SEC Filings

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

Transportation, gathering processing and compression was $514.5 million in first six months 2018 compared to $369.2 million in first six months 2017. These third-party costs are higher in 2018 when compared to 2017 due to our production growth in the Marcellus Shale where we have third-party transportation, gathering, processing and compression agreements, including new in-service transportation costs and the impact of our adoption of the new revenue recognition accounting standard. For additional information, see Adoption of New Accounting Standard above. We have included these costs in the calculation of average realized prices (including all derivative settlements and third-party transportation expenses paid by Range). The following table summarizes transportation, gathering, processing and compression expense for the three months and six months ended June 30, 2018 and 2017 (in thousands) and on a per mcf and per barrel basis:

 

Three Months Ended
June 30,

 

 

 

Six Months Ended
June 30,

 

 

 

2018

 

 

 

2017

 

 

 

Change

 

 

%

 

 

 

2018

 

 

 

2017

 

 

 

Change

 

%

 

Natural gas

$

164,064

 

 

$

129,557

 

 

$

34,507

 

 

27

%

 

$

321,298

 

 

$

251,750

 

 

$

69,548

 

28

%

NGLs

 

105,846

 

 

 

62,033

 

 

 

43,813

 

 

71

%

 

 

193,240

 

 

 

117,488

 

 

 

75,752

 

64

%

Total

$

269,910

 

 

$

191,590

 

 

$

78,320

 

 

41

%

 

$

514,538

 

 

$

369,238

 

 

$

145,300

 

39

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per mcf)

$

1.21

 

 

$

1.08

 

 

$

0.13

 

 

12

%

 

$

1.19

 

 

$

1.07

 

 

$

0.12

 

11

%

NGLs (per bbl)

$

11.16

 

 

$

7.28

 

 

$

3.88

 

 

53

%

 

$

10.30

 

 

$

6.89

 

 

$

3.41

 

49

%

Derivative fair value (loss) income was a loss of $103.3 million in second quarter 2018 compared to income of $111.2 million in second quarter 2017. Derivative fair value (loss) income was a loss of $117.3 million in first six months 2018 compared to a gain of $276.8 million in the same period of 2017. All of our derivatives are accounted for using the mark-to-market accounting method. Mark-to-market accounting treatment can result in more volatility of our revenues as the change in the fair value of our commodity derivative positions is included in total revenue. As commodity prices increase or decrease, such changes will have an opposite effect on the mark-to-market value of our derivatives. Gains on our derivatives generally indicate potentially lower wellhead revenues in the future while losses indicate potentially higher future wellhead revenues. The following table summarizes the impact of our commodity derivatives for the three months and six months ended June 30, 2018 and 2017 (in thousands):

 

 

Three Months Ended

June 30,

 

 

 

Six Months Ended

June 30,

 

 

2018

 

 

 

2017

 

 

 

2018

 

 

 

2017

 

Derivative fair value (loss) income per consolidated statements of operations

$

(103,290

)

 

$

111,195

 

 

$

(117,299

)

 

$

276,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash fair value (loss) gain: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas derivatives

$

(51,785

)

 

$

73,173

 

 

$

(92,882

)

 

$

172,236

 

Oil derivatives

 

(18,415

)

 

 

12,375

 

 

 

(27,757

)

 

 

28,942

 

NGLs derivatives

 

(19,015

)

 

 

22,268

 

 

 

8,800

 

 

 

76,325

 

Freight derivatives

 

200

 

 

 

(7

)

 

 

(110

)

 

 

44

 

Total non-cash fair value (loss) gain (1)

$

(89,015

)

 

$

107,809

 

 

$

(111,949

)

 

$

277,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash receipt (payment) on derivative settlements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas derivatives

$

18,113

 

 

$

942

 

 

$

50,621

 

 

$

8,397

 

Oil derivatives

 

(12,244

)

 

 

5,575

 

 

 

(20,559

)

 

 

8,272

 

NGL derivatives

 

(20,144

)

 

 

(3,131

)

 

 

(35,412

)

 

 

(17,464

)

Total net cash (payment) receipt

$

(14,275

)

 

$

3,386

 

 

$

(5,350

)

 

$

(795

)

(1)

Non-cash fair value adjustments on commodity derivatives is a non-U.S. GAAP measure. Non-cash fair value adjustments on commodity derivatives only represent the net change between periods of the fair market values of commodity derivative positions and exclude the impact of settlements on commodity derivatives during the period. We believe that non-cash fair value adjustments on commodity derivatives is a useful supplemental disclosure to differentiate non-cash fair market value adjustments from settlements on commodity derivatives during the period. Non-cash fair value adjustments on commodity derivatives is not a measure of financial or operating performance under U.S. GAAP, nor should it be considered a substitute for derivative fair value income or loss as reported in our consolidated statements of operations.

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