Range Resources Corporation
) reported its third quarter 2012 production results, preliminary
realized prices and an update on its hedging position. The company
registered record output - thanks to the continued success of its
drilling program in the Marcellus and horizontal Mississippian oil
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On an equivalent basis, production volumes were higher than the
upper end of the third quarter production guidance range, which
averaged around 790 million cubic feet equivalent (MMcfe) net per
day, up 47% from the year-ago quarter and 10% sequentially.
The initial third quarter average net production volumes of oil,
natural gas liquids (NGLs) and natural gas were 7,748 barrels per
day (bpd), 20,040 bpd and 623.3 MMcf per day, respectively. This
constituted 79%, 15% and 6% of natural gas, NGL and crude oil,
respectively. The annual rise in oil, NGLs and natural gas output
was a respective 36%, 30% and 52%.
Range also reported its preliminary third quarter 2012 commodity
price realizations (including the impact of hedges and derivative
settlements) of $4.88 per thousand cubic feet equivalent (Mcfe)
versus $6.41 per Mcfe for the year-ago quarter and $4.74 per Mcfe
for the second quarter of 2012. Realized prices for each commodity,
per the preliminary third quarter estimates were, natural gas -
$3.88 per Mcf, natural gas liquids - $38.79 per barrel and crude
oil - $84.86.
Range also announced its plans of not proceeding with the drilling
operations on the last remaining Barnett undeveloped leasehold,
which had been retained by the company during the Barnett assets
sale in 2011. This is likely to result in an increase of the
non-cash unproved property impairment provision by $20 million for
Range also reported about its hedging position through which it
realized a gain of about $80 million in the third quarter. As of
September 30, 2012, the company expects to derive about $145
million as future hedging gains, of which approximately 40% is
likely to be realized in the last quarter of 2012, 56% in 2013, and
the remaining 4% in 2014.
Range, which recently became the anchor shipper on the Mariner East
Project - venture between
Sunoco Logistics Partners L.P.
MarkWest Energy Partners, L.P.
), retains a Zacks #3 Rank, which is equivalent to a Hold rating
for a period of one to three months. For the long term, we maintain
our Neutral recommendation.