Range Resources Corporation RRC reported first-quarter 2018 earnings (adjusted for one-time items) of 46 cents per share, in line with the Zacks Consensus Estimate. The bottom line was up 84% than the year-ago period’s figure of 25 cents.
Total revenues of $742.6 million beat the Zacks Consensus Estimate of $720.5 million. However, the top line declined 4.4% year over year from $776.7 million.
First-quarter 2018 results were boosted by an increase in oil and gas equivalent production and price realizations, partially offset by higher expenses.
Range Resources Corporation Price, Consensus and EPS Surprise
Range Resources Corporation Price, Consensus and EPS Surprise | Range Resources Corporation Quote
Operational Performance
During the first quarter, the company’s production averaged almost 2,188.4 million cubic feet equivalent per day (MMcfe/d). Natural gas made up for 68.5% of total production, while natural gas liquids (NGLs) and oil accounted for the remaining 31.5%. Range Resources’ net natural gas output surpassed 1.2 billion cubic feet per day mark, making a quarterly record.
Total production volume improved 13% from the year-ago quarter and surpassed the Zacks Consensus Estimate of 2,175 MMcfe/d, primarily due to improvement in the Appalachia division, partially offset by decline in North Louisiana output.
On a year-over-year basis, oil production remained almost in line, while NGL production rose 9%. Moreover, natural gas production jumped 16% year over year.
In the quarter, the company drilled two longest laterals ever, at 17,875 and 18,129 feet.
The company’s total price realization (including the effects of hedges and derivative settlements) averaged $2.34 per thousand cubic feet equivalent (Mcfe), up 8% from the prior-year quarter. Of this, NGL prices surged 35% to $10.77 per barrel while crude oil prices rose 3% to $50.98 per barrel, both on a year-over-year basis. Natural gas prices were up 3% year over year to $2.27 per Mcf.
Expenses
Direct operating cost in this quarter was $37.5 million, increasing 36.5% from the year-ago quarter. Total expenses were $650.7 million, up 32% year over year.
Financials
At the end of the quarter, the company had a total debt of approximately $4,081.7 million, with a debt-to-capitalization ratio of 41.2%. The company incurred expenditure of $227 million in the first quarter for drilling and completion of 27.5 net wells.
The company also recently renewed its revolving credit facility with a syndicate of 27 financial institutions. The credit facility has a maximum size of $4 billion and borrowing base of $3 billion.
Guidance
For the second quarter of 2018, the company estimates production at about 2.19 billion cubic feet equivalent (Bcfe) per day. For 2018, production is projected at about 2.2 Bcfe per day. With this, the annual output is likely to rise 11%. The company intends to increase its cash flow by 11% through 2018.
The upstream energy player reiterated its 2018 capital budget of $941 million.
Price Performance
Fort Worth, TX-based Range Resources has lost 4.1% in the first quarter of 2018 compared with 14.8% fall of its industry.
Zacks Rank and Stocks to Consider
Range Resources has a Zacks Rank #3 (Hold).
If you are interested in the energy sector, you can opt for some better-ranked stocks like EOG Resources, Inc. EOG, Oasis Midstream Partners LP OMP and CNOOC Limited CEO. While EOG Resources sports a Zacks Rank #1 (Strong Buy), Oasis Midstream and CNOOC carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based EOG Resources is an upstream energy company. For 2018, the bottom line of the company is likely to be up 34.1%. In the last four reported quarters, the company witnessed a positive average surprise of 25.7%.
Houston, TX-based Oasis Midstream is an integrated energy partnership. Its revenues for 2018 are anticipated to improve 29.3% from the prior-year quarter, while its bottom line is expected to increase 337.2%.
Hong Kong-based CNOOC is an integrated energy company. Its revenues for 2018 are anticipated to improve 49% year over year, while its bottom line is expected to increase 82.8%.
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