SEC Filings

10-Q
RANGE RESOURCES CORP filed this Form 10-Q on 10/23/2018
Entire Document
 

Derivative fair value (loss) income was a loss of $34.6 million in third quarter 2018 compared to a loss of $88.4 million in third quarter 2017. Derivative fair value (loss) income was a loss of $151.9 million in first nine months 2018 compared to a gain of $188.3 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 nine months ended September 30, 2018 and 2017 (in thousands):

 

 

Three Months Ended

September 30,

 

 

 

Nine Months Ended

September 30,

 

 

2018

 

 

 

2017

 

 

 

2018

 

 

 

2017

 

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

$

(34,591

)

 

$

(88,426

)

 

$

(151,890

)

 

$

188,326

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas derivatives

$

3,326

 

 

$

(16,409

)

 

$

(89,556

)

 

$

155,827

 

Oil derivatives

 

(5,659

)

 

 

(18,991

)

 

 

(33,416

)

 

 

9,951

 

NGLs derivatives

 

2,529

 

 

 

(69,820

)

 

 

11,329

 

 

 

6,505

 

Freight derivatives

 

135

 

 

 

(63

)

 

 

25

 

 

 

(19

)

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

$

331

 

 

$

(105,283

)

 

$

(111,618

)

 

$

172,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (payment) receipt on derivative settlements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas derivatives

$

5,845

 

 

$

26,250

 

 

$

56,466

 

 

$

34,647

 

Oil derivatives

 

(12,744

)

 

 

6,602

 

 

 

(33,303

)

 

 

14,874

 

NGL derivatives

 

(28,023

)

 

 

(15,995

)

 

 

(63,435

)

 

 

(33,459

)

Total net cash (payment) receipt

$

(34,922

)

 

$

16,857

 

 

$

(40,272

)

 

$

16,062

 

(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.

Brokered natural gas, marketing and other revenue in third quarter 2018 was $109.4 million compared to $63.1 million in third quarter 2017 with significantly higher brokered sales volumes and prices. Brokered natural gas marketing and other revenue in first nine months 2018 was $267.4 million compared to $170.5 million in the same period of the prior year due to significantly higher brokered sales volumes.

Operating Costs per Mcfe

We believe some of our expense fluctuations are best analyzed on a unit-of-production, or per mcfe, basis. The following presents information about certain of our expenses on a per mcfe basis for the three months and nine months ended September 30, 2018 and 2017:

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

2018

 

 

2017

 

 

Change

 

 

%

 

 

2018

 

2017

 

Change

 

%

 

Direct operating expense

$

0.15

 

 

$

0.20

 

 

$

(0.05

)

 

(25

%)

 

$

0.17

 

$

0.18

 

$

(0.01

)

(6

%)

Production and ad valorem tax expense

 

0.05

 

 

 

0.07

 

 

 

(0.02

)

 

(29

%) 

 

 

0.05

 

 

0.06

 

 

(0.01

)

(17

%)

General and administrative expense

 

0.21

 

 

 

0.29

 

 

 

(0.08

)

 

(28

%) 

 

 

0.26

 

 

0.29

 

 

(0.03

)

(10

%)

Interest expense

 

0.26

 

 

 

0.27

 

 

 

(0.01

)

 

(4

%) 

 

 

0.27

 

 

0.27

 

 

 

%

Depletion, depreciation and amortization expense

 

0.79

 

 

 

0.87

 

 

 

(0.08

)

 

(9

%) 

 

 

0.80

 

 

0.87

 

 

(0.07

)

(8

%)

37