RANGE RESOURCES CORPORATION (RRC) today announced its third quarter 2012 results. Third quarter results were driven by record high production, which was 47% higher than the prior-year quarter, a 12% decrease in unit costs, offset by a 24% decline in commodity prices. Reported natural gas, NGL and oil revenues totaled $337 million, an 11% increase versus the prior year quarter. Net cash provided from operating activities including changes in working capital was $178 million, a 28% increase over the prior-year quarter. Reported net loss for the third quarter was $53.8 million ($0.34 loss per diluted share), versus net income of $34.8 million ($0.21 per diluted share) for the third quarter of 2011. Earnings in the current quarter included a $58.4 million non-cash derivative mark-to-market reduction in value as compared to a $55.0 million non-cash derivative mark-to-market increase in value in the prior-year quarter.
Results came in below my forecast but production growth is key for this one. I am working on the forecast model and should have updated forecast posted this afternoon.
RRC
Re: RRC
From Citi report on RRC. Looks like RRC has big upside in the Mississippi Lime in OK.
In the Mississippian Lime, Range added ~4k net acres during Q3’12 to bring its
acreage to 156k net acres. After running 2-3 rigs in the play for most of 2012,
Range plans to ramp to 5 rigs starting next year and continue to ramp up drilling
activity by moving to 10 rigs in 2014 and 15 rigs in 2015 to drive growth and hold
acreage. During the third quarter, the company focused on infrastructure build-out
and pad drilling. Six wells were brought online in the quarter with an average 24-
hour IP rate of 312 net BOE/d (~82% liquids) and average lateral lengths of 3,700
feet and 17-20 frac stages, vs. the four wells brought online in Q2’12 with an
average rate of ~500 net BOE/d and lateral lengths up to 3,900 feet and ~19 frac
stages. Estimated average EUR in the play is 600 MBOE with 3,500 foot laterals
and, with well costs of $3.4mm and current strip pricing, the company noted that
IRRs are in excess of ~100%.
In the Mississippian Lime, Range added ~4k net acres during Q3’12 to bring its
acreage to 156k net acres. After running 2-3 rigs in the play for most of 2012,
Range plans to ramp to 5 rigs starting next year and continue to ramp up drilling
activity by moving to 10 rigs in 2014 and 15 rigs in 2015 to drive growth and hold
acreage. During the third quarter, the company focused on infrastructure build-out
and pad drilling. Six wells were brought online in the quarter with an average 24-
hour IP rate of 312 net BOE/d (~82% liquids) and average lateral lengths of 3,700
feet and 17-20 frac stages, vs. the four wells brought online in Q2’12 with an
average rate of ~500 net BOE/d and lateral lengths up to 3,900 feet and ~19 frac
stages. Estimated average EUR in the play is 600 MBOE with 3,500 foot laterals
and, with well costs of $3.4mm and current strip pricing, the company noted that
IRRs are in excess of ~100%.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: RRC
We have updated our model for actual Q3’12 results, updated Q4’12 production and
cost guidance and made other minor adjustments. Our 2012 EPS/CFPS estimates
are now $0.68/$4.42 (from $0.78/$4.43), for 2013 are $1.05/$5.52 (from
$1.13/$5.84) and for 2014 are now $2.72/9.17 (from $2.81/$9.33). We maintain our
Buy rating with a $76 per share price target which is based on RRC achieving a
2013 EV/DACF multiple of ~13x based on our normalized WTI spot oil and
composite spot natural gas price forecast of $90.00/BBl and $4.50/MMBtu, and
~140% of proven-only NAV based on our actual commodity price forecasts.
cost guidance and made other minor adjustments. Our 2012 EPS/CFPS estimates
are now $0.68/$4.42 (from $0.78/$4.43), for 2013 are $1.05/$5.52 (from
$1.13/$5.84) and for 2014 are now $2.72/9.17 (from $2.81/$9.33). We maintain our
Buy rating with a $76 per share price target which is based on RRC achieving a
2013 EV/DACF multiple of ~13x based on our normalized WTI spot oil and
composite spot natural gas price forecast of $90.00/BBl and $4.50/MMBtu, and
~140% of proven-only NAV based on our actual commodity price forecasts.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: RRC
Sweet 16 Growth Portfolio: An updated Net Income & Cash Flow Forecast for Range Resources (RRC) has been posted under the Sweet 16 Tab.
RRC is in the Sweet 16 because it has more than 20% annual production growth locked in for years. It is for those of you that are bullish on natural gas (I am now in that camp). It is a "gasser" with some of the best acreage in the Marcellus Shale. It also has potential in the Oklahoma Mississippi Lime play (see our profile on SD) and in the Permian Basin. My Fair Value Estimate is very close to the First Call Target Price but if natural gas prices move up this one has a lot more upside.
RRC is in the Sweet 16 because it has more than 20% annual production growth locked in for years. It is for those of you that are bullish on natural gas (I am now in that camp). It is a "gasser" with some of the best acreage in the Marcellus Shale. It also has potential in the Oklahoma Mississippi Lime play (see our profile on SD) and in the Permian Basin. My Fair Value Estimate is very close to the First Call Target Price but if natural gas prices move up this one has a lot more upside.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group