Range Resources Corp.’s (RRC) second-quarter 2014 adjusted earnings per share came in at 36 cents, missing the Zacks Consensus Estimate of 37 cents. This was mainly due to lower price realizations. However, the reported figure marked an increase from the year-earlier profit of 34 cents a share.
Second-quarter total revenue of $765.5 million beat the Zacks Consensus Estimate of $501 million and grew 13.7% year over year. The improvement is attributable to production growth of 21.4%.
Operational Performance
The company’s second-quarter production averaged almost 1,104.7 million cubic feet equivalent per day (MMcfe/d), comprising 67% natural gas, while natural gas liquids (NGLs) and oil were 33%. Total production volume experienced a 21.4% improvement from the year-ago quarter, mainly on the back of sustained performance of the company’s drilling program.
Oil production increased 14.5%, NGL rose 111.3% and natural-gas production grew 4.4%, all on a year-over-year basis. Range Resources’ high liquid-rich spending level led to the increase in oil and natural-gas liquids production.
The company’s total price realization (including the effect of hedges and derivative settlements) averaged $3.73 per thousand cubic feet equivalent (Mcfe), down 11.8% year over year. The overall price comprised NGL at $22.43 per barrel (down 28.5% year over year), crude oil at $80.63 a barrel (down 5.2%) and natural gas at $2.87 per Mcf (down 11.2%).
Financials
At the end of the quarter, long-term debt was $2,830.0 million, representing a debt-to-capitalization ratio of 48.4%.
Guidance
For the third quarter, Range Resources expects production to be around 1.20 billion cubic feet equivalent (Bcfe) per day, of which liquids will be 30%. The company expects production for the fourth quarter to be around 1.35 Bcfe per day, out of which liquids will be 30%.
For 2014, the company has maintained its earlier production growth guidance of 25% and capital budget guidance at $1.52 billion, with stress on liquids-rich and oil projects mainly in the Marcellus Shale and horizontal Mississippian plays.
Ranks
Range Resources currently carries a Zacks Rank #3 (Hold). However, better-ranked stocks in the oil and gas industry, like Magellan Midstream Partners LP (MMP), Exco Resources Inc. (XCO) and CNOOC Ltd (CEO), all sporting a Zacks Rank #1 (Strong Buy), appear promising.
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