SEC Filings

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

Direct operating expense was $30.9 million in third quarter 2018 compared to $36.9 million in third quarter 2017. Direct operating expenses include normally recurring expenses to operate and produce our wells, non-recurring well workovers and repair-related expenses. Our direct operating costs decreased in third quarter 2018 primarily due to lower utilities, lower workover costs and the sale of our Northern Oklahoma properties. Our production volumes increased 14% in third quarter 2018. We incurred $1.4 million ($0.01 per mcfe) of workover costs in third quarter 2018 compared to $3.5 million ($0.02 per mcfe) in third quarter 2017. On a per mcfe basis, direct operating expense in third quarter 2018 decreased 25% to $0.15 from $0.20 in the same period of 2017 with the decrease resulting from lower workovers, lower utility costs, lower overhead costs and the sale of our Northern Oklahoma properties.

Direct operating expense was $104.1 million in first nine months 2018 compared to $96.3 million in the same period of 2017. Our direct operating costs increased in first nine months 2018 compared to the same period of 2017 due to higher water hauling/handling costs and higher contract pumping costs. Our production volumes increased 14% in first nine months 2018. We incurred $6.3 million of workover costs in first nine months 2018 compared to $6.9 million in the same period of 2017. On a per mcfe basis, direct operating expense in first nine months 2018 decreased 6% to $0.17 from $0.18 in the same period of 2017 with the decrease resulting from lower utility costs. The following table summarizes direct operating expenses per mcfe for the three months and the nine months ended September 30, 2018 and 2017:

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

2018

 

 

2017

 

 

Change

 

 

%

 

 

2018

 

2017

 

Change

 

%

 

Lease operating expense

$

0.14

 

 

$

0.18

 

 

$

(0.04

)

 

(22

%)

 

$

0.16

 

$

0.17

 

$

(0.01

)

(6

%)

Workovers

 

0.01

 

 

 

0.02

 

 

 

(0.01

)

 

(50

%) 

 

 

0.01

 

 

0.01

 

 

 

%

Stock-based compensation (non-cash)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

Total direct operating expense

$

0.15

 

 

$

0.20

 

 

$

(0.05

)

 

(25

%) 

 

$

0.17

 

$

0.18

 

$

(0.01

)

(6

%)

Production and ad valorem taxes are paid based on market prices rather than hedged prices. This expense category also includes the Pennsylvania impact fee. Production and ad valorem taxes (excluding the impact fee) were $3.4 million in third quarter 2018 compared to $4.1 million in third quarter 2017 due to increase in volumes not subject to production taxes. In February 2012, the Commonwealth of Pennsylvania enacted an “impact fee” which functions as a tax on unconventional natural gas and oil production from the Marcellus Shale in Pennsylvania. Included in third quarter 2018 is a $6.1 million impact fee compared to $7.9 million in third quarter 2017. Production and ad valorem taxes (excluding the impact fee) were $10.5 million in first nine months 2018 compared to $8.4 million in the same period of 2017 due to higher commodity prices and higher volumes subject to production taxes. Included in first nine months 2018 is $19.0 million impact fee compared to $22.7 million in the same period 2017. The following table summarizes production and ad valorem taxes per mcfe for the three months and the nine months ended September 30, 2018 and 2017:

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

2018

 

 

2017

 

 

Change

 

 

%

 

 

2018

 

2017

 

Change

 

%

 

Production taxes

$

0.01

 

 

$

0.02

 

 

$

(0.01

)

 

(50

%)

 

$

0.01

 

$

0.01

 

$

 

%

Ad valorem taxes

 

0.01

 

 

 

0.01

 

 

 

 

 

 

 

0.01

 

 

0.01

 

 

 

%

Impact fee

 

0.03

 

 

 

0.04

 

 

 

(0.01

)

 

(25

%) 

 

 

0.03

 

 

0.04

 

 

(0.01

)

(25

%)

Total production and ad valorem taxes

$

0.05

 

 

$

0.07

 

 

$

(0.02

)

 

(29

%) 

 

$

0.05

 

$

0.06

 

$

(0.01

)

(17

%)

General and administrative (“G&A”) expense was $43.7 million in third quarter 2018 compared to $53.0 million in third quarter 2017. The third quarter 2018 decrease of $9.3 million when compared to the same period of 2017 is primarily due to lower stock-based compensation of $4.4 million and lower legal settlements partially offset by higher technology and legal costs. At September 30, 2018, the number of G&A employees increased 6% when compared to September 30, 2017. On a per mcfe basis, third quarter 2018 G&A expense decreased 28% from third quarter 2017 due to lower stock-based compensation costs and lower legal settlements and the impact of higher production volumes.

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