SEC Filings

10-Q
RANGE RESOURCES CORP filed this Form 10-Q on 07/30/2018
Entire Document
 

Market Conditions

Prices for our products significantly impact our revenue, net income and cash flow. Natural gas, NGLs and oil are commodities and prices for these commodities are inherently volatile. The following table lists average New York Mercantile Exchange (“NYMEX”) prices for natural gas and oil and the Mont Belvieu NGLs composite price for the three months and the six months ended June 30, 2018 and 2017:

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

2018

 

 

2017

 

 

Change

 

 

%

 

 

2018

 

2017

 

Change

 

%

 

Average NYMEX prices (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per mcf)

$

2.80

 

 

$

3.18

 

 

$

(0.38

)

 

(12

%)

 

$

2.89

 

$

3.24

 

$

(0.35

)

(11

%)

Oil (per bbl)

 

67.89

 

 

 

48.36

 

 

 

19.53

 

 

40

%

 

 

65.54

 

 

50.09

 

 

15.45

 

31

%

Mont Belvieu NGLs composite (per gallon) (b)

 

0.66

 

 

 

0.49

 

 

 

0.17

 

 

35

%

 

 

0.64

 

 

0.52

 

 

0.12

 

23

%

(a)

Based on weighted average of bid week prompt month prices.

(b)

Based on our estimated NGLs product composition per barrel.

Consolidated Results of Operations

Overview of Second Quarter 2018 Results

Our financial results are significantly impacted by commodity prices. For second quarter 2018, we experienced an increase in revenue from the sale of natural gas, NGLs and oil due to a 4% increase in net realized prices (average prices including all derivative settlements and third party transportation costs paid by us) and 13% higher production volumes when compared to the same quarter of 2017. Daily production in second quarter 2018 averaged 2.2 Bcfe compared to 1.9 Bcfe in the same period of the prior year with the increase due to our successful Marcellus horizontal drilling program. Average natural gas differentials improved $0.21 per mcf while operating costs were higher.

During second quarter 2018, we recognized a net loss of $79.8 million, or $0.32 per diluted common share compared to net income of $69.6 million, or $0.28 per diluted common share, during second quarter 2017. The decrease in net income for second quarter 2018 from second quarter 2017 is primarily due to lower derivative fair value income or the non-cash fair value adjustments related to our derivatives and higher proved and unproved property impairment charges.

Our second quarter 2018 financial and operating performance included the following results:

 

13% production growth over the same period of 2017;

 

 

revenue from the sale of natural gas, NGLs and oil increased 31% from the same period of 2017 with a 15% increase in average realized prices (before cash settlements on our derivatives) and an increase in production volumes;

 

 

revenue from the sale of natural gas, NGLs and oil including cash settlements on our derivatives increased 27% from the same period of 2017;

 

 

rising forward commodity prices resulted in downward non-cash derivative fair value adjustments of $196.8 million;

 

 

direct operating expenses per mcfe remained the same compared to the same period of 2017 (see discussion on page 35);

 

 

reduced general and administrative expense per mcfe 20% from the same period of 2017 (see discussion on page 36);

 

 

interest expense per mcfe was the same when compared to the same period of 2017;

 

 

reduced our depletion, depreciation and amortization (“DD&A”) rate per mcfe by 7% from the same period of 2017;

 

 

entered into additional derivative contracts for 2018, 2019 and 2020; and

 

 

realized $174.9 million of cash flow from operating activities, a decrease of $10.5 million from the same period of 2017.

 

We generated $174.9 million of cash flows from operating activities in second quarter 2018, a decrease of $10.5 million from second quarter 2017, which reflects higher comparative working capital outflows ($52.0 million outflow during second quarter 2018 compared to $6.5 million inflow in second quarter 2017) offset by improvements in realized prices and higher production volumes.

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