SEC Filings

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

Exploration expense was $8.3 million in third quarter 2018 compared to $22.8 million in third quarter 2017 due to lower seismic and dry hole costs. Exploration expense was $23.5 million in first nine months 2018 compared to $45.8 million in the same period of 2017 due to lower seismic and dry hole costs. The following table details our exploration expense 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

 

 

Change

 

 

%

 

 

2018

 

2017

 

Change

 

%

 

Seismic

$

152

 

 

$

5,143

 

 

$

(4,991

)

 

(97

%)

 

$

92

 

$

14,096

 

$

(14,004

)

(99

%)

Delay rentals and other

 

5,657

 

 

 

5,333

 

 

 

324

 

 

6

 

 

13,764

 

 

11,910

 

 

1,854

 

16

%

Personnel expense

 

2,083

 

 

 

2,725

 

 

 

(642

)

 

(24

%) 

 

 

8,130

 

 

9,001

 

 

(871

)

(10

%)

Dry hole expense

 

2

 

 

 

9,005

 

 

 

(9,003

)

 

(100

%)

 

 

4

 

 

9,166

 

 

(9,162

)

(100

%)

Stock-based compensation expense

 

405

 

 

 

561

 

 

 

(156

)

 

(28

%) 

 

 

1,527

 

 

1,596

 

 

(69

)

(4

%)

Total exploration expense

$

8,299

 

 

$

22,767

 

 

$

(14,468

)

 

(64

%)

 

$

23,517

 

$

45,769

 

$

(22,252

)

(49

%)

Abandonment and impairment of unproved properties was $6.5 million in third quarter 2018 compared to $42.6 million in third quarter 2017. Abandonment and impairment of unproved properties was $73.2 million in first nine months 2018 compared to $52.2 million in the same period of 2017. We assess individually significant unproved properties for impairment on a quarterly basis and recognize a loss where circumstances indicate impairment in value. In determining whether a significant unproved property is impaired we consider numerous factors including, but not limited to, current exploration plans, favorable or unfavorable activity on the property being evaluated and/or adjacent properties, our geologists’ evaluation of the property and the remaining months in the lease term for the property. Impairment of individually insignificant unproved properties is assessed and amortized on an aggregate basis based on our average holding period, expected forfeiture rate and anticipated drilling success. In certain circumstances, our future plans to develop acreage may accelerate our impairment. The decrease in abandonment expense in third quarter 2018 compared to the same period of 2017 reflects fewer North Louisiana lease expirations. The increase in abandonment expense in the nine month period of 2018 from 2017 reflects an increase in expected lease expirations in North Louisiana. As we continue to review our acreage positions and high grade our drilling inventory based on the current price environment, additional leasehold impairments and abandonments may be recorded.

Termination costs were a reduction of $336,000 in third quarter 2018 compared to a reduction of $47,000 in third quarter 2017. Termination costs were a reduction of $373,000 in first nine months 2018 compared to $4.0 million of expense in first nine months 2017. In first quarter 2017, we implemented additional work force reductions which increased these costs to $2.4 million for estimated severance costs and $1.7 million of accelerated vesting of equity grants.

Deferred compensation plan expense was a loss of $223,000 in third quarter 2018 compared to a gain of $9.2 million in third quarter 2017. This non-cash item relates to the increase or decrease in value of the liability associated with our common stock that is vested and held in our deferred compensation plan. The deferred compensation liability is adjusted to fair value by a charge or a credit to deferred compensation plan expense. Our stock price increased from $16.73 at June 30, 2018 to $16.99 at September 30, 2018. In the same period of the prior year, our stock price decreased from $23.17 at June 30, 2017 to $19.57 at September 30, 2017. During first nine months ended 2018, deferred compensation was a gain of $559,000 compared to a gain of $36.8 million in the same period of 2017. Our stock price decreased from $17.06 at December 31, 2017 to $16.99 at September 30, 2018. In the same period of 2017, our stock price decreased from $34.36 at December 31, 2016 to $19.57 at September 30, 2017.

Impairment of proved properties was $15.3 million in second quarter 2018 and $7.3 million in first quarter 2018. In second quarter 2018, we recorded impairment expense related to certain properties in Northwest Pennsylvania and in first quarter 2018, we recorded impairment expense related to certain of our oil and gas properties in Oklahoma. These Oklahoma assets were evaluated for impairment due to the possibility of sale. There were no proved property impairments in third quarter 2018.  Impairment of proved properties was $63.7 million in both third quarter and first nine months 2017 related to certain oil and gas properties in Oklahoma and the Texas Panhandle where we determined that undiscounted future cash flows were less than their carrying amounts. Our analysis also included the possibility of a sale of these properties.

Loss (gain) on the sale of assets was a loss of $30,000 in third quarter 2018 compared to a gain of $102,000 in third quarter 2017. In first nine months 2018, gain on sale of assets was $149,000 compared to a gain of $23.5 million in the same period of 2017. In the third quarter and first nine months 2018, we sold properties in Northern Oklahoma for $23.3 million of proceeds and, after closing adjustments, we recognized a loss of $39,000. In first quarter and first nine months 2017, we sold properties in Western Oklahoma for $26.0 million of proceeds and, after closing adjustments, we recognized a gain of $22.1 million related to this sale.

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