RRC
$16.92
Range Resources
($.13)
(.76%)
Earnings Details
3rd Quarter September 2018
Tuesday, October 23, 2018 5:00:00 PM
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Summary

Range Resources Beats

Range Resources (RRC) reported 3rd Quarter September 2018 earnings of $0.26 per share on revenue of $811.2 million. The consensus earnings estimate was $0.18 per share on revenue of $724.4 million. The Earnings Whisper number was $0.25 per share. Revenue grew 68.2% on a year-over-year basis.

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
$0.26
Earnings Whisper
$0.25
Consensus Estimate
$0.18
Reported Revenue
$811.2 Mil
Revenue Estimate
$724.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Range Announces Third Quarter 2018 Financial Results

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

Highlights –

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

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

Financial Discussion

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

Third Quarter 2018

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

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

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

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


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

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

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

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

Unit Costs

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

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

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

Capital Expenditures

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

Asset Sale

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

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

Operational Discussion

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

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

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

Appalachia Division

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

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

North Louisiana

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

Marketing and Transportation

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

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

Guidance – 2018 

Production per day Guidance

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

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

4Q 2018 Expense Guidance 

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


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


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

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

Hedging Status

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

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

Conference Call Information

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

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

Non-GAAP Financial Measures

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

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

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

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

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

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

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

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

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

 

Investor Contacts:

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

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

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

Media Contact:

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

www.rangeresources.com


RANGE RESOURCES CORPORATION

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

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


RANGE RESOURCES CORPORATION

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


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


RANGE RESOURCES CORPORATION

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


RANGE RESOURCES CORPORATION

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

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

RANGE RESOURCES CORPORATION

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

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

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

    

RANGE RESOURCES CORPORATION

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


RANGE RESOURCES CORPORATION

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


RANGE RESOURCES CORPORATION

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

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

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

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Source: Range Resources Corporation