RANGE RESOURCES CORP - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

COMMISSION FILE NUMBER 0-9592

RANGE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 34-1312571
(State of incorporation) (I.R.S. Employer
Identification No.)

777 MAIN STREET, FT. WORTH, TEXAS 76102
(Address of principal executive offices) (Zip Code)

Registrant's telephone number: (817) 870-2601

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes X No
----- -----

54,769,405 Common Shares were outstanding on November 8, 2002.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The financial statements included herein should be read in conjunction
with the Company's 2001 Form 10-K/A. The statements are unaudited but reflect
all adjustments which, in the opinion of management, are necessary to fairly
present the Company's financial position and results of operations. All
adjustments are of a normal recurring nature unless otherwise noted. These
financial statements have been prepared in accordance with the applicable rules
of the Securities and Exchange Commission and do not include all of the
information and disclosures required by accounting principles generally accepted
in the United States for complete financial statements.

2

RANGE RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

SEE ACCOMPANYING NOTES.

3

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)

SEE ACCOMPANYING NOTES.

4

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)

SEE ACCOMPANYING NOTES.

5

RANGE RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION AND NATURE OF BUSINESS

The Company is engaged in the development, acquisition and exploration
of oil and gas properties primarily in the Southwestern, Gulf Coast and
Appalachian regions of the United States. The Company also provides financing to
small oil and gas producers through a subsidiary, Independent Producer Finance
("IPF"). The Company seeks to increase its reserves and production principally
through development drilling and acquisitions. Range holds its Appalachian oil
and gas assets through a 50% owned joint venture, Great Lakes Energy Partners
L.L.C. ("Great Lakes"). The Company's financial statements for the three years
ended 2001 have been restated.

The Company believes it has sufficient liquidity and cash flow to meet
its obligations for the next twelve months. However, a material drop in oil and
gas prices or a reduction in production and reserves would reduce its ability to
fund capital expenditures, reduce debt and meet its financial obligations. In
addition, the Company's high depletion, depreciation and amortization ("DD&A")
rate may make it difficult to remain profitable if oil and gas prices decline.
The Company operates in an environment with numerous financial and operating
risks, including, but not limited to, the ability to acquire reserves on an
attractive basis, the inherent risks of the search for, development and
production of oil and gas, the ability to sell production at prices which
provide an attractive return and the highly competitive nature of the industry.
The Company's ability to expand its reserve base is, in part, dependent on
obtaining sufficient capital through internal cash flow, borrowings or the
issuance of debt or equity securities.

(2) RESTATEMENT

In July 2002, the Company selected KPMG LLP ("KPMG") as its new
independent auditors. In connection with the change in auditors, the Company
chose to reaudit its consolidated financial statements for the three years ended
December 31, 2001, even though a reaudit was not required. The reaudit was
intended to provide additional assurance to shareholders, insure access to the
capital markets and to avoid any possible impediment to future transactions.
Through KPMG's normal client acceptance procedures and the subsequent reaudit,
KPMG identified five items that it determined should be restated on the
Company's consolidated financial statements for the three years ended December
31, 2001. The Company agreed with KPMG's recommendations and filed a 10K/A for
2001 and 10Q/A's for the first and second quarters of 2002 reflecting the
changes.

During the auditor selection process, KPMG advised the Company that it
believed a different accounting principle should have been used to determine the
amount of gain recognized in 1999 upon the formation of the Great Lakes.
Specifically the gain recognized in September 1999 should be reduced from $39.8
million to $30.9 million and income in subsequent periods should increase as a
result of lower depletion expense. The Company previously announced this
restatement in July 2002. The remaining four items of restatement were
identified during KPMG's reaudit completed in September 2002. Each is detailed
separately below.

The first additional item involved the Company's acquisition of Domain
Energy. In recording the transaction, the purchase price had not been
appropriately allocated to the individual oil and gas properties, causing a
subsequent purchase price adjustment to be miscalculated. As a result,
impairments recognized at year-end 2001 should be reduced. In addition,
properties in Appalachia and Michigan, that had been combined into accounting
pools for the purpose of calculating depletion, were subdivided into smaller
pools and the depreciation rates historically applied on non-oil and gas assets
should be reduced. As a result of these this restatement, pretax income
decreased $7.1 million in 1999, increased $4.8 million in 2000, increased $7.6
million in 2001 and decreased $2.9 million in the first six months of 2002. In
addition, these changes increased pretax income $513,000 and $1.7 million for
the three months and nine months ended September 30, 2001, respectively.

The second item of restatement relates to the Company's deferred
compensation plan (the "Plan"), under which eligible employees can defer all or
a portion of their cash compensation and invest those amounts in a variety of
investment options (including Company common stock) which are placed in a rabbi
trust (the "Rabbi Trust"). Eligible employees can also place common stock awards
in the Rabbi Trust. The Emerging Issues Task Force ("EITF"), has determined that
assets and liabilities of the Rabbi Trust must be consolidated on the Company's
balance sheet. While the

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Rabbi Trust's assets and liabilities are of identical value, Company common
stock held in the Rabbi Trust is treated as if it were treasury stock (it is
deducted from outstanding shares as shares held by an employee benefit plan).
Furthermore, because the Plan allows participants to diversify their
investments, the liability to Plan participants must be revalued on the balance
sheet each accounting period at the assets' then-quoted market prices and
increases or decreases between accounting periods for the treasury stock is
reflected on the income statement as increases or decreases in compensation
expense. The securities, other than Company common stock, held in the Plan are
marked to market in Other comprehensive income. Historically, the Company did
not consolidate the Rabbi Trust in its consolidated financial statements nor did
it add or subtract changes in the market value of the Plan's assets on its
statement of operations. In addition, the Company offers designated employees
the ability to purchase shares at a discount under a shareholder-approved Stock
Purchase Plan or to receive bonuses or a portion of their base pay in restricted
common stock issued at a discount from quoted market prices. Previously, such
shares had always been accounted for based on the Company's estimate of the fair
value of the stock granted or purchased. In the restated financial statements,
stock purchased through the Plan or granted to employees was expensed based on
the quoted market value without regard to the Company's estimate of fair value.
The difference between previously reported values and market value is included
as additional compensation expense on the restated statement of operations. As a
result of this restatement, pretax income decreased $561,000 in 1999, decreased
$3.8 million in 2000, increased $1.7 million in 2001 and decreased $1.8 million
in the first six months of 2002. These changes also increased pretax income $1.3
million and $1.6 million in the three months and nine months ended September 30,
2001, respectively.

The third item of restatement stems from a June 30, 2002, correction to
a series of unreconciled balance sheet accounts that did not have any net
material impact on the statement of operations. These balance sheet general
ledger accounts were not supported by the underlying subsidiary ledger detail
when the Company's accounting department moved from Ohio to Fort Worth. In the
restatement, these corrections were reflected in the periods in which they
applied, rather than in the second quarter of 2002. As a result, pretax income
for periods prior to 1999 increased by $1.9 million, increased by $627,000 in
1999, decreased $2.9 million in 2000, increased by $190,000 in 2001 and
increased by $134,000 in the first six months of 2002. Pretax income increased
$289,000 for the nine months ended September 30, 2001.

The fourth and final additional item involves certain of Great Lakes
interest rate swaps which had early cancellation provisions but had been
accounted for as cash flow hedges. Upon further review, the swaps did not meet
the documentation and effectiveness provisions of SFAS 133, requiring changes in
fair value to be reported as interest expense on the restated financial
statements as opposed to changes in Other comprehensive income. As a result,
pretax income decreased $1.4 million in 2001 and will increase by a
corresponding amount in future periods. Additionally, the ineffective portion of
certain commodity hedges increased income $71,000 in 2001.

In total, all of the restatement changes increased net loss by $15.7
million in 1999, decreased net income by $1.4 million in 2000 and increased net
income by $8.7 million in 2001. The changes decreased net income by $2.3 million
in the first half of 2002 and increased net income by $887,000 and $2.4 million
for the three months and nine months ended September 30, 2001, respectively. The
following is financial information showing the net effect of all restatements
for 2001. The Company's fully restated financial statements for the three years
ended December 31, 2001 can be found on the Company's website at
www.rangeresources.com.

7

STATEMENT OF OPERATIONS

8

BALANCE SHEETS

9

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts
of the Company, majority-owned subsidiaries and a pro rata share of the assets,
liabilities, income and expenses of Great Lakes. Liquid investments with
maturities of ninety days or less are considered cash equivalents. Certain
reclassifications have been made to the presentation of prior periods to conform
with current year presentation. The Company's financial statements for the last
three calendar years have been restated.

REVENUE RECOGNITION

The Company recognizes revenues from the sale of products and services
in the period delivered. Payments received at IPF relating to return are
recognized as income; remaining receipts reduce receivables. Although
receivables are concentrated in the oil industry, the Company does not view this
as an unusual credit risk. However, IPF's receivables are from small independent
operators who usually have limited access to capital and the assets which
underlie the receivables lack diversification. Therefore, operational risk is
substantial and there is significant risk that required maintenance and repairs,
development and planned exploitation may be delayed or not accomplished. At
December 31, 2001 and September 30, 2002, IPF had valuation allowances of $17.3
million and $19.9 million and the Company had other allowances for doubtful
accounts of $2.9 million and $889,000, respectively. A decrease in oil prices
would be likely to cause an increase in IPF's valuation allowance.

MARKETABLE SECURITIES

The Company follows Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Investments," pursuant to which the holdings
of equity securities qualify as available-for-sale and are recorded at fair
value. Unrealized gains and losses are reflected in Stockholders' equity as a
component of Other comprehensive income. A decline in the market value of a
security below cost deemed other than temporary is charged to earnings. Realized
gains and losses are reflected in income. The Company owns approximately 15% of
a very small publicly traded independent exploration and production company.
This entity has experienced growing difficulties, operationally and financially.
During the first nine months of 2001 and 2002, the Company determined that the
decline in the market value of this equity security it holds was other than
temporary and losses of $1.4 million and $1.2 million, respectively, were
recorded as reductions to Interest and other revenues. Based on its analysis of
the investment and its assessment of the prospects of realizing any value on the
stock, the Company determined that the investment had no determinable value at
June 30, 2002 and the book value of the investment was fully reserved. In
October 2002, several creditors sought to place this entity in involuntary
bankruptcy.

INDEPENDENT PRODUCER FINANCE

IPF acquires dollar denominated royalties in oil and gas properties
from small producers. The royalties are accounted for as receivables because the
investment is recovered from a percentage of revenues until a specified return
is received. Payments received believed to relate to the return are recognized
as income; remaining receipts reduce receivables. Receivables classified as
current represent the return of capital expected within twelve months. All
receivables are evaluated quarterly and provisions for uncollectible amounts
established based on the Company's valuation of its royalty interest in the oil
and gas properties. At September 30, 2002, IPF's valuation allowance totaled
$19.9 million. The receivables are non-recourse and are from small independent
operators who usually have limited access to capital and the property interests
backing the receivables frequently lack diversification. Due to favorable oil
and gas prices in late 2000 and early 2001, certain of IPF's receivables began
to generate cash flows which favorably impacted the valuation of the receivable.
As a result, a $1.9 million increase in receivables was recorded as additional
income and a favorable valuation allowance adjustment of $441,000 was recorded
as a reduction of IPF expense for the six months of 2001. Based on price
declines, the IPF valuation allowance was increased $473,000 in the third
quarter of 2001. In the third quarter and nine months ended September 30, 2002,
based on the disappointing performance of certain properties, the valuation
allowance was increased $177,000 and $2.7 million, respectively. During the
third quarter of 2002, IPF revenues were $1.3 million offset by $391,000 of
general and administrative costs, $241,000 of interest and an unfavorable
$176,000 valuation allowance adjustment. During the same period of the prior
year, revenues were $1.7 million offset by the $473,000 unfavorable valuation

10

adjustment, general and administrative expenses of $406,000 and $388,000 of
interest. IPF's receivables have declined from a high of $77.2 million in 1998
to $32.9 million at September 30, 2002, as it has focused on recovering as much
as possible of its investments. During this same period, IPF's debt declined
from $60.1 million to $19.1 million. As of November 4, 2002, IPF's debt was
$16.8 million. The Company continues to assess alternatives relating to its
ownership of IPF.

OIL AND GAS PROPERTIES

The Company follows the successful efforts method of accounting.
Exploratory drilling costs are capitalized pending determination of whether a
well is successful. Wells subsequently determined to be dry holes are charged to
expense. Costs resulting in exploratory discoveries and all development costs,
whether successful or not, are capitalized. Geological and geophysical costs,
delay rentals and unsuccessful exploratory wells are expensed. Depletion is
provided on the unit-of-production method. Oil is converted to mcfe at the rate
of six mcf per barrel. DD&A rates were $1.33 and $1.42 per mcfe in the quarters
ended September 30, 2001 and 2002 and $1.32 and $1.39 for the nine months ended
September 30, 2001 and 2002, respectively. Unproved properties had a net book
value of $25.7 million and $20.6 million at December 31, 2001 and September 30,
2002, respectively.

The Company's long-lived assets are reviewed for impairment quarterly
for events or changes in circumstances that indicate that the carrying amount of
an asset may not be recoverable in accordance with SFAS No. 121. Long-lived
assets are reviewed for potential impairments at the lowest level for which
there are identifiable cash flows that are largely independent of other groups
of assets.

The review is done by determining if the historical cost of proved
properties less the applicable accumulated depreciation, depletion and
amortization and abandonment is less than the estimated expected undiscounted
future cash flows. The expected future cash flows are estimated based on
management's plans to continue to produce and develop proved reserves. Expected
future cash flow from the sale of production of reserves is calculated based on
estimated future prices. Management estimates prices based upon market related
information including published futures prices. In years where market
information is not available, prices are escalated for inflation. The estimated
future level of production is based on assumptions surrounding future levels of
prices and costs, field decline rates, market demand and supply, and the
economic and regulatory climates.

When the carrying value exceeds such cash flows, an impairment loss is
recognized for the difference between the estimated fair market value and the
carrying value of the assets.

TRANSPORTATION AND FIELD ASSETS

The Company's gas gathering systems are generally located in proximity
to certain of its principal fields. Depreciation on these systems is provided on
the straight-line method based on estimated useful lives of four to fifteen
years. The Company also receives third party income for providing certain field
services which are recognized as earned. These revenues approximated $500,000 in
each of the three month periods ended September 2001 and 2002, and $1.4 million
and $1.5 million for the nine month periods, respectively. Depreciation on the
associated field assets is calculated on the straight-line method based on
estimated useful lives of three to seven years. Buildings are depreciated over
ten years.

OTHER ASSETS

The expense of issuing debt is capitalized and included in Other assets
on the balance sheet. These costs are generally amortized over the expected life
of the related securities (using the sum-of-the-years digits amortization
method). When a security is retired prior to maturity, related unamortized costs
are expensed. At September 30, 2002, these capitalized costs totaled $3.3
million. At September 30, 2002, the Company had a deferred tax asset of $8.9
million. At December 31, 2001, the Company had a $4.5 million net tax liability.
At September 30, 2002, Other assets included $3.3 million unamortized debt
issuance costs, $397,000 of long-term deposits, and $963,000 of marketable
securities held in the deferred compensation plan.

11

GAS IMBALANCES

The Company uses the sales method to account for gas imbalances,
recognizing revenue based on cash received rather than gas produced.

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING

Beginning in 2001, SFAS No. 133, "Accounting for Derivatives," required
that derivatives be recorded on the balance sheet as assets or liabilities at
fair value. For derivatives qualifying as hedges, the effective portion of
changes in fair value is recognized in Stockholders' equity as Other
Comprehensive Income ("OCI") and reclassified to earnings when the transaction
is consummated. Ineffective portions of such hedges are recognized in earnings
as they occur. On adopting SFAS No. 133 in January 2001, the Company recorded a
$72.1 million net unrealized pre-tax hedging loss on its balance sheet and an
offsetting deficit in OCI. Due to the decline in oil and gas prices since then,
the roll off of expiring hedges and the effect of new hedges, this loss had
become a $6.8 million unrealized pre-tax loss at September 30, 2002. SFAS No.
133 can greatly increase volatility of earnings and stockholders' equity of
independent oil companies which have active hedging programs such as Range.
Earnings are affected by the ineffective portion of a hedge contract (changes in
realized prices that do not match the changes in the hedge price). Ineffective
gains or losses are recorded in Interest and other revenue while the hedge
contract is open and may increase or reverse until settlement of the contract.
Stockholders' equity is affected by the increase or decrease in OCI. Typically,
when oil and gas prices increase, OCI decreases. The reduction in OCI at
September 30, 2002 related to increases in oil and gas prices since December 31,
2001. Of the $6.8 million unrealized pre-tax loss at September 30, 2002, $7.1
million of losses would be reclassified to earnings over the next twelve month
period and a gain of $243,000 for the periods thereafter, if prices remained
constant. Actual amounts that will be reclassified will vary as a result of
changes in prices.

The Company had hedge agreements with Enron North America Corp.
("Enron") for 22,700 Mmbtu per day at $3.20 per Mmbtu for the first three months
of 2002. At December 31, 2001, based on accounting requirements, an allowance
for bad debts of $1.3 million was recorded, offset by a $318,000 ineffective
gain included in income and a $1.0 million gain included in OCI related to these
defaulted hedge contracts. The gain included in OCI at year-end 2001 was
included in Interest and other revenue in the first quarter of 2002. In the
three months ended June 30, 2002 the Company wrote off this receivable against
the allowance for bad debts. The last Enron contract expired in March 2002. If
the Company recovers any of its $1.6 million unsecured claim, the recovery will
be reported as income at that time.

The Company enters into contracts to reduce the effect of fluctuations
in oil and gas prices. These contracts generally qualify as cash flow hedges;
however, certain of the contracts have an ineffective portion (changes in
realized prices that do not match the changes in hedge price) which is
recognized in earnings. Prior to 2001, gains and losses were determined monthly
and included in revenues in the period the hedged production was sold. Starting
in 2001, gains or losses on open contracts were recorded in OCI. The Company
also enters into swap agreements to reduce the risk of changing interest rates.
These agreements qualify as fair value hedges and related income or expense are
recorded as an adjustment to interest expense in the period covered.

Interest and other revenues in the consolidated statements of
operations reflected ineffective hedging losses of $321,000 and gains of $2.9
million for the three months and the nine months ended September 30, 2001,
respectively. Ineffective hedging losses of $419,000 and $2.6 million are
included for the three months and nine months ended September 30, 2002,
respectively. Net unrealized hedging gains and losses of $9.3 million (net of
$2.5 million losses on interest rate swaps) and restated OCI of a loss of $2.7
million (net of taxes) were recorded on the balance sheet at September 30, 2002.
See Note 7.

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COMPREHENSIVE INCOME

The Company follows SFAS No. 130, "Reporting Comprehensive Income,"
defined as changes in Stockholders' equity from non-owner sources, which is
calculated below (in thousands):

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect reported assets, liabilities, revenues and
expenses, as well as disclosure of contingent assets and liabilities. Actual
results could differ from estimates. Estimates which may significantly impact
the financial statements include reserves, impairment tests on oil and gas
properties, IPF valuation allowance and the fair value of derivatives.

RECENT ACCOUNTING PRONOUNCEMENTS

On September 11, 2002, the EITF issued EITF Issue No. 02-15,
Determining Whether Certain conversions of Convertible Debt to Equity Securities
are within the Scope of FASB Statement No. 84 "Induced Conversions of
Convertible Debt." Statement No. 84 was issued to amend APB Opinion No. 26,
"Early Extinguishment of Debt" to exclude from its scope convertible debt that
is converted to equity securities of the debtor pursuant to conversion
privileges different from those included in the terms of the debt at issuance,
and the change in conversion privileges is effective for a limited period of
time, involves additional consideration, and is made to induce conversion.
Statement 84 applies only to conversions that both (a) occur pursuant to changed
conversion privileges that are exercisable only for a limited period of time and
(b) include the issuance of all of the equity securities issuable pursuant to
conversion privileges included in the terms of the debt at issuance for each
debt instrument that is converted. The Task Force reached a consensus that
Statement 84 applies to all conversions that both (a) occur pursuant to changed
conversion privileges that are exercisable only for a limited period of time and
(b) include the issuance of all of the equity securities issuable pursuant to
conversion privileges included in the terms of the debt at issuance for each
debt instrument that is converted regardless of the party that initiates the
offer. This consensus should be applied prospectively to debt conversions
completed after September 11, 2002. Since 1999, the Company has retired 6%
Debentures and Trust Preferred securities, each of which are convertible into
common stock under the terms of the issue, by either purchasing securities for
cash or issuing common stock in exchange for such securities. Since the
exchanges of common stock for these convertible debt securities were at relative
market values, the convertible securities were retired at a substantial discount
to face value. Under the provisions of SFAS No. 84, when an inducement is issued
to retire convertible debt, the face value of the convertible debt security
shall be charged to Stockholders' equity (common stock and paid in capital), the
shares of common stock issued in excess of the shares that would have been
issued under the terms of the debt instrument are expensed at the market value
of such shares and an offsetting increase to paid in capital will also be
recorded. Therefore, instead of recording gains on retirements of such
securities acquired at substantial discounts to face value, an expense will be
recorded. There will be no difference in total Stockholders' equity from the
change in methods of recording the transactions. The Company plans to review
whether this accounting pronouncement makes entering into such transactions in
the future impractical.

In April 2002, the FASB issued SFAS No. 145, Rescission of SFAS Nos. 4,
44 and 64, Amendment of SFAS No. 13 and Technical Corrections, which rescinds
SFAS No. 4, Reporting Gains and Losses from

13

Extinguishment of Debt and an amendment of that statement, SFAS No. 64,
Extinguishment of Debt Made to Satisfy Sinking - Fund Requirements. Management
has not yet determined the effects of adopting this Statement on the financial
position or results of operations. However, it appears that gains or losses on
certain debt extinguishments previously reported as extraordinary will now
generally be included in pretax income. The Company intends to adopt SFAS No.
145 effective January 1, 2003.

In 2001, SFAS No. 143 "Accounting for Asset Retirement" established
rules for the recognition and measurement of retirement obligations associated
with long-lived assets. The pronouncement requires that retirement costs be
capitalized as part of the cost of related assets and subsequently expensed
using a systematic and rational method. The Company will adopt the statement
effective January 1, 2003. The transition adjustment resulting from the adoption
of SFAS No. 143 will be reported as the cumulative effect of a change in
accounting principle. Currently, the Company capitalized and expenses, through
depletion, such costs. The accrued liability for these costs is currently netted
against oil and gas properties in the balance sheet. At this time, the Company
cannot estimate the effect of SFAS No. 143's adoption on its financial position
or results of operations. However, given the large number of wells in which the
Company owns an interest, the effect could be significant.

(4) ACQUISITIONS

Acquisitions are accounted for as purchases. Purchase prices are
allocated to acquired assets and assumed liabilities based on estimates of fair
value. Acquisitions have been funded with internal cash flow, bank borrowings
and the issuance of debt and equity securities. The Company purchased various
properties for $2.7 million and $4.4 million during the nine months ended
September 30, 2001 and 2002, respectively.

(5) SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES

The Company has and will continue to consider exchanging common stock
or equity-linked securities for debt. Because the Company will begin applying
Statement 84 as its guidance for accounting for these transactions (See Note 3
"Accounting Pronouncements"), the Company believes these transactions have been
made less appealing, from an accounting perspective, than in the past. Existing
stockholders may be materially diluted if substantial exchanges are consummated.
The extent of dilution will depend on the number of shares and price at which
common stock is issued, the price at which newly issued securities are
convertible and the price at which debt is acquired.

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(6) INDEBTEDNESS

The Company had the following debt and Trust Preferred (as hereinafter
defined) outstanding as of the dates shown. Interest rates at September 30,
2002 excluding the impact of interest rate swaps, are shown parenthetically
(in thousands):

Interest paid in cash during the three months ended September 30, 2001
and 2002 totaled $11.0 million and $7.7 million, respectively. Interest paid in
cash during the nine months ended September 30, 2001 and 2002 totaled $28.1
million and $19.6 million, respectively. No interest expense was capitalized
during the three months or the nine months ended September 30, 2001 and 2002,
respectively.

PARENT SENIOR DEBT

In May 2002, the Company entered into an amended $225.0 million
revolving bank facility (the "Parent Facility"). The Parent Facility provides
for a borrowing base subject to redeterminations each April and October. The
borrowing base at October 1, 2002 was $145.0 million. The Company has the right
to increase the borrowing base by up to $10 million during any six month
borrowing base period based on a percentage of the face value of subordinated
debt (8.75% Notes, 6% Debentures or Trust Preferred) retired by the Company. In
October 2002, the Company elected to increase the borrowing base to $147.0
million under this provision. On October 31, 2002, $43.1 million was available.
The loan matures in July 2005. The weighted average interest rate was 5.9% and
3.8% for the three months ended September 30, 2001 and 2002, and 7.0% and 4.0%
for the nine months then ended, respectively. The interest rate is LIBOR plus a
margin of 1.50% to 2.25%, depending on outstandings. A commitment fee is paid on
the undrawn balance based on an annual rate of 0.375% to 0.50%. At September 30,
2002, the commitment fee was 0.375% and the interest rate margin was 1.75%. At
October 31, 2002, the interest rate was 3.6%.

NON-RECOURSE DEBT

The Company consolidates its proportionate share of borrowings on Great
Lakes' $275.0 million secured revolving bank facility (the "Great Lakes
Facility"). The Great Lakes Facility is non-recourse to Range and provides for a
borrowing base subject to redeterminations each April and October. On October
31, 2002, the borrowing base was $205.0 million of which $66.0 million was
available. The loan matures in January 2005. The interest rate on the Great

15

Lakes Facility is LIBOR plus 1.50% to 2.00%, depending on outstandings. A
commitment fee is paid on the undrawn balance at an annual rate of 0.25% to
0.50%. At September 30, 2002, the commitment fee was 0.375% and the interest
rate margin was 1.75%. The average interest rate on the Great Lakes Facility,
excluding hedges, was 5.9% and 3.9% for the three months ended September 30,
2001 and 2002 and 6.9% and 3.9% for the nine months then ended, respectively.
After hedging (see Note 7), the rate was 7.4% and 7.0% for the quarters and 7.8%
and 6.8% for the nine months ended September 30, 2001 and 2002, respectively. At
October 31, 2002, the interest rate was 3.6% excluding hedges and 6.7% after
hedging.

IPF has a $100.0 million secured revolving credit facility (the "IPF
Facility"). The IPF Facility is non-recourse to Range and matures in January
2004. The borrowing base under the IPF Facility is subject to re-determinations
each April and October. However, in November 2002, the borrowing base was
reduced to $16.9 million of which $100,000 was available on November 4, 2002.
The IPF Facility bears interest at LIBOR plus 1.75% to 2.25% depending on
outstandings. A commitment fee is paid on the un-drawn balance at an annual rate
of 0.375% to 0.50%. At September 30, 2002, the commitment fee was 0.50% and the
interest rate margin was 2.25%. The weighted average interest rate on the IPF
Facility was 5.8% and 4.2% for the three months ended September 30, 2001 and
2002, and 6.9% and 4.1% for the nine months ended September 30, 2001 and 2002,
respectively. As of October 31, 2002, the interest rate was 4.2%.

SUBORDINATED NOTES

The 8.75% Senior Subordinated Notes Due 2007 (the "8.75% Notes") are
redeemable at 104.375% of principal, declining 1.46% each January to par in
2005. The 8.75% Notes are unsecured general obligations subordinated to senior
debt. During the nine month period ended September 30, 2002, the Company
exchanged $875,000 face amount of the 8.75% Notes for 183,000 shares of common
stock. In addition, during the three month and nine month period ended September
30, 2002 the Company purchased $3.7 million and $8.7 million face amount of the
8.75% Notes for cash, respectively in the market, with a majority of the
repurchases at a discount. During the three month and nine month periods ended
September 30, 2001, the Company repurchased $10.0 million and $35.0 million face
amount of the 8.75% Notes in the market at a discount. Only cash repurchases are
reflected on the cash flow statement. The gain on all exchanges is included as a
Gain on retirement of debt securities on the Consolidated Statements of
Operations. On October 31, 2002, $69.6 million of the 8.75% Notes were
outstanding.

The 6% Convertible Subordinated Debentures Due 2007 (the "6%
Debentures") are convertible into common stock at the option of the holder at a
price of $19.25 per share. The 6% Debentures mature in 2007 and are redeemable
at 103.0% of principal, declining 0.5% each February to 101% in 2006, remaining
at that level until it becomes par at maturity. The 6% Debentures are unsecured
general obligations subordinated to all senior indebtedness, including the 8.75%
Notes. During the three month and nine month period ended September 30, 2001
$1.5 million of 6% Debentures were retired at a discount in exchange for 226,000
shares of common stock and $5.7 million of 6% Debentures were retired at a
discount in exchange for 759,000 shares of common stock, respectively. During
the nine month period ended September 30, 2002, $7.1 million of 6% Debentures
were retired at a discount in exchange for 1,166,000 shares of common stock. In
addition, $800,000 and $815,000 of 6% Debentures face amount were repurchased in
the three months and nine months ended September 30, 2002, respectively.
Extraordinary gains (net of taxes) of $215,000 and $87,000 were recorded in the
third quarter of 2001 and 2002, and $862,000 and $840,000 for the nine months
ended September 30, 2001 and 2002, respectively. On October 31, 2002, $21.6
million of 6% Debentures were outstanding.

TRUST PREFERRED - MANDITORILY REDEEMABLE SECURITIES OF SUBSIDIARY

In 1997, a special purpose affiliate (the "Trust") issued $120 million
of 5.75% Trust Convertible Preferred Securities (the "Trust Preferred"). The
Trust Preferred is convertible into the Company's common stock at a price of
$23.50 a share. The Trust invested the proceeds in 5.75% convertible junior
subordinated debentures of the Company (the "Junior Debentures"). The Junior
Debentures and the Trust Preferred mature in 2027 and are currently redeemable
at 103.45% of principal, declining 0.58% each November to par in 2007. The
Company guarantees payment on the Trust Preferred to a limited extent, which
taken with other obligations, provides a full subordinated guarantee. The
Company has the right to suspend distributions on the Trust Preferred for five
years without triggering a default. During such suspension, accumulated
distributions accrue additional interest at a rate of 5.75% per annum. The
accounts of the Trust are included in the consolidated financial statements
after eliminations. Distributions are recorded as interest expense in the
statement of operations and are tax deductible. During the nine months ended
September 30, 2001 and 2002, $2.4 million and $2.4 million of Trust Preferred
were reacquired at a

16

discount in exchange for 231,000 and 283,000 shares of common stock. In
addition, during the three months ended September 30, 2002 the Company
repurchased for cash $2.5 million face amount of Trust Preferred at a discount.
Extraordinary gains (net of taxes) of $619,000 and $1.2 million were recorded
for the nine months ended September 30, 2001 and 2002, respectively. On October
31, 2002, $84.8 million face amount of the Trust Preferred was outstanding.

On September 11, 2002, the EITF issued EITF Issue No. 02-15,
Determining Whether Certain conversions of Convertible Debt to Equity Securities
are within the Scope of FASB Statement No. 84 "Induced Conversions of
Convertible Debt." Statement No. 84 was issued to amend APB Opinion No. 26,
"Early Extinguishment of Debt" to exclude from its scope convertible debt that
is converted to equity securities of the debtor pursuant to conversion
privileges different from those included in the terms of the debt at issuance,
and the change in conversion privileges is effective for a limited period of
time, involves additional consideration, and is made to induce conversion.
Statement 84 applies only to conversions that both (a) occur pursuant to changed
conversion privileges that are exercisable only for a limited period of time and
(b) include the issuance of all of the equity securities issuable pursuant to
conversion privileges included in the terms of the debt at issuance for each
debt instrument that is converted. The Task Force reached a consensus that
Statement 84 applies to all conversions that both (a) occur pursuant to changed
conversion privileges that are exercisable only for a limited period of time and
(b) include the issuance of all of the equity securities issuable pursuant to
conversion privileges included in the terms of the debt at issuance for each
debt instrument that is converted, regardless of the party that initiates the
offer. This consensus should be applied prospectively to debt conversions
completed after September 11, 2002. Since 1999, the Company has retired 6%
Debentures and Trust Preferred securities, each of which are convertible into
common stock under the terms of the issue, by either purchasing securities for
cash or issuing common stock in exchange for such securities. Since the
exchanges of common stock for these convertible debt securities were at relative
market values, the convertible securities were retired at a substantial discount
to face value. Under the provisions of SFAS No. 84, when an inducement is issued
to retire convertible debt, the face value of the convertible debt security
shall be charged to Stockholders' equity (common stock and paid in capital), the
shares of common stock issued in excess of the shares that would have been
issued under the terms of the debt instrument are expensed at the market value
of such shares and an offsetting increase to paid in capital will also be
recorded. Therefore, instead of recording gains on retirements of such
securities acquired at substantial discounts to face value, an expense will be
recorded. There will be no difference in total Stockholders' equity from the
change in methods of recoding the transactions.

The debt agreements contain covenants relating to net worth, working
capital, dividends and financial ratios. The Company was in compliance with all
covenants at September 30, 2002. Under the most restrictive covenant, which is
embodied in the 8.75% Notes, approximately $800,000 of other restricted payments
could be made at September 30, 2002. As this covenant limits the ability to
repurchase the 6% Convertible Debentures and Trust Preferred, the Company may
seek to amend it. Under the Parent Facility, common dividends are permitted
beginning January 1, 2003. Dividends on the Trust Preferred may not be paid
unless certain ratio requirements are met. The Parent Facility provides for a
restricted payment basket of $20.0 million plus 50% of net income (excluding
Great Lakes and IPF) plus 66 2/3% of distributions, dividends or payments of
debt from or proceeds from sales of equity interests of Great Lakes and IPF plus
66 2/3% of net cash proceeds from common stock issuances. The Company estimates
that $20.4 million was available under the Parent Facility's restricted payment
basket on September 30, 2002.

(7) FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

The Company's financial instruments include cash and equivalents,
receivables, payables, debt and commodity and interest rate derivatives. The
book value of cash and equivalents, receivables and payables is considered
representative of fair value because of their short maturity. The book value of
bank borrowings is believed to approximate fair value because of their floating
rate structure.

A portion of future oil and gas sales is periodically hedged through
the use of option or swap contracts. Realized gains and losses on these
instruments are reflected in the contract month being hedged as an adjustment to
oil and gas revenue. At times, the Company seeks to manage interest rate risk
through the use of swaps. Gains and losses on interest rate swaps are included
as an adjustment to interest expense in the relevant periods.

At September 30, 2002, the Company had hedging contracts covering 58.4
Bcf of gas at prices averaging $3.96 per mcf and 1.7 million barrels of oil
averaging $24.11 per barrel. Their fair value, represented by the estimated
amount that would be realized upon termination, based on contract prices versus
the New York Mercantile Exchange ("NYMEX") price on September 30, 2002, was a
net unrealized pre-tax loss of $6.8 million. The

17

contracts expire monthly through December 2005. Gains or losses on open and
closed hedging transactions are determined as the difference between the
contract price and the reference price, which is closing prices on the NYMEX.
Transaction gains and losses on settled contracts are determined monthly and are
included as increases or decreases to oil and gas revenues in the period the
hedged production is sold. Oil and gas revenues were increased by $8.5 million
and $3.5 million due to hedging in the quarters ended September 30, 2001 and
2002 and decreased by $20.2 million and increased by $18.8 million for the nine
months then ended, respectively.

The following table sets forth the book and estimated fair values of
financial instruments (in thousands):

(1) Fair value based on quotes received from certain brokerage houses.
Quotes for September 30, 2002 were 99.5% for the 8.75% Notes, 81.5%
for the 6% Debentures and 60.5% for the 5.75% Trust Preferred.

18

The following schedule shows the effect of closed oil and gas hedges
since January 1, 2001 and the value of open contracts at September 30, 2002 (in
thousands):

19

Interest rate swaps are accounted for on the accrual basis with income
or expense being recorded as an adjustment to interest expense in the period
covered. For the three months and the nine months ended September 30, 2002, the
related losses were insignificant. Neither the Parent Company nor IPF had
interest rate swaps in effect. However, Great Lakes had nine interest rate swap
agreements totaling $100.0 million, of which 50% is consolidated at Range. Two
agreements totaling $45.0 million at LIBOR rates of 7.1% expire in May 2004. Two
agreements totaling $20.0 million at 6.2% expire in December 2002. Five
agreements totaling $35.0 million at rates averaging 4.63% expire in June of
2003. The fair value of these swaps at September 30, 2002 approximated a net
loss of $4.9 million of which 50% is consolidated at Range.

The combined fair value of net losses on oil and gas hedges and net
losses on interest rate swaps totaled $9.3 million and appear as short-term and
long-term Unrealized derivative gains and short-term and long-term Unrealized
derivative losses on the balance sheet. Hedging activities are conducted with
major financial or commodities trading institutions which management believes
are acceptable credit risks. At times, such risks may be concentrated with
certain counterparties. The creditworthiness of these counterparties is subject
to continuing review.

(8) COMMITMENTS AND CONTINGENCIES

The Company is involved in various legal actions and claims arising in
the ordinary course of business, which includes a royalty owner suit filed in
2000 asking for class action certification against Great Lakes and the Company.
In the opinion of management, such litigation and claims are likely to be
resolved without material adverse effect on the Company's financial position or
results of operations.

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(9) STOCKHOLDERS' EQUITY

The Company has authorized capital stock of 110 million shares which
includes 100 million of common stock and 10 million of preferred stock. In 1995,
the Company issued $28.8 million of $2.03 Convertible Exchangeable Preferred
Stock which was convertible into common stock at a price of $9.50. The issue was
retired in December 2001. Stockholders equity was $217.6 million at September
30, 2002.

The following is a schedule of changes in the number of outstanding
common shares since the beginning of 2001:

21

(10) STOCK OPTION AND PURCHASE PLANS

The Company has four stock option plans, of which two are active, and a
stock purchase plan. Under these plans, incentive and non-qualified options and
stock purchase rights are issued to directors, officers and employees pursuant
to decisions of the Compensation Committee of the Board of Directors (the
"Board"). Information with respect to the option plans is summarized below:

In 1999, shareholders approved a stock option plan (the "1999 Plan")
authorizing the issuance of up to 1.4 million options. In 2001, shareholders
approved an increase in the number of options issuable to 3.4 million. The
Company submitted a proposal to shareholders, which was approved at the annual
meeting of shareholders in May 2002, increasing the number of options issuable
to 6.0 million. All options issued under the 1999 Plan from August 5, 1999
through May 22, 2002 vested 25% per year beginning after one year and have a
maximum term of 10 years. Options issued under the 1999 Plan after May 22, 2002
vest 30%, 30%, 40% over a three year period and have a maximum term of 5 years.
During the nine months ended September 30, 2002, 1,428,850 options were granted
under the 1999 Plan at exercise prices of $4.43, $4.87 and $5.49 a share to
eligible employees, including 250,000 and 175,000 options granted to the
Chairman and the President, respectively. At September 30, 2002, 2.5 million
options were outstanding under the 1999 Plan at exercise prices of $1.94 to
$6.67.

In 1994, shareholders approved the Outside Directors' Stock Option Plan
(the "Directors' Plan"). In 2000, shareholders approved an increase in the
number of options issuable to 300,000, extended the term of the options to ten
years and set the vesting period at 25% per year beginning a year after grant.
Effective May 22, 2002, the term of the options was changed to five years with
vesting immediately upon grant. Director's options are normally granted upon
election of a Director or annually upon their reelection at the Annual Meeting.
At September 30, 2002, 152,000 options were outstanding under the Directors'
Plan at exercise prices of $2.81 to $6.00.

The Company maintains the 1989 Stock Option Plan (the "1989 Plan")
which authorizes the issuance of up to 3.0 million options. No options have been
granted under this plan since March 1999. Options issued under the 1989 Plan
vest 30% after a year, 60% after two years and 100% after three years and expire
in 5 years. At September 30, 2002, 468,730 options remained outstanding under
the 1989 Plan at exercise prices of $2.63 to $7.63 a share.

The Domain stock option plan was adopted when that company was acquired
with existing Domain options becoming exercisable into Range common stock. No
options have been granted under this plan since the acquisition. At September
30, 2002, 131,702 options, all of which were vested, remained outstanding at an
exercise price of $3.46 a share.

22

In total, 3.3 million options were outstanding at September 30, 2002
at exercise prices of $1.94 to $7.63 a share as follows:

In 1997, shareholders approved a plan (the "Stock Purchase Plan")
authorizing the sale of 900,000 shares of common stock to officers, directors,
key employees and consultants. In May 2001, shareholders approved an increase in
the number of shares authorized under the Stock Purchase Plan to 1,750,000.
Under the Stock Purchase Plan, the right to purchase shares at prices ranging
from 50% to 85% of market value may be granted. Acquired shares are subject to a
one year holding requirement. To date, all purchase rights have been granted at
75% of market. Due to the discount from market value, the Company recorded
additional compensation expense of $348,000 and $126,000 in the nine months
ended September 30, 2001 and 2002, respectively. Through September 30, 2002,
1,213,819 shares have been sold under the Stock Purchase Plan for $5.1 million.
At September 30, 2002, rights to purchase 242,500 shares were outstanding with
terms expiring in May 2003.

(11) DEFERRED COMPENSATION

During 1996, the Board of Directors of the Company adopted a deferred
compensation plan (the "Plan"). The Plan gives certain senior employees the
ability to defer all or a portion of their salaries and bonuses and invest in
Common Stock of the Company at a discount to market prices or make other
investments at the employee's discretion. The stock held in the benefit trust is
treated in a manner similar to treasury stock with an offsetting amount
reflected as a deferred compensation liability of the Company and the carrying
value of the deferred compensation is adjusted to fair value each reporting
period by a charge or credit to operations in the general and administrative
expense category on the Company's statement of operations. The Company recorded
total expenses (credit) related to the fair value adjustment of the Plan of
($1.3 million) and ($1.2 million) the three months ended September 30, 2001 and
2002, respectively. For the nine months ended September 30, 2001 and 2002, the
Company recorded total expenses (credit) of ($2.3 million) and $71,000,
respectively.

(12) BENEFIT PLAN

The Company maintains a 401(k) Plan which permits employees to
contribute up to 50% of their salary (subject to Internal Revenue limitations)
on a pre-tax basis. Historically, the Company has made discretionary
contributions to the 401(k) Plan annually. All Company contributions become
fully vested after the individual employee has three years of service with the
Company. In December 2000 and 2001, the Company contributed $483,000 and
$554,000, at then market value, respectively, of the Company's common stock to
the 401(k) Plan. Employees have a variety of investment options in the 401(k)
Plan. The Company does not require that employees hold the contributed stock in
their account. Employees are encouraged to diversify out of Company stock based
on their personal investment strategies.

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(13) INCOME TAXES

The Company follows SFAS No. 109, "Accounting for Income Taxes,"
pursuant to which the liability method is used. Under this method, deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and regulations that will be in effect when the differences
are expected to reverse. The significant components of deferred tax liabilities
and assets were as follows (in thousands):

A deferred tax liability, generated by gains in OCI, of $4.5 million
was recorded on the balance sheet at December 31, 2001. The deferred tax asset
of $12.2 million at December 31, 2001 was used to offset the majority of the
deferred tax liability primarily resulting from unrealized hedging gains
included in OCI. Therefore, the benefit of the reduced liability is recorded in
2002 as the hedges creating the gains in OCI transfer to realized revenue. As of
September 30, 2002, the deferred tax asset was $8.9 million. During the three
and nine months ended September 30, 2002, the Company recorded a deferred tax
expense (benefit) in the statement of operations of $363,000 and $(4.6) million,
respectively. The deferred tax benefit included $3.9 million, $3.4 million and
$3.0 million which was reclassified from other comprehensive income during the
first, second and third quarters of 2002, respectively. The Company estimates an
additional $1.9 million deferred tax benefit will be reclassified from Other
comprehensive income to income in the fourth quarter.

At December 31, 2001, the Company had regular net operating loss
("NOL") carryovers of $174.3 million and alternative minimum tax ("AMT") NOL
carryovers of $155.9 million that expire between 2012 and 2020. Regular NOL's
generally offset taxable income and to such extent, no income tax payments are
required. To the extent that AMT NOL's offset AMT Income, no alternative minimum
tax payment is due. NOL's generated prior to a change of control are subject to
limitations. The Company experienced several changes of control between 1994 and
1998. Consequently, the use of $34.1 million of NOL's is limited to $10.2
million per year. No such annual limitation exists on the remaining NOL's. At
December 31, 2001, the Company had a statutory depletion carryover of $6.6
million and an AMT credit carryover of $660,000 which are not subject to
limitation or expiration.

24

(14) EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per common share (in thousands except per share amounts):

During the three months ended September 30, 2001 and 2002, 120,000 and
165,000 stock options were included in the computation of diluted earnings per
share and for the nine months then ended, 139,000 and 168,000 stock options were
included in such computation. Remaining stock options, the 6% Debentures, the
Trust Preferred and the $2.03 Preferred were not included because their
inclusion would have been antidilutive.

(15) MAJOR CUSTOMERS

The Company markets its production on a competitive basis. Gas is sold
under various types of contracts ranging from life-of-the-well to short-term
contracts that are cancelable within 30 days. Oil purchasers may be changed on
30 days notice. The price for oil is generally equal to a posted price set by
major purchasers in the area. The Company sells to oil purchasers on the basis
of price and service. For the nine months ended September 30, 2002, two
customers, Duke Energy Trading and Marketing and Petrocom Energy Group, LTD,
accounted for 13% and 12%, respectively, or more of oil and gas revenues.
Management believes that the loss of any one customer would not have a material
long-term adverse effect on the Company.

Between late 1999 and September 30, 2001, Great Lakes sold
approximately 90% of its gas production to FirstEnergy, at prices based on the
close of NYMEX contracts each month plus a basis differential. In mid-2001,
Great Lakes began selling its gas to various purchasers including FirstEnergy.
Over the next twelve months, Great

25

Lakes expects to sell approximately a third of its gas to FirstEnergy. At
December 31, 2001, 91% of Great Lakes gas was being sold at prices based on the
close of NYMEX contracts each month plus a basis differential. The remainder is
sold at a fixed price.

(16) OIL AND GAS ACTIVITIES

The following summarizes selected information with respect to producing
activities. Exploration costs include capitalized as well as expensed outlays
(in thousands):

(a) Includes $5,879 and $9,257 of exploration costs expensed in 2001
and the nine months ended September 30, 2002, respectively.
(b) Includes $3,792 and $4,405 for oil and gas reserves, the remainder
represents acreage purchases in 2001 and the nine months ended
September 30, 2002, respectively.

26

(17) INVESTMENT IN GREAT LAKES

The Company owns 50% of Great Lakes and consolidates its proportionate
interest in the joint venture's assets, liabilities, revenues and expenses. The
following table summarizes the 50% interest in Great Lakes financial statements
as of or for the nine months ended September 30, 2002 (in thousands):

(18) EXTRAORDINARY ITEM

In the third quarter of 2001, $10.0 million of 8.75% Notes was
repurchased for cash and $1.5 million and $120,000 of 6% Debentures and $2.03
Convertible Preferred, respectively, was exchanged for common stock. An
extraordinary gain of $319,000 (net of $172,000 of taxes) was recorded because
the securities were acquired at a discount. In the third quarter of 2002,
$800,000, $2.5 million and $3.7 million of 6% Debentures, 5.75% Preferred and
8.75% Notes, respectively, were repurchased for cash. An extraordinary gain of
$687,000 (net of $363,000 of taxes) was recorded because the securities were
acquired at a discount. For the nine months ended September 30, 2001 and 2002,
respectively, the Company recorded extraordinary gains of $1.6 million (net of
taxes of $886,000) and $2.0 million (net of taxes of $1.1 million). See Note 6
for further information on exchanges and repurchases. See Note 3 to the
consolidated financial statements "Recent Accounting Pronouncements" regarding
further guidance on SFAS 84 and EITF 02-15 and accounting for extraordinary
gains.

27

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

FACTORS AFFECTING FINANCIAL CONDITION AND LIQUIDITY

CRITICAL ACCOUNTING POLICIES

The Company's discussion and analysis of its financial condition and
results of operation are based upon consolidated financial statements, which
have been prepared in accordance with accounting principles generally adopted in
the United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. Application of certain of the
Companies accounting policies, including those related to oil and gas revenues,
bad debts, oil and gas properties, marketable securities, income taxes and
contingencies and litigation, require significant estimates. The Company bases
its estimates on historical experience and various other assumptions that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions. The Company
believes the following critical accounting policies affect its more significant
judgments and estimates used in the preparation of its consolidated financial
statements.

Proved oil and natural gas reserves - Proved reserves are defined by
the U.S. Securities and Exchange Commission ("SEC") as those volumes of crude
oil, condensate, natural gas liquids and natural gas that geological and
engineering data demonstrate with reasonable certainty are recoverable from
known reservoirs under existing economic and operating conditions. Proved
developed reserves are volumes expected to be recovered through existing wells
with existing equipment and operating methods. Although the Company's engineers
are knowledgeable of and follow the guidelines for reserves as established by
the SEC, the estimation of reserves requires the engineers to make a significant
number of assumptions based on professional judgment. Estimated reserves are
often subject to future revision, certain of which could be substantial, based
on the availability of additional information, including: reservoir performance,
new geological and geophysical data, additional drilling, technological
advancements, price changes and other economic factors. Changes in oil and
natural gas prices can lead to a decision to start-up or shut-in production,
which can lead to revisions to reserve quantities. Reserve revisions inherently
lead to adjustments of depreciation rates utilized by the Company. The Company
can not predict the types of reserve revisions that will be required in future
periods.

Successful efforts accounting - The Company utilizes the successful
efforts method to account for exploration and development expenditures.
Unsuccessful exploration wells are expensed and can have a significant effect on
operating results. Successful exploration drilling costs and all development
capital expenditures are capitalized and systematically charged to expense using
the units of production method based on proved developed oil and natural gas
reserves as estimated by the Company's engineers. The Company also uses proved
developed reserves to recognize expense for future estimated dismantlement and
abandonment costs.

Impairment of properties - The Company continually monitors its
long-lived assets recorded in Property, Plant and Equipment in the Consolidated
Balance Sheet to make sure that they are fairly presented. The Company must
evaluate its properties for potential impairment when circumstances indicate
that the carrying value of an asset could exceed its fair value. A significant
amount of judgment is involved in performing these evaluations since the results
are based on estimated future events. Such events include a projection of future
oil and natural gas sales prices, an estimate of the ultimate amount of
recoverable oil and natural gas reserves that will be produced from a field, the
timing of this future production, future costs to produce the oil and natural
gas, and future inflation levels. The need to test a property for impairment can
be based on several factors, including a significant reduction in sales prices
for oil and/or natural gas, unfavorable adjustment to reserves, or other changes
to contracts environmental regulations or tax laws. All of these same factors
must be considered when testing a property's carrying value for impairment. The
Company can not predict the amount of impairment charges that may be recorded in
the future.

Income taxes - The Company is subject to income and other similar taxes
in all areas in which it operates. When recording income tax expense, certain
estimates are required because: (a) income tax returns are generally filed
months after the close of its calendar year; (b) tax returns are subject to
audit by taxing authorities and audits can often take years to complete and
settle; and (c) future events often impact the timing of when income tax
expenses and benefits are recognized by the Company. The Company has deferred
tax assets relating to tax operating loss carryforwards and other deductible
differences. The Company routinely evaluates all deferred tax

28

assets to determine the likelihood of their realization. A valuation allowance
has not been recognized for deferred tax assets due to management's belief that
these assets are likely to be realized.

The Company's deferred tax assets exceed deferred tax liabilities at
year-end 2001, before considering the effects of Other comprehensive income
("OCI"). In determining deferred tax liabilities, accounting rules require OCI
to be considered, even though such income (loss) has not yet been earned. The
inclusion of OCI causes deferred tax liabilities to exceed deferred tax assets
by $4.5 million, therefore, such amount is recorded as deferred tax liability at
year-end 2001 on the Company's balance sheet. The Company needs to earn
approximately $34.8 million of pre-tax income from the unrealized hedges
included in OCI at year-end before statutory taxes will be recorded on the
income statement in 2002. Due to the complexity of the accounting rules
regarding taxes, the timing of when the Company will record deferred taxes is
uncertain.

The Company occasionally is challenged by taxing authorities over the
amount and/or timing of recognition of revenues and deductions in its various
income tax returns. Although the Company believes that it has adequate accruals
for matters not resolved with various taxing authorities, gains or losses could
occur in future years from changes in estimates or resolution of outstanding
matters.

Legal, environmental and other contingent matters - A provision for
legal, environmental and other contingent matters is charged to expense when the
loss is probable and the cost can be reasonably estimated. Judgment is often
required to determine when expenses should be recorded for legal, environmental
and contingent matters. In addition, the Company often must estimate the amount
of such losses. In many cases, management's judgment is based on interpretation
of laws and regulations, which can be interpreted differently by regulators
and/or courts of law. The Company's management closely monitors known and
potential legal, environmental and other contingent matters, and makes its best
estimate of when the Company should record losses for these based on information
available to the Company.

Other significant accounting policies requiring estimates include the
following: The Company recognizes revenues from the sale of products and
services in the period delivered. Revenues at IPF are recognized as earned. We
provide an allowance for doubtful accounts for specific receivables we judge
unlikely to be collected. At IPF, all receivables are evaluated quarterly and
provisions for uncollectible amounts are established. The Company records a
write down of marketable securities when the decline in market value is
considered to be other than temporary. Impairments are recorded when management
believes that a property's net book value is not recoverable based on current
estimates of expected future cash flows.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended September 30, 2002, the Company spent
$68.0 million on development, exploration and acquisitions. During the period,
debt and Trust Preferred were reduced by $27.5 million. At September 30, 2002,
the Company had $463,000 in cash, total assets of $637.9 million and, including
the Trust Preferred as debt, a debt to capitalization (including debt, deferred
taxes and stockholders' equity) ratio of 63%. Excluding the Trust Preferred from
debt and equity, the debt to capitalization ratio was 56%. Available borrowing
capacity on the

29

Company's bank lines at September 30, 2002 was $39.4 million at the parent, a
net $34.5 million at Great Lakes and $7.9 million at IPF. Long-term debt at
September 30, 2002 totaled $364.7 million. This included $101.6 million of
parent bank borrowings, a net $68.0 million at Great Lakes, $19.1 million at
IPF, $69.6 million of 8.75% Notes, $21.6 million of 6% Debentures and $84.8
million of Trust Preferred.

During the nine months ended September 30, 2002, 1.6 million shares of
common stock were exchanged for $7.1 million of 6% Debentures, $2.4 million of
Trust Preferred and $875,000 of 8.75% Notes. In addition, $800,000 face amount
of 6% Debentures, $2.5 million face amount of 5.75% Trust Preferred and $8.7
million face amount of 8.75% Notes were repurchased for cash. A $2.0 million
extraordinary gain on retirement (net of taxes) was recorded as the securities
were acquired at a discount. (See Note 3 to the consolidated financial
statements "Recent Accounting Pronouncements").

The Company believes its capital resources are adequate to meet its
requirements for at least the next twelve months; however, future cash flows are
subject to a number of variables including the level of production and prices as
well as various economic conditions that have historically affected the oil and
gas business. There can be no assurance that internal cash flow and other
capital sources will provide sufficient funds to maintain planned capital
expenditures.

Cash Flow

The Company's principal sources of cash are operating cash flow and
bank borrowings. The Company's cash flow is highly dependent on oil and gas
prices. The Company has entered into hedging agreements covering approximately
70%, 60%, 30% and 10% of anticipated production from proved reserves on an mcfe
basis for the remainder of 2002, 2003, 2004 and 2005, respectively. The $72.5
million of capital expenditures (which included $8.5 million for abandonment) in
the nine months ended September 30, 2002 was funded with internal cash flow. Net
cash provided by operations for the nine months ended September 30, 2001 and
2002 was $93.3 million and $79.1 million, respectively. Cash flow from
operations decreased from the prior year with lower prices and volumes, higher
exploration and general and administrative expense being somewhat offset by
lower direct operating and interest expense. Net cash used in investing for the
nine months ended September 30, 2001 and 2002 was $52.8 million and $65.8
million, respectively. The 2001 period included $61.6 million of additions to
oil and gas properties partially offset by $6.9 million of IPF receipts (net of
fundings) and $2.0 million in asset sales. The 2002 period included $72.5
million of additions to oil and gas properties partially offset by $5.8 million
of IPF receipts (net of fundings). Net cash used in financing for the nine
months ended September 30, 2001 and 2002 was $38.3 million and $16.2 million,
respectively. During the first nine months of September 2002, total debt
(including Trust Preferred) declined $27.5 million. Parent bank debt increased
which was more than offset by decreases in non-recourse bank debt of $11.7
million, Subordinated Notes (8.75% Notes and 6% Debentures) of $17.5 million and
the Trust Preferred of $4.9 million. The net reduction in debt was the result of
exchanges of common stock and the use of excess cash flow to reduce debt.

Capital Requirements

During the nine months ended September 30, 2002, the $72.5 million of
capital expenditures was funded with internal cash flow. The Company seeks to
entirely fund its capital budget with internal cash flow. Based on the 2002
capital budget of $100.0 million, the Company sought to increase production and
expand the reserve base. Due to certain production interruptions experienced
this year, production for the year is not expected to increase. However, the
Company believes production will begin to grow by year-end. The Company
currently anticipates the capital expenditure program will be entirely funded
with internal cash flow in 2002 and will approximate $90.0-$95.0 million.

Banking

The Company maintains three separate revolving bank credit facilities:
a $225.0 million facility at the Parent; a $100.0 million facility at IPF and a
$275.0 million facility at Great Lakes. Each facility is secured by
substantially all the borrowers' assets. The IPF and Great Lakes facilities are
non-recourse to Range. As Great Lakes is 50% owned, half its borrowings are
consolidated in Range's financial statements. Availability under the facilities
is subject to borrowing bases set by the banks semi-annually and in certain
other circumstances. The borrowing bases are dependent on a number of factors,
primarily the lenders' assessment of the future cash flows.

30

Redeterminations, other than increases, require approval of 75% of the lenders,
increases require unanimous approval.

At October 31, 2002, the Parent had a $147.0 million borrowing base of
which $43.1 million was available. Great Lakes, half of which is consolidated at
Range, had a $205.0 million borrowing base, of which $66.0 million was
available. In November 2002, IPF's borrowing base was redetermined to be $16.9
million, of which $100,000 was currently available on November 4.

Hedging
Oil and Gas Prices

The Company regularly enters into hedging agreements to reduce the
impact of fluctuations in oil and gas prices. The Company's current policy, when
futures prices justify, is to hedge 50% to 75% of anticipated production from
existing proved reserves on a rolling 12 to 18 month basis. At September 30,
2002 hedges were in place covering 58.4 Bcf of gas at prices averaging $3.96 per
Mmbtu and 1.7 million barrels of oil at prices averaging $24.11 per barrel.
Their fair value at September 30, 2002 (the estimated amount that would be
realized on termination based on contract versus NYMEX prices) was a net
unrealized pre-tax loss of $6.8 million. The contracts expire monthly and cover
approximately 70%, 60%, 30% and 10% of anticipated production from proved
reserves on an mcfe basis for the remainder of 2002, 2003, 2004 and 2005,
respectively. Gains or losses on open and closed hedging transactions are
determined as the difference between contract price and a reference price,
generally closing prices on the NYMEX. Gains and losses are determined monthly
and are included as increases or decreases in oil and gas revenues in the period
the hedged production is sold. An ineffective portion (changes in contract
prices that do not match changes in the hedge price) of open hedge contracts is
recognized in earnings as it occurs. Net decreases to oil and gas revenues from
hedging for the nine months ended September 30, 2001 were $20.2 million and oil
and gas revenues were increased by $18.8 million from hedging for the nine
months ended September 30, 2002.

Interest Rates

At September 30, 2002, Range had $364.7 million of debt (including
Trust Preferred) outstanding. Of this amount, $176.0 million bore interest at
fixed rates averaging 7.0%. Senior debt and non-recourse debt totaling $188.7
million bore interest at floating rates which averaged 3.7% at September 30,
2002. At times, the Company enters into interest rate swap agreements to limit
the impact of interest rate fluctuations on its floating rate debt. At September
30, 2002 Great Lakes had interest rate swap agreements totaling $100.0 million,
50% of which is consolidated at Range. Two agreements totaling $45.0 million at
rates of 7.1% expire in May 2004, two agreements totaling $20.0 million at 6.2%
expire in December 2002, and five agreements totaling $35.0 million at rates
averaging 4.65% expire in June 2003. The values of these swaps are marked to
market quarterly. The fair value of the swaps, based on then current quotes for
equivalent agreements at September 30, 2002 was a net loss of $4.9 million, of
which 50% is consolidated at Range. The 30-day LIBOR rate on September 30, 2002
was 1.81%. A 1% increase or decrease in short-term interest rates would cost or
save the Company approximately $1.4 million in annual interest expense.

Capital Restructuring Program

As described in Note 2 to the Consolidated Financial Statements, the
Company took a number of steps beginning in 1998 to strengthen its financial
position. These steps included asset sales and the exchange of common stock for
fixed income securities. These initiatives have helped reduce parent company
bank debt from $365.2 million to $101.6 million and total debt (including Trust
Preferred) from $727.2 million to $364.7 million at September 30, 2002. While
the Company's financial position has stabilized, management believes debt
remains too high. To return to its historical posture of consistent
profitability and growth, the Company believes it should further reduce debt.
Management currently believes the Company has sufficient cash flow and liquidity
to meet its obligations for the next twelve months. However, a significant drop
in oil and gas prices or a reduction in production or reserves would reduce the
Company's ability to fund capital expenditures and meet its financial
obligations.

31

INFLATION AND CHANGES IN PRICES

The Company's revenues, the value of its assets, its ability to obtain
bank loans or additional capital on attractive terms have been and will continue
to be affected by changes in oil and gas prices. Oil and gas prices are subject
to significant fluctuations that are beyond the Company's ability to control or
predict. During the first nine months of 2002, the Company received an average
of $22.32 per barrel of oil and $3.44 per mcf of gas after hedging compared to
$25.85 per barrel of oil and $3.82 per mcf of gas in the same period of the
prior year. Although certain of the Company's costs and expenses are affected by
the general inflation, such inflation does not normally have a significant
effect on the Company. However, industry specific inflationary pressure built up
in late 2000 and 2001 due to favorable conditions in the industry. While product
prices declined in late 2001 and the three quarters of 2002, the cost of
services in the industry have not declined by the same percentage. Increases in
product prices could cause industry specific inflationary pressures to again
increase.

RESULTS OF OPERATIONS

SELECTED OPERATING DATA:

32

The following table identifies certain items in the results of
operations and is presented to assist in comparison of the second quarter and
nine month period of 2002 to the same periods of the prior year. The table
should be read in conjunction with the following discussions of results of
operations (in thousands):

Comparison of 2002 to 2001

Quarters Ended September 30, 2001 and 2002

Net income in the third quarter of 2002 totaled $9.2 million, compared
to $8.2 million in the prior year period. Gains on retirement of debt securities
were $319,000 (net of taxes) and $687,000 (net of taxes) for the third quarter
of 2001 and 2002, respectively. Production declined to 151.2 Mmcfe per day, a 1%
decrease from the prior year period. The decline was due to lower production at
Matagorda Island 519, other natural production declines in the Gulf Coast area
and an unfavorable impact on Gulf Coast volumes from tropical storm Isidore.
Revenues declined primarily due to a decrease in average prices per mcfe to
$3.46. The average prices received for oil decreased 13% to $22.05 per barrel,
increased 2% for gas to $3.48 per mcf and decreased 5% for NGL's to $13.49 per
barrel. Production expenses increased 4% to $10.5 million as a result of higher
production taxes and other operating expenses. Operating cost (including
production taxes) per mcfe produced averaged $0.76 in 2002 versus $0.72 in 2001.

Transportation and processing revenues increased 13% to $1.0 million in
2002 with higher oil trading margins and higher gas prices. IPF recorded income
of $1.3 million, a decrease of $377,000 from the 2001 period. 2001 IPF expenses
included an $473,000 unfavorable valuation allowance adjustment. IPF expenses in
2002 includes a $177,000 unfavorable valuation allowance. IPF revenue declined
from the previous year due to a smaller portfolio balance. During the quarter
ended September 30, 2002, IPF expenses included $391,000 of administrative costs
and $241,000 of interest, compared to prior year period administrative expenses
of $406,000 and interest of $388,000.

Exploration expense increased $575,000 to $1.8 million in 2002,
primarily due to additional seismic activity and dry hole costs. General and
administrative expenses increased 68% or $1.2 million to $3.1 million in the
quarter with higher legal, accounting and engineering technical consulting
costs, information systems programming costs and salary related expenses. The
fair value deferred compensation adjustment included in general and
administrative expense is a credit of $1.3 million in the three months ended
2001 and a credit of $1.2 million in 2002. (See Note 11 to the consolidated
financial statements).

33

Interest and other income was a loss of $181,000 in 2001 and a loss of
$125,000 in 2002. The 2001 period included $321,000 of ineffective hedging
losses and $103,000 of gains on asset sales. The 2002 period included $419,000
of ineffective hedging losses, and $266,000 of gains on asset sales. Interest
expense decreased 29% to $5.8 million as a result of the lower outstanding debt,
falling interest rates and lower marked to market swap interest expense. Total
debt was $409.6 million and $364.7 million at September 30, 2001 and 2002,
respectively. The average interest rates (excluding hedging) were 6.2% and 5.3%,
respectively, at September 30, 2001 and 2002 including fixed and variable rate
debt.

Depletion, depreciation and amortization ("DD&A") increased 5% from the
third quarter of 2001. The per mcfe DD&A rate for the third quarter of 2002 was
$1.42, a $0.09 increase from the rate for the third quarter of 2001. The DD&A
rate is determined based on year-end reserves (which are evaluated based on a
published ten-year price forecast) and the net book value associated with them
and, to a lesser extent, deprecation on other assets owned. The Company
currently expects its DD&A rate for the remainder of 2002 to approximate $1.37
per mcfe. The high DD&A rate will make it difficult for the Company to remain
profitable if commodity prices fall materially.

Income taxes were $3.0 million in the third quarter of 2001 (including
$172,000 included in extraordinary gain) versus $363,000 of tax expense
(included in extraordinary gain) in the three months ended September 30, 2002.
At December 31, 2000, the Company had a $72.0 million deferred tax asset for
which a full valuation allowance was recorded. Increased oil and gas prices
caused the Company to realize enough taxable income to fully utilize the asset
during the nine months of 2001. Therefore, the Company provided deferred taxes
on income in the quarter ended September 30, 2001 after the valuation allowance
was fully utilized. See Note 13 to the consolidated financial statements for
current year more information on 2002 taxes.

Nine Month Periods Ended September 30, 2001 and 2002

Net income for the nine months ended September 30, 2002 totaled $20.9
million compared to $45.2 million for the comparable period of 2001. Gains on
retirement of securities (net of taxes) of $1.6 million and $2.0 million are
included in the nine months ended September 30, 2001 and 2002, respectively.
Production for the nine months declined to 150.4 Mmcfe per day, a 1% decrease
from the prior year period. The decline was due to lower production at Matagorda
Island 519, other natural production declines in the Gulf Coast area and the
unfavorable impact on Gulf Coast volumes from tropical storm Isidore. Revenues
declined primarily due to a decrease in average prices per mcfe to $3.44. The
average prices received for oil decreased 14% to $22.32 per barrel, 10% for gas
to $3.44 per mcf and 38% for NGL's to $12.39 per barrel. Production expenses
decreased 14% to $29.7 million in 2002 as a result of lower production taxes and
workover costs in the Gulf of Mexico. Operating cost (including production
taxes) per mcfe produced averaged $0.72 in 2002 versus $0.83 in 2001.

Transportation and processing revenues are slightly higher in 2002 than
the prior year at $2.7 million. IPF recorded income of $3.5 million, a decrease
of $3.7 million from the 2001 period. IPF income in the 2001 period included a
favorable receivables adjustment of $1.9 million. IPF expenses in the 2002
period includes $2.7 million of unfavorable valuation allowance adjustments. IPF
income declined from the previous year due to smaller portfolio balance. During
the nine months ended September 30, 2002, IPF expenses included $1.3 million of
administrative costs and $754,000 of interest, compared to prior year period
administrative expenses of $1.3 million and interest of $1.5 million.

Exploration expense increased $5.6 million to $9.3 million in 2002,
primarily due to additional seismic activity and additional dry hole costs which
includes the first quarter $3.5 million dry hole cost in East Texas. General and
administrative expenses increased 51% to $12.3 million in the nine months ended
September 30, 2002 due to an increase in the fair value deferred compensation
adjustment, higher legal accounting and engineering consulting costs, insurance
and salary related expenses. The fair value deferred compensation adjustment
included in general and administrative expenses was a credit of $2.3 million in
the nine months ended 2001 and an expense of $71,000 in the 2002 period. (See
Note 11 to the consolidated financial statements).

Interest and other income decreased from a positive $3.1 million to a
loss of $3.4 million. The 2001 period included $2.9 million of ineffective
hedging gains, $1.2 million of gains on asset sales offset by a $1.4 million
write down of marketable securities. The 2002 period included $2.6 million of
ineffective hedging losses and a $1.2 million write down of marketable
securities. Interest expense decreased 32% to $17.5 million as a result of lower
outstanding

34

debt, falling interest rates and lower marked to market swap interest expense.
Total debt was $392.2 million and $364.7 million at December 31, 2001 and
September 30, 2002, respectively. The average interest rates were 5.5% and 5.3%,
respectively, at December 31, 2001 and September 30, 2002 including fixed and
valuable rate debt.

Depletion, depreciation and amortization increased 4% from the nine
month period of 2001. The per mcfe DD&A rate for the nine months of 2002 was
$1.39, a $0.07 increase from the rate for the same period of the prior year.

35

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The primary objective of the following information is to provide
forward-looking quantitative and qualitative information about the Company's
potential exposure to market risks. In the Company's case, the term "market
risk" refers primarily to the risk of loss arising from adverse changes in oil
and gas prices and interest rates. The disclosures are not meant to be
indicators of expected future losses, but rather indicators of reasonably
possible losses. This forward-looking information provides indicators of how
Range views and manages its ongoing market risk exposures. The Company's market
risk sensitive instruments were entered into for purposes other than trading.

Commodity Price Risk. Range's major market risk exposure is to oil and
gas pricing. Realized pricing is primarily driven by worldwide prices for oil
and market prices for North American gas production. Oil and gas prices have
been volatile and unpredictable for many years.

The Company periodically enters into hedging arrangements with respect
to its oil and gas production. Pursuant to these swaps, Range receives a fixed
price for its production and pays market prices to the contract counterparty.
This hedging is intended to reduce the impact of oil and gas price fluctuations
on the Company's results and not to increase profits. Realized gains or losses
are generally recognized in oil and gas revenues when the associated production
occurs. Starting in 2001, gains or losses on open contracts are recorded either
in current period income or other comprehensive income ("OCI"). The gains or
losses realized as a result of hedging are substantially offset in the cash
market when the commodity is delivered. Of the $6.8 million unrealized pre-tax
loss included in OCI at September 30, 2002 $7.1 million of losses would be
reclassified to earnings over the next twelve month period if prices remained
constant. The actual amounts that will be reclassified will vary as a result of
changes in prices. Range does not hold or issue derivative instruments for
trading purposes.

As of September 30, 2002 oil and gas hedges were in place covering 58.4
Bcf of gas and 1.7 million barrels of oil. Their fair value, represented by the
estimated amount that would be realized on termination based on contract versus
NYMEX prices, was a net unrealized pre-tax loss of $6.8 million at September 30,
2002. These contracts expire monthly through December 2005 and cover
approximately 70%, 60%, 30% and 10% of anticipated production from proved
reserves on an mcfe basis for the remainder of 2002, 2003, 2004 and 2005,
respectively. Gains or losses on open and closed hedging transactions are
determined as the difference between the contract price and the reference price,
generally closing prices on the NYMEX. Transaction gains and losses are
determined monthly and are included as increases or decreases to oil and gas
revenues in the period the hedged production is sold. Net realized losses
incurred relating to these swaps for the nine months ended September 30, 2001
were $20.2 million and net realized gains were $18.8 million for the nine months
ended September 30, 2002.

In the first nine months of 2002, a 10% reduction in oil and gas
prices, excluding amounts fixed through hedging transactions, would have reduced
revenue by $12.3 million. If oil and gas future prices at September 30, 2002 had
declined 10%, the unrealized hedging gain at that date would have increased
$26.8 million.

Interest rate risk. At September 30, 2002 Range had $364.7 million of
debt (including Trust Preferred) outstanding. Of this amount, $176.0 million
bore interest at fixed rates averaging 7.0%. Senior debt and non-recourse debt
totaling $188.7 million bore interest at floating rates averaging 3.7%. At
September 30, 2002 Great Lakes had nine interest rate swap agreements totaling
$100.0 million (See Note 7), 50% of which is consolidated at Range, which had a
fair value loss (Range's share) of $2.4 million at that date. A 1% increase or
decrease in short-term interest rates would cost or save the Company
approximately $1.4 million in annual interest expense.

36

ITEM 4. CONTROLS AND PROCEDURES.

Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to be
included in the Company's periodic filings with the Securities and Exchange
Commission. No significant changes in the Company's internal controls or other
factors that could affect these controls have occurred subsequent to the date of
such evaluation.

As detailed in Note 2 to our consolidated financial statements, the
Company chose to reaudit its Consolidated Financial Statements for the three
years ended December 31, 2001 and in the course of such reaudit KPMG LLP advised
the Company that a series of restatements were appropriate. As a result of that
reaudit and restatement process, KPMG advised the Company that it may have had a
material weakness in its system of internal accounting controls. A company's
internal accounting controls should function to ensure (a) the reliability of
financial reporting; (b) the effectiveness and efficiency of operations; and (c)
compliance with applicable laws and regulations. Given the restatements, the
Company was unsure that its internal accounting controls were properly
functioning to ensure reliability of financial reporting. In response,
management formed a committee of the Chief Financial Officer, Investor Relations
Officer and the Controller to meet with the Company's outside auditors and the
audit committee of the Board of Directors to discuss accounting standards and
pronouncements and ensure that the Company's financial reporting is in full
compliance with them. The committee will take affirmative steps as necessary to
ensure adequate and properly functioning internal accounting controls. The
Company believes that with these actions the Company's internal accounting
controls are now properly functioning.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is involved in various legal actions and claims arising in
the ordinary course of business. In the opinion of management, such litigation
and claims are likely to be resolved without material adverse effect on its
financial position or results of operations

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

(a) Not applicable

(b) Not applicable

(c) Not applicable

(d) Not applicable.

ITEM 3. NOT APPLICABLE.

ITEM 4. NOT APPLICABLE

ITEM 5. NOT APPLICABLE

37

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:

3.1.1. Certificate of Incorporation of Lomak dated March 24, 1980
(incorporated by reference to the Company's Registration
Statement (No. 33-31558)).

3.1.2. Certificate of Amendment of Certificate of Incorporation dated
July 22, 1981 (incorporated by reference to the Company's
Registration Statement (No. 33-31558)).

3.1.3. Certificate of Amendment of Certificate of Incorporation dated
September 8, 1982 (incorporated by reference to the Company's
Registration Statement (No. 33-31558)).

3.1.4. Certificate of Amendment of Certificate of Incorporation dated
December 28, 1988 (incorporated by reference to the Company's
Registration Statement (No. 33-31558)).

3.1.5. Certificate of Amendment of Certificate of Incorporation dated
August 31, 1989 (incorporated by reference to the Company's
Registration Statement (No. 33-31558)).

3.1.6. Certificate of Amendment of Certificate of Incorporation dated
May 30, 1991 (incorporated by reference to the Company's
Registration Statement (No. 333-20259)).

3.1.7. Certificate of Amendment of Certificate of Incorporation dated
November 20, 1992 (incorporated by reference to the Company's
Registration Statement (No. 333-20257)).

3.1.8. Certificate of Amendment of Certificate of Incorporation dated
May 24, 1996 (incorporated by reference to the Company's
Registration Statement (No. 333-20257)).

3.1.9. Certificate of Amendment of Certificate of Incorporation dated
October 2, 1996 (incorporated by reference to the Company's
Registration Statement (No. 333-20257)).

3.1.10. Restated Certificate of Incorporation as required by Item 102
of Regulation S-T (incorporated by reference to the Company's
Registration Statement (No. 333-20257)).

3.1.11. Certificate of Amendment of Certificate of Incorporation dated
August 25, 1998 (incorporated by reference to the Company's
Registration Statement (No. 333-62439)).

3.1.12. Certificate of Amendment of Certificate of Incorporation dated
May 25, 2000 (incorporated by reference to the Company's Form
10-Q dated August 8, 2000).

3.2.1. By-Laws of the Company (incorporated by reference to the
Company's Registration Statement (No. 33-31558).

3.2.2 Amended and Restated By-laws of the Company dated May 24,
2001.

(b) Reports on Form 8/K

Form 8K/A dated July 17, 2002 (filed on July 17, 2002)
reporting under Item 4 - Changes in Registrants Certifying
Accountants.

Form 8-K dated July 15, 2002 (filed on July 15, 2002)
reporting under Item 4 - Changes in Registrants Certifying
Accountants.

Form 8-K dated August 14, 2002 (filed on August 14, 2002)
reporting under Item 9- Regulation FD Disclosure.

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned.

RANGE RESOURCES CORPORATION

By: /s/ Eddie M. LeBlanc
-------------------------------
Eddie M. LeBlanc
Chief Financial Officer

November 13, 2002

39

I, John H. Pinkerton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Range
Resources Corporation;

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation of the
Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 13, 2002

/s/ John H. Pinkerton
------------------------------------
John H. Pinkerton, President

40

I, Eddie M. LeBlanc, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Range
Resources Corporation;

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation of the
Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):

d) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and

e) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 13, 2002

/s/ Eddie M. LeBlanc
-------------------------------------------
Eddie M. LeBlanc, Chief Financial Officer

41

EXHIBIT INDEX