Shares of Range Resources (NYSE: RRC) spiked as much as 12.6% by 10:45 a.m. EDT on Wednesday. Fueling the energy company's rally was an update on how it planned to work around the temporary shutdown of Energy Transfer's (NYSE: ET) Mariner East pipeline system.
Range Resources provided investors with an update on how an outage of Energy Transfer's Mariner East pipeline will impact its operations. The midstream giant needs to shut that system down so that it can perform optimization work at its Marcus Hook export terminal. That will allow it to more efficiently transport natural gas liquids (NGLs) to end markets.
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Range Resources typically transports ethane via the Mariner East 1 pipeline. However, it will instead sell those volumes as part of its natural gas stream. Meanwhile, it will ship propane on Mariner East 2 instead of the first pipeline, so the outage will have a minimal impact on production and cash flow. Overall, the company expects its third-quarter output to be between 2.22 and 2.23 BCFE/d, which is slightly less than its original guidance of 2.25 to 2.26 BCFE/d. Further, Range assured investors that it remains on track to spend at or below its $756 million capital budget this year.
Infrastructure outages can have a significant impact on the ability of oil and gas companies to get their production to market centers. However, that won't be the case for Range Resources as Energy Transfer shuts down Mariner East 1 this month, since it has ways to work around that situation. The shutdown should have minimal impact on the company's third-quarter results.
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