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8-K - FORM 8-K - RANGE RESOURCES CORP | d85306e8vk.htm |
Exhibit 99.1
NEWS RELEASE
RANGE ANNOUNCES THIRD QUARTER 2011 RESULTS
FORT WORTH, TEXAS, OCTOBER 25, 2011...RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its
third quarter 2011 financial results. The favorable third quarter results were driven by higher
production volumes, higher realized prices and lower unit costs. Reported GAAP net income for
third quarter 2011 totaled $34.8 million ($0.21 per diluted share), up from a loss of $8.2 million
($0.05 per diluted share) for the prior year quarter. Net cash provided from operating activities
including changes in working capital totaled $100.2 million for the third quarter versus $140.1
million for the prior year quarter. Adjusted net income comparable to analysts estimates, a
non-GAAP measure, was $44.7 million ($0.28 per diluted share), versus $18.9 million ($0.12 per
diluted share) for the prior year quarter. Cash flow from operations before changes in working
capital, a non-GAAP measure, increased 35% year-over-year to $190.0 million. Comparing these
amounts to analysts average First Call consensus estimates, the Companys earnings per share
($0.28 per diluted share) was greater than the consensus of analysts estimates of $0.23 per
diluted share and cash flow per share ($1.19 per diluted share) for the quarter was greater than
the consensus analysts estimates of $1.07 per diluted share. See Non-GAAP Financial Measures
for a definition of each of these non-GAAP financial measures and tables that reconcile each of
these non-GAAP measures to their most directly comparable GAAP financial measure.
The third quarter results reflect a 7% increase in production, a 15% increase in realized prices
and a 9% decrease in the unit costs of the Companys five largest cost categories compared to the
prior year quarter. As previously announced, production averaged 537.2 Mmcfe net per day.
Production was 76% natural gas, 17% natural gas liquids (NGLs) and 7% crude oil. Targeted drilling
to Ranges liquids-rich plays increased the Companys liquid production by almost 12% between
years. Realized prices, including all cash-settled derivatives, averaged $5.73 per mcfe, a 15%
increase over the prior year quarter. The increase in the average per mcfe prices was primarily
due to strong NGL and oil prices as well as liquids making up a larger percentage of the production
mix. During the third quarter, the Company continued to drive down its unit costs. In aggregate,
the Companys five largest cost categories, direct operating, production taxes, general and
administrative, interest and depreciation, depletion and amortization, decreased 9% on a unit of
production basis as compared to the prior year quarter. The most significant cost declines related
to direct operating costs, production taxes and general and administrative expenses.
Range also announced that it has increased its year-over-year 2011 production growth target by ten
percent from 10% to 11% for the year. Fourth quarter 2011 production guidance has been set at 608
Mmcfe per day. The fourth quarter production guidance represents a 12% increase over actual
production in the prior year quarter. Adjusted for the Barnett sale, the fourth quarter production
guidance represents a 43% increase over the prior year. Range also fine tuned its capital spending
estimate for 2011 from $1.38 billion to $1.47 billion, a 6.5% increase. The additional capital
spending is attributable to non-operated drilling activities in the Marcellus, Ardmore Woodford and
Cana Woodford shale plays as well as leasehold acquisition costs related to the Mississippian
horizontal play in Oklahoma.
Commenting on the announcement, John Pinkerton, Ranges Chairman and CEO, said, Third quarter
results reflect terrific operating performance driving excellent financial performance. Higher
production and higher realized prices combined with significantly lower unit costs drove a 35%
increase in cash flow and more than doubled the analysts earnings compared to the third quarter of
last year. Due to our outstanding drilling results and the progress of the infrastructure
build-out, we have increased our full year 2011 production growth target by 10%. Looking to the
fourth quarter, we anticipate total production to jump 70 Mmcfe per day over the third quarter and
for our Marcellus production to reach our exit rate goal of 400 Mmcfe per day net. Given the
momentum of the higher production coupled with the cost reductions, we anticipate fourth quarter
results to exceed those of the third quarter. In turn, these results should give our shareholders
a good indication of how accelerating production growth and continued reduction in unit costs will
positively impact our ongoing results. We believe these are the key elements that will drive our
results for 2012 and beyond.
Financial Discussion
(Except for reported GAAP amounts, specific expense categories exclude non-cash property
impairments, mark-to-market on unrealized derivatives, non-cash stock compensation and other items
shown separately on attached tables but include the results associated with Barnett Shale
properties combined with the reported continuing operations amounts.)
As previously announced, Range closed substantially all of the Barnett Shale property sale at the
end of April and the remainder of the sale during the third quarter. Under generally accepted
accounting principles (GAAP), the Barnett Shale properties have been reclassified as Discontinued
operations for the quarter and for the prior-year comparable period. As a result, production,
revenue and expenses associated with the properties have been removed from continuing operations
and reclassified to discontinued operations. In this release, Range has included Statements of
Operations that reconcile and reclassify Barnett Shale discontinued operations into continuing
operations for comparative purposes. These supplemental non-GAAP tables present the reported GAAP
amounts as compared to the amounts that would have been reported if the Barnett Shale operations
were included in continuing operations. All variances discussed in this release include the
Barnett Shale operations as continuing operations in the current year and the prior year periods.
For the quarter, production averaged 537.2 Mmcfe per day, comprised of 410.5 Mmcf per day of gas
(76%), 15,429 barrels per day of natural gas liquids (17%) and 5,680 barrels per day of oil (7%).
Due to continued drilling success in the Marcellus Shale and Midcontinent areas, the Companys
liquids production increased 12% over the prior year period, while natural gas production grew 5%.
Realized prices, including all cash-settled derivatives, averaged $5.73 per mcfe, a 15% increase
over the prior-year quarter of $4.97. The increase in the average per mcfe price was due to a
greater proportion of liquids in the total production mix and stronger NGL and crude oil prices.
The average realized natural gas liquids price increased 45% to $49.52 a barrel versus the
prior-year quarter, while the average oil price rose 22% to $81.70 a barrel. The average realized
natural gas price was $4.51 per mcf, 4% higher than the prior-year quarter. Reported GAAP natural
gas, NGL and oil sale revenues for the quarter were $271.8 million, an increase of 45% as compared
to the prior year excluding sales from the Barnett Shale properties shown as discontinued
operations. Total natural gas, NGL and oil sales (including all cash settled derivatives and the
Barnett Shale properties) increased 23% compared to the prior-year quarter to $283.3 million
resulting from higher volumes and prices. Total revenues include $9.4 million of cash proceeds for
natural gas hedges that were included in the Barnett Shale property sale. Under GAAP, the
proceeds of these hedges are recognized as the hedges are settled. The final $9.4 million of cash
proceeds associated with these natural gas hedges will be recognized in the fourth quarter.
Natural gas liquids realized prices include $3.1 million of cash-settled hedging gains for the
quarter. These cash proceeds represent the first NGL hedges to be settled during 2011.
During the third quarter of 2011, Range continued to lower its cost structure. On a unit of
production basis the Companys five largest cost categories fell by 9% in aggregate compared to the
prior-year period with each of the five components showing meaningful improvements. Direct
operating expenses dropped 20% to $0.58 per mcfe, production tax expense decreased 23% to $0.15 per
mcfe, general and administrative expense fell 12% to $0.53 per mcfe, interest expense declined 5%
to $0.69 per mcfe and depreciation, depletion and amortization expense decreased 4% to $1.89 per
mcfe.
In addition to the final closing of the Barnett Shale property sale in the third quarter for $12
million in proceeds, the Company also sold producing properties located in East Texas for $11.0
million and some shallow coal bed methane properties in Pennsylvania for $6.0 million. An
impairment charge of $31.2 million was recognized on the properties. An additional $7.5 million
impairment was recognized on certain minor Gulf Coast dry gas properties due to low commodity
prices at quarter end.
Capital Expenditures
Third quarter drilling expenditures of $352.4 million funded the drilling of 77 (64 net) wells and
the completion of previously drilled wells. A 100% drilling success rate was achieved. During the
third quarter, total
capital expenditures were $473.5 million which included $77.5 million on acreage acquisition and
$25.5 million on infrastructure build-out primarily on non-operated properties. For the first nine
months of 2011, Range has drilled 223 (197 net) wells and spent $900.8 million on drilling and
recompletions. In addition, during the first
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nine months of 2011, $145.1 million was expended on
acreage, $37.3 million on gas gathering systems and $53.3 million for exploration expense (includes
$26.2 million for seismic, $14.2 million for delay rentals and $2.5 million for dry hole costs).
During the third quarter, approximately $100 million was expended on our non-operated properties
and leasehold acquisitions.
Credit Facility
Last week, lenders under Ranges revolving credit facility completed their regular semi-annual
redetermination of the borrowing base, voting unanimously to reaffirm the $2.0 billion borrowing
base and aggregate commitment of $1.5 billion. The facility is comprised of commitments from a
diverse group of 26 financial institutions with no institution holding more than 7% of total
commitments. The next borrowing base redetermination is scheduled for April 1, 2012. At the end
of the third quarter, Range has $52 million of invested cash on hand and no amount outstanding on
the credit facility.
Operational Discussion
Marcellus Shale Division
Significant progress was made on multiple fronts in the Marcellus Shale and the division is solidly
on track to reach the 2011 year-end production target of 400 Mmcfe per day net to Range.
Currently, total production from the Marcellus Shale is running approximately 350 Mmcfe per day net
to Range. In southwest Pennsylvania, Range drilled 42 wells during the third quarter. During the
quarter, a total of 28 wells were turned to sales bringing the total horizontal Marcellus wells
producing in the southwest to 214 wells. At the end of the third quarter, there were 12 wells
waiting on pipeline and 74 wells waiting on completion in the southwest. In northeast
Pennsylvania, Range drilled 14 wells during the third quarter. A total of 10 wells were turned to
sales during the third quarter. At quarter-end, there were 15 wells on production in the northeast
with 11 wells waiting on pipeline and 22 wells waiting on completion.
In addition to the operational progress in the Marcellus, Range made substantial progress during
the quarter regarding infrastructure build-out and marketing arrangements. Below are the key
accomplishments achieved during the third quarter.
| During the third quarter, an additional 40 Mmcf per day of fully dedicated cryogenic gas processing capacity was brought on line increasing Ranges total dedicated processing capacity to 390 Mmcf per day. In addition to the committed capacity, Range currently has access to approximately 100 Mmcf per day of interruptible processing capacity. | ||
| Phase I of the Lycoming trunkline system in northeast Pennsylvania was completed and Phase II is expected to be completed by the end of 2011. Additional phases are planned to complete Ranges expected development in Lycoming County. The trunkline will give 350 Mmcf per day of capacity flowing into the Transco system moving gas into and out of the Leidy storage complex. | ||
| Range accomplished a key element in the development of its liquid-rich Marcellus play by signing its first ethane sales contract. The contract with NOVA Chemicals Corporation was signed at the conclusion of the binding open season of the Mariner West Project. The project was the culmination of years of planning and will ensure that Range can continue accelerating its Marcellus Shale development plans. The first sales under the contract are targeted to occur in late 2013. Anticipating Ranges ethane production growth, numerous petrochemical companies, both domestic and international, have approached the Company as potential customers. |
| Late in the third quarter, Range began receiving an incremental NGL pricing uplift when the C3+ fractionation facility was completed at the gas processing facility located in Houston, Pennsylvania. This complex allows for the production of 60,000 barrels per day of purity propane, butane, and natural gasoline for sale into the premium Northeast markets. As a result, Ranges realizations should improve since the liquids will no longer be required to be trucked or railed offsite to be |
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fractionated. Range expects that the railroad siding at the Houston, Pennsylvania plant will be fully operational in the near future allowing for the direct rail shipment of purity NGL products to customers. Until then, trucks will transload to rail cars at a nearby facility that will significantly reduce the freight costs. With the start-up of the rail facilities, Range believes it will be able to fully realize the expected uplift in incremental NGL pricing of $12 to $15 million annually by the elimination of all intermediate transportation charges before freight cost to the customers. |
| Basis during the third quarter in the southwest area of the Marcellus continued to be in the flat to positive $0.08 per mcf range above the NYMEX Henry Hub index price depending on bid week quotes and daily swing gas spot markets. In the northeast along the Transco-Leidy transmission system, basis during the third quarter continued in the positive $0.10 to $0.15 per mcf above the NYMEX Henry Hub index price depending on bid week quotes and daily swing gas spot markets. Currently, Range has commitments in the southwest portion of the Marcellus for over 420 Mmcf per day to transport natural gas to markets either with Range-owned firm transportation or firm sales arrangements with customers who hold firm transportation. Transportation commitments in the southwest are planned to increase to 550 Mmcf per day during 2012 to accommodate the expected increased production from that region. In the northeast Marcellus along the Transco-Leidy transmission line, Range currently has commitments of 80 Mmcf per day increasing to 100 Mmcf per day during 2012 in the form of firm sales arrangements with customers owning existing firm transportation on Transco and storage at Leidy. Range believes that our existing firm sales arrangements both in the southwest and the northeast can be further increased as it demonstrates that additional production volumes are available. |
Midcontinent Division
Third quarter activity in the Midcontinent Division focused on the Texas Panhandle St. Louis play,
as well as increased leasing in the Mississippian horizontal play of northern Oklahoma. Two offset
St. Louis horizontal wells were added in the Texas Panhandle at combined rates of 20.4 Mmcf of
natural gas and 1,394 barrels of liquids per day or 28.8 (13.1 net) Mmcfe per day based on 24-hour
test rates. The original discovery well, which was placed on production in January of this year,
continues producing at rates of 11.2 Mmcf of natural gas and 694 barrels of liquids per day or 15.4
(4.7 net) Mmcfe per day. The cumulative production for the discovery well is 4.6 Bcfe. Drilling
activity continues in the play with two additional St. Louis offsets scheduled to be drilled during
the fourth quarter. In the Woodford play of the Ardmore Basin, three wells were connected to sales
during the quarter at combined rates of 2,738 gross (1,307 net) boe per day. Activity by other
companies in the Cana Woodford is further de-risking our held by production leasehold position of
42,000 net acres in the play. Range has participated in three non-operated wells in the Cana during
the year.
Leasing activity expanded during the quarter in the Mississippian horizontal play of northern
Oklahoma. Having started the year with 15,000 net acres, Ranges position has increased to 105,000
net acres. Reserve projections are estimated in the range of 400-500 Mboe per well for
approximately 2,000 foot laterals at depths of 5,000 feet. These potential reserves generate
attractive finding and development costs, along with strong rates of return in this liquids-rich
play. Ranges production from the Mississippi horizontal area continues to hold at 3,400 gross
(2,709 net) boe per day. With its larger acreage position, Range is targeting a two rig drilling
program in 2012 and is currently focused on adding the necessary infrastructure to facilitate
future development.
Appalachia Division
The Appalachian Division continued development of its 350,000 (235,000 net) acre position in
Virginia during the third quarter of 2011. Range owns the gas rights on 216,000 royalty acres of
this position and receives the added economic benefit of the royalty for wells drilled on this
acreage. The division averaged three drilling rigs running in the quarter with activity focused on
tight gas sand and horizontal drilling projects in Nora. The division drilled 10 (10 net) vertical
and 10 (10 net) horizontal wells in the quarter. The horizontal wells targeted the Huron Shale and
Berea Sandstone in the Nora field. Over the past three years, Range has continued to
optimize horizontal drilling operations in these formations by reducing the number of drilling days
and corresponding well cost while at the same time increasing lateral length by 30%. With
increased lateral length, Range has also increased the number of frac stages per well to
effectively stimulate the formation. The initial 30- day average production from these longer
laterals is 40% higher than the average of earlier drilled horizontals. Through longer laterals
and more frac stages, we have improved our estimated ultimate recoveries from
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about 1 Bcf per well
up to 1.3 Bcf per well while keeping our cost at $1.2 million. Also in the quarter, Range
performed seven recompletions of behind-pipe pays in its continued efforts to maximize production
on existing wells.
Hedging Position as of October 25, 2011
Premium (Paid) | ||||||||||||
Daily Volume | Hedge Price | / Received | ||||||||||
Gas (Mmbtu) |
||||||||||||
3Q 2011 Collars |
318,200 | $ | 5.43 - $6.29 | ($0.40 | ) | |||||||
4Q 2011 Collars |
348,200 | $ | 5.33 - $6.18 | ($0.37 | ) | |||||||
2012 Swaps |
70,000 | $ | 5.00 | ($0.04 | ) | |||||||
2012 Collars |
189,641 | $ | 5.32 - $5.91 | ($0.28 | ) | |||||||
2013 Collars |
160,000 | $ | 5.09 - $5.65 | | ||||||||
Oil (Bbls) |
||||||||||||
3Q 2011 Calls |
5,500 | $ | 80.00 | $ | 10.37 | |||||||
4Q 2011 Calls |
5,500 | $ | 80.00 | $ | 10.37 | |||||||
2012 Collars |
2,000 | $ | 70.00 - $80.00 | $ | 7.50 | |||||||
2012 Calls |
4,700 | $ | 85.00 | $ | 13.71 | |||||||
NGL (Bbls) |
||||||||||||
3Q 2011 Swaps |
7,000 | $ | 104.17 | | ||||||||
4Q 2011 Swaps |
7,000 | $ | 104.17 | | ||||||||
2012 Swaps |
5,000 | $ | 102.59 | |
Conference Call Information
The Company will host a conference call on Wednesday, October 26 at 1:00 p.m. ET to review the
third quarter results. To participate in the call, please dial 877-407-0778 and ask for the Range
Resources third quarter earnings conference call. A replay of the call will be available through
December 11. To access the phone replay dial 877-660-6853. The account number is 286 and the
conference ID is 381259. Additional financial and statistical information about the period not
included in this release but discussed on the conference call will be available on our home page at
www.rangeresources.com.
A simultaneous webcast of the call may be accessed over the internet at www.rangeresources.com or
www.vcall.com. To listen, please go to either website in time to register and install any
necessary software. The webcast will be archived for replay on the Companys website until January
26.
Non-GAAP Financial Measures and Supplemental Tables
Adjusted net income comparable to analysts estimates as used in this release represents income
from continuing operations before income taxes adjusted for certain items (detailed below and in
the accompanying table) less income taxes. We believe adjusted net income comparable to analysts
estimates is calculated on the same basis as analysts estimates and that many investors use this
published research in making investment decisions useful in evaluating operational trends of the
Company and its performance relative to other oil and gas producing companies. Diluted earnings
per share (adjusted) as set forth in this release represents adjusted net income comparable to
analysts estimates on a diluted per share basis. A table is included which
reconciles income or loss from continuing operations to adjusted net income comparable to analysts
estimates and diluted earnings per share (adjusted). On its website, the Company provides
additional comparative information on prior periods.
Third quarter 2011 earnings included income of $55.0 million for the non-cash unrealized
mark-to-market increase in value of the Companys derivatives, loss of $8.7 million recorded for
the mark-to-market in
5
the deferred compensation plan for the increase in the Companys common stock
during the period and $10.2 million of non-cash stock compensation expense, $38.7 million of proved
property impairment reflecting lower gas prices related to Gulf Coast properties and the sold East
Texas properties, and an unproved property impairment expense of $16.6 million. Excluding these
items, net income would have been $44.7 million or $0.28 per share ($0.28 fully diluted).
Excluding similar non-cash items from the prior-year quarter, net income would have been $18.9
million or $0.12 per share ($0.12 fully diluted). By excluding these non-cash items from our
reported earnings, we believe we present our earnings in a manner consistent with the presentation
used by analysts in their projection of the Companys earnings. (See the reconciliation of
non-GAAP earnings in the accompanying table.)
Cash flow from operations before changes in working capital as used in this release
represents net cash provided by operations before changes in working capital and exploration
expense adjusted for certain non-cash compensation items. Cash flow from operations before changes
in working capital is widely accepted by the investment community as a financial indicator of an
oil and gas companys ability to generate cash to internally fund exploration and development
activities and to service debt. Cash flow from operations before changes in working capital is
also useful because it is widely used by professional research analysts in valuing, comparing,
rating and providing investment recommendations of companies in the oil and gas exploration and
production industry. In turn, many investors use this published research in making investment
decisions. Cash flow from operations before changes in working capital is not a measure of
financial performance under GAAP and should not be considered as an alternative to Cash flows from
operating, investing, or financing activities as an indicator of cash flows, or as a measure of
liquidity. A table is included which reconciles Net cash provided from operating activities to
Cash flow from operations before changes in working capital as used in this release. On its
website, the Company provides additional comparative information on prior periods for cash flow,
cash margins and non-GAAP earnings as used in this release.
The cash prices realized for natural gas, NGL and oil production including the amounts realized on
cash-settled derivatives is a critical component in the Companys performance tracked by investors
and professional research analysts in valuing, comparing, rating and providing investment
recommendations and forecasts of companies in the oil and gas exploration and production industry.
In turn, many investors use this published research in making investment decisions. Due to the
GAAP disclosures of various hedging and derivative transactions, such information is now reported
in various lines of the Statements of Operations. The Company believes that it is important to
furnish a table reflecting the details of the various components of each line in the statements of
operations to better inform the reader the details of each amount and provide a summary of the
realized cash-settled amounts which historically were reported as natural gas, NGL and oil sales.
This information will serve to bridge the gap between various readers understanding and fully
disclose the information needed.
The Company discloses in this release the detail components of many of the single line items shown
in the GAAP financial statements included in the Companys Quarterly Report on Form 10-Q. The
Company believes that it is important to furnish this detail of the various components comprising
each line of the Statements of Operations to better inform the reader the details of each amount,
the changes between periods and the effect on its financial results.
Hedging and Derivatives
In this release, Range has reclassified within total revenues its reporting of the cash settlement
of its commodity derivatives. Under this presentation those hedges considered effective under
ASC 815 are included in Natural gas, NGL and oil sales when settled. For those hedges designated
to regions where the historical correlation between NYMEX and regional prices is non-highly
effective or there is volumetric ineffectiveness due to the sale of the underlying reserves,
they are deemed to be derivatives and the cash settlements are included in a separate line item
shown as Derivative fair value income in the Form 10-Q along with the change in mark-to-market
valuations of such unrealized derivatives. The Company has provided additional information
regarding natural gas, NGL and oil sales in a supplemental table included with this release which
would correspond to amounts shown by analysts for natural gas, NGL and oil sales realized,
including all cash-settled derivatives.
RANGE RESOURCES CORPORATION (NYSE: RRC) is an independent natural gas company operating in the
Appalachia and Southwest regions of the United States.
Except for historical information, statements made in this release such as attractive returns on
capital, expected operating costs, expected production growth, expected capital funding sources, expectation
of exceptional results in subsequent periods, expected reduction of future unit costs, attractive
hedge positions and expansion of plays are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements are based on assumptions and estimates that management believes are reasonable based on
currently available information; however, managements
6
assumptions and Ranges future performance
are subject to a wide range of business risks and uncertainties and there is no assurance that
these goals and projections can or will be met. Any number of factors could cause actual results to
differ materially from those in the forward-looking statements, including, but not limited to, the
volatility of oil and gas prices, the results of our hedging transactions, the costs and results of
drilling and operations, the timing of production, mechanical and other inherent risks associated
with oil and gas production, weather, the availability of drilling equipment, changes in interest
rates, litigation, uncertainties about reserve estimates, environmental risks and regulatory
changes. Range undertakes no obligation to publicly update or revise any forward-looking
statements. Further information on risks and uncertainties is available in Ranges filings with the
Securities and Exchange Commission (SEC), which are incorporated by reference.
The SEC permits oil and gas companies, in filings made with the SEC, to disclose proved reserves,
which are estimates that geological and engineering data demonstrate with reasonable certainty to
be recoverable in future years from known reservoirs under existing economic and operating
conditions as well as the option to disclose probable and possible reserves. Range has elected not
to disclose the Companys probable and possible reserves in its filings with the SEC. Range uses
certain broader terms such as resource potential, or unproved resource potential or upside or
other descriptions of volumes of resources potentially recoverable through additional drilling or
recovery techniques that may include probable and possible reserves as defined by the SECs
guidelines. Range has not attempted to distinguish probable and possible reserves from these
broader classifications. The SECs rules prohibit us from including in filings with the SEC these
broader classifications of reserves. These estimates are by their nature more speculative than
estimates of proved, probable and possible reserves and accordingly are subject to substantially
greater risk of being actually realized. Unproved resource potential refers to Ranges internal
estimates of hydrocarbon quantities that may be potentially discovered through exploratory drilling
or recovered with additional drilling or recovery techniques and have not been reviewed by
independent engineers. Unproved resource potential does not constitute reserves within the meaning
of the Society of Petroleum Engineers Petroleum Resource Management System and does not include
proved reserves. Area wide unproven, unrisked resource potential has not been fully risked by
Ranges management. Actual quantities that may be ultimately recovered from Ranges interests will
differ substantially. Factors affecting ultimate recovery include the scope of Ranges drilling
program, which will be directly affected by the availability of capital, drilling and production
costs, commodity prices, availability of drilling services and equipment, drilling results, lease
expirations, transportation constraints, regulatory approvals, field spacing rules, recoveries of
gas in place, length of horizontal laterals, actual drilling results, including geological and
mechanical factors affecting recovery rates and other factors. Estimates of resource potential may
change significantly as development of our resource plays provides additional data. Investors are
urged to consider closely the disclosure in our most recent Annual Report on Form 10-K, available
from our website at www.rangeresources.com or by written request to 100 Throckmorton Street, Suite
1200, Fort Worth, Texas 76102. You can also obtain this Form 10-K by calling the SEC at
1-800-SEC-0330.
7
SOURCE: | Range Resources Corporation Main number: 817-870-2601 |
Investor Contacts:
Rodney Waller, Senior Vice President
817-869-4258
817-869-4258
David Amend, Investor Relations Manager
817-869-4266
817-869-4266
Laith Sando, Senior Financial Analyst
817-869-4267
817-869-4267
or
Media Contact:
Matt Pitzarella, Director of Corporate Communications
724-873-3224
724-873-3224
www.rangeresources.com
8
RANGE RESOURCES CORPORATION
STATEMENTS OF OPERATIONS
Based on GAAP reported earnings with additional
details of items included in each line in Form 10-Q
(Unaudited, in thousands, except per share data)
Based on GAAP reported earnings with additional
details of items included in each line in Form 10-Q
(Unaudited, in thousands, except per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||
Revenues and other income: |
||||||||||||||||||||||||
Natural gas, NGL and oil sales (a) |
$ | 271,799 | $ | 187,757 | $ | 755,367 | $ | 548,583 | ||||||||||||||||
Derivative cash settlements gain (loss) (a) (c) |
10,742 | 10,179 | 8,342 | 16,878 | ||||||||||||||||||||
Gain on early settlement of oil collars (c) |
| 15,697 | | 15,697 | ||||||||||||||||||||
Transportation and gathering |
1,191 | (1,357 | ) | 1,195 | 2,030 | |||||||||||||||||||
Transportation and gathering non-cash stock
compensation (b) |
(375 | ) | (283 | ) | (1,107 | ) | (926 | ) | ||||||||||||||||
Change in mark-to-market on unrealized derivatives gain
(loss) (c) |
58,990 | (18,284 | ) | 67,093 | 23,885 | |||||||||||||||||||
Ineffective hedging gain (loss) (c) |
(3,971 | ) | 2,389 | 2,531 | 2,400 | |||||||||||||||||||
Gain (loss) on sale of properties |
203 | 67 | (1,280 | ) | 78,156 | |||||||||||||||||||
Equity method investment (d) |
(640 | ) | (845 | ) | (1,399 | ) | (1,830 | ) | ||||||||||||||||
Other (d) |
266 | (165 | ) | 1,668 | (118 | ) | ||||||||||||||||||
Total revenues and other income |
338,205 | 195,155 | 73 | % | 832,410 | 684,755 | 22 | % | ||||||||||||||||
Costs and expenses: |
||||||||||||||||||||||||
Direct operating |
29,365 | 24,991 | 85,638 | 67,073 | ||||||||||||||||||||
Direct operating non-cash stock compensation (b) |
463 | 544 | 1,416 | 1,469 | ||||||||||||||||||||
Production and ad valorem taxes |
7,317 | 6,903 | 21,746 | 19,108 | ||||||||||||||||||||
Exploration |
16,704 | 14,202 | 53,217 | 40,553 | ||||||||||||||||||||
Exploration non-cash stock compensation (b) |
902 | 1,023 | 3,168 | 3,231 | ||||||||||||||||||||
Abandonment and impairment of unproved properties |
16,627 | 14,435 | 52,064 | 30,713 | ||||||||||||||||||||
General and administrative |
26,398 | 28,233 | 80,814 | 71,093 | ||||||||||||||||||||
General and administrative non-cash stock
compensation (b) |
8,491 | 7,821 | 27,488 | 26,401 | ||||||||||||||||||||
General and administrative lawsuit settlements |
168 | 469 | 238 | 3,035 | ||||||||||||||||||||
General and administrative bad debt expense |
850 | | 446 | | ||||||||||||||||||||
Termination costs |
| | | 5,138 | ||||||||||||||||||||
Termination costs non-cash stock compensation (b) |
| | | 2,800 | ||||||||||||||||||||
Deferred compensation plan (e) |
8,717 | (5,347 | ) | 33,569 | (25,194 | ) | ||||||||||||||||||
Interest expense |
34,181 | 23,363 | 90,343 | 65,565 | ||||||||||||||||||||
Loss on early extinguishment of debt |
(4 | ) | 5,351 | 18,576 | 5,351 | |||||||||||||||||||
Depletion, depreciation and amortization |
93,619 | 69,730 | 244,129 | $ | 202,350 | |||||||||||||||||||
Impairment of proved property |
38,681 | | 38,681 | 6,505 | ||||||||||||||||||||
Total costs and expenses |
282,479 | 191,718 | 47 | % | 751,533 | 525,191 | 43 | % | ||||||||||||||||
Income from continuing operations before income taxes |
55,726 | 3,437 | 1,521 | % | 80,877 | 159,564 | -49 | % | ||||||||||||||||
Income tax expense: |
||||||||||||||||||||||||
Current |
(7 | ) | (10 | ) | 1 | (10 | ) | |||||||||||||||||
Deferred |
22,547 | 794 | 35,345 | 61,569 | ||||||||||||||||||||
22,540 | 784 | 35,346 | 61,559 | |||||||||||||||||||||
Income from continuing operations |
33,186 | 2,653 | 1,151 | % | 45,531 | 98,005 | -54 | % | ||||||||||||||||
Discontinued operations, net of tax |
1,569 | (10,821 | ) | 15,484 | (19,542 | ) | ||||||||||||||||||
Net income (loss) |
$ | 34,755 | $ | (8,168 | ) | 526 | % | $ | 61,015 | $ | 78,463 | -22 | % | |||||||||||
Income (Loss) Per Common Share: |
||||||||||||||||||||||||
Basic-Income (loss) from continuing operations |
$ | 0.21 | $ | 0.02 | $ | 0.28 | $ | 0.61 | ||||||||||||||||
Discontinued operations |
0.01 | (0.07 | ) | 0.10 | (0.12 | ) | ||||||||||||||||||
Net income (loss) |
$ | 0.22 | $ | (0.05 | ) | 540 | % | $ | 0.38 | $ | 0.49 | -22 | % | |||||||||||
Diluted-Income (loss) from continuing operations |
$ | 0.20 | $ | 0.02 | $ | 0.28 | $ | 0.61 | ||||||||||||||||
Discontinued operations |
0.01 | (0.07 | ) | 0.10 | (0.12 | ) | ||||||||||||||||||
Net income (loss) |
$ | 0.21 | $ | (0.05 | ) | 520 | % | $ | 0.38 | $ | 0.49 | -22 | % | |||||||||||
Weighted average common shares outstanding, as reported: |
||||||||||||||||||||||||
Basic |
158,154 | 157,109 | 1 | % | 157,901 | 156,777 | 1 | % | ||||||||||||||||
Diluted |
159,322 | 158,184 | 1 | % | 158,939 | 158,493 | 0 | % |
(a) | See separate natural gas, NGL and oil sales information table. | |
(b) | Costs associated with stock compensation and restricted stock amortization, which have been reflected in the categories associated with the direct personnel costs, which are combined with the cash costs in the 10-Q. | |
(c) | Included in Derivative fair value income in the 10-Q. | |
(d) | Included in Other revenues in the 10-Q. | |
(e) | Reflects the change in market value of the vested Company stock held in the deferred compensation plan. |
9
RANGE RESOURCES CORPORATION
STATEMENTS OF OPERATIONS
Restated for Barnett discontinued operations,
a non-GAAP presentation
(Unaudited, in thousands, except per share data)
Restated for Barnett discontinued operations,
a non-GAAP presentation
(Unaudited, in thousands, except per share data)
Three Months Ended September 30, 2011 | Three Months Ended September 30, 2010 | |||||||||||||||||||||||
Barnett | Barnett | |||||||||||||||||||||||
Discontinued | Including | Discontinued | Including | |||||||||||||||||||||
As reported | Operations | Barnett Ops | As reported | Operations | Barnett Ops | |||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Natural gas, NGL and oil sales |
$ | 271,799 | $ | 723 | $ | 272,522 | $ | 187,757 | $ | 31,803 | $ | 219,560 | ||||||||||||
Derivative cash settlements gain (loss) |
10,742 | | 10,742 | 10,179 | | 10,179 | ||||||||||||||||||
Gas on early settlement of oil collars |
| | | 15,697 | | 15,697 | ||||||||||||||||||
Transportation and gathering |
1,191 | | 1,191 | (1,357 | ) | 6 | (1,351 | ) | ||||||||||||||||
Transportation and gathering non-cash stock
compensation |
(375 | ) | | (375 | ) | (283 | ) | | (283 | ) | ||||||||||||||
Change in mark-to-market on unrealized
derivatives gain (loss) |
58,990 | | 58,990 | (18,284 | ) | | (18,284 | ) | ||||||||||||||||
Ineffective hedging gain (loss) |
(3,971 | ) | | (3,971 | ) | 2,389 | | 2,389 | ||||||||||||||||
Gain (loss) on sale of properties |
203 | 1,032 | 1,235 | 67 | | 67 | ||||||||||||||||||
Equity method investment |
(640 | ) | | (640 | ) | (845 | ) | | (845 | ) | ||||||||||||||
Interest and other |
266 | | 266 | (165 | ) | (3 | ) | (168 | ) | |||||||||||||||
338,205 | 1,755 | 339,960 | 195,155 | 31,806 | 226,961 | |||||||||||||||||||
Expenses: |
||||||||||||||||||||||||
Direct operating |
29,365 | (611 | ) | 28,754 | 24,991 | 8,690 | 33,681 | |||||||||||||||||
Direct operating non-cash stock compensation |
463 | | 463 | 544 | 62 | 606 | ||||||||||||||||||
Production and ad valorem taxes |
7,317 | (44 | ) | 7,273 | 6,903 | 1,970 | 8,873 | |||||||||||||||||
Exploration |
16,704 | | 16,704 | 14,202 | 11 | 14,213 | ||||||||||||||||||
Exploration non-cash stock compensation |
902 | | 902 | 1,023 | | 1,023 | ||||||||||||||||||
Abandonment and impairment of unproved properties |
16,627 | | 16,627 | 14,435 | 6,099 | 20,534 | ||||||||||||||||||
General and administrative |
26,398 | | 26,398 | 28,233 | | 28,233 | ||||||||||||||||||
General and administrative non-cash stock
compensation |
8,491 | | 8,491 | 7,821 | | 7,821 | ||||||||||||||||||
General and administrative lawsuit settlements |
168 | | 168 | 469 | | 469 | ||||||||||||||||||
General and administrative bad debt expense |
850 | | 850 | | | | ||||||||||||||||||
Termination costs |
| | | | | | ||||||||||||||||||
Termination costs non-cash stock compensation |
| | | | | | ||||||||||||||||||
Deferred compensation plan |
8,717 | | 8,717 | (5,347 | ) | | (5,347 | ) | ||||||||||||||||
Interest expense |
34,181 | | 34,181 | 23,363 | 10,443 | 33,806 | ||||||||||||||||||
Loss on early extinguishment of debt |
(4 | ) | | (4 | ) | 5,351 | | 5,351 | ||||||||||||||||
Depletion, depreciation and amortization |
93,619 | | 93,619 | 69,730 | 22,038 | 91,768 | ||||||||||||||||||
Impairment of proved properties |
38,681 | | 38,681 | | | | ||||||||||||||||||
282,479 | (655 | ) | 281,824 | 191,718 | 49,313 | 241,031 | ||||||||||||||||||
Income (loss) from continuing operations before
income taxes |
55,726 | 2,410 | 58,136 | 3,437 | (17,507 | ) | (14,070 | ) | ||||||||||||||||
Income tax expense (benefit): |
||||||||||||||||||||||||
Current |
(7 | ) | | (7 | ) | (10 | ) | | (10 | ) | ||||||||||||||
Deferred |
22,547 | 841 | 23,388 | 794 | (6,686 | ) | (5,892 | ) | ||||||||||||||||
22,540 | 841 | 23,381 | 784 | (6,686 | ) | (5,902 | ) | |||||||||||||||||
Income (loss) from continuing operations |
33,186 | 1,569 | 34,755 | 2,653 | (10,821 | ) | (8,168 | ) | ||||||||||||||||
Discontinued operations-Barnett Shale, net of tax |
1,569 | (1,569 | ) | | (10,821 | ) | 10,821 | | ||||||||||||||||
Net income (loss) |
$ | 34,755 | $ | | $ | 34,755 | $ | (8,168 | ) | $ | | $ | (8,168 | ) | ||||||||||
OPERATING HIGHLIGHTS |
||||||||||||||||||||||||
Average daily production: |
||||||||||||||||||||||||
Natural gas (mcf) |
406,977 | 3,525 | 410,501 | 297,286 | 92,042 | 389,328 | ||||||||||||||||||
NGL (bbl) |
15,550 | (120 | ) | 15,429 | 11,516 | 2,395 | 13,911 | |||||||||||||||||
Oil (bbl) |
5,686 | (6 | ) | 5,680 | 4,926 | 87 | 5,012 | |||||||||||||||||
Gas equivalent (mcfe) |
534,388 | 2,769 | 537,157 | 395,936 | 106,929 | 502,865 | ||||||||||||||||||
Average prices realized: |
||||||||||||||||||||||||
Natural gas (mcf) |
$ | 4.52 | $ | 3.12 | $ | 4.51 | $ | 4.80 | $ | 2.85 | $ | 4.34 | ||||||||||||
NGL (bbl) |
$ | 49.31 | $ | 21.71 | $ | 49.52 | $ | 34.40 | $ | 32.29 | $ | 34.04 | ||||||||||||
Oil (bbl) |
$ | 81.72 | $ | 98.13 | $ | 81.70 | $ | 66.74 | $ | 72.66 | $ | 66.84 | ||||||||||||
Gas equivalent (mcfe) |
$ | 5.75 | $ | 2.84 | $ | 5.73 | $ | 5.43 | $ | 3.23 | $ | 4.97 | ||||||||||||
Direct operating cash costs per mcfe: |
||||||||||||||||||||||||
Field expenses |
$ | 0.57 | $ | | $ | 0.55 | $ | 0.67 | $ | 0.84 | $ | 0.71 | ||||||||||||
Workovers |
0.03 | $ | | 0.03 | 0.02 | 0.04 | 0.02 | |||||||||||||||||
Total operating costs |
$ | 0.60 | $ | | $ | 0.58 | $ | 0.69 | $ | 0.88 | $ | 0.73 | ||||||||||||
10
RANGE RESOURCES CORPORATION
STATEMENTS OF OPERATIONS
Restated for Barnett discontinued operations,
a non-GAAP presentation
(Unaudited, in thousands, except per share data)
Restated for Barnett discontinued operations,
a non-GAAP presentation
(Unaudited, in thousands, except per share data)
Nine Months Ended September 30, 2011 | Nine Months Ended September 30, 2010 | |||||||||||||||||||||||
Barnett | Barnett | |||||||||||||||||||||||
Discontinued | Including | Discontinued | Including | |||||||||||||||||||||
As reported | Operations | Barnett Ops | As reported | Operations | Barnett Ops | |||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Natural gas, NGL and oil sales |
$ | 755,367 | $ | 53,757 | $ | 809,124 | $ | 548,583 | $ | 114,521 | $ | 663,104 | ||||||||||||
Derivative cash settlements gain (loss) |
8,342 | | 8,342 | 16,878 | | 16,878 | ||||||||||||||||||
Gain on early settlement of oil collars |
| | | 15,697 | | 15,697 | ||||||||||||||||||
Transportation and gathering |
1,195 | 6 | 1,201 | 2,030 | 29 | 2,059 | ||||||||||||||||||
Transportation and gathering non-cash stock
compensation |
(1,107 | ) | | (1,107 | ) | (926 | ) | | (926 | ) | ||||||||||||||
Change in mark-to-market on unrealized
derivatives gain (loss) |
67,093 | | 67,093 | 23,885 | | 23,885 | ||||||||||||||||||
Ineffective hedging gain (loss) |
2,531 | | 2,531 | 2,400 | | 2,400 | ||||||||||||||||||
Gain (loss) on sale of properties |
(1,280 | ) | 4,852 | 3,572 | 78,156 | 955 | 79,111 | |||||||||||||||||
Equity method investment |
(1,399 | ) | | (1,399 | ) | (1,830 | ) | | (1,830 | ) | ||||||||||||||
Interest and other |
1,668 | 4 | 1,672 | (118 | ) | (3 | ) | (121 | ) | |||||||||||||||
832,410 | 58,619 | 891,029 | 684,755 | 115,502 | 800,257 | |||||||||||||||||||
Expenses: |
||||||||||||||||||||||||
Direct operating |
85,638 | 9,790 | 95,428 | 67,073 | 26,305 | 93,378 | ||||||||||||||||||
Direct operating non-cash stock compensation |
1,416 | 45 | 1,461 | 1,469 | 255 | 1,724 | ||||||||||||||||||
Production and ad valorem taxes |
21,746 | 1,206 | 22,952 | 19,108 | 5,925 | 25,033 | ||||||||||||||||||
Exploration |
53,217 | 37 | 53,254 | 40,553 | 560 | 41,113 | ||||||||||||||||||
Exploration non-cash stock compensation |
3,168 | | 3,168 | 3,231 | | 3,231 | ||||||||||||||||||
Abandonment and impairment of unproved properties |
52,064 | | 52,064 | 30,713 | 15,725 | 46,438 | ||||||||||||||||||
General and administrative |
80,814 | | 80,814 | 71,093 | | 71,093 | ||||||||||||||||||
General and administrative non-cash stock
compensation |
27,488 | | 27,488 | 26,401 | | 26,401 | ||||||||||||||||||
General and administrative lawsuit settlements |
238 | | 238 | 3,035 | | 3,035 | ||||||||||||||||||
General and administrative bad debt expense |
446 | | 446 | | | | ||||||||||||||||||
Termination costs |
| | | 5,138 | | 5,138 | ||||||||||||||||||
Termination costs non-cash stock compensation. |
| | | 2,800 | | 2,800 | ||||||||||||||||||
Deferred compensation plan |
33,569 | | 33,569 | (25,194 | ) | | (25,194 | ) | ||||||||||||||||
Interest expense |
90,343 | 14,791 | 105,134 | 65,565 | 29,307 | 94,872 | ||||||||||||||||||
Loss on early extinguishment of debt |
18,576 | | 18,576 | 5,351 | | 5,351 | ||||||||||||||||||
Depletion, depreciation and amortization |
244,129 | 8,894 | 253,023 | 202,350 | 69,041 | 271,391 | ||||||||||||||||||
Impairment of proved properties |
38,681 | | 38,681 | 6,505 | | 6,505 | ||||||||||||||||||
751,533 | 34,763 | 786,296 | 525,191 | 147,118 | 672,309 | |||||||||||||||||||
Income (loss) from continuing operations before
income taxes |
80,877 | 23,856 | 104,733 | 159,564 | (31,616 | ) | 127,948 | |||||||||||||||||
Income tax expense (benefit): |
||||||||||||||||||||||||
Current |
1 | | 1 | (10 | ) | | (10 | ) | ||||||||||||||||
Deferred |
35,345 | 8,372 | 43,717 | 61,569 | (12,074 | ) | 49,495 | |||||||||||||||||
35,346 | 8,372 | 43,718 | 61,559 | (12,074 | ) | 49,485 | ||||||||||||||||||
Income (loss) from continuing operations |
45,531 | 15,484 | 61,015 | 98,005 | (19,542 | ) | 78,463 | |||||||||||||||||
Discontinued operations-Barnett Shale, net of tax. |
15,484 | (15,484 | ) | | (19,542 | ) | 19,542 | | ||||||||||||||||
Net income |
$ | 61,015 | $ | | $ | 61,015 | $ | 78,463 | $ | | $ | 78,463 | ||||||||||||
OPERATING HIGHLIGHTS |
||||||||||||||||||||||||
Average daily production: |
||||||||||||||||||||||||
Natural gas (mcf) |
366,516 | 43,109 | 409,625 | 282,596 | 99,530 | 382,126 | ||||||||||||||||||
NGL (bbl) |
13,914 | 793 | 14,708 | 8,786 | 2,163 | 10,949 | ||||||||||||||||||
Oil (bbl) |
5,356 | 30 | 5,386 | 5,248 | 102 | 5,350 | ||||||||||||||||||
Gas equivalent (mcfe) |
482,138 | 48,046 | 530,184 | 366,804 | 113,117 | 479,921 | ||||||||||||||||||
Average prices realized: |
||||||||||||||||||||||||
Natural gas (mcf) |
$ | 4.58 | $ | 2.93 | $ | 4.48 | $ | 4.87 | $ | 3.40 | $ | 4.49 | ||||||||||||
NGL (bbl) |
$ | 49.39 | $ | 45.86 | $ | 49.20 | $ | 38.30 | $ | 34.19 | $ | 37.49 | ||||||||||||
Oil (bbl) |
$ | 80.53 | $ | 92.00 | $ | 80.59 | $ | 68.11 | $ | 74.19 | $ | 68.23 | ||||||||||||
Gas equivalent (mcfe) |
$ | 5.80 | $ | 3.44 | $ | 5.65 | $ | 5.65 | $ | 3.71 | $ | 5.19 | ||||||||||||
Direct operating cash costs per mcfe: |
||||||||||||||||||||||||
Field expenses |
$ | 0.63 | $ | 0.73 | $ | 0.64 | $ | 0.64 | $ | 0.81 | $ | 0.68 | ||||||||||||
Workovers |
0.02 | 0.02 | 0.02 | 0.03 | 0.04 | 0.03 | ||||||||||||||||||
Total operating costs |
$ | 0.65 | $ | 0.75 | $ | 0.66 | $ | 0.67 | $ | 0.85 | $ | 0.71 | ||||||||||||
11
RANGE RESOURCES CORPORATION
BALANCE SHEETS
(In thousands)
(In thousands)
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | (Audited) | |||||||
Assets |
||||||||
Current assets |
$ | 151,656 | $ | 100,883 | ||||
Current assets of discontinued operations |
2,626 | 876,304 | ||||||
Current unrealized derivative gain |
136,488 | 123,255 | ||||||
Natural gas and oil properties |
4,846,835 | 4,084,013 | ||||||
Transportation and field assets |
54,264 | 74,049 | ||||||
Other |
284,609 | 240,082 | ||||||
$ | 5,476,478 | $ | 5,498,586 | |||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities |
$ | 401,843 | $ | 393,228 | ||||
Current asset retirement obligation |
4,020 | 4,020 | ||||||
Current unrealized derivative loss |
| 352 | ||||||
Current liabilities of discontinued operations |
1,064 | 32,962 | ||||||
Bank debt |
| 274,000 | ||||||
Subordinated notes |
1,787,678 | 1,686,536 | ||||||
Total long-term debt |
1,787,678 | 1,960,536 | ||||||
Deferred tax liability |
714,677 | 672,041 | ||||||
Unrealized derivative loss |
| 13,412 | ||||||
Deferred compensation liability |
165,810 | 134,488 | ||||||
Long-term asset retirement obligation and other. |
77,633 | 59,885 | ||||||
Long-term liabilities of discontinued operations |
| 3,901 | ||||||
Common stock and retained earnings |
2,244,000 | 2,163,803 | ||||||
Stock in deferred compensation plan and treasury |
(6,456 | ) | (7,512 | ) | ||||
Accumulated other comprehensive income |
86,209 | 67,470 | ||||||
Total stockholders equity |
2,323,753 | 2,223,761 | ||||||
$ | 5,476,478 | $ | 5,498,586 | |||||
12
RANGE RESOURCES CORPORATION
CASH FLOWS FROM OPERATING ACTIVITIES
(Unaudited, in thousands)
(Unaudited, in thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income |
$ | 34,755 | $ | (8,168 | ) | $ | 61,015 | $ | 78,463 | |||||||
Adjustments to reconcile net income to net cash provided from operating
activities: |
||||||||||||||||
(Income) loss discontinued operations |
(1,569 | ) | 10,821 | (15,484 | ) | 19,542 | ||||||||||
(Gain) loss from equity investment, net of distributions |
5,640 | 845 | 24,899 | 1,830 | ||||||||||||
Deferred income tax expense (benefit) |
22,547 | 795 | 35,345 | 61,570 | ||||||||||||
Depletion, depreciation, amortization and proved property impairment |
132,300 | 71,390 | 282,810 | 210,516 | ||||||||||||
Exploration dry hole costs |
2,509 | 1,661 | 2,515 | 1,661 | ||||||||||||
Abandonment and impairment of unproved properties |
16,627 | 14,435 | 52,064 | 30,713 | ||||||||||||
Mark-to-market (gain) loss on oil and gas derivatives not designated as hedges |
(58,990 | ) | 18,284 | (67,093 | ) | (23,885 | ) | |||||||||
Unrealized derivative (gain) loss |
3,971 | (2,389 | ) | (2,531 | ) | (2,400 | ) | |||||||||
Allowance for bad debts |
850 | | 446 | | ||||||||||||
Amortization of deferred financing costs, loss on extinguishment of debt, and
other |
3,862 | 6,524 | 23,753 | 8,891 | ||||||||||||
Deferred and stock-based compensation |
18,598 | 4,447 | 66,759 | 10,313 | ||||||||||||
(Gain) loss on sale of assets and other |
(203 | ) | (67 | ) | 1,280 | (78,156 | ) | |||||||||
Changes in working capital: |
||||||||||||||||
Accounts receivable |
(25,420 | ) | (9,796 | ) | (29,579 | ) | (1,735 | ) | ||||||||
Inventory and other |
(1,872 | ) | (2,745 | ) | 875 | (2,407 | ) | |||||||||
Accounts payable |
(13,483 | ) | (1,494 | ) | (19,705 | ) | 12,365 | |||||||||
Accrued liabilities and other |
(23,849 | ) | 18,181 | (24,285 | ) | 4,143 | ||||||||||
Net changes in working capital |
(64,624 | ) | 4,146 | (72,694 | ) | 12,366 | ||||||||||
Net cash provided from continuing operations |
116,273 | 122,724 | 393,084 | 331,424 | ||||||||||||
Net cash provided from discontinued operations |
(16,092 | ) | 17,369 | 20,710 | 69,106 | |||||||||||
Net cash provided from operating activities |
$ | 100,181 | $ | 140,093 | $ | 413,794 | $ | 400,530 | ||||||||
RECONCILIATION OF NET CASH PROVIDED FROM OPERATING
ACTIVITIES, AS REPORTED, TO CASH FLOW FROM OPERATIONS
BEFORE CHANGES IN WORKING CAPITAL, a non-GAAP measure
(Unaudited, in thousands)
ACTIVITIES, AS REPORTED, TO CASH FLOW FROM OPERATIONS
BEFORE CHANGES IN WORKING CAPITAL, a non-GAAP measure
(Unaudited, in thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||
Net cash provided from operating activities, as reported |
$ | 100,181 | $ | 140,093 | $ | 413,794 | $ | 400,530 | ||||||||||
Net changes in working capital from continuing operations |
64,624 | (4,146 | ) | 72,694 | (12,366 | ) | ||||||||||||
Exploration expense |
14,195 | 12,541 | 50,702 | 38,892 | ||||||||||||||
Office closing severance/exit accrual |
| | | 5,138 | ||||||||||||||
Lawsuit settlements |
168 | 469 | 238 | 3,035 | ||||||||||||||
Equity method investment distribution |
(5,000 | ) | | (23,500 | ) | | ||||||||||||
Non-cash compensation adjustment |
(1,664 | ) | (1,515 | ) | 185 | (1,533 | ) | |||||||||||
Net changes in working capital from discontinued operations and other |
17,470 | (6,666 | ) | 7,270 | (16,096 | ) | ||||||||||||
Cash flow from operations before changes in working capital, a non-GAAP
measure |
$ | 189,974 | $ | 140,776 | $ | 521,383 | $ | 417,600 | ||||||||||
ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING
(Unaudited, in thousands)
(Unaudited, in thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Basic: |
||||||||||||||||
Weighted average shares outstanding |
161,085 | 160,038 | 160,789 | 159,582 | ||||||||||||
Stock held by deferred compensation plan |
(2,931 | ) | (2,929 | ) | (2,888 | ) | (2,805 | ) | ||||||||
Adjusted basic |
158,154 | 157,109 | 157,901 | 156,777 | ||||||||||||
Dilutive: |
||||||||||||||||
Weighted average shares outstanding |
161,085 | 160,038 | 160,789 | 159,582 | ||||||||||||
Anti-dilutive or dilutive stock options under treasury method |
(1,763 | ) | (1,854 | ) | (1,850 | ) | (1,089 | ) | ||||||||
Adjusted dilutive |
159,322 | 158,184 | 158,939 | 158,493 | ||||||||||||
13
RANGE RESOURCES CORPORATION
RECONCILIATION OF NATURAL GAS, NGL AND OIL SALES AND
DERIVATIVE FAIR VALUE INCOME (LOSS) TO CALCULATED
CASH REALIZED NATURAL GAS, NGL AND OIL SALES,
PRODUCTION PRICES AND DIRECT OPERATING CASH COSTS,
non-GAAP measures
(Unaudited, in thousands, except per unit data)
DERIVATIVE FAIR VALUE INCOME (LOSS) TO CALCULATED
CASH REALIZED NATURAL GAS, NGL AND OIL SALES,
PRODUCTION PRICES AND DIRECT OPERATING CASH COSTS,
non-GAAP measures
(Unaudited, in thousands, except per unit data)
As Reported, GAAP | Non-GAAP | |||||||||||||||||||||||
Excludes Barnett Operations | Includes Barnett Operations | |||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2011 | 2010 | % | 2011 | 2010 | % | |||||||||||||||||||
Natural gas, NGL and oil sales components: |
||||||||||||||||||||||||
Natural gas sales |
$ | 135,133 | $ | 105,448 | $ | 136,146 | $ | 129,557 | ||||||||||||||||
NGL sales |
67,447 | 36,450 | 67,206 | 43,562 | ||||||||||||||||||||
Oil sales |
42,461 | 30,243 | 42,412 | 30,825 | ||||||||||||||||||||
Cash-settled hedges (effective): |
||||||||||||||||||||||||
Natural gas |
17,346 | 15,616 | 17,346 | 15,616 | ||||||||||||||||||||
Crude oil |
| | | | ||||||||||||||||||||
Early cash-settled natural gas hedges sold with Barnett sale |
9,412 | | 9,412 | | ||||||||||||||||||||
Total natural gas, NGL and oil sales, as reported |
$ | 271,799 | $ | 187,757 | 45 | % | $ | 272,522 | $ | 219,560 | 24 | % | ||||||||||||
Derivative fair value income (loss) components: |
||||||||||||||||||||||||
Cash-settled derivatives (ineffective): |
||||||||||||||||||||||||
Natural gas |
$ | 7,370 | $ | 10,179 | $ | 7,370 | $ | 10,179 | ||||||||||||||||
Crude oil |
285 | 15,697 | 285 | 15,697 | ||||||||||||||||||||
NGLs |
3,088 | | 3,088 | | ||||||||||||||||||||
Change in mark-to-market on unrealized derivatives |
58,990 | (18,284 | ) | 58,990 | (18,284 | ) | ||||||||||||||||||
Unrealized ineffectiveness |
(3,971 | ) | 2,389 | (3,971 | ) | 2,389 | ||||||||||||||||||
Total derivative fair value income (loss), as reported |
$ | 65,762 | $ | 9,981 | $ | 65,762 | $ | 9,981 | ||||||||||||||||
Natural gas, NGL and oil sales, including all cash-settled derivatives: |
||||||||||||||||||||||||
Natural gas sales |
$ | 169,261 | $ | 131,243 | $ | 170,274 | $ | 155,352 | ||||||||||||||||
NGL sales |
70,535 | 36,450 | 70,294 | 43,562 | ||||||||||||||||||||
Oil sales |
42,746 | 45,940 | 42,697 | 46,522 | ||||||||||||||||||||
Total |
$ | 282,542 | $ | 213,633 | 32 | % | $ | 283,265 | $ | 245,436 | 15 | % | ||||||||||||
Production during the period (a): |
||||||||||||||||||||||||
Natural gas (mcf) |
37,441,857 | 27,350,286 | 37 | % | 37,766,121 | 35,818,171 | 5 | % | ||||||||||||||||
NGL (bbl) |
1,430,568 | 1,059,485 | 35 | % | 1,419,485 | 1,279,781 | 11 | % | ||||||||||||||||
Oil (bbl) |
523,074 | 453,147 | 15 | % | 522,572 | 461,145 | 13 | % | ||||||||||||||||
Gas equivalent (mcfe) (b) |
49,163,709 | 36,426,083 | 35 | % | 49,418,463 | 46,263,547 | 7 | % | ||||||||||||||||
Production average per day (a): |
||||||||||||||||||||||||
Natural gas (mcf) |
406,977 | 297,286 | 37 | % | 410,501 | 389,328 | 5 | % | ||||||||||||||||
NGL (bbl) |
15,550 | 11,516 | 35 | % | 15,429 | 13,911 | 11 | % | ||||||||||||||||
Oil (bbl) |
5,686 | 4,926 | 15 | % | 5,680 | 5,012 | 13 | % | ||||||||||||||||
Gas equivalent (mcfe) (b) |
534,388 | 395,936 | 35 | % | 537,157 | 502,865 | 7 | % | ||||||||||||||||
Average prices realized, including cash-settled derivatives and early
cash-settled hedges for Barnett: |
||||||||||||||||||||||||
Natural gas (mcf) |
$ | 4.52 | $ | 4.80 | -6 | % | $ | 4.51 | $ | 4.34 | 4 | % | ||||||||||||
NGL (bbl) |
$ | 49.31 | $ | 34.40 | 43 | % | $ | 49.52 | $ | 34.04 | 45 | % | ||||||||||||
Oil (bbl) |
$ | 81.72 | $ | 66.74 | 22 | % | $ | 81.70 | $ | 66.84 | 22 | % | ||||||||||||
Gas equivalent (mcfe) (b) |
$ | 5.75 | $ | 5.43 | 6 | % | $ | 5.73 | $ | 4.97 | 15 | % | ||||||||||||
Direct operating cash costs per mcfe (c): |
||||||||||||||||||||||||
Field expenses |
$ | 0.57 | $ | 0.67 | -15 | % | $ | 0.55 | $ | 0.71 | -23 | % | ||||||||||||
Workovers |
0.03 | 0.02 | 50 | % | 0.03 | 0.02 | 50 | % | ||||||||||||||||
Total direct operating cash costs (c) |
$ | 0.60 | $ | 0.69 | -13 | % | $ | 0.58 | $ | 0.73 | -21 | % | ||||||||||||
(a) | Represents volumes sold regardless of when produced. | |
(b) | Oil and NGLs are converted to mcfe at a rate of one barrel equals six mcf based upon the approximate relative energy content of oil and natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices. | |
(c) | Excludes non-cash stock compensation. |
14
RANGE RESOURCES CORPORATION
RECONCILIATION OF NATURAL GAS, NGL AND OIL SALES AND
DERIVATIVE FAIR VALUE INCOME (LOSS) TO CALCULATED
CASH REALIZED NATURAL GAS, NGL AND OIL SALES,
PRODUCTION PRICES AND DIRECT OPERATING CASH COSTS,
non-GAAP measures
(Unaudited, in thousands, except per unit data)
DERIVATIVE FAIR VALUE INCOME (LOSS) TO CALCULATED
CASH REALIZED NATURAL GAS, NGL AND OIL SALES,
PRODUCTION PRICES AND DIRECT OPERATING CASH COSTS,
non-GAAP measures
(Unaudited, in thousands, except per unit data)
As Reported, GAAP | Non-GAAP | |||||||||||||||||||||||
Excludes Barnett Operations | Includes Barnett Operations | |||||||||||||||||||||||
Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2011 | 2010 | % | 2011 | 2010 | % | |||||||||||||||||||
Natural gas, NGL and oil sales components: |
||||||||||||||||||||||||
Natural gas sales |
$ | 364,716 | $ | 323,975 | $ | 399,189 | $ | 416,250 | ||||||||||||||||
NGL sales |
184,520 | 91,876 | 194,449 | 112,061 | ||||||||||||||||||||
Oil sales |
125,472 | 97,561 | 126,221 | 99,622 | ||||||||||||||||||||
Cash-settled hedges (effective): |
||||||||||||||||||||||||
Natural gas |
65,006 | 35,148 | 73,612 | 35,148 | ||||||||||||||||||||
Crude oil |
| 23 | | 23 | ||||||||||||||||||||
Early cash-settled natural gas hedges sold with Barnett sale |
15,653 | | 15,653 | | ||||||||||||||||||||
Total natural gas, NGL and oil sales, as reported |
$ | 755,367 | $ | 548,583 | 38 | % | $ | 809,124 | $ | 663,104 | 22 | % | ||||||||||||
Derivative fair value income (loss) components: |
||||||||||||||||||||||||
Cash-settled derivatives (ineffective): |
||||||||||||||||||||||||
Natural gas |
$ | 12,982 | $ | 16,878 | $ | 12,982 | $ | 16,878 | ||||||||||||||||
Crude oil |
(7,727 | ) | 15,697 | (7,727 | ) | 15,697 | ||||||||||||||||||
NGLs |
3,088 | | 3,088 | | ||||||||||||||||||||
Change in mark-to-market on unrealized derivatives |
67,093 | 23,885 | 67,093 | 23,885 | ||||||||||||||||||||
Unrealized ineffectiveness |
2,531 | 2,400 | 2,531 | 2,400 | ||||||||||||||||||||
Total derivative fair value income (loss), as reported |
$ | 77,967 | $ | 58,860 | $ | 77,967 | $ | 58,860 | ||||||||||||||||
Natural gas, NGL and oil sales, including all cash-settled derivatives: |
||||||||||||||||||||||||
Natural gas sales |
$ | 458,357 | $ | 376,001 | $ | 501,436 | $ | 468,272 | ||||||||||||||||
NGL sales |
187,608 | 91,876 | 197,537 | 112,061 | ||||||||||||||||||||
Oil sales |
117,745 | 113,281 | 118,494 | 115,346 | ||||||||||||||||||||
Total |
$ | 763,710 | $ | 581,158 | 31 | % | $ | 817,467 | $ | 695,679 | 17 | % | ||||||||||||
Production during the period (a): |
||||||||||||||||||||||||
Natural gas (mcf) |
100,058,851 | 77,148,685 | 30 | % | 111,827,545 | 104,320,417 | 7 | % | ||||||||||||||||
NGL (bbl) |
3,798,635 | 2,398,684 | 58 | % | 4,015,156 | 2,989,106 | 34 | % | ||||||||||||||||
Oil (bbl) |
1,462,168 | 1,432,805 | 2 | % | 1,470,296 | 1,460,565 | 1 | % | ||||||||||||||||
Gas equivalent (mcfe) (b) |
131,623,669 | 100,137,624 | 31 | % | 144,740,258 | 131,018,443 | 10 | % | ||||||||||||||||
Production average per day (a): |
||||||||||||||||||||||||
Natural gas (mcf) |
366,516 | 282,596 | 30 | % | 409,625 | 382,126 | 7 | % | ||||||||||||||||
NGL (bbl) |
13,914 | 8,786 | 58 | % | 14,708 | 10,949 | 34 | % | ||||||||||||||||
Oil (bbl) |
5,356 | 5,248 | 2 | % | 5,386 | 5,350 | 1 | % | ||||||||||||||||
Gas equivalent (mcfe) (b) |
482,138 | 366,804 | 31 | % | 530,184 | 479,921 | 10 | % | ||||||||||||||||
Average prices realized, including cash-settled derivatives and early
cash-settled hedges for Barnett: |
||||||||||||||||||||||||
Natural gas (mcf) |
$ | 4.58 | $ | 4.87 | -6 | % | $ | 4.48 | $ | 4.49 | 0 | % | ||||||||||||
NGL (bbl) |
$ | 49.39 | $ | 38.30 | 29 | % | $ | 49.20 | $ | 37.49 | 31 | % | ||||||||||||
Oil (bbl) |
$ | 80.53 | $ | 68.11 | 18 | % | $ | 80.59 | $ | 68.23 | 18 | % | ||||||||||||
Gas equivalent (mcfe) (b) |
$ | 5.80 | $ | 5.65 | 3 | % | $ | 5.65 | $ | 5.19 | 9 | % | ||||||||||||
Direct operating cash costs per mcfe (c): |
||||||||||||||||||||||||
Field expenses |
$ | 0.63 | $ | 0.64 | -2 | % | $ | 0.64 | $ | 0.68 | -6 | % | ||||||||||||
Workovers |
0.02 | 0.03 | -33 | % | 0.02 | 0.03 | -33 | % | ||||||||||||||||
Total direct operating cash costs (c) |
$ | 0.65 | $ | 0.67 | -3 | % | $ | 0.66 | $ | 0.71 | -7 | % | ||||||||||||
(a) | Represents volumes sold regardless of when produced. | |
(b) | Oil and NGLs are converted to mcfe at a rate of one barrel equals six mcf based upon the approximate relative energy content of oil and natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices. | |
(c) | Excludes non-cash stock compensation. |
15
RANGE RESOURCES CORPORATION
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AS REPORTED TO INCOME FROM OPERATIONS BEFORE INCOME TAXES
EXCLUDING CERTAIN ITEMS, a non-GAAP measure
(Unaudited, in thousands, except per share data)
AS REPORTED TO INCOME FROM OPERATIONS BEFORE INCOME TAXES
EXCLUDING CERTAIN ITEMS, a non-GAAP measure
(Unaudited, in thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2011 | 2010 | % | 2011 | 2010 | % | |||||||||||||||||||
Income from continuing operations before income taxes,
as reported |
$ | 55,726 | $ | 3,437 | 1521 | % | $ | 80,877 | $ | 159,564 | -49 | % | ||||||||||||
Adjustment for certain items: |
||||||||||||||||||||||||
(Gain) loss on sale of properties |
(203 | ) | (67 | ) | 1,280 | (78,156 | ) | |||||||||||||||||
Barnett discontinued operations less gain on sale |
1,378 | (11,346 | ) | 19,004 | (16,591 | ) | ||||||||||||||||||
Change in mark-to-market on unrealized derivatives (gain)
loss |
(58,990 | ) | 18,284 | (67,093 | ) | (23,885 | ) | |||||||||||||||||
Unrealized derivative (gain) loss |
3,971 | (2,389 | ) | (2,531 | ) | (2,400 | ) | |||||||||||||||||
Abandonment and impairment of unproved properties |
16,627 | 14,435 | 52,064 | 30,713 | ||||||||||||||||||||
Loss on early extinguishment of debt |
(4 | ) | 5,351 | 18,576 | 5,351 | |||||||||||||||||||
Proved property impairment |
38,681 | | 38,681 | 6,505 | ||||||||||||||||||||
Termination costs |
| | | 7,938 | ||||||||||||||||||||
Lawsuit settlements |
168 | 469 | 238 | 3,035 | ||||||||||||||||||||
Transportation and gathering non-cash stock compensation |
375 | 283 | 1,107 | 926 | ||||||||||||||||||||
Direct operating non-cash stock compensation |
463 | 544 | 1,416 | 1,469 | ||||||||||||||||||||
Exploration expenses non-cash stock compensation |
902 | 1,023 | 3,168 | 3,231 | ||||||||||||||||||||
General & administrative non-cash stock compensation |
8,491 | 7,821 | 27,488 | 26,401 | ||||||||||||||||||||
Deferred compensation plan non-cash stock compensation |
8,717 | (5,347 | ) | 33,569 | (25,194 | ) | ||||||||||||||||||
Income from operations before income taxes, as adjusted |
76,302 | 32,498 | 135 | % | 207,844 | 98,907 | 110 | % | ||||||||||||||||
Income tax expense, as adjusted |
||||||||||||||||||||||||
Current |
(7 | ) | (10 | ) | 1 | (10 | ) | |||||||||||||||||
Deferred |
31,650 | 13,620 | 84,725 | 40,007 | ||||||||||||||||||||
Net income excluding certain items, a non-GAAP measure |
$ | 44,659 | $ | 18,888 | 136 | % | $ | 123,118 | $ | 58,910 | 109 | % | ||||||||||||
Non-GAAP income per common share |
||||||||||||||||||||||||
Basic . |
$ | 0.28 | $ | 0.12 | 133 | % | $ | 0.78 | $ | 0.38 | 105 | % | ||||||||||||
Diluted |
$ | 0.28 | $ | 0.12 | 133 | % | $ | 0.77 | $ | 0.37 | 108 | % | ||||||||||||
Non-GAAP diluted shares outstanding, if dilutive |
159,322 | 158,184 | 158,939 | 158,493 | ||||||||||||||||||||
HEDGING POSITION AS OF OCTOBER 25, 2011
(Unaudited)
(Unaudited)
Premium (Paid) / | ||||||||||
Daily Volume | Hedge Price | Received | ||||||||
Gas (Mmbtu) |
||||||||||
3Q 2011 Collars |
318,200 | $5.43 - $6.29 | ($0.40 | ) | ||||||
4Q 2011 Collars |
348,200 | $5.33 - $6.18 | ($0.37 | ) | ||||||
2012 Swaps |
70,000 | $5.00 | ($0.04 | ) | ||||||
2012 Collars |
189,641 | $5.32 - $5.91 | ($0.28 | ) | ||||||
2013 Collars |
160,000 | $5.09 - $5.65 | | |||||||
Oil (Bbls) |
||||||||||
3Q 2011 Calls |
5,500 | $80.00 | $ | 10.37 | ||||||
4Q 2011 Calls |
5,500 | $80.00 | $ | 10.37 | ||||||
2012 Collars |
2,000 | $70.00 - $80.00 | $ | 7.50 | ||||||
2012 Calls |
4,700 | $85.00 | $ | 13.71 | ||||||
NGL (Bbls) |
||||||||||
3Q 2011 Swaps |
7,000 | $104.17 | | |||||||
4Q 2011 Swaps |
7,000 | $104.17 | | |||||||
2012 Swaps |
5,000 | $102.59 | |
NOTE: SEE WEBSITE FOR OTHER SUPPLEMENTAL INFORMATION FOR THE PERIODS
16