SEC Filings

10-K
RANGE RESOURCES CORP filed this Form 10-K on 02/22/2017
Entire Document
 

 

Commodity Sensitivity Analysis

The following table shows the fair value of our swaps and basis swaps and the hypothetical change in fair value that would result from a 10% and a 25% change in commodity prices at December 31, 2016. We remain at risk for possible changes in the market value of commodity derivative instruments; however, such risks should be mitigated by price changes in the underlying physical commodity (in thousands):

 

 

 

 

Hypothetical Change
in Fair Value

 

 

Hypothetical Change
in Fair Value

 

 

 

 

 

Increase in
Commodity Price of

 

 

Decrease in
Commodity Price of

 

 

Fair Value

 

 

10%

 

 

25%

 

 

10%

 

 

25%

 

Swaps

$

(207,978

)

 

$

(205,755

)

 

$

(514,392

)

 

$

206,027

 

 

$

518,797

 

Collars

 

3,673

 

 

 

(11,029

)

 

 

(28,202

)

 

 

11,115

 

 

 

29,323

 

Puts

 

18,159

 

 

 

(6,870

)

 

 

(12,664

)

 

 

10,820

 

 

 

34,645

 

Calls

 

(1,042

)

 

 

(663

)

 

 

(1,929

)

 

 

481

 

 

 

866

 

Basis swaps

 

11,106

 

 

 

1,009

 

 

 

2,521

 

 

 

(943

)

 

 

(2,387

)

Freight swaps

 

65

 

 

 

247

 

 

 

618

 

 

 

(247

)

 

 

(625

)

Our commodity-based contracts expose us to the credit risk of non-performance by the counterparty to the contracts. Our exposure is diversified among major investment grade financial institutions and commodity traders and we have master netting agreements with the majority of our counterparties that provide for offsetting payables against receivables from separate derivative contracts. Our derivative contracts are with multiple counterparties to minimize our exposure to any individual counterparty. At December 31, 2016, our derivative counterparties include twenty-two financial institutions, of which all but five are secured lenders in our bank credit facility. Counterparty credit risk is considered when determining the fair value of our derivative contracts. While counterparties are major investment grade financial institutions and large commodity traders, the fair value of our derivative contracts have been adjusted to account for the risk of non-performance by certain of our counterparties, which was immaterial. Our propane sales from the Marcus Hook facility near Philadelphia are short-term and are to a single purchaser. Ethane sales from Marcus Hook are to a single international customer bearing a credit rating similar to Range.

Interest Rate Risk

We are exposed to interest rate risk on our bank debt. We attempt to balance variable rate debt, fixed rate debt and debt maturities to manage interest costs, interest rate volatility and financing risk. This is accomplished through a mix of fixed rate publically traded debt and variable rate bank debt. At December 31, 2016, we had $3.8 billion of debt outstanding. Of this amount, $2.9 billion bears interest at a fixed rate averaging 5.2%. Bank debt totaling $882.0 million bears interest at floating rates, which was 2.4% on that date. On December 31, 2016, the 30-day LIBOR rate was 0.8%. A 1% increase in short-term interest rates on the floating-rate debt outstanding at December 31, 2016 would cost us approximately $8.8 million in additional annual interest expense.

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