Energy Prospectus

FORT WORTH, Texas, July 24, 2023 (GLOBE NEWSWIRE) -- RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its second quarter 2023 financial results.

Second Quarter 2023 Highlights –

Non-GAAP revenues for second quarter 2023 totaled $590 million, and cash flow from operations before changes in working capital, a non-GAAP measure, was $187 million. Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $72 million ($0.30 per diluted share) in second quarter 2023. < Adjusted net income compares to my forecast of $73.7 million ($0.31/quarter, lower because of low NGL prices. Transportation & processing expenses came in 10 cents lower than my forecast of $1.52/mcfe. Range's total cash expenses were $1.90/mcfe.

Cash flow from operating activities of $127 million

Cash flow from operations, before working capital changes, of $187 million < Compares to my forecast of 189.1 million.

Capital spending was $175 million, approximately 30% of the 2023 budget

Production averaged 2.1 Bcfe per day, approximately 68% natural gas < Compares to my forecast of 2,059,800 Mcfepd (68.5% natural gas)

Price realizations including hedges of $2.88 per mcfe – premium of $0.78 over NYMEX natural gas

NGL realizations of $21.51 per barrel – premium of $0.33 over Mont Belvieu equivalent < Much lower than my NGL price forecast of $25/bbl. I now think all of the companies will report lower realized NGL prices than I expected. Huge surplus of propane is pushing down NGL prices.

Natural gas differentials, including basis hedging, averaged ($0.47) per mcf to NYMEX

Repurchased $61.6 million face value of 2025 senior notes at a discount < This is very good news. RRC should be able to generate $60 to $80 million free cash flow per quarter for Q3 and Q4. Big improvement in their balance sheet.

Commenting on the quarter, Dennis Degner, the Company’s CEO said, “Second quarter results reflect the resilience and durability of Range’s business. Range’s competitive cost structure, low relative capital intensity, liquids optionality and thoughtful hedging allowed us to generate healthy full-cycle margins and maintain our trajectory towards our target capital structure, despite what we expect is a cyclical low in commodity prices. The Range team remains focused on efficiently developing our Marcellus assets to create value for shareholders into what we believe is an improving macro outlook for natural gas and natural gas liquids.”

> before changes in working capital, a non-GAAP measure, was $187 million
Cash flow from operating activities was $127 million

If you exclude stuff , you can make the number anything you want. Working capital had a use of cash of 60 m. So the way i look at it they made 127 before spending 175 for cap ex

127-175 is negative FCF. I don't like it when companies spin numbers, and i don't like it when their great hedges still lost money from a FCF perspective.

Also worth noting is the 2.88 realized number includes oil and ngl and settled hedges which compares to your model number of 3.11.

The NG component was a lousy 1.63 before hedge impact!!! Hedges added .71 cents for a NG number of 2.34

AR has no hedges

Lower NGL prices in Q3 and Q4 will lower my current valuation by $0.50 to $30.50 per share.

So Net Debt from Q-1 to Q-2 was down ~$60 Million
Shares outstanding from Q-1 to Q-2 were down 1.9 Million
Stock Price from Jan 1 to today was up 29.5%.
Plus I got .5% Dividends
Plus I made ~5% on Covered calls since December
I am not complaining......

Operating Cash Flow Before Changes in Working Capital is the ACTUAL CASH FLOW FOR THE QUARTER. This is standard practice to report it this way and it is what my forecasts are based on. So, are all of the other energy sector analysts.

RRC is not trying to mislead investors in anyway. All companies provide this information in the quarterly reports to the SEC.

According to the 10 q just filed, shares outstanding increased from 265,687 in q1 to 265,752 in Q2
No shares were bought back in q2, so it's impossible for Outstanding shares to have declined

https://ir.rangeresources.com/node/27951/html#consolidated_statements_stockholders_equ

Additionally, notable is the company did not buy any shares this qtr. They decided to reduce debt.
So what's that tell you? They wont be buying at 30. They will be paying down the 688 m owed in 2025.

Good move on their part

The fact that its one of the best gainers YTD with NG prices in the crapper is more reason to sell the position and harvest gains. The hedges saved them. Others with no hedges won't be as fortunate.

Revenue all in q2 2023 was 637 m vs 1,225 last year, a stunning decline!

If you are bullish on NG prices buy the unhedged ones.

The stock prices today assume NG will improve almost a buck between now and December. That's a risky proposition

Of all the gassers, RRC leads the loser list today, so the weak prices wasn't built in to the pre earnings results.

ScotiaBank Equity Research
Range Resources Corp. (RRC-N) ; SP; US$38.00 PT | Cameron Bean
Q2/23 First Take – Cash Flow Beat on Lower Costs; ’24 Hedge Book Bolstered | Positive