3rd quarter production of 1,445,000 mcfe per day beat my forecast of 1,398,000 mcfe per day. Updating forecast model now and will have more comments later today. - Dan
FORT WORTH, TX--(Marketwired - Oct 28, 2015) - RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its third quarter financial results.
Highlights -
•Unit costs declined by $0.36 per mcfe, or 12% compared to the prior-year quarter.
•Production volumes averaged 1,445 Mmcfe per day, a 20% increase over the prior-year quarter.
•Marcellus production averaged 1,277 Mmcfe per day, a 27% increase over the prior-year quarter.
•First Utica well in Washington County, Pennsylvania estimated to have 15 Bcf EUR, or 2.8 Bcf per 1,000 feet of lateral.
•Second Utica well brought online with choke management at 13 Mmcf per day rate and projected to have higher EUR than the first well.
•Full-year 2015 capital budget of $870 million is on track to deliver 20% annual year-over-year growth.
•Mariner East I with full operations for propane and ethane expected by the end of the year.
Commenting, Jeff Ventura, Range's Chairman, President and CEO, said, "Our operational results in the third quarter continued to improve during this challenging commodity period. Range is expecting to deliver our 20% production growth target in 2015 from a significantly lower capital budget of only $870 million, compared to $1.5 billion in 2014. We believe Range has one of the most capital efficient operations in the industry and we expect to continue improvements in 2016 and beyond. The keys to increasing capital efficiency are our large, concentrated, stacked pay acreage position that can deliver high quality returns at low-cost and right-sized takeaway capacity to move products to better or improving markets. This gives Range a sustainable competitive advantage in the current market and becomes more important as the natural gas markets improve.
"We are continuing to work on potential non-core asset sales for areas in our portfolio that cannot compete against the Marcellus for capital. Range expects to close one or more non-core asset sales prior to year-end. Any sales proceeds will be used to reduce debt and strengthen our balance sheet. Importantly, we are continuing to drive down costs and implement innovative marketing solutions that are expected to deliver improved margins. We also see signs of improved pricing ahead, especially in Appalachia, as the Mariner East I project becomes fully operational by year-end and completion of other infrastructure projects to move natural gas and NGLs out of the basin. Each of these projects is expected to improve the basis differentials in the southwest area of the Marcellus in the near-term. These projects, combined with the industry slowdown and reduction in capital spending, should help to bring supply and demand in balance both nationally and regionally, thus improving our prices and margins going forward."
RRC Q3 Results
RRC Q3 Results
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: RRC Q3 Results
This will make a BIG difference in 2016:
"The Mariner East I project is scheduled to commence full operations by the end of the year. Our latest communications with Sunoco Logistics indicate that ethane startup should occur within the next month and full ethane and propane operations by the end of the year. While the benefits of this project have been discussed before, the project's significance to Range bears repeating. First, when fully operational, Range will ship 20,000 barrels of ethane via pipeline to the Marcus Hook facilities in Philadelphia. The 20,000 barrels of ethane will be sold to INEOS, FOB at Marcus Hook, under a 15-year sales agreement. Second, 20,000 barrels of propane will be shipped via pipeline to Marcus Hook, where it can be sold in either the international market, or the local market, depending on which option yields the best price. The supply of large ships available to transport propane to international markets is expected to increase by roughly 50% in 2016, thus lowering shipping costs, and improving the expected net price received. Range has begun locking in the premium spread between the Mont Belvieu index and the respective European and Asian propane market indexes for 2016 on a limited amount of our propane volumes. Third, Range has access to 800,000 barrels of propane storage (80% of the total capacity) at Marcus Hook, which is especially valuable as it allows faster loading of ocean-going vessels and potential seasonal price opportunities. Fourth, having access to the harbor facilities at Marcus Hook is an important advantage for Range, as it could permit future export of other NGL products and growing volumes of ethane and propane."
"The Mariner East I project is scheduled to commence full operations by the end of the year. Our latest communications with Sunoco Logistics indicate that ethane startup should occur within the next month and full ethane and propane operations by the end of the year. While the benefits of this project have been discussed before, the project's significance to Range bears repeating. First, when fully operational, Range will ship 20,000 barrels of ethane via pipeline to the Marcus Hook facilities in Philadelphia. The 20,000 barrels of ethane will be sold to INEOS, FOB at Marcus Hook, under a 15-year sales agreement. Second, 20,000 barrels of propane will be shipped via pipeline to Marcus Hook, where it can be sold in either the international market, or the local market, depending on which option yields the best price. The supply of large ships available to transport propane to international markets is expected to increase by roughly 50% in 2016, thus lowering shipping costs, and improving the expected net price received. Range has begun locking in the premium spread between the Mont Belvieu index and the respective European and Asian propane market indexes for 2016 on a limited amount of our propane volumes. Third, Range has access to 800,000 barrels of propane storage (80% of the total capacity) at Marcus Hook, which is especially valuable as it allows faster loading of ocean-going vessels and potential seasonal price opportunities. Fourth, having access to the harbor facilities at Marcus Hook is an important advantage for Range, as it could permit future export of other NGL products and growing volumes of ethane and propane."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: RRC Q3 Results
Financial Position and Liquidity
On August 3, 2015, Range called for redemption of all $500 million in outstanding principal of its 6.75% Senior Subordinated Notes due in 2020 at a price of 103.375% of the outstanding principal, plus accrued interest. Combined with the issuance in May 2015 of $750 million of its 4.875% Senior Notes due 2025, Range has significantly reduced its borrowing costs and extended the average maturity of its debt.
As of September 30, 2015, Range has bank commitments of $2 billion under the maximum bank credit facility of $4 billion. With outstanding bank debt of $987 million and undrawn letters of credit of $136.8 million, Range has immediately available committed liquidity at September 30, 2015 of $876.2 million.
On August 3, 2015, Range called for redemption of all $500 million in outstanding principal of its 6.75% Senior Subordinated Notes due in 2020 at a price of 103.375% of the outstanding principal, plus accrued interest. Combined with the issuance in May 2015 of $750 million of its 4.875% Senior Notes due 2025, Range has significantly reduced its borrowing costs and extended the average maturity of its debt.
As of September 30, 2015, Range has bank commitments of $2 billion under the maximum bank credit facility of $4 billion. With outstanding bank debt of $987 million and undrawn letters of credit of $136.8 million, Range has immediately available committed liquidity at September 30, 2015 of $876.2 million.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group