Range Resources Corp. : Range Announces First Quarter 2012 Results
04/25/2012| 05:15pm US/Eastern
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RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its first
quarter 2012 results. Revenues for the first quarter 2012 totaled $247
million, a 16% increase over the prior year quarter. Net cash provided
from operating activities including changes in working capital totaled
$156 million, an 11% increase over the prior year first quarter. The net
loss for the first quarter 2012 was $42 million ($0.26 loss per diluted
share) versus a net loss of $25 million for the first quarter 2011.
Revenue and cash flow results were driven by higher production volumes
and lower unit costs offset by lower realized prices. Earnings also
included the impact of a derivative mark-to-market loss and a onetime
retroactive charge for the recently adopted Pennsylvania impact fee.
Adjusted net income comparable to analysts' estimates, a non-GAAP
measure, was $24 million ($0.15 per diluted share) for first quarter
2012 versus the prior year quarter amount of $35 million ($0.22 per
diluted share). Cash flow from operations before changes in working
capital, a non-GAAP measure, was $163 million essentially equal to the
prior year quarter. Comparing these amounts to analysts' average First
Call consensus estimates, the Company's earnings per share of $0.15 per
diluted share exceeded the consensus of analysts' estimates of $0.13 per
diluted share. Cash flow per share of $1.02 per diluted share also
exceeded the consensus analysts' estimates of $0.97 per diluted share.
See "Non-GAAP Financial Measures" for a definition of each of these
non-GAAP financial measures and tables that reconcile each of these
non-GAAP measures to their most directly comparable GAAP financial
measure.
Commenting on the announcement, Jeff Ventura, Range's President and CEO,
said, "The operational results from the first quarter 2012 demonstrate
the progress that Range is making in expanding our liquid-rich
development areas. 71% of our total production for the quarter was
produced from our liquid-rich and oil projects. We are on track to
significantly drive up our liquids production in 2012 while hitting our
overall 30% to 35% production growth target. Financially, we held our
own as first quarter 2012 cash flow was equal to the prior year quarter.
Higher production volumes and lower unit costs offset the impact of
lower natural gas prices. We strengthened our balance sheet during the
quarter by issuing 5% ten and a half year subordinated notes. This
allowed us to end the quarter with $123 million of invested cash and no
outstanding amount under our bank credit facility. The combination of
the invested cash and the unused credit facility increased our committed
liquidity position to nearly $1.6 billion at quarter-end. Subsequent to
quarter-end, we also increased our credit facility commitment from $1.5
billion to $1.75 billion and reaffirmed our $2 billion borrowing base.
Operationally, we made important progress in all five of our
liquids-rich and oil projects: super-rich Marcellus, super-rich Upper
Devonian, wet Utica, horizontal Mississippian and Cline Shale. We have
worked diligently over the past several years to develop a deep
inventory of projects that generate attractive returns even in this
period of low natural gas prices. Our financial strength coupled with
our high return inventory puts us in an excellent position to continue
to deliver per share value for our shareholders."
During the quarter, 71% of Range's production came from our liquid-rich
and oil areas with only 29% of our production coming from dry gas areas.
Production for the first quarter 2012 averaged 655.5 Mmcfe net per day,
a record high for the Company, and a 20% increase over the prior-year
quarter. Adjusting for the Barnett Shale production sold in April 2011,
the increase would have been 50%. This record production was driven by
the continued success of the Company's drilling program. On a
year-over-year basis, crude oil production increased 36%, while natural
gas liquid (NGL) production rose 20% and natural gas production
increased 19%. For the quarter, production was comprised of 512.5 Mmcf
per day of gas (78%), 17,152 barrels per day of NGLs (16%) and 6,682
barrels per day of oil (6%). Realized prices, including all cash-settled
derivatives averaged $5.19 per mcfe before transportation, gathering and
compression costs, a 14% decrease versus the prior-year quarter. The
average realized prices by product were $4.01 per mcf for natural gas,
$46.20 per barrel for NGLs and $83.54 per barrel for oil. (The realized
price, including all cash-settled derivatives, but net of
transportation, gathering and compression costs, averaged $4.51 per mcfe
for the quarter.)
Financial Discussion -
(Range sold its Barnett Shale properties in April of 2011.Under
generally accepted accounting principles, activity in 2011 for the
Barnett Shale properties was reclassified as "Discontinued operations."
As a result, production, revenue and expenses associated with the
properties were removed from continuing operations and reclassified as
discontinued operations.In this release, the Statements of
Income are broken out to reconcile and show the changes to the current
period and the prior-year period for the reclassification of the
discontinued operations.These supplemental non-GAAP tables
present the reported GAAP amounts as compared to the amounts that would
have been reported if the Barnett Shale operations were included in
continuing operations.All variances discussed in this release
include the Barnett Shale operations as continuing operations in all
prior year periods.Except for reported GAAP amounts, specific
expense categories exclude non-cash property impairments, mark-to-market
on unrealized derivatives, non-cash stock compensation and other items
shown separately on attached tables but include the amounts associated
with Barnett Shale properties combined with the reported continuing
operations amounts. Effective with 2011 year-end reporting, the Company
reclassified only third party transportation, gathering and compression
costs as a separate component of operating expenses which previously was
included as a reduction of natural gas, natural gas liquids and oil
sales.Prior reported results have been similarly reclassified to
conform to the current year presentation.)
First quarter financial results were driven by the 20% increase in
production and a 6% reduction in unit costs partially offset by a 14%
decline in realized prices. Natural gas, NGL and oil revenue (including
all cash settled derivatives) was $309.8 million, 24% higher than the
prior year quarter of $250.6 million (excluding the Barnett Shale
properties sold in April 2011 shown as discontinued operations).
Adjusting for the Barnett Shale properties, the year-over-year revenue
increase would have been 5%.
During the first quarter of 2012, Range continued to lower its cost
structure. On a unit of production basis, the Company's five largest
cost categories fell by 6% in aggregate compared to the prior-year
period. Lease operating expense decreased 36% to $0.48 per mcfe,
interest expense decreased 15% to $0.62 per mcfe while general and
administrative expense decreased 9% to $0.50 per mcfe. Transportation,
gathering and compression expense of $0.68 per mcfe increased 23% due to
continued expansion of Marcellus infrastructure. Depreciation, depletion
and amortization expense rose 2% to $1.68 per mcfe as there was no
depletion in March 2011 for discontinued operations related to the
Barnett Shale properties.
Several non-cash or non-recurring items impacted first quarter results.
A $53.0 million mark-to-market loss was recorded to reflect the
reduction in the value of the Company's commodity hedges due to
increased oil and natural gasoline (C5) commodity prices during the
quarter. A $24.0 million onetime expense was recorded in the first
quarter due to the retroactive payment required under the recently
adopted Pennsylvania impact fee for wells drilled in 2011 and prior
years. A $10.4 million loss was incurred from the sale of certain East
Texas properties. A $7.8 million reduction in expense relating to the
Company's deferred compensation plan was recorded due to the decrease in
our common stock price during the quarter.
Capital Expenditures -
First quarter drilling expenditures of $334 million funded the drilling
of 74 (58 net) wells and the completion of previously drilled wells. A
100% drilling success rate was achieved. During the quarter, total
capital expenditures were $436 million which included $75 million for
leasehold, $21 million for exploration and $6 million for infrastructure
build-out. The capital expenditure budget for the year of $1.6 billion
remains unchanged.
Credit Facility -
On April 9th, lenders under Range's bank credit facility
completed their regular semi-annual redetermination of the borrowing
base, unanimously reaffirming the requested $2.0 billion borrowing base.
The lenders also agreed to increase the aggregate commitment under the
borrowing base from $1.5 billion to $1.75 billion. The facility is
comprised of commitments from a diverse group of 29 financial
institutions with no institution holding more than 6% of the total
commitment. The next borrowing base redetermination is scheduled for
October 1, 2012. At the end of the first quarter 2012, Range had $123
million of invested cash on hand and no amount outstanding under the
credit facility.
Operational Discussion -
Marcellus Shale Division
Current Marcellus Shale production is approximately 460 Mmcfe per day
net with roughly 80% of the production coming from the liquid-rich area
of the play. We are on track to meet our 600 Mmcfe per day net
production target by year-end 2012. During the first quarter, 28
horizontal wells were brought online in southwest Pennsylvania, all of
which are located in the wet area of the play. The initial 24-hour
production rates of the new wells averaged 6.6 Mmcf per day of natural
gas and 252 barrels of NGLs and condensate per day or 8.2 (7.0 net)
Mmcfe per day. Two wells in the wet area utilized the new reduced
cluster spacing ("RCS") completion technique and produced at
approximately twice the initial rate of non-RCS wells on the same pad.
Due to the capacity limitations of the production facilities, many of
the 28 newly connected wells are producing at constrained rates. Of
significance at quarter-end there were three wells producing into sales
at a combined rate of 45 (37.1 net) Mmcfe per day. Subsequent to the end
of the quarter, three additional wells on the same pad were turned to
sales with total production now at approximately 75 (61.8 net) Mmcfe per
day. At quarter-end, in southwest Pennsylvania there were 57 Marcellus
Shale wells waiting on completion and 43 additional wells waiting on
pipeline. A few days ago, we commenced flowback operations on one well
at the edge of the super-rich area. The peak one-day production was 108
barrels per day condensate, 501 barrels per day NGLs, and 7.1 Mmcf per
day gas. If ethane was extracted, we estimate that the well would have
made 6 Mmcf per day and over 1,300 barrels per day of liquids. (Range's
net revenue interest in this well is 83.75%.) The well's lateral length
is 2,752 feet and was completed with 14 stages using the RCS method.
Based on its initial results, the new targeting methods combined with
the RCS completion have significantly improved the well's performance
and we believe that this could be impactful in both the wet and
super-rich areas.
During the quarter, our first Upper Devonian test in the super-rich area
of southwest Pennsylvania was drilled and is currently being completed.
A second Upper Devonian test in the super-rich area is currently
drilling. Rotary sidewall cores have been taken on both Upper Devonian
wells. The preliminary core analysis is very encouraging from both wells.
During the first quarter, 10 horizontal wells were drilled in northeast
Pennsylvania and five horizontal wells were turned to sales in the
Lycoming County area. First quarter results include four wells that had
outstanding 24-hour initial test rates. The average test rate for the
four wells was 22 (18.9 net) Mmcf per day and the wells had an average
lateral length of 3,000 feet with 10 stages. At the end of the first
quarter, there were 8 wells waiting on pipeline and 21 wells waiting on
completion in northeast Lycoming area. In Bradford County on our
non-operated position, 10 (2.5 net) horizontal wells were drilled and 7
(1.8 net) wells were turned to sales. At the end of the quarter 15 (3.8
net) wells were waiting on pipeline and 22 (5.5 net) wells were waiting
on completion. Range has no non-operated rigs running in Bradford County.
Range continues to make progress with its midstream partners in
expanding the infrastructure to accommodate the significant growth in
volumes anticipated over the next several years. In the super-rich and
wet areas of southwest Pennsylvania, an additional 50 miles of
twenty-inch trunkline is currently being constructed that will
interconnect with gas processing facilities. Also in southwest
Pennsylvania, in Allegheny and Butler Counties, where Range owns a
sizeable leasehold position, 40 miles of twenty-inch trunkline was
recently completed to flow natural gas into the Dominion Transmission
system. In northeast Pennsylvania, phase two of the trunkline system,
encompassing 18 miles of thirty-inch pipeline was also recently
completed.
Southwest Division
Range's Midcontinent team continues to focus its efforts in the
horizontal Mississippian play which yielded strong initial results for
the quarter. Range's acreage position in the play has increased to
145,000 net acres at quarter-end, up from 105,000 net acres at year-end
2011. Range is currently running two rigs in the play. Initial results
on the first two wells of the 2012 program compare favorably with prior
results. Initial 24-hour rates for the two wells averaged 525 (428 net)
boe per day per well (320 barrels per day oil, 117 barrels per NGLs and
530 mcf per day gas), with an average lateral length of 2,700 feet and
15 stages. Estimates of ultimate reserves per well continue to be
consistent with our 400-500 Mboe per well projection for the play. As
the program gains momentum, longer lateral lengths and varying
stimulation methods will be attempted to determine the most efficient
and cost effective means to add value. A third processing facility and
associated infrastructure is currently under construction in the play
and is expected to become operational late in the second quarter. Two
other processing facilities are currently being used.
In the Texas Panhandle, one rig is currently running in the development
of the horizontal St. Louis Lime play. The first well of the 2012
program has been completed and is expected to be turned to sales in the
second quarter. Additional drilling will continue with 7 (4.6 net) St.
Louis Lime horizontals and 1 (0.8 net) Granite Wash horizontal well
planned for the year. Range has secured capacity in several third party
projects being developed in the Texas Panhandle to increase pipeline and
processing capacity to support its planned development in this area.
Range's Permian team is focusing on 100,000 net acres in our Conger
field area in Glasscock and Sterling Counties, Texas that is over 90%
held by production. Range announced the results of its first Cline Shale
well in February of this year and performance is continuing to
outperform the projected ultimate recovery of 340 Mboe. A second well
has been drilled and completed at 484 (378 net) boe per day (282 barrels
per day oil, 123 barrels per day NGLs and 476 mcf per day gas). For the
remainder of 2012, Range plans to drill three more horizontal Cline
Shale wells. The three wells will be spread across the Conger field
properties to further de-risk the acreage block.
The Permian team's first vertical Wolfberry well in the Conger field had
an initial production rate of 495 (371.3 net) boe per day (195 barrels
per day oil, 141 barrels per day NGLs and 954 mcf per day gas). The
90-day average production rate for the well was 204 (153.0 net) boe per
day (59 barrels per day oil, 83 barrels per day NGLs, and 372 mcf per
day gas). The team has also completed its second vertical Wolfberry well
at an initial production rate of 517 (403.3 net) boe per day (212
barrels per day oil, 144 barrels per day NGLs and 969 mcf per day gas).
Range has the potential for 100 - 150 additional Wolfberry locations on
40 acre spacing at Conger. Range plans to drill two more vertical
Wolfberry wells in 2012.
Southern Appalachia Division
The Southern Appalachia Division continued development of multi-pay
horizons on its 350,000 (235,000 net) acre position in Virginia during
the first quarter of 2012. The division had one drilling rig and two
completion rigs running in the quarter. The division placed on line 16
wells including four tight-gas sand, eight coalbed methane and four
horizontal Huron Shale wells. The division also performed cleanouts on
five horizontal wells in the field resulting in doubling the wells'
production.
Conference Call Information -
The Company will host a conference call on Thursday April 26 at 1:00pm
ET to review the first quarter results. To participate in the call,
please dial 877-407-0778 and ask for the Range Resources' first quarter
financial results conference call. A replay of the call will be
available through May 31 at 877-660-6853. The account number is 286 and
the conference ID for the replay is 392701. Additional financial and
statistical information about the period not included in this release
but discussed on the conference call is available on our home page at www.rangeresources.com.
A simultaneous webcast of the call may be accessed over the Internet at www.rangeresources.com
or www.vcall.com.
To listen, please go to either website in time to register and install
any necessary software. The webcast will be archived for replay on the
Company's website until May 31.
Non-GAAP Financial Measures and Supplemental
Tables -
Adjusted net income comparable to analysts' estimates as used in this
release represents income from continuing operations before income taxes
adjusted for certain items (detailed below and 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 useful in evaluating operational trends of the
Company and its performance relative to other oil and gas producing
companies. Adjusted diluted earnings per share 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 continuing operations to adjusted net income
comparable to analysts' estimates and adjusted diluted earnings per
share. On its website, the Company provides additional comparative
information on prior periods.
First quarter 2012 earnings included a loss of $53.0 million for the
non-cash unrealized mark-to-market reduction in value of the Company's
derivatives, unproved property impairment expense of $20.3 million, a
$7.8 million gain recorded for the mark-to-market in the deferred
compensation plan, a $24 million onetime charge reflecting the
retroactive payment required by the Pennsylvania impact fee for wells
drilled in 2011 and prior years and $9.9 million of non-cash stock
compensation expense. Excluding these items, net income would have been
$24.4 million or $0.15 per diluted share. Excluding similar non-cash
items from the prior-year quarter, net income would have been $35.2
million or $0.22 per diluted share. By excluding these non-cash items
from our reported earnings, we believe we present our earnings in a
manner consistent with the presentation used by analysts in their
projection of the Company's earnings. (See the reconciliation of
non-GAAP earnings in the accompanying table.)
"Cash flow from operations before changes in working capital" as used 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 operating, 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
from operating activities" 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 natural gas, NGLs and oil production
including the amounts realized on cash-settled derivatives 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 hedging and derivative transactions and
transportation, gathering and compression costs, such information is now
reported in various lines of the Statements of Operations. The Company
believes that it is important to furnish a table reflecting the details
of the various components of each line in the Statements of Operations
to better inform the reader of the details of each amount and provide a
summary of the realized cash-settled amounts which historically were
reported as natural gas, NGLs and oil sales. This information will serve
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.
Hedging and Derivatives -
In this release, Range has reclassified within total revenues its
reporting of the cash settlement of its commodity derivatives. Under
this presentation those hedges considered "effective" under ASC 815 are
included in "Natural gas, NGLs and oil sales" when settled. For those
hedges designated to regions where the historical correlation between
NYMEX and regional prices is "non-highly effective" or there is
"volumetric ineffectiveness" due to the sale of the underlying reserves,
they are deemed to be "derivatives" and the cash settlements are
included in a separate line item shown as "Derivative fair value income
(loss)" in the Form 10-Q along with the change in mark-to-market
valuations of such unrealized derivatives. The Company has provided
additional information regarding natural gas, NGLs and oil sales in a
supplemental table included with this release which would correspond to
amounts shown by analysts for natural gas, NGLs and oil sales realized,
including all cash-settled derivatives.
RANGE RESOURCES CORPORATION (NYSE: RRC) is a leading independent
oil and natural gas producer with operations focused in Appalachia and
the southwest region of the United States. 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 http://www.rangeresources.com/
and http://www.myrangeresources.com/.
Except for historical information, statements made in this release
such as consistent growth at low cost, deliver per share value,
excellent hedge position, high return projects, financial strength,
future liquidity, future expansion of infrastructure to accommodate
expected future growth, number of wells expected to be completed and
turned to sales, expected impact from RCS completions and generates
attractive returns are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. 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, including, but not limited to, the volatility of oil and gas
prices, the results of hedging transactions, the costs and results of
drilling and operations, the timing of production, mechanical and other
inherent risks associated with oil and gas production, weather, the
availability of drilling equipment, changes in interest rates,
litigation, uncertainties about reserve estimates and environmental
risks. Range undertakes no obligation to publicly update or revise any
forward-looking statements.
Estimated ultimate recovery, or "EUR," refers to our management's
internal estimates of per well hydrocarbon quantities that may be
potentially recovered from a hypothetical future well completed as a
producer in the area.These quantities do 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.Our management estimated
these ultimate recoveries based on our previous operating experience in
the given area and publicly available information relating to the
operations of producers who are conducting operating in these areas.Actual
quantities that may be ultimately recovered from Range's interests may
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 ultimate recoveries 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.
Further information on risks and uncertainties is available in
Range's filings with the Securities and Exchange Commission ("SEC"),
which are incorporated by reference. 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 by calling
the SEC at 1-800-SEC-0330.
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,
2012
2011
Revenues and other income:
Natural gas, NGLs and oil sales (a)
$
317,617
$
251,963
Derivative cash settlements gain (loss) (a) (b)
(7,829
)
(1,366
)
Change in mark-to-market on unrealized derivatives
(52,056
)
(40,036
)
gain (loss) (b)
Ineffective hedging (loss) gain (b)
(948
)
568
(Loss) gain on sale of properties
(10,426
)
139
Equity method investment (c)
316
262
Transportation and gathering (c)
(334
)
703
Transportation and gathering - non-cash stock
(453
)
(390
)
compensation (c) (d)
Other (c)
1,006
815
Total revenues and other income
246,893
212,658
16
%
Costs and expenses:
Direct operating
28,665
28,407
Direct operating - non-cash stock compensation (d)
357
310
Transportation, gathering and compression
40,820
25,082
Production and ad valorem taxes
12,634
6,879
Pennsylvania impact fee - prior year
24,000
-
Exploration
20,588
25,858
Exploration - non-cash stock compensation (d)
928
1,329
Abandonment and impairment of unproved properties
20,289
16,537
General and administrative
30,055
27,117
General and administrative - non-cash stock
8,158
7,530
compensation (d)
General and administrative - lawsuit settlements
516
-
General and administrative - bad debt expense
-
(688
)
Deferred compensation plan (e)
(7,830
)
30,630
Interest expense
37,205
24,779
Depletion, depreciation and amortization
100,151
72,216
Total costs and expenses
316,536
265,986
19
%
Loss from continuing operations before income taxes
(69,643
)
(53,328
)
-31
%
Income tax benefit:
Current
-
-
Deferred
(27,843
)
(19,897
)
(27,843
)
(19,897
)
Loss from continuing operations
(41,800
)
(33,431
)
-25
%
Discontinued operations, net of tax
-
8,398
Net loss
$
(41,800
)
$
(25,033
)
-67
%
Loss Per Common Share:
Basic-Loss from continuing operations
$
(0.26
)
$
(0.21
)
Discontinued operations
-
0.05
Net loss
$
(0.26
)
$
(0.16
)
-63
%
Diluted-Loss from continuing operations
$
(0.26
)
$
(0.21
)
Discontinued operations
-
0.05
Net loss
$
(0.26
)
$
(0.16
)
-63
%
Weighted average common shares outstanding, as reported:
Basic
158,913
157,545
1
%
Diluted
158,913
157,545
1
%
(a) See separate natural gas, NGLs and oil sales information table.
(b) Included in Derivative fair value loss in the 10-Q.
(c) Included in Other revenues in the 10-Q.
(d) 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.
(e) Reflects the change in market value of the vested Company stock held
in the deferred compensation plan.
RANGE RESOURCES CORPORATION
STATEMENTS OF OPERATIONS
Restated for Barnett discontinued operations,
a non-GAAP presentation
Three Months Ended March 31, 2012
Three Months Ended March 31, 2011
(Unaudited, in thousands, except per share data)
As reported
Barnett Discontinued Operations
Including Barnett Ops
As reported
Barnett Discontinued Operations
Including Barnett Ops
Revenues and other income:
Natural gas, NGLs and oil sales
$
317,617
-
$
317,617
$
251,963
$
44,573
$
296,536
Derivative cash settlements gain (loss)
(7,829
)
-
(7,829
)
(1,366
)
-
(1,366
)
Change in mark-to-market on
unrealized derivatives
gain (loss)
(52,056
)
-
(52,056
)
(40,036
)
-
(40,036
)
Ineffective hedging gain (loss)
(948
)
-
(948
)
568
-
568
Gain (loss) on sale of properties
(10,426
)
-
(10,426
)
139
-
139
Equity method investment
316
-
316
262
-
262
Transportation and gathering
(334
)
-
(334
)
703
5
708
Transportation and gathering -
non-cash stock
compensation
(453
)
-
(453
)
(390
)
-
(390
)
Interest and other
1,006
-
1,006
815
4
819
246,893
-
246,893
212,658
44,582
257,240
Costs and expenses:
Direct operating
28,665
-
28,665
28,407
8,232
36,639
Direct operating - non-cash stock compensation
357
-
357
310
45
355
Transportation, gathering and compression
40,820
-
40,820
25,082
2,316
27,398
Production and ad valorem taxes
12,634
-
12,634
6,879
1,066
7,945
Pennsylvania impact fee - prior year
24,000
24,000
-
-
-
Exploration
20,588
-
20,588
25,858
32
25,890
Exploration - non-cash stock compensation
928
-
928
1,329
-
1,329
Abandonment and impairment of unproved properties
20,289
-
20,289
16,537
-
16,537
General and administrative
30,055
-
30,055
27,117
-
27,117
General and administrative - non-
cash stock
compensation
8,158
-
8,158
7,530
-
7,530
General and administrative - lawsuit settlements
516
-
516
-
-
-
General and administrative - bad debt expense
-
-
-
(688
)
-
(688
)
Deferred compensation plan
(7,830
)
-
(7,830
)
30,630
-
30,630
Interest expense
37,205
-
37,205
24,779
11,076
35,855
Depletion, depreciation and amortization
100,151
-
100,151
72,216
8,880
81,096
316,536
-
316,536
265,986
31,647
297,633
(Loss) income from continuing operations before income taxes
(69,643
)
-
(69,643
)
(53,328
)
12,935
(40,393
)
Income tax expense (benefit):
Current
-
-
-
-
-
-
Deferred
(27,843
)
-
(27,843
)
(19,897
)
4,537
(15,360
)
(27,843
)
-
(27,843
)
(19,897
)
4,537
(15,360
)
(Loss) income from continuing operations
(41,800
)
-
(41,800
)
(33,431
)
8,398
(25,033
)
Discontinued operations-Barnett Shale, net of tax
-
-
-
8,398
(8,398
)
-
Net loss
$
(41,800
)
-
$
(41,800
)
$
(25,033
)
-
$
(25,033
)
OPERATING HIGHLIGHTS
Average daily production:
Natural gas (mcf)
512,453
-
512,453
331,172
98,728
429,900
NGLs (bbl)
17,152
-
17,152
12,573
1,765
14,338
Oil (bbl)
6,682
-
6,682
4,846
78
4,924
Gas equivalent (mcfe)
655,457
-
655,457
435,686
109,783
545,469
Average prices realized before transportation, gathering and
compression:
Natural gas (mcf)
$
4.01
-
$
4.01
$
5.40
$
4.11
$
5.10
NGLs (bbl)
$
46.20
-
$
46.20
$
48.65
$
46.65
$
48.40
Oil (bbl)
$
83.54
-
$
83.54
$
79.31
$
89.89
$
79.48
Gas equivalent (mcfe)
$
5.19
-
$
5.19
$
6.39
$
4.51
$
6.01
Direct operating cash costs per mcfe:
Field expenses
$
0.45
-
$
0.45
$
0.71
$
0.81
$
0.74
Workovers
0.03
-
0.03
0.01
0.02
0.01
Total operating costs
$
0.48
-
$
0.48
$
0.72
$
0.83
$
0.75
Transportation, gathering and compression cost per mcfe:
$
0.68
-
$
0.68
$
0.63
$
0.23
$
0.55
RANGE RESOURCES CORPORATION
BALANCE SHEETS
(In thousands)
March 31,
2012
December 31,
2011
(Unaudited)
Assets
Current assets
$
246,371
$
141,342
Current unrealized derivative gain
216,508
173,921
Natural gas and oil properties
5,439,429
5,157,566
Transportation and field assets
50,156
52,678
Other
325,481
319,963
$
6,277,945
$
5,845,470
Liabilities and Stockholders' Equity
Current liabilities
$
544,763
$
506,274
Current asset retirement obligation
5,005
5,005
Current unrealized derivative loss
4,767
-
Current liabilities of discontinued operations
-
653
Bank debt
-
187,000
Subordinated notes
2,388,260
1,787,967
Total long-term debt
2,388,260
1,974,967
Deferred tax liability
685,078
710,490
Unrealized derivative loss
3,792
173
Deferred compensation liability
165,958
169,188
Long-term asset retirement obligation and other
87,233
86,300
Common stock and retained earnings
2,199,208
2,242,136
Treasury stock
(6,278
)
(6,343
)
Accumulated other comprehensive income
200,159
156,627
Total stockholders' equity
2,393,089
2,392,420
$
6,277,945
$
5,845,470
RANGE RESOURCES CORPORATION
CASH FLOWS FROM OPERATING ACTIVITIES
(Unaudited, in thousands)
Three Months Ended
March 31,
2012
2011
Net loss
$
(41,800
)
$
(25,033
)
Adjustments to reconcile net income to net cash provided from
operating activities:
(Income) loss discontinued operations
-
(8,398
)
(Gain) loss from equity investment, net of distributions
251
12,705
Deferred income tax expense (benefit)
(27,843
)
(19,897
)
Depletion, depreciation, amortization and proved property impairment
100,151
72,216
Exploration dry hole costs
709
10
Abandonment and impairment of unproved properties
20,289
16,537
Mark-to-market (gain) loss on oil and gas derivatives not designated
as hedges
52,056
40,036
Unrealized derivative (gain) loss
948
(568
)
Allowance for bad debts
-
(688
)
Amortization of deferred financing costs, loss on extinguishment of
debt, and other
1,848
(78
)
Deferred and stock-based compensation
2,508
40,650
(Loss) gain on sale of assets and other
10,426
(139
)
Changes in working capital:
Accounts receivable
11,947
(10,528
)
Inventory and other
(897
)
3,574
Accounts payable
8,962
2,302
Accrued liabilities and other
16,422
(1,491
)
Net changes in working capital
36,434
(6,143
)
Net cash provided from continuing operations
155,977
121,210
Net cash provided from discontinued operations
-
19,412
Net cash provided from operating activities
$
155,977
$
140,622
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,
2012
2011
Net cash provided from operating activities, as reported
$
155,977
$
140,622
Net changes in working capital from continuing operations
(36,434
)
6,143
Exploration expense
19,879
25,848
Lawsuit settlements
516
-
Equity method investment distribution / intercompany elimination
(566
)
(12,966
)
Prior year Pennsylvania impact fee
24,000
-
Non-cash compensation adjustment
(388
)
1,320
Net changes in working capital from discontinued operations and other
-
2,480
Cash flow from operations before changes in working capital, a
non-GAAP measure
$
162,984
$
163,447
ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING
(Unaudited, in thousands)
Three Months Ended
March 31,
2012
2011
Basic:
Weighted average shares outstanding
161,739
160,438
Stock held by deferred compensation plan
(2,826
)
(2,893
)
Adjusted basic
158,913
157,545
Dilutive:
Weighted average shares outstanding
161,739
160,438
Anti-dilutive or dilutive stock options under treasury method
(2,826
)
(2,893
)
Adjusted dilutive
158,913
157,545
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
non-GAAP measures
As Reported, GAAP
Non-GAAP
Excludes Barnett Operations
Includes Barnett Operations
(Unaudited, in thousands, except per unit data)
Three Months Ended March 31,
Three Months Ended March 31,
2012
2011
%
2012
2011
%
Natural gas, NGLs and oil sales components:
Natural gas sales
$
128,068
$
130,795
$
128,068
$
158,723
NGLs sales
76,498
55,045
76,498
62,454
Oil sales
55,422
36,507
55,422
37,136
Cash-settled hedges (effective):
Natural gas
57,629
29,616
57,629
38,223
Crude oil
-
-
-
-
Total natural gas, NGLs and oil sales, as reported
$
317,617
$
251,963
26
%
$
317,617
$
296,536
7
%
Derivative fair value income (loss) components:
Cash-settled derivatives (ineffective):
Natural gas
$
1,185
$
552
$
1,185
$
552
NGLs
(4,392
)
-
(4,392
)
-
Crude Oil
(4,622
)
(1,918
)
(4,622
)
(1,918
)
Change in mark-to-market on unrealized derivatives
(52,056
)
(40,036
)
(52,056
)
(40,036
)
Unrealized ineffectiveness
(948
)
568
(948
)
568
Total derivative fair value income (loss), as reported
$
(60,833
)
$
(40,834
)
$
(60,833
)
$
(40,834
)
Natural gas, NGLs and oil sales, including all cash-settled
derivatives:
Natural gas sales
$
186,882
$
160,963
$
186,882
$
197,498
NGLs sales
72,106
55,045
72,106
62,454
Oil sales
50,800
34,589
50,800
35,218
Total
$
309,788
$
250,597
24
%
$
309,788
$
295,170
5
%
Third party transportation, gathering and compression fee components:
Natural gas
$
38,506
$
24,512
$
38,506
$
26,828
NGLs
2,314
570
2,314
570
Total transportation, gathering and compression, as reported
$
40,820
$
25,082
$
40,820
$
27,398
Production during the period (a):
Natural gas (mcf)
46,633,207
29,805,523
56
%
46,633,207
38,691,021
21
%
NGLs (bbl)
1,560,826
1,131,565
38
%
1,560,826
1,290,408
21
%
Oil (bbl)
608,077
436,132
39
%
608,077
443,120
37
%
Gas equivalent (mcfe) (b)
59,646,625
39,211,706
52
%
59,646,625
49,092,189
21
%
Production - average per day (a):
Natural gas (mcf)
512,453
331,172
55
%
512,453
429,900
19
%
NGLs (bbl)
17,152
12,573
36
%
17,152
14,338
20
%
Oil (bbl)
6,682
4,846
38
%
6,682
4,924
36
%
Gas equivalent (mcfe) (b)
655,457
435,686
50
%
655,457
545,469
20
%
Average prices realized, including all derivative settlements but
excluding transportation, gathering and compression costs:
Natural gas (mcf)
$
4.01
$
5.40
-26
%
$
4.01
$
5.10
-21
%
NGLs (bbl)
$
46.20
$
48.65
-5
%
$
46.20
$
48.40
-5
%
Oil (bbl)
$
83.54
$
79.31
5
%
$
83.54
$
79.48
5
%
Gas equivalent (mcfe) (b)
$
5.19
$
6.39
-19
%
$
5.19
$
6.01
-14
%
Average prices realized, including all derivative settlements, net
of transportation, gathering and compression costs:
Natural gas (mcf)
$
3.18
$
4.58
-30
%
$
3.18
$
4.41
-28
%
NGLs (bbl)
$
44.71
$
48.14
-7
%
$
44.71
$
47.96
-7
%
Oil (bbl)
$
83.54
$
79.31
5
%
$
83.54
$
79.48
5
%
Gas equivalent (mcfe) (b)
$
4.51
$
5.75
-22
%
$
4.51
$
5.45
-17
%
(a) Represents volumes sold regardless of when produced.
(b) Oil and NGLs are converted to mcfe at a rate of one barrel equals
six mcf based upon the approximate relative energy content of oil and
natural gas, which is not necessarily indicative of the relationship of
oil and natural gas prices.
RANGE RESOURCES CORPORATION
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES AS REPORTED TO INCOME
FROM OPERATIONS BEFORE INCOME TAXES EXCLUDING CERTAIN
ITEMS, a non-GAAP measure
(Unaudited, in thousands, except per share data)
Three Months Ended March 31,
2012
2011
%
(Loss) income from continuing operations before income taxes, as
reported
$
(69,643
)
$
(53,328
)
-31
%
Adjustment for certain items:
(Loss) gain on sale of properties
10,426
(139
)
Barnett discontinued operations less gain on sale
-
12,980
Change in mark-to-market on unrealized derivatives (gain) loss
52,056
40,036
Unrealized derivative (gain) loss
948
(568
)
Abandonment and impairment of unproved properties
20,289
16,537
Prior year Pennsylvania impact fee
24,000
-
Lawsuit settlements
516
-
Transportation and gathering - non-cash stock compensation
General & administrative - non-cash stock compensation
8,158
7,530
Deferred compensation plan - non-cash stock compensation
(7,830
)
30,630
Income from operations before income taxes, as adjusted
40,658
55,707
-27
%
Income tax expense, as adjusted
Current
-
-
Deferred
16,244
20,485
Net income excluding certain items, a non-GAAP measure
$
24,414
$
35,222
-31
%
Non-GAAP income per common share
Basic
$
0.15
$
0.22
-32
%
Diluted
$
0.15
$
0.22
-32
%
Non-GAAP diluted shares outstanding, if dilutive
159,858
158,515
HEDGING POSITION AS OF APRIL 25, 2012
(Unaudited)
Daily Volume
Hedge Price
Premium (Paid) / Received
Gas (Mmbtu)
1Q 2012 Swaps
160,000
$4.10
($0.02)
1Q 2012 Collars
189,641
$5.32 - $5.91
($0.28)
2Q 2012 Swaps
210,000
$3.94
($0.01)
2Q 2012 Collars
189,641
$5.32 - $5.91
($0.28)
3Q 2012 Swaps
160,000
$4.18
($0.02)
3Q 2012 Collars
279,641
$4.76 - $5.22
($0.19)
4Q 2012 Swaps
200,000
$4.07
($0.02)
4Q 2012 Collars
279,641
$4.76 - $5.22
($0.19)
2013 Swaps
102,521
$3.66
--
2013 Collars
240,000
$4.73 - $5.20
--
2014 Collars
90,000
$4.25 - $4.85
--
Oil (Bbls)
1Q 2012 Calls
4,700
$85.00
$13.71
1Q 2012 Collars
2,000
$70.00 - $80.00
$7.50
2Q 2012 Calls
2,200
$85.00
$13.71
2Q 2012 Collars
4,500
$75.56 - $82.78
$10.18
3Q 2012 Calls
2,200
$85.00
$13.71
3Q 2012 Collars
4,500
$75.56 - $82.78
$9.30
4Q 2012 Calls
2,200
$85.00
$13.71
4Q 2012 Collars
4,500
$75.56 - $82.78
$8.56
2013 Swaps
4,756
$96.49
--
2013 Collars
3,000
$90.60 - $100.00
--
2014 Swaps
3,000
$93.33
--
2014 Collars
2,000
$85.55 - $100.00
--
NGLs (using C5) (Bbls)
1Q 2012 Swaps
12,000
$96.28
--
2Q 2012 Swaps
12,000
$96.28
--
3Q 2012 Swaps
12,000
$96.28
--
4Q 2012 Swaps
12,000
$96.28
--
2013 Swaps
8,000
$89.64
--
NOTE:SEE WEBSITE FOR OTHER SUPPLEMENTAL INFORMATION FOR THE
PERIODS
Range Resources Corporation Main number: 817-870-2601 or Investor
Contacts: Rodney Waller, 817-869-4258 Senior Vice President or David
Amend, 817-869-4266 Investor Relations Manager or Laith
Sando, 817-869-4267 Senior Financial Analyst or Media
Contact: Matt Pitzarella, 724-873-3224 Director of
Corporate Communications www.rangeresources.com
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