RRC
$6.01
Range Resources
$.24
4.16%
Earnings Details
1st Quarter March 2020
Thursday, April 30, 2020 5:30:00 PM
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Summary

Range Resources Beats

Range Resources (RRC) reported 1st Quarter March 2020 earnings of $0.04 per share on revenue of $693.9 million. The consensus estimate was a loss of $0.02 per share on revenue of $595.4 million. The Earnings Whisper number was for a loss of $0.03 per share. Revenue fell 7.2% 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
$0.04
Earnings Whisper
($0.03)
Consensus Estimate
($0.02)
Reported Revenue
$693.9 Mil
Revenue Estimate
$595.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Range Announces First Quarter 2020 Financial Results

FORT WORTH, Texas, April 30, 2020 (GLOBE NEWSWIRE) -- RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its first quarter 2020 financial results. 

First Quarter Highlights –

  • GAAP cash flow provided from operating activities of $125 million, and non-GAAP cash flow of $125 million
  • GAAP net income of $145 million ($0.58 per diluted share), and non-GAAP net income of $10 million ($0.04 per diluted share)
  • Cash unit costs of $1.93 per mcfe, an improvement of $0.20 per mcfe versus prior-year period
  • Natural gas differentials, including basis hedging, averaged $0.12 per mcf below NYMEX
  • NGL differential of $1.30 per barrel above Mont Belvieu, best in recent Company history
  • In January, issued $550 million senior notes due 2026, with proceeds used to redeem $500 million senior notes due 2021 and 2022
  • In March, Range’s $3.0 billion borrowing base and $2.4 billion elected commitment were reaffirmed
  • Production averaged 2,294 Mmcfe per day, approximately 70% natural gas
  • Southwest Pennsylvania production increased 7% over the prior-year period to 2,042 Mmcfe per day

Commenting on the quarter, Jeff Ventura, the Company’s CEO said, “The Range team has met the unique challenges of working through this pandemic with dedication and compassion, making sure that our business plans remains on track, while prioritizing health and safety.   Range continues to make steady progress on key near-term objectives: improving our cost structure, bolstering liquidity, and operating safely while maintaining peer-leading capital efficiency.  These efforts have positioned Range to successfully navigate the current commodity environment and benefit from an improved outlook for natural gas and natural gas liquids, particularly given Range’s peer-leading drilling inventory.”

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.

First Quarter 2020

GAAP revenues for first quarter 2020 totaled $694 million, GAAP net cash provided from operating activities (including changes in working capital) was $125 million, and GAAP net income was $145 million ($0.58 per diluted share).  First quarter earnings results include a gain on asset sales of $122 million and a $233 million derivative fair value gain due to decreases in commodity prices.

Non-GAAP revenues for first quarter 2020 totaled $561 million, and cash flow from operations before changes in working capital, a non-GAAP measure, was $125 million.  Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $10 million ($0.04 per diluted share) in first quarter 2020.

The following table details Range’s average production and realized pricing for first quarter 2020:

 1Q20 Production & Realized Pricing
  Natural Gas
(Mcf)
 NGLs (Bbl) Oil
(Bbl)
 Natural Gas
Equivalent (Mcfe)
    
         
Net Production per day 1,601,765 105,858 9,542 2,294,160
         
Average NYMEX price $1.95   $47.11  
Differential, including basis hedging   (0.12)     (6.10)  
Realized prices before NYMEX hedges   1.83 $  14.87   41.01  
Settled NYMEX hedges   0.45   1.04    11.19  
Average realized prices after hedges (a) $ 2.29 $ 15.91 $ 52.20 $ 2.55









(a)    May not add due to rounding.

First quarter 2020 natural gas, NGLs and oil price realizations (including the impact of derivative settlements which correspond to analysts’ estimates) averaged $2.55 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 $1.83 per mcf, or a ($0.12) per mcf differential to NYMEX.  First quarter natural gas differentials benefit from capacity to premium northeast markets in the winter months and Range’s ability to hedge those basis locations.
     
  • Pre-hedge NGL realizations were $14.87 per barrel, or $1.30 per barrel premium to the Mont Belvieu weighted barrel, as shown on Supplemental Table 9 on the Company’s website.  Range continues to improve on its NGL pricing versus benchmarks, as the first quarter differential to Mont Belvieu was another best in recent Company history.  Range expects to maintain a strong NGL differential during 2020 as a result of access to international markets and its diversified portfolio of sales agreements.
     
  • Crude oil and condensate price realizations, before realized hedges, averaged $41.01 per barrel, or $6.10 below WTI (West Texas Intermediate).

Unit Costs

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

Expenses 1Q 2020
($/Mcfe)
  1Q 2019
($/Mcfe)
   Increase
 (Decrease)
         
Direct operating(a)$0.15 $0.16  (6%)
Transportation, gathering, processing and compression 1.36  1.49  (9%)
Production and ad valorem taxes 0.04  0.06  (33%)
General and administrative(a) 0.16  0.18  (11%)
Interest expense(a) 0.22  0.25  (12%)
Total cash unit costs(b) 1.93  2.13  (9%)
Depletion, depreciation and amortization (DD&A) 0.49  0.68  (28%)
Total unit costs plus DD&A(b)$2.43 $2.81  (14%)










(a)Excludes stock-based compensation, legal settlements and amortization of deferred financing costs.
(b)May not add due to rounding.

Capital Expenditures

First quarter 2020 drilling and completion expenditures were $124 million.  In addition, during the quarter, $4.1 million was spent on acreage and $2.0 million on gathering systems.  Range remains on track to spend at or below its reduced total capital budget of $430 million for 2020.

Financial Position and Buyback Activity

Range’s $3.0 billion borrowing base and $2.4 billion commitment amount were reaffirmed during first quarter 2020 with no changes to financial covenants.  The credit facility matures on April 13, 2023 and is subject to semi-annual redeterminations. The Company had over $1.5 billion of borrowing capacity under the current commitment amount at the end of the first quarter.

In January 2020, Range issued $550 million aggregate principal amount of 9.25% senior notes due 2026.  On the closing of the senior notes, proceeds were used to redeem $500 million aggregate principal amount of the Company’s senior notes due 2021 and senior notes due 2022, which was completed in February 2020.  Also announced in January, the Company suspended its dividend, which was approximately $20 million annually, to prioritize debt reduction. 

Range repurchased and retired approximately $111 million in principal amount of its senior notes during the first quarter at an average weighted discount to par of 28%.  Range also repurchased eight million shares of the Company’s common stock during the first quarter at an average price of $2.80 per share.  At the end of the quarter, Range had approximately $71 million remaining on the Company’s $100 million share repurchase program.  

Operational Discussion

The table below summarizes estimated activity for 2020 regarding the number of wells to sales for each area. 

   Wells TIL
1Q 2020
 Calendar 2020
Planned TIL
 Remaining
2020
SW PA Super-Rich  0 3 3
SW PA Wet  12 31 19
SW PA Dry  8 33 25
Total Wells  20 67 47






Production by Area

Total production for first quarter 2020 averaged approximately 2,294 net Mmcfe per day.   The southwest Appalachia area averaged 2,042 net Mmcfe per day during the quarter, a 7% increase over first quarter 2019.  The northeast Marcellus properties averaged 86 net Mmcf per day, including approximately 9 net Mmcf per day of legacy acreage production that was sold in March.  North Louisiana production during first quarter 2020 averaged approximately 166 net Mmcfe per day. 

Marketing and Transportation

Range’s liquids marketing continued to expand premiums relative to Mont Belvieu pricing, with first quarter NGL realizations averaging a $1.30 premium.  The portfolio of domestic and international ethane contracts performed very well during the quarter and generated a significant uplift relative to Mont Belvieu while propane and butane markets benefited from an increase in Marcus Hook export premiums.  As the quarter progressed, propane fundamentals improved despite a warmer than average winter.  The improvements were driven by decreasing domestic propane production which fell over 400,000 barrels per day from the end of last year.  Given the significant reduction in U.S. drilling activity announced over the past several weeks, Range expects decreases in natural gas and NGL supply to accelerate as the year continues and into 2021.  Range also expects to benefit from strong export realizations this year with a 15,000 barrel per day increase in Mariner East 2 pipeline and dock capacity that became operational April 1st.

Condensate sales and pricing were strong during the first quarter, as Range’s differential was ($6.10) below WTI.  However, entering second quarter, demand for gasoline and jet fuel have been directly impacted by COVID-19 related reductions in vehicle and air travel.  While Range anticipates some second quarter weakness in condensate pricing, the Company’s diverse portfolio of condensate counterparties with sales contracted on monthly, quarterly, and annual bases helps shield the majority of production from the spot market.  Range continues to expect annual condensate differentials to be WTI minus $7 - $8 per barrel, and Range’s strong WTI hedge protection in the form of swaps serve to mitigate the financial impacts from lower prices.  

Range had a natural gas differential of ($0.12) during the first quarter, including the benefit of basis hedging.  The Company’s transportation portfolio provides access to premium winter markets for natural gas in the Midwest and Northeast, and while an 11% warmer than normal winter caused those markets to realize lower than normal premiums, Range’s basis hedging activity captured a large portion of a higher priced market during last November’s early cold weather.   As a result, Range remains on track with its differential to NYMEX guidance of ($0.20) - ($0.26) for the year.    

The Range marketing team continues to maximize the utilization of the Company’s existing production infrastructure, which resulted in gathering, processing and compression (GP&T) expense, improving to $1.36 per mcfe in the first quarter.   Due to optimized planning efforts and the efficient utilization of Range’s GP&T portfolio, coupled with lower processing costs and contract renegotiations, the Company is improving its full-year transportation, gathering, processing and compression expense guidance to $1.37 to $1.40 per mcfe.

Guidance – 2020 

Production per day Guidance

Production for full-year 2020 is expected to average approximately 2.3 Bcfe per day, with ~70% natural gas production.

Full Year 2020 Expense Guidance 

Direct operating expense:$0.14 - $0.16 per mcfe
Transportation, gathering, processing and compression expense:$1.37 - $1.40 per mcfe
Production tax expense:$0.04 - $0.05 per mcfe
Exploration expense:$30.0 - $38.0 million
G&A expense:$0.14 - $0.16 per mcfe
Interest expense:$0.22 - $0.24 per mcfe
DD&A expense:$0.48 - $0.52 per mcfe
Net brokered gas marketing expense:$10.0 - $16.0 million







Full Year 2020 Price Guidance

Based on current market indications, Range expects to average the following price differentials for its production in 2020. 

Natural Gas:(1)NYMEX minus $0.20 to $0.26
Natural Gas Liquids (including ethane):(2)Mont Belvieu plus $0.50 to $1.50 per barrel
Oil/Condensate:WTI minus $7.00 to $8.00 per barrel




(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 to increase the predictability of cash flow and to help maintain a more flexible financial position.  Range has over 70% of its remaining 2020 natural gas production hedged at a weighted average floor price of $2.57 per Mmbtu.  Similarly, Range has hedged over 80% of its remaining 2020 projected crude oil production at an average floor price of $58.22.  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 basis hedges was a gain of $4.8 million as of March 31, 2020.  The Company also has propane basis swap contracts and freight swaps which lock in the differential between Mont Belvieu and international propane indices.  The combined fair value of these contracts was a loss of $4.0 million on March 31, 2020.  

Conference Call Information

A conference call to review the financial results is scheduled on Friday, May 1 at 9:00 a.m. ET.  A webcast of the call may be accessed at www.rangeresources.com. The webcast will be archived for replay on the Company's website until June 1, 2020.

To participate in the call, dial 877-928-8777 and provide conference code 4828938 about 15 minutes prior to the scheduled start time.

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 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

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

Range Media Contacts:

Mark Windle, Manager of Corporate Communications
724-873-3223
mwindle@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 March 31,
 2020 2019  %
Revenues and other income:           
Natural gas, NGLs and oil sales (a)$432,096  $671,654     
Derivative fair value (loss)/income 233,175   (61,731)    
Brokered natural gas, marketing and other (b) 28,389   138,143     
Other (b) 260   71     
Total revenues and other income 693,920   748,137   -7%
            
Costs and expenses:           
Direct operating 31,585   32,636     
Direct operating – non-cash stock-based compensation (c) 450   591     
Transportation, gathering, processing and compression  284,765   302,655     
Production and ad valorem taxes  9,019   11,310     
Brokered natural gas and marketing 32,211   131,857     
Brokered natural gas and marketing – non-cash
  stock-based compensation (c)
 413   448     
Exploration 6,747   7,723     
Exploration – non-cash stock-based compensation (c)  330   488     
Abandonment and impairment of unproved properties  5,413   12,659     
General and administrative  33,010   36,294     
General and administrative – non-cash stock-based
  compensation (c)
 8,029   9,638     
General and administrative – lawsuit settlements 815   706     
General and administrative – bad debt expense 400        
Termination costs 1,595        
Deferred compensation plan (d) (8,537)  3,581     
Interest expense 45,457   49,749     
Interest expense – amortization of deferred financing costs (e) 2,061   1,788     
Gain on early extinguishment of debt (12,923)       
Depletion, depreciation and amortization  102,986   138,718     
Impairment of proved properties 77,000        
(Gain) loss on sale of assets (122,099)  189     
Total costs and expenses 498,727   741,030   -33%
            
Income before income taxes 195,193   7,107   2646%
            
Income tax expense (benefit):           
Current (363)       
Deferred 50,581   5,688     
  50,218   5,688     
            
Net income$144,975  $1,419   10117%
            
Net Income Per Common Share:           
Basic$0.58  $0.01     
Diluted$0.58  $0.01     
            
Weighted average common shares outstanding, as reported:           
Basic 246,218   247,776   1%
Diluted 247,684   249,154   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.
  


BALANCE SHEETS       
(In thousands) March 31,   December 31, 
  2020   2019 
  (Unaudited)   (Audited) 
Assets       
Current assets$209,770  $290,954 
Derivative assets 263,555   137,554 
Natural gas and oil properties, successful efforts method 5,989,967   6,041,035 
Transportation and field assets 5,394   5,375 
Operating lease right-of-use assets 56,412   62,053 
Other 64,540   75,432 
 $6,589,638  $6,612,403 
        
Liabilities and Stockholders’ Equity       
Current liabilities$487,732  $551,032 
Asset retirement obligations 2,393   2,393 
Derivative liabilities    13,119 
        
Bank debt 545,270   464,319 
Senior notes 2,592,960   2,659,844 
Senior subordinated notes 48,799   48,774 
Total debt 3,187,029   3,172,937 
        
Deferred tax liability 210,803   160,196 
Derivative liabilities 6,823   949 
Deferred compensation liability 46,411   64,070 
Operating lease liabilities 36,768   41,068 
Asset retirement obligations and other liabilities 137,091   259,151 
        
Common stock and retained earnings 2,505,053   2,355,512 
Other comprehensive loss (715)  (788)
Common stock held in treasury stock (29,750)  (7,236)
Total stockholders’ equity 2,474,588   2,347,488 
 $6,589,638  $6,612,403 
 


RECONCILIATION OF TOTAL REVENUES AND OTHER INCOME TO TOTAL REVENUE EXCLUDING CERTAIN ITEMS, a non-GAAP measure 
(Unaudited, in thousands) 
 Three Months Ended March 31,
 2020 2019 %
            
Total revenues and other income, as reported$693,920  $748,137   -7%
Adjustment for certain special items:           
Total change in fair value related to derivatives prior to settlement (gain) loss (133,246)  86,565     
Total revenues, as adjusted, non-GAAP$560,674  $834,702   -33%
 


CASH FLOWS FROM OPERATING ACTIVITIES       
(Unaudited in thousands)       
        
 Three Months Ended March 31, 
  2020   2019 
        
Net income$144,975  $1,419 
Adjustments to reconcile net cash provided from continuing operations:       
Deferred income tax expense 50,581   5,688 
Depletion, depreciation, amortization and impairment 179,986   138,718 
Abandonment and impairment of unproved properties 5,413   12,659 
Derivative fair value (income) loss (233,175)  61,731 
Cash settlements on derivative financial instruments 99,929   24,834 
Allowance for bad debts 400    
Amortization of deferred issuance costs and other 1,657   1,807 
Deferred and stock-based compensation 476   14,112 
(Gain) loss on sale of assets and other (122,099)  189 
Gain on early extinguishment of debt (12,923)   
        
Changes in working capital:       
Accounts receivable 84,345   134,006 
Inventory and other (4,432)  (4,763)
Accounts payable 18,660   (30,431)
Accrued liabilities and other (89,287)  (99,275)
Net changes in working capital 9,286   (463)
Net cash provided from operating activities$124,506  $260,694 
        
        
        
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 March 31,
  2020   2019 
Net cash provided from operating activities, as reported$124,506  $260,694 
Net changes in working capital (9,286)  463 
Exploration expense 6,747   7,723 
Lawsuit settlements 815   706 
Termination costs 1,595    
Non-cash compensation adjustment 613   615 
Cash flow from operations before changes in working capital – non-GAAP measure$124,990  $270,201 
        
        
        
ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING       
(Unaudited, in thousands)       
        
 Three Months Ended March 31,
  2020   2019 
Basic:       
Weighted average shares outstanding 249,409   250,320 
Stock held by deferred compensation plan (3,191)  (2,544)
Adjusted basic 246,218   247,776 
        
Dilutive:       
Weighted average shares outstanding 249,409   250,320 
Dilutive stock options under treasury method (1,725)  (1,166)
Adjusted dilutive 247,684   249,154 
        


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 March 31, 
 2020 2019 %
Natural gas, NGL and oil sales components:           
Natural gas sales$253,249  $434,720     
NGL sales 143,239   197,813     
Oil sales 35,608   39,121     
Total oil and gas sales, as reported$432,096  $671,654   -36%
            
Derivative fair value income (loss), as reported:$233,175  $(61,731)    
Cash settlements on derivative financial instruments – (gain) loss:           
Natural gas (80,172)  872     
NGLs (10,043)  (24,864)    
Crude Oil (9,714)  (842)    
Total change in fair value related to derivatives prior to settlement, a
non-GAAP measure
$133,246  $(86,565)    
            
Transportation, gathering, processing and compression components:           
Natural gas$169,841  $189,082     
NGLs 114,924   113,573     
Total transportation, gathering, processing and compression, as reported$284,765  $302,655     
            
Natural gas, NGL and oil sales, including cash-settled derivatives: (c)           
Natural gas sales$333,421  $433,848     
NGL sales 153,282   222,677     
Oil sales 45,322   39,963     
Total$532,025  $696,488   -24%
            
Production of oil and gas during the periods (a):           
Natural gas (mcf) 145,760,592   140,521,663   4%
NGL (bbl) 9,633,035   9,612,547   -%
Oil (bbl) 868,297   805,550   8%
Gas equivalent (mcfe) (b) 208,768,584   203,030,245   3%
            
Production of oil and gas – average per day (a):           
Natural gas (mcf) 1,601,765   1,561,352   3%
NGL (bbl) 105,858   106,806   -1%
Oil (bbl) 9,542   8,951   7%
Gas equivalent (mcfe) (b)  2,294,160   2,255,892   2%
            
Average prices, excluding derivative settlements and before third party
transportation costs:
           
Natural gas (mcf)$1.74  $3.09   -44%
NGL (bbl)$14.87  $20.58   -28%
Oil (bbl)$41.01  $48.56   -16%
Gas equivalent (mcfe) (b)$2.07  $3.31   -37%
            
Average prices, including derivative settlements before third party
transportation costs: (c)
           
Natural gas (mcf)$2.29  $3.09   -26%
NGL (bbl)$15.91  $23.17   -31%
Oil (bbl)$52.20  $49.61   5%
Gas equivalent (mcfe) (b)$2.55  $3.43   -26%
            
Average prices, including derivative settlements and after third party
transportation costs: (d)
           
Natural gas (mcf)$1.12  $1.74   -36%
NGL (bbl)$3.98  $11.35   -65%
Oil (bbl)$52.20  $49.61   5%
Gas equivalent (mcfe) (b)$1.18  $1.94   -39%
            
Transportation, gathering and compression expense per mcfe$1.36  $1.49   -8%


(a)Represents volumes sold regardless of when produced.
(b)Oil and NGL volumes 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.
  


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 March 31, 
 2020 2019  %
            
Income from operations before income taxes, as reported$195,193  $7,107   2646%
Adjustment for certain special items:           
(Gain) loss on sale of assets (122,099)  189     
Change in fair value related to derivatives prior to settlement (133,246)  86,565     
Abandonment and impairment of unproved properties 5,413   12,659     
Gain on early extinguishment of debt (12,923)       
Impairment of proved property 77,000        
Lawsuit settlements 815   706     
Termination costs 1,595        
Brokered natural gas and marketing – non-cash stock-based
compensation
 413   448     
Direct operating – non-cash stock-based compensation 450   591     
Exploration expenses – non-cash stock-based compensation 330   488     
General & administrative – non-cash stock-based compensation 8,029   9,638     
Deferred compensation plan – non-cash adjustment (8,537)  3,581     
            
Income before income taxes, as adjusted 12,433   121,972   -90%
            
Income tax expense (benefit), as adjusted           
Current (363)       
Deferred (a) 3,108   30,510     
Net income excluding certain items, a non-GAAP measure$9,688  $91,462   -89%
            
Non-GAAP income per common share           
Basic$0.04  $0.37   -89%
Diluted$0.04  $0.37   -89%
            
Non-GAAP diluted shares outstanding, if dilutive 247,684   249,154     

(a)  Deferred taxes are estimated to be approximately 25% for 2020 and 2019.

    

RECONCILIATION OF NET INCOME (LOSS), EXCLUDING
CERTAIN ITEMS AND ADJUSTED EARNINGS PER SHARE, non-GAAP measures
       
(In thousands, except per share data)       
 Three Months Ended
March 31,
 
  2020   2019 
        
Net income, as reported$144,975  $1,419 
Adjustment for certain special items:       
(Gain) loss on sale of assets (122,099)  189 
Gain on early extinguishment of debt (12,923)   
Change in fair value related to derivatives prior to settlement   (133,246)  86,565 
Impairment of proved property 77,000    
Abandonment and impairment of unproved properties 5,413   12,659 
Lawsuit settlements 815   706 
Termination costs 1,595    
Non-cash stock-based compensation 9,222   11,165 
Deferred compensation plan (8,537)  3,581 
Tax impact 47,473   (24,822)
        
Net income excluding certain items, a non-GAAP measure$9,688  $91,462 
        
Net income per diluted share, as reported$0.58  $0.01 
Adjustment for certain special items per diluted share:       
(Gain) loss on sale of assets (0.48)  0.00 
Gain on early extinguishment of debt (0.05)   
Change in fair value related to derivatives prior to settlement (0.53)  0.35 
Impairment of proved property 0.30    
Abandonment and impairment of unproved properties 0.02   0.05 
Lawsuit settlements 0.00   0.00 
Termination costs 0.01    
Non-cash stock-based compensation 0.04   0.04 
Deferred compensation plan (0.03)  0.01 
Adjustment for rounding differences (0.01)  0.01 
Tax impact 0.19   (0.10)
        
Net income per diluted share, excluding certain items, a non-
  GAAP measure
$0.04  $0.37 
        
Adjusted earnings per share, a non-GAAP measure:       
Basic$0.04  $0.37 
Diluted$0.04  $0.37 
        


RECONCILIATION OF CASH MARGIN PER MCFE, a non-GAAP measure       
(Unaudited, in thousands, except per unit data)       
 Three Months Ended
March 31,
 
  2020   2019 
        
Revenues       
Natural gas, NGL and oil sales, as reported$432,096  $671,654 
Derivative fair value income (loss), as reported 233,175   (61,731)
Less non-cash fair value (gain) loss (133,246)  86,565 
Brokered natural gas and marketing and other, as reported 28,649   138,214 
Less ARO settlement and other (gains) losses (260)  (71)
Cash revenue applicable to production 560,414   834,631 
        
Expenses       
Direct operating, as reported 32,035   33,227 
Less direct operating stock-based compensation (450)  (591)
Transportation, gathering and compression, as reported 284,765   302,655 
Production and ad valorem taxes, as reported 9,019   11,310 
Brokered natural gas and marketing, as reported 32,624   132,305 
Less brokered natural gas and marketing stock-based
compensation
   (413)  (448)
General and administrative, as reported 42,254   46,638 
Less G&A stock-based compensation (8,029)  (9,638)
Less lawsuit settlements (815)  (706)
Interest expense, as reported 47,518   51,537 
Less amortization of deferred financing costs (2,061)  (1,788)
Cash expenses 436,447   564,501 
        
Cash margin, a non-GAAP measure$123,967  $270,130 
        
Mmcfe produced during period 208,769   203,030 
        
Cash margin per mcfe$0.59  $1.33 
        
        
RECONCILIATION OF INCOME BEFORE INCOME TAXES TO CASH MARGIN       
(Unaudited, in thousands, except per unit data)       
 Three Months Ended
March 31,
 
  2020   2019 
        
Income before income taxes, as reported$195,193  $7,107 
Adjustments to reconcile income before income taxes to
  cash margin:
       
ARO settlements and other (gains) losses (260)  (71)
Derivative fair value (income) loss (233,175)  61,731 
Net cash receipts on derivative settlements 99,929   24,834 
Exploration expense 6,747   7,723 
Lawsuit settlements 815   706 
Termination costs 1,595    
Deferred compensation plan (8,537)  3,581 
Stock-based compensation (direct operating, brokered natural gas
and marketing, general and administrative and termination costs)
 9,222   11,165 
Interest – amortization of deferred financing costs 2,061   1,788 
Depletion, depreciation and amortization 102,986   138,718 
(Gain) loss on sale of assets (122,099)  189 
Gain on early extinguishment of debt (12,923)   
Impairment of proved property and other assets 77,000    
Abandonment and impairment of unproved properties 5,413   12,659 
Cash margin, a non-GAAP measure$123,967  $270,130 
        


HEDGING POSITION AS OF March 31, 2020 – (Unaudited)         
   Daily Volume   Hedge Price 
Gas  1        
         
Apr-Oct 2020 3-way Collar  20,000 Mmbtu   $1.75 / $2.00 x $2.50 
2Q 2020 Swaps  1,200,110 Mmbtu   $2.55 
3Q 2020 Swaps  1,180,000 Mmbtu   $2.57 
4Q 2020 Swaps  1,087,147 Mmbtu   $2.60 
         
2021 3-way Collars  240,000 Mmbtu   $1.99 / $2.31 x $2.60 
2021 Swaps  50,000 Mmbtu   $2.62 
         
Oil 2        
         
2Q 2020 Swaps  8,000 bbls   $58.41 
3Q 2020 Swaps  8,000 bbls   $58.19 
4Q 2020 Swaps  6,000 bbls   $58.02 
         
2021 Swaps  1,000 bbls   $55.00 
         
         
C3 Propane 3        
         
2Q 2020 Swaps  8,243 bbls   $0.563/gallon 
         
nC4 Butane 4        
         
2Q 2020 Swaps  3,330 bbls   $0.574/gallon 
3Q 2020 Swaps  2,500 bbls   $0.570/gallon 
         
iC4 Iso-Butane        
         
2Q 2020 Swaps  659 bbls   $0.642/gallon 
         
C5 Natural Gasoline         
         
2Q 2020 Swaps  495 bbls   $1.208/gallon 


(1)Range sold natural gas call swaptions of 120,000 Mmbtu/d for 2H2020 and 100,000 Mmbtu/d for calendar 2021 at average strike prices of $2.51 and $2.69 per Mmbtu, respectively.  Range also sold 40,000 Mmbtu/d of 2Q20 $2.30 strike calls.
(2)Range sold 500 bbls/d of 2Q20-3Q20 $59.00 strike WTI calls, and call swaption of 3,000 bbls/d for calendar 2021 at an average strike price of $56.50.
(3)Propane price represents Mont Belvieu equivalent average of international pricing less applicable spreads and/or freight.
(4)Range sold nC4 butane calls of 2,000 bbls/d for 2Q20 and 2,500 bbls/d for 3Q20 at average strike prices of $0.5625 per gallon and $0.57 per gallon, respectively.

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

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Source: Range Resources Corporation