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Range Announces Second Quarter 2018 Financial Results

FORT WORTH, Texas, July 30, 2018 (GLOBE NEWSWIRE) -- RANGE RESOURCES CORPORATION (NYSE:RRC) today announced its second quarter 2018 financial results. 

Highlights –

  • Production averaged a record 2,200 Mmcfe per day, an increase of 13% compared to second quarter 2017
  • Liquids production averaged 117,520 barrels per day, a 12% increase over the prior-year period, and contributed 46% of total product revenues before hedging
  • Natural gas differentials, including basis hedging, of $0.16 below NYMEX, a $0.23 improvement over prior-year quarter
  • Pre-hedge NGL realizations were $23.69 per barrel, a 63% increase over the prior-year quarter
  • Pre-hedge crude oil and condensate realizations of $63.07, a 45% increase over the prior-year quarter
  • Southwest Pennsylvania production increased 30% over the prior-year period to 1,752 Mmcfe per day
  • Cash from operations of $175 million, and non-GAAP cash flow of $237 million
  • Net loss of $80 million ($0.32 per diluted share), non-GAAP net income of $50 million ($0.20 per diluted share)

Commenting, Jeff Ventura, the Company’s CEO said, “This year is off to a solid start with another quarter of improving cash margins and record production, lifting cash flow per share by 22% over the same period last year.  This effort was led by our Marcellus operations, where long laterals and the utilization of existing pads and infrastructure are a tailwind for capital efficiencies, positioning us to deliver growth within cash flow for 2018 and in our five-year outlook.  At the same time, Range is intently focused on actions to fast-forward the de-levering process swiftly and prudently through asset sales.  We have processes underway and believe we can execute one or more successful sales in the current year, which would improve our balance sheet and corporate returns.”

Financial Discussion

Except for generally accepted accounting principles (“GAAP”) reported amounts, specific expense categories exclude non-cash impairments, unrealized mark-to-market adjustment on derivatives, non-cash stock compensation and other items shown separately on the attached tables.  “Unit costs” as used in this release are composed of direct operating, transportation, gathering, processing and compression, production and ad valorem taxes, general and administrative, interest and depletion, depreciation and amortization costs divided by production.  See “Non-GAAP Financial Measures” for a definition of each of the non-GAAP financial measures and the tables that reconcile each of the non-GAAP measures to their most directly comparable GAAP financial measure.

Second Quarter 2018

GAAP revenues for second quarter 2018 totaled $656 million (a 3% decrease compared to second quarter 2017), GAAP net cash provided from operating activities, including changes in working capital, was $175 million, compared to $185 million in second quarter 2017, and GAAP earnings was a loss of $80 million ($0.32 per diluted share) versus earnings of $70 million ($0.28 per diluted share) in the prior-year quarter.  Second quarter earnings results include a $103 million derivative loss due to increases in future commodity prices compared to a $111 million derivative gain in the prior year and a $6.6 million mark to market loss related to the deferred compensation plan compared to a $14.5 million gain in the prior year.  Second quarter 2018 also included a $55 million unproved impairment primarily related to expiring leases in North Louisiana and a $15 million impairment of proved properties related to legacy assets in northwest Pennsylvania.  

Non-GAAP revenues for second quarter 2018 totaled $745 million, an increase of 32% compared to second quarter 2017, and cash flow from operations before changes in working capital, a non-GAAP measure, was $237 million, compared to $194 million in second quarter 2017.  Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $50 million ($0.20 per diluted share) in second quarter 2018, compared to $16 million ($0.06 per diluted share) in the prior-year quarter, an increase of 233%. 

The following table details Range’s average production and realized pricing for the second quarter 2018:

Net Production
  Natural Gas
(Mmcf/d)
  Oil
(Bbl/d)
  NGLs
(Bbl/d)
  Natural Gas
Equivalent
(Mcfe/d)
               
  1,495   13,301   104,219   2,200


  Realized Pricing
    Natural Gas
($/Mcf)
  Oil
($/Bbl)

  NGLs
($/Bbl)
  Natural Gas
Equivalent
($/Mcfe)

                 
Average NYMEX price   $2.80   $67.89        
Differential, including basis hedging   (0.16)   (4.82)        
Realized prices before NYMEX hedges   2.64   63.07   $23.69   $3.30
Settled NYMEX hedges   0.14   (10.12)   (2.12)   (0.07)
Average realized prices after hedges   $2.78   $52.95   $21.57   $3.23
                 

Second quarter 2018 natural gas, NGLs and oil price realizations (including the impact of cash-settled hedges and derivative settlements which correspond to analysts’ estimates) averaged $3.23 per mcfe, a 12% increase from the prior-year quarter.  Additional detail on commodity price realizations can be found in the Supplemental Tables provided on the Company’s website.   

  • The average Company natural gas price including the impact of basis hedging was $2.64 per mcf (or $0.16 per mcf below NYMEX) during the second quarter, which was significantly better than the $0.39 negative differential to NYMEX in the prior year quarter.  The combination of increased pipeline connectivity, seasonally low storage levels and compressed basis across the Appalachian and Midwest regions has also improved the Company’s expected 2018 natural gas differential to NYMEX minus $0.10 per mcf.
     
  • Pre-hedge NGL realizations were $23.69 per barrel, or 35% of WTI, in second quarter 2018.  Realized NGL price was above the mid-point of guidance as a result of NGL component price improvements late in the quarter.  Range expects similar pricing strength through the second half of 2018, putting Range at the high-end of previously announced calendar 2018 guidance.
     
  • Crude oil and condensate price realizations, before realized hedges, for the second quarter averaged $63.07 per barrel, or $4.82 below WTI, a 45% improvement in realized price over the prior year quarter. 

Unit Costs

The following table details Range’s unit costs per mcfe, excluding stock-based compensation:

Expenses   2Q 2018
($/Mcfe)
  2Q 2017
($/Mcfe)
   Increase
(Decrease)
             
Direct operating $ 0.17 $ 0.17  
Transportation, gathering, processing and compression   1.35(a)   1.08   25%
Production and ad valorem taxes   0.05   0.06   (17%)
General and administrative   0.20   0.21   (5%)
Interest expense   0.26   0.26  
Total cash unit costs(b)   2.03   1.78   14%
Depletion, depreciation and
amortization (DD&A)
  0.80   0.86   (7%)
Total unit costs plus DD&A(b) $ 2.83 $ 2.65   7%
             

(a) Second quarter 2018 transportation, gathering, processing and compression expense reflects the change in accounting method made earlier this year.  As a result of adopting the new accounting standard, expenses increased by approximately $0.21 per mcfe in second quarter 2018.  There was an equal increase to NGL revenue as there is zero net impact to cash flow as a result of the change in accounting method. See page 8 in Range’s second quarter 2018 Form 10-Q.
(b) May not add due to rounding

Capital Expenditures

Second quarter 2018 drilling expenditures of $260 million funded the drilling and completion of 30 (27.3 net) wells.  A 100% success rate was achieved.  In addition $10.3 million was spent on acreage purchases during the second quarter.  Total capital expenditures year to date were $521 million.  Range remains on target with its $941 million total capital budget for 2018 which is expected to be funded within cash flows, excluding asset sale proceeds.

In addition, subsequent to quarter-end, Range sold Midcontinent properties for $23 million, consisting of approximately 11 Mmcfe per day of production and expected annualized cash flow of approximately $3 million

Operational Discussion

Range’s net production for second quarter 2018 averaged 2,200 Mmcfe per day, consisting of 1,495 Mmcf per day of natural gas, 104,219 barrels per day of NGLs and 13,301 barrels per day of condensate and oil.  This makes Range one of the top 10 natural gas producers in the U.S. and a top three NGL producer amongst E&P companies, providing leverage to improving oil and NGL pricing fundamentals.   

The table below summarizes wells turned to sales and the estimated activity for the remainder of the year.  Estimated well costs, lateral lengths and EUR’s by area can be found in the company presentation on Range’s website. 

    Wells TIL
1Q 2018
  Wells TIL
2Q 2018
  Calendar 2018
Planned TIL
  Remaining
2H 2018
SW PA Super-Rich   2   3   15   10
SW PA Wet   7   8   42   27
SW PA Dry     28   43   15
Total Appalachia   9   39   100   52
                 
Total N. LA.   4   4   11   3
Total   13   43   111   55
                 

Appalachia Division

Production for second quarter 2018 averaged approximately 1,876 net Mmcfe per day from the Appalachia division, a 25% increase over the prior-year quarter.  The southwest area of the division averaged 1,752 net Mmcfe per day during the quarter, a 30% increase over second quarter 2017.  This was achieved through continued operational improvements and exceptional well results across Range’s acreage position.  The northeast Marcellus properties averaged 107 net Mmcf per day and legacy acreage produced approximately 17 net Mmcf per day during the second quarter 2018.

North Louisiana

Production for the division in second quarter of 2018 averaged approximately 313 net Mmcfe per day.  The division brought on line four wells during the quarter, and expects to bring on line an additional three wells during the remainder of the year for a total of 11 wells in 2018.

Marketing and Transportation

Range’s marketing efforts were affected by two separate third-party midstream events during the second quarter that took away the primary method of transportation for certain production.  The Company minimized the impact to cash flow by working with our various midstream and processing partners to maintain production during the downtime.

The transportation of natural gas liquids on Sunoco’s Mariner East 1 pipeline was suspended for almost two months during the second quarter.  As a result, Range lost access to capacity on the Mariner East 1 pipeline for a combined 40,000 barrels per day of ethane and propane.  As one of the largest NGL producers in the United States, Range has taken a portfolio approach to the sale of its purity products.  The marketing team utilized alternate markets for Mariner East ethane volumes or simply sold the ethane as natural gas.  For propane, Range has access to another local pipeline and railcars that continued to provide outlets to international markets via the Marcus Hook terminal as well as various domestic markets.  As a result, Range was able to realize propane prices that were, on average, above the Mont Belvieu index price, while paying slightly higher transportation expense.  The Mariner East 1 pipeline was returned to service in mid-June.

In early June, TransCanada’s Leach Xpress project on which Range holds natural gas capacity (300,000 Dth/day) was taken offline following a pipeline rupture in West Virginia.  Range rerouted the natural gas production earmarked for the Leach Xpress capacity into local Appalachian markets.  On July 15th, the Leach Xpress project returned to service. 

Energy Transfer’s Rover project (phase 2), which is the last major natural gas transportation project for which Range has contracted capacity, is expected to reach full completion in third quarter 2018.  Once the Rover project is in service, over 70% of Range’s production can be sold in the Gulf Coast market, which currently receives near NYMEX pricing. 

Guidance – 2018 

Production per day Guidance

Production for the third quarter of 2018 is expected to be approximately 2,220 Mmcfe per day.  This excludes all Midcontinent volumes following the sale of that asset in early July.

Production expectations for the full year 2018 remain approximately 11% year-over-year growth. 

3Q 2018 Expense Guidance 

Direct operating expense:   $0.17 − $0.19 per mcfe
Transportation, gathering, processing and compression expense:   $1.38 − $1.42 per mcfe
Production tax expense:   $0.05 − $0.07 per mcfe
Exploration expense:   $7.0 − $10.0 million
Unproved property impairment expense:   $8.0 − $10.0 million
G&A expense:   $0.20 − $0.22 per mcfe
Interest expense:   $0.26 − $0.28 per mcfe
DD&A expense:   $0.80 − $0.84 per mcfe
Net brokered gas marketing expense:   ~$3.0 million

3Q 2018 Natural Gas Price Differentials (including basis hedging):  NYMEX minus $0.20                         

Based on current market indications, Range expects to average the following pre-hedge differentials for calendar 2018 production. 

  New Guidance   Prior Guidance
Natural Gas: NYMEX minus $0.10   NYMEX minus $0.15
Natural Gas Liquids (including ethane): 35% − 36% of WTI   32% − 36% of WTI
Oil/Condensate: WTI minus $5.00 to $6.00   WTI minus $5.00 to $6.00

Hedging Status

Range hedges portions of its expected future production volumes to increase the predictability of cash flow and to help maintain a more flexible financial position. Range currently has over 80% of its expected second half 2018 natural gas production hedged at a weighted average floor price of $2.97 per Mmbtu.  Similarly, Range has hedged over 70% of its second half 2018 projected crude oil production at a floor price of $53.20 and over 50% of its composite NGL production.  Please see Range’s detailed hedging schedule posted at the end of the financial tables below and on its website at www.rangeresources.com

Range has also hedged Marcellus and other basis differentials to limit volatility between NYMEX and regional prices.  The fair value of the basis hedges was a loss of $1.9 million as of June 30, 2018. The Company also has propane basis swap contracts which lock in the differential between Mont Belvieu and international propane indices.  The fair value of these contracts was a loss of $2.1 million on June 30, 2018.  

Conference Call Information

A conference call to review the financial results is scheduled on Tuesday, July 31 at 9:00 a.m. ET. To participate in the call, please dial 866-900-7525 and provide conference code 9999543 about 10 minutes prior to the scheduled start time.

A simultaneous webcast of the call may be accessed at www.rangeresources.com. The webcast will be archived for replay on the Company's website until August 31, 2018.

Non-GAAP Financial Measures

Adjusted net income comparable to analysts’ estimates as set forth in this release represents income or loss from operations before income taxes adjusted for certain non-cash items (detailed in the accompanying table) less income taxes.  We believe adjusted net income comparable to analysts’ estimates is calculated on the same basis as analysts’ estimates and that many investors use this published research in making investment decisions and evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Diluted earnings per share (adjusted) as set forth in this release represents adjusted net income comparable to analysts’ estimates on a diluted per share basis.  A table is included which reconciles income or loss from operations to adjusted net income comparable to analysts’ estimates and diluted earnings per share (adjusted).  The Company provides additional comparative information on prior periods along with non-GAAP revenue disclosures on its website. 

Cash flow from operations before changes in working capital (sometimes referred to as “adjusted cash flow”) as defined in this release represents net cash provided by operations before changes in working capital and exploration expense adjusted for certain non-cash compensation items.  Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company’s ability to generate cash to internally fund exploration and development activities and to service debt.  Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry.  In turn, many investors use this published research in making investment decisions.  Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operations, investing, or financing activities as an indicator of cash flows, or as a measure of liquidity.  A table is included which reconciles net cash provided by operations to cash flow from operations before changes in working capital as used in this release.  On its website, the Company provides additional comparative information on prior periods for cash flow, cash margins and non-GAAP earnings as used in this release.

The cash prices realized for oil and natural gas production, including the amounts realized on cash-settled derivatives and net of transportation, gathering, processing and compression expense, is a critical component in the Company’s performance tracked by investors and professional research analysts in valuing, comparing, rating and providing investment recommendations and forecasts of companies in the oil and gas exploration and production industry.  In turn, many investors use this published research in making investment decisions.  Due to the GAAP disclosures of various derivative transactions and third-party transportation, gathering, processing and compression expense, such information is now reported in various lines of the income statement.  The Company believes that it is important to furnish a table reflecting the details of the various components of each line in the statement of operations to better inform the reader of the details of each amount and provide a summary of the realized cash-settled amounts and third-party transportation, gathering, processing and compression expense which historically were reported as natural gas, NGLs and oil sales.  This information is intended to bridge the gap between various readers’ understanding and fully disclose the information needed.

The Company discloses in this release the detailed components of many of the single line items shown in the GAAP financial statements included in the Company’s quarterly report on Form 10-Q.  The Company believes that it is important to furnish this detail of the various components comprising each line of the Statements of Operations to better inform the reader of the details of each amount, the changes between periods and the effect on its financial results.

We believe that the presentation of PV-10 is relevant and useful to our investors as supplemental disclosure to the standardized measure, or after-tax amount, because it presents the discounted future net cash flows attributable to our proved reserves before taking into account future corporate income taxes and our current tax structure. While the standardized measure is dependent on the unique tax situation of each company, PV-10 is based on prices and discount factors that are consistent for all companies. Because of this, PV-10 can be used within the industry and by creditors and security analysts to evaluate estimated net cash flows from proved reserves on a more comparable basis.

RANGE RESOURCES CORPORATION (NYSE:RRC) is a leading U.S. independent oil and natural gas producer with operations focused in stacked-pay projects in the Appalachian Basin and North Louisiana. The Company pursues an organic growth strategy targeting high return, low-cost projects within its large inventory of low risk development drilling opportunities.  The Company is headquartered in Fort Worth, Texas.  More information about Range can be found at www.rangeresources.com.

Included within this news release are certain “forward-looking statements” within the meaning of the federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Range’s current beliefs, expectations or intentions regarding future events.  Words such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “outlook,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” and similar expressions are intended to identify such forward-looking statements.

All statements, except for statements of historical fact, made within regarding activities, events or developments the Company expects, believes or anticipates will or may occur in the future, such as those regarding future well costs, expected asset sales, well productivity, future liquidity and financial resilience, anticipated exports and related financial impact, NGL market supply and demand, improving commodity fundamentals and pricing, future capital efficiencies, future shareholder value, emerging plays, capital spending, anticipated drilling and completion activity, acreage prospectivity, expected pipeline utilization and future guidance information are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and Range's future performance are subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements.  Further information on risks and uncertainties is available in Range's filings with the Securities and Exchange Commission (SEC), including its most recent Annual Report on Form 10-K.  Unless required by law, Range undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date they are made.

The SEC permits oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions as well as the option to disclose probable and possible reserves.  Range has elected not to disclose its probable and possible reserves in its filings with the SEC.  Range uses certain broader terms such as "resource potential,” “unrisked resource potential,” "unproved resource potential" or "upside" or other descriptions of volumes of resources potentially recoverable through additional drilling or recovery techniques that may include probable and possible reserves as defined by the SEC's guidelines.  Range has not attempted to distinguish probable and possible reserves from these broader classifications. The SEC’s rules prohibit us from including in filings with the SEC these broader classifications of reserves.  These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of actually being realized.  Unproved resource potential refers to Range's internal estimates of hydrocarbon quantities that may be potentially discovered through exploratory drilling or recovered with additional drilling or recovery techniques and have not been reviewed by independent engineers.  Unproved resource potential does not constitute reserves within the meaning of the Society of Petroleum Engineer's Petroleum Resource Management System and does not include proved reserves.  Area wide unproven resource potential has not been fully risked by Range's management.  “EUR”, or estimated ultimate recovery, refers to our management’s estimates of hydrocarbon quantities that may be recovered from a well completed as a producer in the area. These quantities may not necessarily constitute or represent reserves within the meaning of the Society of Petroleum Engineer’s Petroleum Resource Management System or the SEC’s oil and natural gas disclosure rules. Actual quantities that may be recovered from Range's interests could differ substantially.  Factors affecting ultimate recovery include the scope of Range's drilling program, which will be directly affected by the availability of capital, drilling and production costs, commodity prices, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals, field spacing rules, recoveries of gas in place, length of horizontal laterals, actual drilling results, including geological and mechanical factors affecting recovery rates and other factors.  Estimates of resource potential may change significantly as development of our resource plays provides additional data. 

In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases. Investors are urged to consider closely the disclosure in our most recent Annual Report on Form 10-K, available from our website at www.rangeresources.com or by written request to 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102.  You can also obtain this Form 10-K on the SEC’s website at www.sec.gov or by calling the SEC at 1-800-SEC-0330.

Investor Contacts:

Laith Sando, Vice President – Investor Relations
817-869-4267
lsando@rangeresources.com

Michael Freeman, Director – Investor Relations & Hedging
817-869-4264
mfreeman@rangeresources.com

John Durham, Senior Financial Analyst
817-869-1538
jdurham@rangeresources.com

Media Contact:

Michael Mackin, Director of External Affairs
724-743-6776
mmackin@rangeresources.com

www.rangeresources.com


RANGE RESOURCES CORPORATION

STATEMENTS OF OPERATIONS                                              
Based on GAAP reported earnings with additional                                              
details of items included in each line in Form 10-Q                                              
(Unaudited, in thousands, except per share data)                                              
                                               
  Three Months Ended June 30,     Six Months Ended June 30,  
    2018       2017       %       2018       2017       %  
                                               
Revenues and other income:                                              
Natural gas, NGLs and oil sales (a) $ 661,390     $ 506,137             $ 1,358,019     $ 1,065,587          
Derivative fair value (loss)/income   (103,290 )     111,195               (117,299 )     276,752          
Brokered natural gas, marketing and other (b)   97,908       56,016               157,663       107,597          
ARO settlement gain (loss) (b)   (12 )     (40 )             (12 )     (40 )        
Other (b)   188       (197 )             412       (130 )        
Total revenues and other income   656,184       673,111       -3 %     1,398,783       1,449,766       -4 %
                                               
Costs and expenses:                                              
Direct operating   34,549       30,898               72,080       58,397          
Direct operating – non-cash stock-based compensation (c)   539       522               1,130       1,046          
Transportation, gathering, processing and compression   269,910       191,590               514,538       369,238          
Production and ad valorem taxes   10,140       9,969               20,066       19,132          
Brokered natural gas and marketing   102,434       55,469               157,743       108,756          
Brokered natural gas and marketing – non-cash
  stock-based compensation (c)
  313       388               598       651          
Exploration   7,128       13,970               14,096       21,967          
Exploration – non-cash stock-based compensation (c)   371       528               1,122       1,035          
Abandonment and impairment of unproved properties   54,922       5,193               66,695       9,613          
General and administrative   39,114       37,203               83,443       73,158          
General and administrative – non-cash stock-based
  compensation (c)
  8,814       14,279               32,725       25,197          
General and administrative – lawsuit settlements   1,155       540               1,332       1,163          
General and administrative – bad debt expense   (1,500 )     300               (1,500 )     300          
Termination costs         (50 )             (37 )     2,400          
Termination costs – non-cash stock-based compensation (c)         (46 )                   1,696          
Deferred compensation plan (d)   6,615       (14,466 )             (782 )     (27,635 )        
Interest expense   52,137       46,132               102,670       91,455          
Interest expense – amortization of deferred financing
  costs
  1,725       1,794               3,577       3,572          
Depletion, depreciation and amortization   161,026       152,504               323,292       302,325          
Impairment of proved properties and other assets   15,302                     22,614                
Gain on sale of assets   (156 )     (807 )             (179 )     (23,407 )        
Total costs and expenses   764,538       545,910       -40 %     1,415,223       1,040,059       36 %
                                               
(Loss) income before income taxes   (108,354 )     127,201       -185 %     (16,440 )     409,707       -104 %
                                               
Income tax (benefit) expense:                                              
Current                                      
Deferred   (28,518 )     57,651               14,158       170,046          
    (28,518 )     57,651               14,158       170,046          
                                               
Net (loss) income $ (79,836 )   $ 69,550       -215 %   $ (30,598 )   $ 239,661       -113 %
                                               
Net (Loss) Income Per Common Share:                                              
Basic $ (0.32 )   $ 0.28             $ (0.13 )   $ 0.97          
Diluted $ (0.32 )   $ 0.28             $ (0.13 )   $ 0.97          
                                               
Weighted average common shares outstanding, as reported:                                              
Basic   245,880       245,177       0 %     245,795       244,916       0 %
Diluted   245,880       245,335       0 %     245,795       245,242       0 %

(a)  See separate natural gas, NGLs and oil sales information table.
(b)  Included in Brokered natural gas, marketing and other revenues in the 10-Q.
(c)  Costs associated with stock compensation and restricted stock amortization, which have been reflected in the categories associated
          with the direct personnel costs, which are combined with the cash costs in the 10-Q.
(d)  Reflects the change in market value of the vested Company stock held in the deferred compensation plan.


RANGE RESOURCES CORPORATION

BALANCE SHEETS              
(In thousands)   June 30,       December 31,  
    2018       2017  
    (Unaudited)       (Audited)  
Assets              
Current assets $ 384,872     $ 370,627  
Derivative assets   3,295       58,880  
Goodwill   1,641,197       1,641,197  
Natural gas and oil properties, successful efforts method   9,705,122       9,566,737  
Transportation and field assets   13,190       14,666  
Other   78,401       76,734  
  $ 11,826,077     $ 11,728,841  
               
Liabilities and Stockholders’ Equity              
Current liabilities $ 632,354     $ 704,913  
Asset retirement obligations   6,327       6,327  
Derivative liabilities   101,328       44,233  
               
Bank debt   1,304,584       1,208,467  
Senior notes   2,853,948       2,851,754  
Senior subordinated notes   48,630       48,585  
Total debt   4,207,162       4,108,806  
               
Deferred tax liability   707,563       693,356  
Derivative liabilities   10,088       9,789  
Deferred compensation liability   87,087       101,102  
Asset retirement obligations and other liabilities   310,133       286,043  
               
Common stock and retained earnings   5,765,633       5,776,203  
Other comprehensive loss   (1,194 )     (1,332 )
Common stock held in treasury stock   (404 )     (599 )
Total stockholders’ equity   5,764,035       5,774,272  
  $ 11,826,077     $ 11,728,841  
               


RECONCILIATION OF TOTAL REVENUES AND OTHER INCOME TO TOTAL REVENUE EXCLUDING CERTAIN ITEMS, a non-GAAP measure                          
(Unaudited, in thousands)                          
  Three Months Ended June 30,     Six Months Ended June 30,  
    2018       2017       %       2018       2017       %  
                                               
Total revenues and other income, as reported $ 656,184     $ 673,111       -3 %   $ 1,398,783     $ 1,449,766       -4 %
Adjustment for certain special items:                                              
Total change in fair value related to derivatives
prior to settlement (gain) loss
  89,015       (107,809 )             111,949       (277,547 )        
ARO settlement (gain) loss   12       40               12       40          
Total revenues, as adjusted, non-GAAP $ 745,211     $ 565,342       32 %   $ 1,510,744     $ 1,172,259       29 %
                                               
                                               

RANGE RESOURCES CORPORATION

CASH FLOWS FROM OPERATING ACTIVITIES                              
(Unaudited in thousands)                              
                               
  Three Months Ended June 30,     Six Months Ended June 30,  
    2018       2017       2018       2017  
                               
Net (loss) income $ (79,836 )   $ 69,550     $ (30,598 )   $ 239,661  
Adjustments to reconcile net cash provided from continuing operations:                              
Deferred income tax (benefit) expense   (28,518 )     57,651       14,158       170,046  
Depletion, depreciation, amortization and impairment   176,328       152,504       345,906       302,325  
Exploration dry hole costs         161       2       161  
Abandonment and impairment of unproved properties   54,922       5,193       66,695       9,613  
Derivative fair value loss (income)   103,290       (111,195 )     117,299       (276,752 )
Cash settlements on derivative financial instruments that do not qualify for hedge  
  accounting
  (14,275 )     3,387       (5,350 )     (794 )
Allowance for bad debts   (1,500 )     300       (1,500 )     300  
Amortization of deferred issuance costs, loss on extinguishment of debt, and other   1,064       1,247       2,376       2,557  
Deferred and stock-based compensation   15,640       990       34,167       1,952  
(Gain) loss on sale of assets and other   (156 )     (807 )     (179 )     (23,407 )
                               
Changes in working capital:                              
Accounts receivable   (68,338 )     (8,920 )     (14,425 )     (13,610 )
Inventory and other   6,090       848       796       3,716  
Accounts payable   (32,838 )     (5,958 )     14,615       18,426  
Accrued liabilities and other   43,070       20,515       1,553       (22,866 )
Net changes in working capital   (52,016 )     6,485       2,539       (14,334 )
Net cash provided from operating activities $ 174,943     $ 185,466     $ 545,515     $ 411,328  
                               
                               
                               
RECONCILIATION OF NET CASH PROVIDED FROM OPERATING ACTIVITIES, AS REPORTED, TO CASH FLOW FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL, a non-GAAP measure                              
(Unaudited, in thousands)                              
                               
  Three Months Ended June 30,     Six Months Ended June 30,  
    2018       2017       2018       2017  
Net cash provided from operating activities, as reported $ 174,943     $ 185,466     $ 545,515     $ 411,328  
Net changes in working capital   52,016       (6,485 )     (2,539 )     14,334  
Exploration expense   7,128       13,809       14,094       21,806  
Lawsuit settlements   1,155       540       1,332       1,163  
Termination costs         (50 )           2,400  
Non-cash compensation adjustment   1,685       801       1,802       1,092  
Cash flow from operations before changes in working capital – non-GAAP measure $ 236,927     $ 194,081     $ 560,204     $ 452,123  
                               
                               
                               
ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING                              
(Unaudited, in thousands)                              
                               
  Three Months Ended June 30,     Six Months Ended June 30,  
    2018       2017       2018       2017  
Basic:                              
Weighted average shares outstanding   249,324       247,852       248,952       247,622  
Stock held by deferred compensation plan   (3,444 )     (2,675 )     (3,157 )     (2,706 )
Adjusted basic   245,880       245,177       245,795       244,916  
                               
Dilutive:                              
Weighted average shares outstanding   249,324       247,852       248,952       247,622  
Dilutive stock options under treasury method   (3,444 )     (2,517 )     (3,157 )     (2,380 )
Adjusted dilutive   245,880       245,335       245,795       245,242  
                               


RANGE RESOURCES CORPORATION

RECONCILIATION OF NATURAL GAS, NGLs AND OIL SALES AND DERIVATIVE FAIR VALUE INCOME (LOSS) TO CALCULATED CASH REALIZED NATURAL GAS, NGLs AND OIL PRICES WITH AND WITHOUT THIRD PARTY TRANSPORTATION, GATHERING AND COMPRESSION FEES, a non-GAAP measure            
(Unaudited, in thousands, except per unit data)            
  Three Months Ended June 30,     Six Months Ended June 30,  
    2018       2017       %       2018       2017       %  
Natural gas, NGL and oil sales components:                                              
Natural gas sales $ 360,351     $ 336,534             $ 791,924     $ 707,866          
NGL sales   224,703       123,784               427,230       261,847          
Oil sales   76,336       45,819               138,865       95,854          
Total oil and gas sales, as reported $ 661,390     $ 506,137       31 %   $ 1,358,019     $ 1,065,567       27 %
                                               
Derivative fair value income (loss), as reported: $ (103,290 )   $ 111,195             $ (117,299 )   $ 276,752          
Cash settlements on derivative financial instruments – (gain) loss:                                              
Natural gas   (18,113 )     (942 )             (50,621 )     (8,397 )        
NGLs   20,144       3,131               35,412       17,464          
Crude Oil   12,244       (5,575 )             20,559       (8,272 )        
Total change in fair value related to derivatives prior to settlement, a
non-GAAP measure
$ (89,015 )   $ 107,809             $ (111,949 )   $ 277,547          
                                               
Transportation, gathering, processing and compression components:                                              
Natural gas $ 164,064     $ 129,557             $ 321,298     $ 251,750          
NGLs   105,846       62,033               193,240       117,488          
Total transportation, gathering, processing and compression, as reported $ 269,910     $ 191,590             $ 514,538     $ 369,238          
                                               
Natural gas, NGL and oil sales, including cash-settled derivatives: (c)                                              
Natural gas sales $ 378,464     $ 337,476             $ 842,545     $ 716,263          
NGL sales   204,559       120,653               391,818       244,383          
Oil sales   64,092       51,394               118,306       104,126          
Total $ 647,115     $ 509,523       27 %     1,352,669       1,064,772       27 %
                                               
Production of oil and gas during the periods (a):                                              
Natural gas (mcf)   136,057,805       119,487,827       14 %     271,011,900       235,744,164       15 %
NGL (bbl)   9,483,910       8,524,267       11 %     18,753,941       17,060,995       10 %
Oil (bbl)   1,210,379       1,052,784       15 %     2,273,813       2,118,070       7 %
Gas equivalent (mcfe) (b)   200,223,539       176,950,133       13 %     397,178,424       350,818,554       13 %
                                               
Production of oil and gas – average per day (a):                                              
Natural gas (mcf)   1,495,141       1,313,053       14 %     1,497,303       1,302,454       15 %
NGL (bbl)   104,219       93,673       11 %     103,613       94,260       10 %
Oil (bbl)   13,301       11,569       15 %     12,563       11,702       7 %
Gas equivalent (mcfe) (b)   2,200,259       1,944,507       13 %     2,194,356       1,938,224       13 %
                                               
Average prices, excluding derivative settlements and before third party transportation costs:                                              
Natural gas (mcf) $ 2.65     $ 2.82       -6 %   $ 2.92     $ 3.00       -3 %
NGL (bbl) $ 23.69     $ 14.52       63 %   $ 22.78     $ 15.35       48 %
Oil (bbl) $ 63.07     $ 43.52       45 %   $ 61.07     $ 45.26       35 %
Gas equivalent (mcfe) (b) $ 3.30     $ 2.86       15 %   $ 3.42     $ 3.04       13 %
                                               
Average prices, including derivative settlements before third party transportation costs: (c)                                              
Natural gas (mcf) $ 2.78     $ 2.82       -2 %   $ 3.11     $ 3.04       2 %
NGL (bbl) $ 21.57     $ 14.15       52 %   $ 20.89     $ 14.32       46 %
Oil (bbl) $ 52.95     $ 48.82       8 %   $ 52.03     $ 49.16       6 %
Gas equivalent (mcfe) (b) $ 3.23     $ 2.88       12 %   $ 3.41     $ 3.04       12 %
                                               
Average prices, including derivative settlements and after third party
  transportation costs: (d)
                                             
Natural gas (mcf) $ 1.58     $ 1.74       -9 %   $ 1.92     $ 1.97       -2 %
NGL (bbl) $ 10.41     $ 6.88       51 %   $ 10.59     $ 7.44       42 %
Oil (bbl) $ 52.95     $ 48.82       8 %   $ 52.03     $ 49.16       6 %
Gas equivalent (mcfe) (b) $ 1.88     $ 1.80       5 %   $ 2.11     $ 1.98       6 %
                                               
Transportation, gathering and compression expense per mcfe $ 1.35     $ 1.08       25 %   $ 1.30     $ 1.05       23 %

(a)  Represents volumes sold regardless of when produced.
(b)  Oil and NGLs are converted at the rate of one barrel equals six mcfe based upon the approximate relative energy content of oil to natural gas, which is not necessarily indicative of the relationship of oil and natural gas prices.
(c)  Excluding third party transportation, gathering and compression costs.
(d)  Net of transportation, gathering and compression costs.

RANGE RESOURCES CORPORATION

RECONCILIATION OF INCOME (LOSS) BEFORE INCOME TAXES AS REPORTED TO INCOME BEFORE INCOME TAXES EXCLUDING CERTAIN ITEMS, a non-GAAP measure        

 
 
(Unaudited, in thousands, except per share data)          
  Three Months Ended June 30,     Six Months Ended June 30,  
    2018       2017       %       2018       2017       %  
                                               
(Loss) income from operations before income taxes, as reported $ (108,354 )   $ 127,201       185 %   $ (16,440 )   $ 409,707       104 %
Adjustment for certain special items:                                              
(Gain) loss on sale of assets   (156 )     (807 )             (179 )     (23,407 )        
Loss (gain) on ARO settlements   12       40               12       40          
Change in fair value related to derivatives prior to settlement   89,015       (107,809 )             111,949       (277,547 )        
Abandonment and impairment of unproved properties   54,922       5,193               66,695       9,613          
Impairment of proved property   15,302                     22,614                
Lawsuit settlements   1,155       540               1,332       1,163          
Termination costs         (50 )             (37 )     2,400          
Termination costs – non-cash stock-based compensation         (46 )                   1,696          
Brokered natural gas and marketing – non-cash stock-based
compensation
  313       388               598       651          
Direct operating – non-cash stock-based compensation   539       522               1,130       1,046          
Exploration expenses – non-cash stock-based compensation   371       528               1,122       1,035          
General & administrative – non-cash stock-based compensation   8,814       14,279               32,725       25,197          
Deferred compensation plan – non-cash adjustment   6,615       (14,466 )             (782 )     (27,635 )        
                                               
Income before income taxes, as adjusted   68,548       25,513       169 %     220,739       123,959       78 %
                                               
Income tax expense, as adjusted                                              
Current                                      
Deferred (a)   18,231       9,622               57,748       47,250          
Net income excluding certain items, a non-GAAP measure $ 50,317     $ 15,891       217 %   $ 162,991     $ 76,709       112 %
                                               
Non-GAAP income per common share                                              
Basic $ 0.20     $ 0.06       233 %   $ 0.66     $ 0.31       113 %
Diluted $ 0.20     $ 0.06       233 %   $ 0.66     $ 0.31       113 %
                                               
Non-GAAP diluted shares outstanding, if dilutive   246,692       245,335               246,530       245,242          
                                               

(a)  Deferred taxes for 2017 to be approximately 38% and 26% for 2018.

    

RANGE RESOURCES CORPORATION

RECONCILIATION OF NET (LOSS) INCOME, EXCLUDING
CERTAIN ITEMS AND ADJUSTMENT EARNINGS PER SHARE, non-GAAP measures
                                 
(In thousands, except per share data)                                  
  Three Months Ended
June 30,
      Six Months Ended
  June 30,
   
    2018       2017         2018       2017    
                                   
Net (loss) income, as reported $ (79,836 )   $ 69,550       $ (30,598 )   $ 239,661    
Adjustment for certain special items:                                  
(Gain) loss on sale of assets   (156 )     (807 )       (179 )     (23,407 )  
Loss (gain) on ARO settlements   12       40         12       40    
Change in fair value related to derivatives prior to settlement   89,015       (107,809 )       111,949       (277,547 )  
Impairment of proved property   15,302               22,614          
Abandonment and impairment of unproved properties   54,922       5,193         66,695       9,613    
Lawsuit settlements   1,155       540         1,332       1,163    
Termination costs         (50 )       (37 )     2,400    
Non-cash stock-based compensation   10,037       15,671         35,575       29,625    
Deferred compensation plan   6,615       (14,466 )       (782 )     (27,635 )  
Tax impact   (46,749 )     48,029         (43,590 )     122,796    
                                   
Net income (loss) excluding certain items, a non-GAAP measure $ 50,317     $ 15,891       $ 162,991     $ 76,709    
                                   
Net (loss) income per diluted share, as reported $ (0.32 )   $ 0.28       $ (0.13 )   $ 0.97    
Adjustment for certain special items per diluted share:                                  
(Gain) loss on sale of assets   (0.00 )     (0.00 )       (0.00 )     (0.10 )  
Change in fair value related to derivatives prior to settlement   0.36       (0.44 )       0.46       (1.13 )  
Impairment of proved property   0.06               0.09          
Abandonment and impairment of unproved properties   0.22       0.02         0.27       0.04    
Lawsuit settlements   0.00       0.00         0.01       0.00    
Termination costs         (0.00 )       (0.00 )     0.01    
Non-cash stock-based compensation   0.04       0.06         0.14       0.12    
Deferred compensation plan   0.03       (0.06 )       (0.00 )     (0.11 )  
Adjustment for rounding differences                       0.01    
Tax impact   (0.19 )     0.20         (0.18 )     0.50    
                                   
Net income (loss) per diluted share, excluding certain items, a non-GAAP measure $ 0.20     $ 0.06       $ 0.66     $ 0.31    
                                   
Adjusted earnings (loss) per share, a non-GAAP measure:                                  
Basic $ 0.20     $ 0.06       $ 0.66     $ 0.31    
Diluted $ 0.20     $ 0.06       $ 0.66     $ 0.31    
                                   

RANGE RESOURCES CORPORATION

RECONCILIATION OF CASH MARGIN PER MCFE, a non-GAAP measure                                  
(Unaudited, in thousands, except per unit data)                                  
  Three Months Ended
June 30,
      Six Months Ended
  June 30,
   
    2018       2017         2018       2017    
                                   
Revenues                                  
Natural gas, NGL and oil sales, as reported $ 661,390     $ 506,137       $ 1,358,019     $ 1,065,587    
Derivative fair value income (loss), as reported   (103,290 )     111,195         (117,299 )     276,752    
  Less non-cash fair value (gain) loss   89,015       (107,809 )       111,949       (277,547 )  
Brokered natural gas and marketing and other, as reported   98,084       55,779           158,063       107,427    
  Less ARO settlement and other (gains) losses   (176 )     237         (400 )     170    
  Cash revenue applicable to production   745,023       565,539         1,510,332       1,172,389    
                                   
Expenses                                  
Direct operating, as reported   35,088       31,420         73,210       59,443    
  Less direct operating stock-based compensation   (539 )     (522 )       (1,130 )     (1,046 )  
Transportation, gathering and compression, as reported   269,910       191,590         514,538       369,238    
Production and ad valorem taxes, as reported   10,140       9,969         20,066       19,132    
Brokered natural gas and marketing, as reported   102,747       55,857         158,341       109,407    
  Less brokered natural gas and marketing stock-based
  compensation
    (313 )     (388 )       (598 )     (651 )  
General and administrative, as reported   47,583       52,322         116,000       99,818    
  Less G&A stock-based compensation   (8,814 )     (14,279 )       (32,725 )     (25,197 )  
  Less lawsuit settlements   (1,155 )     (540 )       (1,332 )     (1,163 )  
Interest expense, as reported   53,862       47,926         106,247       95,027    
  Less amortization of deferred financing costs   (1,725 )     (1,794 )       (3,577 )     (3,572 )  
  Cash expenses   506,784       371,561         949,040       720,436    
                                   
Cash margin, a non-GAAP measure $ 238,239     $ 193,978       $ 561,292     $ 451,953    
                                   
Mmcfe produced during period   200,223       176,950         397,178       350,818    
                                   
Cash margin per mcfe $ 1.19     $ 1.10       $ 1.41     $ 1.29    
                                   
                                   
RECONCILIATION OF (LOSS) INCOME BEFORE INCOME TAXES TO CASH MARGIN                                  
(Unaudited, in thousands, except per unit data)                                  
  Three Months Ended
June 30,
      Six Months Ended
  June 30,
   
    2018       2017         2018       2017    
                                   
(Loss) income before income taxes, as reported $ (108,354 )   $ 127,201       $   (16,440 )   $ 409,707    
Adjustments to reconcile (loss) income before income taxes to cash margin:                                  
ARO settlements and other (gains) losses   (176 )     237         (400 )     170    
Derivative fair value (income) loss   103,290       (111,195 )       117,299       (276,752 )  
Net cash receipts on derivative settlements   (14,275 )     3,386         (5,350 )     (795 )  
Exploration expense   7,128       13,970         14,096       21,967    
Lawsuit settlements   1,155       540         1,332       1,163    
Termination costs         (50 )       (37 )     2,400    
Deferred compensation plan   6,615       (14,466 )       (782 )     (27,635 )  
Stock-based compensation (direct operating, brokered natural gas
  and marketing, general and administrative and termination costs)
  10,037       15,671         35,575       29,625    
Interest – amortization of deferred financing costs   1,725       1,794         3,577       3,572    
Depletion, depreciation and amortization   161,026       152,504         323,292       302,325    
(Gain) loss on sale of assets   (156 )     (807 )       (179 )     (23,407 )  
Impairment of proved property and other assets   15,302               22,614          
Abandonment and impairment of unproved properties   54,922       5,193         66,695       9,613    
Cash margin, a non-GAAP measure $ 238,239     $ 193,978       $ 561,292     $ 451,953    
                                   

RANGE RESOURCES CORPORATION

HEDGING POSITION AS OF July 20, 2018 – (Unaudited)  

          Daily Volume       Hedge Price  
  Gas  1                  
                     
  3Q 2018 Swaps       1,346,848 Mmbtu       $2.98  
  4Q 2018 Swaps       1,373,261 Mmbtu       $2.97  
                     
  4Q 2018 Sold Calls       70,000 Mmbtu       $3.10 2  
                     
  2019 Swaps       832,534 Mmbtu       $2.83  
                     
  2020 Swaps       10,000 Mmbtu       $2.75  
                     
  Oil                  
                     
  3Q 2018 Swaps       8,500 bbls       $53.20  
  4Q 2018 Swaps       8,500 bbls       $53.20  
                     
  2019 Swaps       6,624 bbls       $54.57  
                     
  1H 2020 Swaps       1,125 bbls       $57.67  
                     
  C2 Ethane                  
                     
  3Q 2018 Swaps       1,337 bbls       $0.315/gallon  
                     
  C3 Propane 3                  
                     
  3Q 2018 Swaps       12,168 bbls       $0.69/gallon  
  4Q 2018 Swaps       10,668 bbls       $0.67/gallon  
                     
  4Q 2018 Collars       1,250 bbls       $0.90 x $1.00/gallon  
                     
  1Q 2019 Swaps       1,500 bbls       $0.90/gallon  
                     
  C4 Normal Butane                  
                     
  3Q 2018 Swaps       4,250 bbls       $0.81/gallon  
  4Q 2018 Swaps       4,250 bbls       $0.81/gallon  
                     
  C5 Natural Gasoline                  
                     
  3Q 2018 Swaps       5,152 bbls       $1.22/gallon  
  4Q 2018 Swaps       5,152 bbls       $1.23/gallon  
                     
  2019 Swaps       1,244 bbls       $1.30/gallon  
                     

(1) Range also sold call swaptions of 380,000 Mmbtu/d for calendar 2019, and 140,000 Mmbtu/d for calendar 2020 at average strike prices of $2.96 and $2.81 per Mmbtu, respectively
(2) Sold Calls have an average deferred Premium of +$0.16 per Mmbtu
(3) Swaps incorporate international propane hedges

SEE WEBSITE FOR OTHER SUPPLEMENTAL INFORMATION FOR THE PERIODS AND ADDITIONAL HEDGING DETAILS

 

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