Range Resources Corp.
) first-quarter 2013 adjusted earnings came in at 11 cents a
share, falling behind the Zacks Consensus Estimate of 18 cents.
Results also decreased from the year-earlier profit of 15 cents a
First quarter total revenue of $319.2 million failed to reach
our $390 million projection but grew 27% year over year. The
annualized growth is attributable to the 32% production
The company's first quarter production averaged almost 876.0
million cubic feet equivalent per day (MMcfe/d), comprising 34%
natural gas, 22% natural gas liquids (NGLs) and 52% oil. Total
production volume experienced a 32% improvement from the
year-earlier quarter, mainly on the back of sustained
accomplishment from the company's drilling program.
Oil production expanded 50%, NGL rose 21% and natural-gas
production increased 33% on a year-over-year basis. Range's high
liquid-rich spending level led to the relative increase in oil
and natural-gas liquids production.
Range's total price realization (including the effects of
hedges and derivative settlements) averaged $4.26 per Mcfe, down
5% year over year. The overall price comprised NGL at $33.61 per
barrel (down 25.0% year over year), crude oil at $85.46 a barrel
(up 2.0%) and natural gas at $3.14 per Mcf (down 1.0%).
At the end of the quarter, long-term debt was $2,936.5
million, representing a debt-to-capitalization ratio of
For the second quarter, the company expects production between
880 Mmcfe and 890 Mmcfe per day.
For 2013, the company has maintained its earlier production
growth guidance of 20% to 25% and capital budget guidance at $1.3
billion with stress on liquids-rich and oil projects mainly in
the Marcellus Shale and horizontal Mississippian plays.
We believe that Range Resources' large acreage holdings will
support several years of oil and gas drilling in the fast-growing
fields. In a dynamic natural gas price environment, the company's
record production and declining unit costs along with the sale of
non-core properties will prove beneficial over time. We believe
that with a robust asset base, Range Resources remains on track
to reach its projected production level for this year. The
company made significant operational progress in the quarter in
all of its five liquids-rich and oil ventures, namely, Marcellus,
Upper Devonian, wet Utica, horizontal Mississippian and Cline
Range Resources' diversified asset portfolio is spread between
low-risk/long reserve-life Appalachian assets and
large-volume/rapid-payout Gulf Coast properties. The company has
an impressive inventory in the Marcellus Shale, one of the
prominent emerging shale plays in the U.S. Lower 48. Given its
dominant position in the Marcellus Shale play and its continuous
endeavor to control costs, we believe that Range Resources will
be capable of organizational sustainability and long-term
shareholder value creation.
However, we remain on the sidelines as the company is still
exposed to volatile natural gas fundamentals, interest rate risks
and an uncertain macro backdrop. Additionally, Range Resources is
governed by several stringent regulations, especially in the
Marcellus Shale, the Appalachian Basin and the southwestern U.S.,
where it has a robust asset base.
Range Resources currently retains a Zacks Rank #3 (Hold).
However, there are other stocks in the oil and gas industry, like
Harvest Natural Resources Inc.
EPL Oil & Gas, Inc
Kosmos Energy Ltd.
), which appear more promising and carry a Zacks Rank #1 (Strong
EPL OIL&GAS INC (EPL): Free Stock Analysis
HARVEST NATURAL (HNR): Free Stock Analysis
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RANGE RESOURCES (RRC): Free Stock Analysis
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