Range Resources Corp.’s (RRC) first-quarter 2014 adjusted earnings came in at 46 cents a share, beating the Zacks Consensus Estimate of 38 cents. Results also increased from the year-earlier profit of 33 cents a share.
First quarter total revenue of $457.3 million failed to reach our $502 million projection but grew 43% year over year. The year-over-year increase is attributable to 21% production growth.
Operational Performance
The company’s first quarter production averaged almost 1,056.2 million cubic feet equivalent per day (MMcfe/d), comprising 65% natural gas, while natural gas liquids (NGLs) and oil were 35%. Total production volume experienced a 20.6% improvement from the year-earlier quarter, mainly on the back of sustained accomplishment from the company’s drilling program.
Oil production expanded 13%, NGL rose 137% and natural-gas production remained unchanged 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 $4.14 per Mcfe, down 3% year over year. The overall price comprised NGL at $25.35 per barrel (down 25.0% year over year), crude oil at $82.03 a barrel (down 4.0%) and natural gas at $3.14 per Mcf (unchanged).
Financials
At the end of the quarter, long-term debt was $3,234.9 million, representing a debt-to-capitalization ratio of 56.9%.
Guidance
For the second quarter, the company expects production between 1,065 Mmcfe and 1,075 Mmcfe per day, of which liquids will be 30% to 35%. The company expects production for the third and fourth quarters to range between 1,160 Mmcfe and 1,210 Mmcfe per day and 1,280 Mmcfe and 1,340 Mmcfe per day, respectively. Liquids would comprise 30% to 35% for both the quarters.
For 2014, 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.
Ranks
Range Resources currently retains a Zacks Rank #3 (Hold). However, there are other stocks in the oil and gas industry, like Unit Corp (UNT), Helmerich & Payne, Inc. (HP) and Boardwalk Pipeline Partners, LP (BWP), which appear more promising and carry a Zacks Rank #1 (Strong Buy).
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