Range Resources Corp.
) trumped the second-quarter 2013 Zacks Consensus Estimate of a
loss of 2 cents with its adjusted earnings of 34 cents a share.
Results also increased from the year-earlier adjusted profit of
11 cents a share.
Second quarter total revenue of $673.4 million also outdid the
Zacks Consensus Estimate of $420 million and grew 50% year over
year from $448.9 million. The year-over-year improvement was
attributable to 27% production growth.
The company's quarterly production averaged almost 910.0
million cubic feet equivalent per day (MMcfe/d), comprising 24%
natural gas, 35% natural gas liquids (NGLs) and 39% oil. Total
production volume expanded 27% from the year-earlier quarter,
mainly on the back of continued accomplishments from the
company's drilling program.
Oil production expanded 39%, NGL rose 35% and natural-gas
production increased 24% 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 $5.02 per Mcfe, up 6%
year over year. The overall price comprised NGL at $32.91 per
barrel (down 22% year over year), crude oil at $85.09 a barrel
(up 1%) and natural gas at $4.20 per Mcf (up 15%).
At the end of the quarter, debt was $2.9 billion flat with the
year-ago quarter. During the quarter, the company completed the
redemption for all $250 million in outstanding principal of its
7.25% Senior Subordinated Notes due 2018. The principal along
with the $9.1 million redemption premium was funded using
borrowings under the bank credit facility. As a result, Range
currently has no senior subordinated note maturities until 2019.
At the end of the second quarter, the company had approximately
$1.4 billion of unutilized liquidity available under its $1.8
billion bank commitment amount and $2.0 billion bank credit
facility borrowing base.
For the third quarter, the company expects production between
945 Mmcfe and 950 Mmcfe per day.
For 2013, the company 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, declining unit costs as well as 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 recent times 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. We see the
company's dominance in the Marcellus Shale play and continuous
endeavors to control costs as favorable for its profitabilty 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 #4 (Sell).
However, there are other stocks in the oil and gas industry, like
VOC Energy Trust
Blueknight Energy Partners, L.P.
Memorial Production Partners LP
), which appear promising and carry a Zacks Rank #1 (Strong Buy).
BLUEKNIGHT EGY (BKEP): Free Stock Analysis
MEMORIAL PRODUC (MEMP): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
VOC ENERGY TRST (VOC): Free Stock Analysis
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