Range Resources Corporation
) registered fourth quarter 2012 production growth of 35% from
the year-ago quarter mainly from the continued success of its
drilling program in the liquid-rich high return plays. This
resulted in 41% liquid production growth.
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Fort Worth, Texas-based independent oil and gas company's
quarterly production of 844 million cubic feet equivalent per day
(MMcfe/d) surged 35% over the prior-year quarter and 7%
The fourth quarter average net production volumes of oil, natural
gas liquids (NGLs) and natural gas were 9,863 barrels per day
(BPD), 21,652 BPD and 655 MMcf per day, respectively. This
constituted 78% of natural gas, while the balance was for NGL and
Range Resources also reported its preliminary fourth quarter 2012
commodity price realizations (including the impact of hedges and
derivative settlements) of $5.35 per thousand cubic feet
equivalent (Mcfe). This represents a year-over-year decrease of
11% but a sequential increase of 10%. Realized prices for each
commodity, per the preliminary fourth quarter estimates, were
$4.22 per Mcf for natural gas, $43.56 per barrel for natural gas
liquids and $82.30 for crude oil.
The company has a track record of growing production at a
double-digit rate while reducing its finding and development
(F&D) costs and sustaining an industry leading low-cost
structure. This can be attributed to increased production from
the low-cost Marcellus region.
However, with the majority of Range Resources' reserves tilted
toward natural gas, the company's results are vulnerable to
fluctuations in natural gas markets. The timid gas price
environment compelled the company to reduce its exposure to
natural gas drilling. Range Resources highlighted that it will
trim dry gas drilling activity, mostly in northeastern
Pennsylvania, where it intends to lessen its activity from four
to five rigs in 2012 to one rig in 2013.
We appreciate the company's initiative of deploying more funds
toward liquids, a trend common even among its peers,
Chesapeake Energy Corp.
We maintain our long-term Neutral recommendation for the company,
which retains a Zacks Rank #3 (short-term Hold rating).