Range Resources' (RRC) 2018 Investment Lower Than Expected

Range Resources Corporation (NYSE:RRC) announced that it has spent about $20 million less than expectations in 2018, courtesy of drilling efficiencies and water recycling.

In 2018, the company had allocated $941 million for drilling and other capital programs. The amount was down nearly 26% from $1.27 billion spent in 2017. Notably, almost 80% of the budget was to be allocated for the Marcellus region. In spite of declines in spending, production in 2018 was expected to grow by 11% year over year.

For 2018, production is estimated at about 2.2 Bcfe per day. With this, the annual output is likely to rise 11%. As projected, the company generated free cash flow during the fourth quarter of 2018. This is expected to mitigate a majority of cash flow impact from processing downtime.

As a major portion of the production comprises natural gas, Range Resources is well positioned to capitalize on the mounting demand for clean energy.

In a separate announcement, Range Resources announced that the Houston natural gas processing and NGL fractionation facility as well as the Harmon Creek processing facility, operated by MarkWest in Pennsylvania, have become functional following an operational issue that required the extended curtailment of the complexes.

Consequent to the MarkWest’s operational downtime, Range Resources lost about 10 billion cubic feet equivalent (Bcfe) of production. For the fourth quarter of 2018, the company projects production to be about 2.15 Bcfe per day.

Range Resources is an independent oil and gas company, engaged in the exploration, development as well as acquisition of oil and gas properties in the Appalachian Basin and North Louisiana. The Appalachian Basin incorporates prolific acreages in Marcellus, Utica and Upper Devonian shale formations. The North Louisiana properties consist of Lower Cotton Valley formation, which represents the company’s Upper Red and Lower Red assets.

Zacks Rank & Key Picks

Currently, Range Resources carries a Zacks Rank #3 (Hold).

A few better-ranked players in the energy space are SunCoke Energy, Inc (NYSE:SXC) , Shell (LON:RDSa) Midstream Partners, L.P (NYSE:SHLX) and Unit Corp. (NYSE:UNT) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SunCoke acquires, owns and operates coke making as well as coal mining operations. The company delivered average positive earnings surprise of 302.6% in the last four quarters.

Headquartered in Houston, TX, Shell Midstream Partners owns, operates, develops and acquires pipelines as well as other midstream assets. The company is expected to witness year-over-year earnings growth of 18.7% in 2018.

Unit Corp. is a diversified energy company. The company has an average positive surprise of 21.2% in the last four quarters.

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Shell Midstream Partners, L.P. (SHLX): Free Stock Analysis Report

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