RRC is down because Wall Street thinks of it as a "gasser". However, I put it in the Sweet-16 because their liquids production should be up 45% from 2011 to 2012.
RANGE RESOURCES CORPORATION (NYSE: RRC - News) today provided information on production volumes, price realizations and its hedging position. Fourth quarter 2011 production volumes averaged 625 Mmcfe per day (above what I have in my forecast model), a record high for Range. Fourth quarter 2011 production increased 16% over the prior-year period and was 16% higher than third quarter 2011. Production for full-year 2011 averaged 554 Mmcfe per day, a 12% increase over 2010. This represents Range`s eighth consecutive year of double-digit production growth. Adjusting for the sale of the Barnett properties at the end of April 2011, the 12% production growth in 2011 would have been 36%.
[Based on my forecast model, production should be up another 30% in 2012. - Dan]
The Company announced its preliminary fourth quarter 2011 natural gas, NGLs and oil price realizations (including the impact of cash-settled hedges and derivative settlements which would correspond to analysts` estimates) averaged $5.44 per mcfe. This represents a 2% increase from the prior-year period. Production and preliminary realized prices by each commodity for the fourth quarter were: natural gas - 491 Mmcfe per day ($4.14), natural gas liquids - 16,931 barrels per day ($54.31) and crude oil - 5,409 barrels per day ($83.71).
During the fourth quarter, Range increased its commodity hedge position. The Company currently has approximately 75% of its anticipated natural gas production for 2012 hedged at a weighted average floor of $4.45 per Mmbtu, net of premium payments. In addition, Range has a material portion of its 2013 anticipated natural gas production hedged at a floor price of $4.73 per Mmbtu. Range`s updated hedge position is shown in the table below.
Commenting on the announcement, Jeff L. Ventura, Range`s President and CEO, said, "Our fourth quarter production results exceeded guidance. Achieving our eighth year of double-digit production growth, despite selling our Barnett properties in April, is a terrific accomplishment by our team. With a significant portion of our 2012 and 2013 natural gas hedged, we are well positioned to continue to generate attractive returns during this period of low natural gas prices. Our large inventory of high-return, liquid-rich projects, low cost structure and strong financial position, provides us substantial flexibility as we continue to focus on creating value per share for our shareholders."
RRC
Re: RRC
CITI on RRC:
Range Resources Corp (RRC)
Q4'11 Ops Update – Another Output Beat as Marcellus Ramps Up
Q4'11 Top Line – This morning, Range Resources provided its preliminary Q4'11
production and pricing realizations and an update on its 2012+ hedging schedule. Total
production of 625 MMcfe/d beat guidance of 608 MMcfe/d and came in slightly above
our forecast of 623 MMcfe/d. Oil and NGL output was below projections, while natural
gas volumes exceeded expectations; the situation was flipped on the realizations.
As a result, top line revenue of $313 million exactly matched our forecasts.
Total production rose 16% both year-over-year and sequentially. On an organic basis
adjusted for Barnett sale in April 2011, Q4 output was up 42% year-over-year. FY'11
output of 554 MMcfe/d represents a 12% increase versus 2010 (36% on organic basis).
Marcellus Hits Target Exit Rate – The output beat was hardly a surprise as RRC
earlier noted it reached its Marcellus target exit rate of 400 MMcfe/d nearly a month
ahead of schedule. RRC also increased its transportation & gas processing capacity in
the play, securing necessary infrastructure to meet its estimated 2012 production.
Although RRC has yet to provide 2012 guidance except to say output will likely grow by
~30% (we are modeling ~32%), it targets a 2012 Marcellus exit rate of 650 MMcfe/d.
Adding To Hedges – Due to additional gas hedges added in Q4, RRC is now one of
the most protected companies in our coverage group, with ~3/4s of its 2012 and ~1/3
of 2013 output hedged (vs. group avg. of 33% and 8%) at floors of $4.45/MMBtu and
$4.73/MMBtu. RRC also added 2012-13 oil and NGL hedges.
Revising Estimates – After adjusting our model for these disclosures, our 2011
estimates are little changed, while our 2012-13 estimates are lower due to additional oil
and NGL hedges at prices below our forecasts, partially offset by a shift in the projected
production mix towards higher oil and liquids output. Our EPS/CFPS estimates are now
$1.25/$5.34 (from $1.45/$5.76) for 2012 and $3.13/$9.35 (from $3.16/$9.41) for 2013.
We are lowering our 12-mo PT to $65/sh while maintaining our Buy rating.
Q4'11 Results Still Ahead – RRC has not yet scheduled its Q4'11 earnings date, but
plans to report full year results and 2012 production/capex guidance week of Feb 20th.
Range Resources Corp (RRC)
Q4'11 Ops Update – Another Output Beat as Marcellus Ramps Up
Q4'11 Top Line – This morning, Range Resources provided its preliminary Q4'11
production and pricing realizations and an update on its 2012+ hedging schedule. Total
production of 625 MMcfe/d beat guidance of 608 MMcfe/d and came in slightly above
our forecast of 623 MMcfe/d. Oil and NGL output was below projections, while natural
gas volumes exceeded expectations; the situation was flipped on the realizations.
As a result, top line revenue of $313 million exactly matched our forecasts.
Total production rose 16% both year-over-year and sequentially. On an organic basis
adjusted for Barnett sale in April 2011, Q4 output was up 42% year-over-year. FY'11
output of 554 MMcfe/d represents a 12% increase versus 2010 (36% on organic basis).
Marcellus Hits Target Exit Rate – The output beat was hardly a surprise as RRC
earlier noted it reached its Marcellus target exit rate of 400 MMcfe/d nearly a month
ahead of schedule. RRC also increased its transportation & gas processing capacity in
the play, securing necessary infrastructure to meet its estimated 2012 production.
Although RRC has yet to provide 2012 guidance except to say output will likely grow by
~30% (we are modeling ~32%), it targets a 2012 Marcellus exit rate of 650 MMcfe/d.
Adding To Hedges – Due to additional gas hedges added in Q4, RRC is now one of
the most protected companies in our coverage group, with ~3/4s of its 2012 and ~1/3
of 2013 output hedged (vs. group avg. of 33% and 8%) at floors of $4.45/MMBtu and
$4.73/MMBtu. RRC also added 2012-13 oil and NGL hedges.
Revising Estimates – After adjusting our model for these disclosures, our 2011
estimates are little changed, while our 2012-13 estimates are lower due to additional oil
and NGL hedges at prices below our forecasts, partially offset by a shift in the projected
production mix towards higher oil and liquids output. Our EPS/CFPS estimates are now
$1.25/$5.34 (from $1.45/$5.76) for 2012 and $3.13/$9.35 (from $3.16/$9.41) for 2013.
We are lowering our 12-mo PT to $65/sh while maintaining our Buy rating.
Q4'11 Results Still Ahead – RRC has not yet scheduled its Q4'11 earnings date, but
plans to report full year results and 2012 production/capex guidance week of Feb 20th.