Range Resources Corp. (RRC) reported strong third-quarter 2014 results. Significantly higher production primarily in the Marcellus shale region led to the improvement.
The company’s adjusted earnings per share came in at 37 cents, which surpassed the Zacks Consensus Estimate of 35 cents and improved from the year-ago adjusted profit of 36 cents.
Third-quarter total revenue of $616.6 million beat the Zacks Consensus Estimate of $495 million and grew 39% year over year. The improvement is attributable to production growth of 21.4%.
Operational Performance
The company’s third-quarter production averaged almost 1,208.6 million cubic feet equivalent per day (MMcfe/d), comprising 68% natural gas, while natural gas liquids (NGLs) and oil contributed 32%. Total production volume experienced a 26% improvement from the year-ago quarter, mainly on the back of higher upstream operations in the Marcellus shale region.
Oil production decreased 3%, NGL rose 109% and natural-gas production grew 11%, all on a year-over-year basis.
The company’s total price realization (including the effect of hedges and derivative settlements) averaged $4.16 per Mcfe, down 13% year over year. The overall price comprised NGL at $22.53 per barrel (down 27% year over year), crude oil at $78.66 a barrel (down 8%) and natural gas at $3.63 per Mcf (down 7%).
Financials
At the end of the quarter, long-term debt was $2,999 million, representing a debt-to-capitalization ratio of 48.6%.
Guidance
For the fourth quarter, Range Resources reaffirmed its production guidance at 1.35 Bcfe per day, of which liquids will be 30%.
For 2014, the company also maintained its production growth guidance of 25%. The company projects 20−25% production growth beyond 2014.
Zacks Rank
Range Resources currently carries a Zacks Rank #5 (Strong Sell), implying that the stock will significantly underperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the energy space like Magellan Midstream Partners LP (MMP), Delek Logistics Partners LP (DKL) and Cobalt International Energy Inc. (CIE). All these stocks sport a Zacks Rank #1 (Strong Buy).
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