&T, interest, and cash G&A per mcfe.


The following table details Range’s average production and realized pricing for third quarter 2019:

Net Production
 Natural Gas
(Mmcf/d)
 Oil (Bbl/d) NGLs
(Bbl/d)
 Natural Gas
Equivalent (Mmcfe/d)
    
        
 1,562 10,212 103,383 2,244
        


 Realized Pricing (a)
  Natural Gas
($/Mcf)
 Oil
($/Bbl)
 NGLs
($/Bbl)
 Natural Gas
Equivalent ($/Mcfe)
         
Average NYMEX price $2.23 $56.42    
Differential, including basis hedging (0.26) (6.84)    
Realized prices before NYMEX hedges 1.97 49.58 $15.06 $2.30
Settled NYMEX hedges 0.51  0.15   0.74   0.38
Average realized prices after hedges $2.48 $49.73 $15.80 $2.69
         
 (a)  May not add due to rounding        


Third quarter 2019 natural gas, NGLs and oil price realizations (including the impact of derivative settlements which correspond to analysts’ estimates) averaged $2.68 per mcfe.  Additional detail on commodity price realizations can be found in the Supplemental Tables provided on the Company’s website. 

  • The average natural gas price, including the impact of basis hedging, was $1.97 per mcf, or $0.26 per mcf below NYMEX.  Based on recent pricing, Range expects a fourth quarter 2019 differential of approximately $0.30 below NYMEX.
     
  • Pre-hedge NGL realizations were $15.06 per barrel, or $0.29 per barrel below to a Mont Belvieu weighted barrel, as shown on Supplemental Table 9 on the Company’s website.  The third quarter NGL differential to Mont Belvieu was the best in recent Company history.  Range expects to maintain a strong differential during fourth quarter 2019 as a result of access to international markets and its diversified portfolio of ethane contracts.
     
  • Crude oil and condensate price realizations, before realized hedges, averaged $49.58 per barrel, or $6.84 below West Texas Intermediate (WTI).  Range expects a fourth quarter 2019 oil and condensate pricing differential of approximately $7 below WTI.


Operational Discussion

NGL Marketing

During September and October, Sunoco performed optimization work at the Marcus Hook export terminal which is expected to result in more efficient transportation to end markets.  The upgrade required the Mariner East pipeline to experience downtime, and as a result of the outage, Range sold ethane volumes in its residue natural gas stream that would typically be transported via the Mariner East system. 

The value of exported barrels from the East Coast increased during the quarter, particularly in September after a Middle East oil disruption.  Range capitalized on the opportunity during the third quarter by utilizing both pipeline and rail access to export terminals.  Propane export values at the dock remain elevated and are currently estimated at $0.10 per gallon above the Mont Belvieu index.  The combination of ethane rejection and access to international markets for propane and butane led to the best quarterly NGL differential to Mont Belvieu that Range has realized in recent history.  Range resumed use of Mariner East ethane capacity in mid-October and expects another strong differential to Mont Belvieu in the fourth quarter of 2019.

Appalachia Division

Production for third quarter 2019 averaged approximately 2,042 net Mmcfe per day from the Appalachia division, a 3% increase over the prior-year third quarter.  Despite the third-party optimization work mentioned above, which impacted ethane recovery, the southwest area of the division averaged 1,945 net Mmcfe per day during third quarter 2019.  The northeast Marcellus properties averaged 97 net Mmcf per day inclusive of approximately 15 net Mmcf per day of legacy acreage production during third quarter 2019.

North Louisiana

Production for third quarter 2019 averaged approximately 202 net Mmcfe per day.  The division brought on line two wells during the quarter and expects to bring on line an additional well during the fourth quarter.

The table below summarizes estimated activity for 2019 regarding the number of wells to sales for each area. 

  Wells TIL
3Q 2019
 Wells TIL
1H 2019
 Calendar 2019
Planned TIL
 Remaining
4Q 2019
SW PA Super-Rich 8 11 19 0
SW PA Wet 8 8 36 20
SW PA Dry 6 20 33 7
Total Appalachia 22 39 88 27
         
Total N. LA. 2 5 8 1
Total 24 44 96 28
         


Guidance – 2019 

Production per day Guidance

Production for fourth quarter 2019 is expected to be ~2.33 to 2.35 Bcfe per day, which includes an approximately 25 Mmcfe per day impact from recent asset sales and ethane recovery. Full year 2019 production is expected to average ~2.28 Bcfe per day, which is in line with prior guidance, after incorporating asset sales and reduced ethane recovery in September and October. 

4Q 2019 Expense Guidance 

Direct operating expense:  $0.16 - $0.17 per mcfe
Transportation, gathering, processing and compression expense:  $1.40 - $1.42 per mcfe
Production tax expense:  $0.04 - $0.05 per mcfe
Exploration expense:  $7.0 - $9.0 million
Unproved property impairment expense:  $15.0 - $18.0 million
G&A expense:  $0.15 - $0.17 per mcfe
Interest expense:  $0.19 - $0.21 per mcfe
DD&A expense:  $0.67 - $0.70 per mcfe
Net brokered gas marketing expense:   ~$6.0 million

Price Guidance

Based on current market indications, Range expects to average the following pre-hedge differentials for fourth quarter 2019 production. 

 4Q 2019 Pricing Guidance
Natural Gas: (1)NYMEX minus $0.30
Natural Gas Liquids: (2)Mont Belvieu minus $0.60 to $0.80 per barrel
Oil/Condensate:WTI minus $6.00 to $8.00

(1) Including basis hedging
(2) Weighting based on 53% ethane, 27% propane, 7% normal butane, 4% iso-butane and 9% natural gasoline.


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 2019 natural gas production hedged at a weighted average floor price of $2.81 per Mmbtu.  Similarly, Range has hedged over 80% of its fourth quarter 2019 projected crude oil production at an average floor price of $56.78.  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 gain of $4.6 million as of September 30, 2019.  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 $3.3 million on September 30, 2019.  

Conference Call Information
A conference call to review the financial results is scheduled on Thursday, October 24 at 9:00 a.m. ET.  To participate in the call, please dial 866-900-7525 and provide conference code 9092535 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, 2019.

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 were historically 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 development 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 in this release 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

Media Contact:

Mark Windle, Manager of Corporate Communications
724-873-3223
mwindle@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, 
  2019   2018   %   2019   2018   % 
                        
Revenues and other income:                       
Natural gas, NGLs and oil sales (a)$474,754  $736,431      $1,709,987  $2,094,450     
Derivative fair value income/(loss) 74,676   (34,591)      208,190   (151,890)    
Brokered natural gas, marketing and other (b) 72,765   109,111       302,848   266,774     
ARO settlement (loss) gain (b) (11)         (11)  (12)    
Other (b) 261   274       997   686     
Total revenues and other income 622,445   811,225   -23%  2,222,011   2,210,008   1%
                        
Costs and expenses:                       
Direct operating 34,957   30,389       101,025   102,469     
Direct operating – non-cash stock-based compensation (c) 319   537       1,459   1,667     
Transportation, gathering, processing and compression  295,912   304,562       899,786   819,100     
Production and ad valorem taxes  7,805   9,427       29,004   29,493     
Brokered natural gas and marketing 79,416   115,677       311,837   273,420     
Brokered natural gas and marketing – non-cash stock-based compensation (c) 522   403       1,523   1,001     
Exploration 10,517   7,894       25,961   21,990     
Exploration – non-cash stock-based compensation (c)  496   405       1,372   1,527     
Abandonment and impairment of unproved properties  16,202   6,549       41,631   73,244     
General and administrative  32,626   37,812       107,425   121,255     
General and administrative – non-cash stock-based compensation (c) 8,423   5,607       27,561   38,332     
General and administrative – lawsuit settlements 139   53       2,035   1,385     
General and administrative – rig release penalty           1,436        
General and administrative – bad debt expense  (141)  250       (141)  (1,250)    
Termination costs 820   (336)      3,000   (373)    
Termination costs – non-cash stock-based compensation (c) (1)         25        
Deferred compensation plan (d) (8,871)  223       (16,432)  (559)    
Interest expense 45,202   53,063       144,873   155,733     
Interest expense – amortization of deferred financing costs (e) 1,795   1,738       5,388   5,315     
Gain on early extinguishment of debt  (2,985)         (2,985)       
Depletion, depreciation and amortization  137,751   164,266       417,974   487,558     
Impairment of proved property              22,614     
Loss/(gain) on sale of assets 36,341   30       30,663   (149)    
Total costs and expenses 697,245   738,549   -6%  2,134,420   2,153,772   -1%
                        
(Loss) income before income taxes (74,800)  72,676   -203%  87,591   56,236   56%
                        
Income tax (benefit) expense:                       
Current 4,079          4,079        
Deferred (51,298)  24,137       (5,511)  38,295     
  (47,219)  24,137       (1,432)  38,295     
                        
Net (loss) income$(27,581) $48,539   -157% $89,023  $17,941   396%
                        
Net (Loss) Income Per Common Share:                       
Basic$(0.11) $0.19      $0.35  $0.07     
Diluted$(0.11) $0.19      $0.35  $0.07     
                        
Weighted average common shares outstanding, as reported:                       
Basic 248,082   246,451   1%  247,878   246,016   1%
Diluted 248,082   247,166   0%  248,823   246,879   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.
(e)  Included in interest expense in the 10-Q.


RANGE RESOURCES CORPORATION

BALANCE SHEETS       
(In thousands) September 30,   December 31, 
  2019   2018 
  (Unaudited)   (Audited) 
Assets       
Current assets$275,439  $514,232 
Derivative assets 156,847   92,795 
Natural gas and oil properties, successful efforts method 8,295,570   9,023,185 
Transportation and field assets 6,311   9,776 
Operating lease right-of-use assets 47,214    
Other 72,818   68,166 
 $8,854,199  $9,708,154 
        
Liabilities and Stockholders’ Equity       
Current liabilities$550,424  $745,182 
Asset retirement obligations 5,485   5,485 
Derivative liabilities 1,521   4,144 
        
Bank debt 318,919   932,018 
Senior notes 2,766,322   2,856,166 
Senior subordinated notes 48,749   48,677 
Total debt 3,133,990   3,836,861 
        
Deferred tax liability 661,216   666,668 
Derivative liabilities 296   3,462 
Deferred compensation liability 58,329   67,542 
Asset retirement obligations and other liabilities 284,746   319,379 
        
Common stock and retained earnings   4,158,998   4,060,480 
Other comprehensive loss (478)  (658)
Common stock held in treasury stock (328)  (391)
Total stockholders’ equity 4,158,192   4,059,431 
 $8,854,199  $9,708,154 
        


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,
 
  2019   2018   %   2019   2018   % 
                        
Total revenues and other income, as reported$622,445  $811,225   -23% $2,222,011  $2,210,008   1%
Adjustment for certain special items:                       
Total change in fair value related to derivatives prior to settlement loss (gain) 5,332   (331)      (69,841)  111,618     
ARO settlement loss 11          11   12     
Total revenues, as adjusted, non-GAAP$627,788  $810,894   -23% $2,152,181  $2,321,638   -7%
                        


RANGE RESOURCES CORPORATION

CASH FLOWS FROM OPERATING ACTIVITIES               
(Unaudited in thousands)               
                
 Three Months Ended September 30,  Nine Months Ended September 30, 
  2019   2018   2019   2018 
                
Net (loss) income$(27,581) $48,539  $89,023  $17,941 
Adjustments to reconcile net cash provided from continuing operations:               
Deferred income tax (benefit) expense (51,298)  24,137   (5,511)  38,295 
Depletion, depreciation, amortization and impairment 137,751   164,266   417,974   510,172 
Exploration dry hole costs    2      4 
Abandonment and impairment of unproved properties 16,202   6,549   41,631   73,244 
Derivative fair value (income) loss (74,676)  34,591   (208,190)  151,890 
Cash settlements on derivative financial instruments that do not qualify for hedge accounting 80,008   (34,922)  138,349   (40,272)
Allowance for bad debts (141)  250   (141)  (1,250)
Amortization of deferred issuance costs, loss on extinguishment of debt, and other 1,619   1,787   4,862   4,163 
Deferred and stock-based compensation 683   7,085   14,410   41,252 
Loss (gain) on sale of assets and other 36,341   30   30,663   (149)
Gain on early extinguishment of debt (2,985)     (2,985)   
                
Changes in working capital:               
Accounts receivable 40,086   (35,288)  241,514   (49,713)
Inventory and other 1,011   (1,618)  (4,024)  (822)
Accounts payable (23,513)  (21,144)  (52,645)  (6,529)
Accrued liabilities and other (29,592)  35,168   (155,499)  36,721 
Net changes in working capital (12,008)  (22,882)  29,346   (20,343)
Net cash provided from operating activities$103,915  $229,432  $549,431  $774,947 
                
                
                
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, 
  2019   2018   2019   2018 
Net cash provided from operating activities, as reported$103,915  $229,432  $549,431  $774,947 
Net changes in working capital 12,008   22,882   (29,346)  20,343 
Exploration expense 10,517   7,892   25,961   21,986 
Lawsuit settlements 139   53   2,035   1,385 
Termination costs 820   (336)  3,000   (373)
Rig release penalty       1,436    
Non-cash compensation adjustment 392   41   1,635   1,880 
Cash flow from operations before changes in working capital – non-GAAP measure$127,791  $259,964  $554,152  $820,168 
                
                
                
ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING               
(Unaudited, in thousands)               
                
 Three Months Ended September 30,  Nine Months Ended September 30, 
  2019   2018   2019   2018 
Basic:               
Weighted average shares outstanding 251,408   249,482   250,995   249,131 
Stock held by deferred compensation plan (3,326)  (3,031)  (3,117)  (3,115)
Adjusted basic 248,082   246,451   247,878   246,016 
                
Dilutive:               
Weighted average shares outstanding 251,408   249,482   250,995   249,131 
Dilutive stock options under treasury method (3,326)  (2,316)  (2,172)  (2,252)
Adjusted dilutive 248,082   247,166   248,823   246,879 
                


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, 
  2019   2018   %   2019   2018   % 
Natural gas, NGL and oil sales components:                       
Natural gas sales$284,980  $390,656      $1,063,323  $1,182,580     
NGL sales 143,195   278,563       508,035   705,793     
Oil sales 46,579   67,212       138,629   206,077     
Total oil and gas sales, as reported$474,754  $736,431   -36 % $1,709,987  $2,094,450   -18%
                        
Derivative fair value income (loss), as reported:$74,676  $(34,591)     $208,190  $(151,890)    
Cash settlements on derivative financial instruments – (gain) loss:                       
Natural gas (72,809)  (5,845)      (92,333)  (56,466)    
NGLs (7,053)  28,023       (47,835)  63,435     
Crude Oil (146)  12,744       1,819   33,303     
Total change in fair value related to derivatives prior to settlement, a non-GAAP measure$(5,332) $331      $69,841  $(111,618)    
                        
Transportation, gathering, processing and compression components:                       
Natural gas$180,353  $176,271      $554,788  $497,569     
NGLs 115,559   128,291       344,998   321,531     
Total transportation, gathering, processing and compression, as reported$295,912  $304,562      $899,786  $819,100     
                        
Natural gas, NGL and oil sales, including cash-settled derivatives: (c)                       
Natural gas sales$357,789  $396,501      $1,155,656  $1,239,046     
NGL sales 150,248   250,540       555,870   642,358     
Oil sales 46,725   54,468       136,810   172,774     
Total$554,762  $701,509   -21 %  1,848,336   2,054,178   -10%
                        
Production of oil and gas during the periods (a):                       
Natural gas (mcf) 143,721,265   140,757,676   2 %  427,405,931   411,769,576   4%
NGL (bbl) 9,511,234   10,255,159   -7 %  28,971,049   29,009,100   0%
Oil (bbl) 939,541   1,040,891   -10 %  2,727,415   3,314,704   -18%
Gas equivalent (mcfe) (b) 206,425,915   208,533,976   -1 %  617,596,715   605,712,400   2%
                        
Production of oil and gas – average per day (a):                       
Natural gas (mcf) 1,562,188   1,529,975   0 %  1,565,589   1,508,313   4%
NGL (bbl) 103,383   111,469   (0)%  106,121   106,260   0%
Oil (bbl) 10,212   11,314   (0)%  9,991   12,142   -18%
Gas equivalent (mcfe) (b)  2,243,760   2,266,674   (0)%  2,262,259   2,218,727   2%
                        
Average prices, excluding derivative settlements and before third party transportation costs:                       
Natural gas (mcf)$1.98  $2.78   -29 % $2.49  $2.87   -13%
NGL (bbl)$15.06  $27.16   -45 % $17.54  $24.33   -28%
Oil (bbl)$49.58  $64.57   -23 % $50.83  $62.17   -18%
Gas equivalent (mcfe) (b)$2.30  $3.53   -35 % $2.77  $3.46   -20%
                        
Average prices, including derivative settlements before third party transportation costs: (c)                       
Natural gas (mcf)$2.49  $2.82   -12 % $2.70  $3.01   -10%
NGL (bbl)$15.80  $24.43   -35 % $19.19  $22.14   -13%
Oil (bbl)$49.73  $52.33   -5 % $50.16  $52.12   -4%
Gas equivalent (mcfe) (b)$2.69  $3.36   -20 % $2.99  $3.39   -12%
                        
Average prices, including derivative settlements and after third party transportation costs: (d)                       
Natural gas (mcf)$1.23  $1.56   -21 % $1.41  $1.80   -22%
NGL (bbl)$3.65  $11.92   -69 % $7.28  $11.06   -34%
Oil (bbl)$49.73  $52.33   -5 % $50.16  $52.12   -4%
Gas equivalent (mcfe) (b)$1.25  $1.90   -34 % $1.54  $2.04   -25%
                        
Transportation, gathering and compression expense per mcfe$1.43  $1.46   -2 % $1.46  $1.35   8%

(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, 
  2019   2018   %   2019   2018   % 
                        
(Loss) income from operations before income taxes, as reported$(74,800) $72,676   203% $87,591  $56,236   -56%
Adjustment for certain special items:                       
Loss (gain) on sale of assets 36,341   30       30,663   (149)    
Loss on ARO settlements 11          11   12     
Change in fair value related to derivatives prior to settlement 5,332   (331)      (69,841)  111,618     
Rig release penalty           1,436        
Abandonment and impairment of unproved properties 16,202   6,549       41,631   73,244     
Gain on early extinguishment of debt (2,985)         (2,985)       
Impairment of proved property              22,614     
Lawsuit settlements 139   53       2,035   1,385     
Termination costs 820   (336)      3,000   (373)    
Termination costs – non-cash stock-based compensation (1)         25        
Brokered natural gas and marketing – non-cash stock-based compensation 522   403       1,523   1,001     
Direct operating – non-cash stock-based compensation 319   537       1,459   1,667     
Exploration expenses – non-cash stock-based compensation 496   405       1,372   1,527     
General & administrative – non-cash stock-based compensation 8,423   5,607       27,561   38,332     
Deferred compensation plan – non-cash adjustment (8,871)  223       (16,432)  (559)    
                        
(Loss) income before income taxes, as adjusted (18,052)  85,816   -121%  109,049   306,555   -64%
                        
Income tax (benefit) expense, as adjusted                       
Current 4,079          4,079        
Deferred (a) (4,513)  21,869       27,279   79,617     
Net (loss) income excluding certain items, a non-GAAP measure$(17,618) $63,947   -128% $77,691  $226,938   -66%
                        
Non-GAAP (loss) income per common share                       
Basic$(0.07) $0.26   -127% $0.31  $0.92   -66%
Diluted$(0.07) $0.26   -127% $0.31  $0.92   -66%
                        
Non-GAAP diluted shares outstanding, if dilutive 248,082   247,166       248,823   246,879     
                        

(a)  Deferred taxes are estimated to be approximately 25% for 2019 and 26% for 2018.

    

RANGE RESOURCES CORPORATION

RECONCILIATION OF NET (LOSS) INCOME, 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,
  
  2019   2018    2019   2018  
                  
Net (loss) income, as reported$(27,581) $48,539   $89,023  $17,941  
Adjustment for certain special items:                 
Loss (gain) on sale of assets 36,341   30    30,663   (149) 
Loss on ARO settlements 11       11   12  
Gain on early extinguishment of debt (2,985)      (2,985)    
Change in fair value related to derivatives prior to settlement 5,332   (331)   (69,841)  111,618  
Impairment of proved property           22,614  
Abandonment and impairment of unproved properties 16,202   6,549    41,631   73,244  
Lawsuit settlements 139   53    2,035   1,385  
Rig release penalty        1,436     
Termination costs 820   (336)   3,000   (373) 
Non-cash stock-based compensation 9,759   6,952    31,940   42,527  
Deferred compensation plan (8,871)  223    (16,432)  (559) 
Tax impact (46,785)  2,268    (32,790)  (41,322) 
                  
Net (loss) income excluding certain items, a non-GAAP measure$(17,618) $63,947   $77,691  $226,938  
                  
Net (loss) income per diluted share, as reported$(0.11) $0.19   $0.35  $0.07  
Adjustment for certain special items per diluted share:                 
Loss (gain) on sale of assets 0.15   0.00    0.12   (0.00) 
Loss on ARO settlements 0.00       0.00   0.00  
Gain on early extinguishment of debt (0.01)      (0.01)    
Change in fair value related to derivatives prior to settlement 0.02   (0.00)   (0.28)  0.45  
Impairment of proved property           0.09  
Abandonment and impairment of unproved properties 0.07   0.03    0.17   0.30  
Lawsuit settlements 0.00   0.00    0.01   0.01  
Termination costs 0.00   (0.00)   0.01   (0.00) 
Non-cash stock-based compensation 0.04   0.03    0.13   0.17  
Deferred compensation plan (0.04)  0.00    (0.07)  (0.00) 
Adjustment for rounding differences        0.01     
Tax impact (0.19)  0.01    (0.13)  (0.17) 
                  
Net (loss) income per diluted share, excluding certain items, a non-GAAP measure$(0.07) $0.26   $0.31  $0.92  
                  
Adjusted earnings per share, a non-GAAP measure:                 
Basic$(0.07) $0.26   $0.31  $0.92  
Diluted$(0.07) $0.26   $0.31  $0.92  
                  


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,
 
  2019   2018   2019   2018 
                
Revenues               
Natural gas, NGL and oil sales, as reported$474,754  $736,431  $1,709,987  $2,094,450 
Derivative fair value income (loss), as reported 74,676   (34,591)  208,190   (151,890)
Less non-cash fair value loss (gain) 5,332   (331)  (69,841)  111,618 
Brokered natural gas and marketing and other, as reported 73,015   109,385     303,834   267,448 
Less ARO settlement and other (gains) (250)  (274)  (986)  (674)
Cash revenue applicable to production 627,527   810,620   2,151,184   2,320,952 
                
Expenses               
Direct operating, as reported 35,276   30,926   102,484   104,136 
Less direct operating stock-based compensation (319)  (537)  (1,459)  (1,667)
Transportation, gathering and compression, as reported 295,912   304,562   899,786   819,100 
Production and ad valorem taxes, as reported 7,805   9,427   29,004   29,493 
Brokered natural gas and marketing, as reported 79,938   116,080   313,360   274,421 
Less brokered natural gas and marketing stock-based compensation   (522)  (403)  (1,523)  (1,001)
General and administrative, as reported 41,047   43,722   138,316   159,722 
Less G&A stock-based compensation (8,423)  (5,607)  (27,561)  (38,332)
Less lawsuit settlements (139)  (53)  (2,035)  (1,385)
Less rig release penalty       (1,436)   
Interest expense, as reported 46,997   54,801   150,261   161,048 
Less amortization of deferred financing costs (1,795)  (1,738)  (5,388)  (5,315)
Cash expenses 495,777   551,180   1,593,809   1,500,220 
                
Cash margin, a non-GAAP measure$131,750  $259,440  $557,375  $820,732 
                
Mmcfe produced during period 206,426   208,534   617,597   605,712 
                
Cash margin per mcfe$0.64  $1.24  $0.90  $1.35 
                
                
RECONCILIATION OF (LOSS) INCOME BEFORE INCOME TAXES TO CASH MARGIN               
(Unaudited, in thousands, except per unit data)               
 Three Months Ended
September 30,
  Nine Months Ended
  September 30,
 
  2019   2018   2019   2018 
                
(Loss) income before income taxes, as reported$(74,800) $72,676  $  87,591  $56,236 
Adjustments to reconcile (loss) income before income taxes to cash margin:               
ARO settlements and other (gains) (250)  (274)  (986)  (674)
Derivative fair value (income) loss (74,676)  34,591   (208,190)  151,890 
Net cash receipts on derivative settlements 80,008   (34,922)  138,349   (40,272)
Exploration expense 10,517   7,894   25,961   21,990 
Lawsuit settlements 139   53   2,035   1,385 
Rig release penalty       1,436    
Termination costs 820   (336)  3,000   (373)
Deferred compensation plan (8,871)  223   (16,432)  (559)
Stock-based compensation (direct operating, brokered natural gas and marketing, general and administrative and termination costs) 9,759   6,952   31,940   42,527 
Interest – amortization of deferred financing costs 1,795   1,738   5,388   5,315 
Depletion, depreciation and amortization 137,751   164,266   417,974   487,558 
Loss (gain) on sale of assets 36,341   30   30,663   (149)
Gain on early extinguishment of debt (2,985)     (2,985)   
Impairment of proved property and other assets          22,614 
Abandonment and impairment of unproved properties 16,202   6,549   41,631   73,244 
Cash margin, a non-GAAP measure$131,750  $259,440  $557,375  $820,732 
                


RANGE RESOURCES CORPORATION

HEDGING POSITION AS OF September 30, 2019 – (Unaudited)  

   Daily Volume  Hedge Price
 Gas 1     
       
 4Q 2019 Swaps 1,421,739 Mmbtu  $2.82
       
 2020 Swaps 821,776 Mmbtu  $2.66
       
 2021 Swaps 30,000 Mmbtu  $2.70
       
       
 Oil 2     
       
 4Q 2019 Collars 1,000 bbls  $63 x 73
       
 4Q 2019 Swaps 9,168 bbls  $56.11
       
 2020 Swaps 7,240 bbls  $58.42
       
 2021 Swaps 1,000 bbls  $55.00
       
       
 Natural Gas Liquids      
       
 4Q 2019 C3 Swaps 500 bbls  $0.525 /gallon
       
 4Q 2019 NC4 Swaps 1,000 bbls  $0.60 /gallon
       
 4Q 2019 iC4 Swaps 168 bbls  $0.75 /gallon
       
 4Q 2019 C5 Swaps 5,500 bbls  $1.296/gallon
       
(1) Range also sold natural gas call swaptions of 250,000 Mmbtu/d for calendar 2020, and 80,000 Mmbtu/d for calendar 2021 at average strike prices of $2.80 and $2.73 per Mmbtu, respectively.
(2) Range also sold WTI calls of 500 Bbls/d for 2Q-3Q 2020 at a strike price of $59 per Bbl and WTI call swaptions of 2,000 Bbls/d for calendar 2021 at an average strike price of $56 per Bbl.
  

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

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Source: Range Resources Corporation