Range Resources (RRC) Incurs Lower-than-Expected Q2 Loss

Range Resources Corp.’s (NYSE:RRC) second-quarter 2016 adjusted loss came in at 21 cents a share, narrower than the Zacks Consensus Estimate of loss of 29 cents. The company had reported loss of 6 cents a share in the year-earlier quarter.

Second-quarter total revenue of $101.8 million lagged the Zacks Consensus Estimate of $326 million and declined 58% year over year from $244.6 million.

Operational Performance

The company’s second-quarter production averaged almost 1,421 million cubic feet equivalent per day (MMcfe/d). Natural gas made up for 64% of the total production, while natural gas liquids (NGLs) and oil accounted for the remaining 36%. Total production volume improved 4% from the year-earlier quarter on the back of the company’s highly successful drilling program.

Oil production decreased 22%, whereas NGL rose 34% and natural-gas production decreased 5%, all on a year-over-year basis.

The company’s total price realization (including the effects of hedges and derivative settlements) averaged $2.50 per Mcfe, down 19% year over year. Of this, NGL prices increased 16% to $11.57 per barrel, crude oil prices decreased 40% to $40.48 per barrel and natural gas prices plunged 15% to $2.52 per Mcf, all on a year-over-year basis.

RANGE RESOURCES Price, Consensus and EPS Surprise

RANGE RESOURCES Price, Consensus and EPS Surprise | RANGE RESOURCES Quote

Financials

At the end of the quarter, long-term debt was approximately $2,567.0 million. Second-quarter drilling expenditures of $120 million funded the drilling of 28 wells. In addition, during the quarter, $3.5 million was spent on acreage purchases, $6.4 million as exploration expense, and $0.2 million on gas gathering systems.

Guidance

For the third quarter, the company estimates production of 1.421 billion cubic feet equivalent (Bcfe) per day, up 4% from the prior-year quarter, with Marcellus production averaging a record 1,379 net Mmcfe per day, up 16% from the prior-year quarter.

For 2016, the company has reaffirmed its production guidance at the upper end of its earlier projection. Production is expected in the range of 1,410–1,420 MMcfe/d after completion of all asset sales. Capital budget for the year is $495 million.

Ranks

Range Resources currently carries a Zacks Rank #2 (Buy). Some better-ranked stocks from the oil and gas industry are Sasol Ltd (NYSE:SSL) , Dril-Quip, Inc. (NYSE:DRQ) and Murphy USA Inc (NYSE:MUSA) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).