Range Resources (RRC) Q1 Results - May 1

[dan_s]

First Quarter Highlights – with my comments in blue.

GAAP cash flow provided from operating activities of $125 million, and non-GAAP cash flow of $125 million < Compares to my Q1 forecast of $115 million cash flow from operations.

GAAP net income of $145 million ($0.58 per diluted share), and non-GAAP net income of $10 million ($0.04 per diluted share) < Compares to my Q1 forecast of $4.4 million net income, $0.02/share.

Cash unit costs of $1.93 per mcfe, an improvement of $0.20 per mcfe versus prior-year period

Natural gas differentials, including basis hedging, averaged $0.12 per mcf below NYMEX

NGL differential of $1.30 per barrel above Mont Belvieu, best in recent Company history

In January, issued $550 million senior notes due 2026, with proceeds used to redeem $500 million senior notes due 2021 and 2022

In March, Range’s $3.0 billion borrowing base and $2.4 billion elected commitment were reaffirmed < VERY GOOD NEWS.

Production averaged 2,294 Mmcfe per day, approximately 70% natural gas < Above my forecast.

Southwest Pennsylvania production increased 7% over the prior-year period to 2,042 Mmcfe per day

Commenting on the quarter, Jeff Ventura, the Company’s CEO said, “The Range team has met the unique challenges of working through this pandemic with dedication and compassion, making sure that our business plans remains on track, while prioritizing health and safety. Range continues to make steady progress on key near-term objectives: improving our cost structure, bolstering liquidity, and operating safely while maintaining peer-leading capital efficiency. These efforts have positioned Range to successfully navigate the current commodity environment and benefit from an improved outlook for natural gas and natural gas liquids, particularly given Range’s peer-leading drilling inventory.”

Capital Expenditures

First quarter 2020 drilling and completion expenditures were $124 million. In addition, during the quarter, $4.1 million was spent on acreage and $2.0 million on gathering systems. Range remains on track to spend at or below its reduced total capital budget of $430 million for 2020.

Financial Position and Buyback Activity < Range's balance sheet is in MUCH BETTER SHAPE than it was a few months ago.

Range’s $3.0 billion borrowing base and $2.4 billion commitment amount were reaffirmed during first quarter 2020 with no changes to financial covenants. The credit facility matures on April 13, 2023 and is subject to semi-annual redeterminations. The Company had over $1.5 billion of borrowing capacity under the current commitment amount at the end of the first quarter.

In January 2020, Range issued $550 million aggregate principal amount of 9.25% senior notes due 2026. On the closing of the senior notes, proceeds were used to redeem $500 million aggregate principal amount of the Company’s senior notes due 2021 and senior notes due 2022, which was completed in February 2020. Also announced in January, the Company suspended its dividend, which was approximately $20 million annually, to prioritize debt reduction.

Range repurchased and retired approximately $111 million in principal amount of its senior notes during the first quarter at an average weighted discount to par of 28%. Range also repurchased eight million shares of the Company’s common stock during the first quarter at an average price of $2.80 per share. At the end of the quarter, Range had approximately $71 million remaining on the Company’s $100 million share repurchase program.

[dan_s]

Stifel's take May 1

Range Resources Corporation (RRC, $5.83, Hold; Target $3.50) - In-Line Quarter.
Tweaking Well Mix Drier. TG&P Expense Tilts Lower. - Jane Trotsenko

Neutral to slightly positive update for RRC. While 1Q20 operational results and adj. EBITDA came in in-line, the company delivered a beat on FCF due to lower than expected capex. 2020 guidance remained largely unchanged, except for lower outlook for TG&P expense and slightly drier well mix. In contrast to some of its Appalachian peers, the company does not anticipate any impact from condensate-related constrains in Appalachia on its production and condensate pricing, reflecting solid marketing and pricing arrangements. RRC echoed AR's positive commentary on the strength of international LPG demand as well as the improving outlook domestically. Even in today's challenging environment, both AR and RRC beat our estimates on NGL pricing.
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Stifel seems to be using a very conservative natural gas price in their forecasts. Oil price has very little impact on AR and RRC.