Range Resources Corp.
) reported impressive fourth quarter as well as full year 2012
results on the back of solid contribution from the Marcellus
plays associated with liquid volume growth.
Adjusted fourth quarter earnings came in at 46 cents per share,
beating the Zacks Consensus Estimate of 14 cents comprehensively.
The reported results also improved approximately 39.4% from the
year-ago adjusted profit level of 33 cents.
Quarterly total revenue of $398.7 million surpassed our $387.0
million projection and increased 20.1% year over year.
Full year 2012 adjusted earnings were 92 cents per share,
representing a 17.1% decrease from $1.11 per share in full year
Total revenue in 2012 increased 9.7% to $1,351.7 million from the
2011 level of $1,232.5 million.
The company's fourth quarter production averaged a record 844.3
million cubic feet equivalent per day (MMcfe/d). Total production
volume experienced a 35.1% improvement from the year-earlier
period and 7% sequentially, mainly on the back of continued
success in its drilling program in the liquid-rich high return
plays. In particular, liquids output jumped 41% from the year-ago
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. Natural gas
made up 78% of total production, while the balance was
constituted by NGL and crude oil.
Natural gas production expanded 33.4%, NGL rose 27.9% and oil
production increased 82.3% on a year-over-year basis.
Full year 2012 total production of 752.6 MMcfe/d improved 35.8%
from the 2011 level of 554.1 MMcfe/d.
For the fourth quarter, Range's total price realization
(including the effects of hedges and derivative settlements)
averaged $4.64 per Mcfe, down 14.2% year over year. The overall
price comprised NGL at $41.96 per barrel (down 22.7% year over
year) and natural gas at $3.35 per Mcf (down approximately
18.1%). However, crude oil was sold at $82.30 a barrel (down
At the end of the quarter, long-term debt was $2,878.2 million,
representing a debt-to-capitalization ratio of 55.0% (versus
55.5% in the preceding quarter).
Total capital spending for 2012 stood at $1.62 billion that
involves $189 million for leasehold.
For each of the four quarters of 2013, Range has hedged 280,000
million British thermal units per day (MMbtu/d) of natural gas
production at an average floor price of $4.59.
The company has also hedged 402,500 MMbtu/d of natural gas at an
average price of $3.81 for 2014 and 55,000 MMbtu/d at an average
floor price of $4.03 for 2015.
The company now expects 2013 production growth in the range of
20% to 25% with liquids likely to be higher than the above
mentioned range. It also expects total production growth of
845-850 MMcfe/d for the first quarter, of which liquid growth is
expected at around 20%.
2013 production growth will be mainly driven by the substantial
impetus from the Marcellus and Horizontal Mississippian oil
plays. This will be further aided by the solid liquids potential
in the Cline Shale, Wolfberry and Utica plays.
Range Resources also remains enthusiastic about the growing
global markets for NGLs through its Mariner East and West
Earlier, Range Resources had set its capital budget for 2013 at
$1.3 billion, which is nearly 20% less, year over year. The total
budget comprises about $1.1 billion for drilling and
recompletions, $100 million for leasehold and renewals, $75
million for pipelines and facilities, and $25 million for
The company aims to spend approximately 85% of the budget toward
oil and liquids-rich projects mostly in the Marcellus Shale and
Horizontal Mississippian plays that have a combined acreage of
The independent oil and natural gas producer plans to fund the
capital outlay from operating cash flow, proceeds from asset
sales and existing liquidity under its credit facility. The
properties to be sold involve some of its Permian Basin
properties in southeast New Mexico and West Texas. It also
anticipates shedding a total of $2.3 billion worth of properties
since the start of its asset sale program in 2004 with this
Range Resources currently retains a Zacks Rank #2 (short-term Buy
rating). There are other stocks in the oil and gas industry that
can also be considered. These include
Linn Co, LLC
) with a Zacks Rank #1 (Strong Buy), and
Breitburn Energy Partners L.P.
) with Zacks Rank #2 (Buy).
BREITBURN EGY (BBEP): Free Stock Analysis
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LINN CO LLC (LNCO): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
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