UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
October 28, 2010 (October 27, 2010)
October 28, 2010 (October 27, 2010)
RANGE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-12209 | 34-1312571 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 100 Throckmorton, Suite 1200 Ft. Worth, Texas |
76102 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (817) 870-2601
(Former name or former address, if changed since last report): Not applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligations of the registrant under any of the following provisions (see General
Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 Results of Operations and Financial Condition
On October 27, 2010 Range Resources Corporation issued a press release announcing its third
quarter 2010 results. A copy of this press release is being furnished as an exhibit to this report
on Form 8-K.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits:
99.1 Press Release dated October 27, 2010
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RANGE RESOURCES CORPORATION |
||||
| By: | /s/ Roger S. Manny | |||
| Roger S. Manny | ||||
| Chief Financial Officer | ||||
Date: October 28, 2010
3
EXHIBIT INDEX
| Exhibit Number | Description | |
99.1 |
Press Release dated October 27, 2010 |
4
Exhibit 99.1
NEWS RELEASE
RANGE ANNOUNCES THIRD QUARTER 2010 RESULTS
FORT WORTH, TEXAS, OCTOBER 27, 2010...RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its
third quarter 2010 results. Production averaged 503 Mmcfe per day, a record high for the Company
and a 15% increase over the prior-year quarter. This represents the 31st consecutive quarter of
sequential production growth. Production was 77% natural gas and 23% natural gas liquids (NGLs)
and crude oil. Drilling in the liquids-rich portion of the Marcellus Shale play as well as in the
Midcontinent and Permian Basin regions drove the production growth. On a year-over-year basis,
NGLs and crude oil production rose 62%, while natural gas production rose 6%.
Third quarter financial results were impacted by a 22% drop in realized prices, which more than
offset a 16% decrease in unit costs. Reported GAAP net income was a loss of $8.2 million versus a
loss of $29.8 million for the prior-year quarter. Diluted earnings per share was a loss of $0.05
versus a $0.19 loss for the prior-year period. Adjusted net income comparable to analysts’
estimates, a non-GAAP measure, was $18.9 million or $0.12 per diluted share. Reported GAAP net
cash provided from operating activities totaled $138.4 million for the third quarter. Cash flow
from operations before changes in working capital, a non-GAAP measure, declined 18% from the
prior-year quarter to $140.8 million. Please see “Non-GAAP Financial Measures” for a definition of
each of these non-GAAP financial measures and tables that reconcile each of these non-GAAP measures
to their most directly comparable GAAP financial measure.
Range also announced that it has decided to offer for sale its Barnett Shale properties in Texas.
The properties include approximately 360 producing wells and approximately 1,000 drilling
locations. Net production from the Barnett Shale properties is expected to average approximately
120-130 Mmcfe per day in the fourth quarter of 2010. The properties include 53,000 net acres, of
which approximately 80% is located in the core of the play and nearly 80% of the acreage is
currently held by production.
Commenting on the announcement, John Pinkerton, Range’s Chairman and CEO, said, “While our
financial results were impacted by a 22% decline in realized prices, much progress was made in the
third quarter as our operating results were terrific, and we continue to execute on reducing our
cost structure. Production rose 15%, surpassing the 500 Mmcfe per day milestone and marking our
31st consecutive quarter of sequential production growth. Unit costs continued to
decline, with depreciation, depletion and amortization expense leading the way with an 18% decrease
versus the prior-year quarter. DD&A expense is expected to decline further in the quarter ahead,
as we anticipate our all-in finding and development costs for 2010 to come in at or below $1.00 per
mcfe.
Importantly, our portfolio of high-quality, high-return projects is leading the way as shown by the
results of liquids-rich plays in the Marcellus Shale play as well as in the Midcontinent and
Permian areas. Our confidence in the quality and size of these plays was one of the key reasons we
have decided to market our Barnett Shale properties. Divesting of our Barnett Shale properties
reflects Range’s strategy of focusing on per-share growth. While a sale of our Barnett Shale
properties will provide substantial capital, it will not inhibit our per-share production and
reserve growth outlook. We currently anticipate that we can grow production and reserves in 2011
on both an absolute and per-share basis, despite losing the production and reserves associated with
the planned sale.”
Financial Discussion
(Excludes non-cash mark-to-market and non-cash stock-based compensation items shown separately on
attached tables)
For the quarter, production averaged 502.9 Mmcfe per day, comprised of 389.3 Mmcf per day of gas,
13,911 barrels per day of natural gas liquids and 5,012 barrels per day of oil, resulting in a
production mix of 77% natural gas, 17% natural gas liquids and 6% crude oil. This compares to a
production mix in the third quarter of 2009 of 84% natural gas, 8% natural gas liquids and 8% crude
oil. With continued targeted drilling to liquids-rich regions, we expect our volume of natural gas
liquids to continue to rise. Wellhead prices, including cash-settled derivatives, averaged $4.97
per mcfe, a 22% decrease versus the prior-year quarter. The average realized gas price was $4.34
per mcf, a 28% decrease from the prior-year quarter. The natural gas liquids price rose 9% to
$34.04 a barrel versus the prior-year quarter, while oil prices rose 5% to $66.84 a barrel versus
the prior-year quarter. Total natural gas, NGL and oil sales (including all cash-settled
derivatives) declined 4% compared to the prior-year quarter to $245.4 million. In the third
quarter, Range early-settled certain 2011 crude oil collars it had put in place earlier this year
locking in $15.7 million of cash gains. These cash gains were recognized in the third quarter as
additional cash flow, but were not included in the realized crude oil prices since they were
settled early in a lump sum. These oil volumes were subsequently re-hedged.
During the third quarter 2010, Range continued to lower its cost structure. Depreciation,
depletion and amortization expense decreased 18% from $2.42 per mcfe for the prior-year quarter to
$1.98 per mcfe. Direct operating expenses for the quarter were $0.73 per mcfe, a 3% decrease
compared to the prior-year quarter. Interest expense declined 4% from the prior-year quarter to
$0.73 per mcfe. General and administrative expenses, excluding lawsuit settlements, were $0.61 per
mcfe, a 9% increase over the prior-year quarter due primarily to continued increases in the
Marcellus Shale division.
Capital Expenditures
Total third quarter capital expenditures of $265 million funded the drilling of 118 (78 net) wells
and 5 (5 net) recompletions. A 99% success rate was achieved. For the first nine months of 2010,
156 (111 net) wells have been successfully drilled and are now on production, while 111 (81 net)
wells are currently in various stages of completion or waiting on pipeline connection. In the
third quarter, $177 million was expended on drilling and recompletions, $63 million on acreage, $5
million on expanding gas gathering systems and $20 million for exploration expense.
Operational Discussion
Range’s operational teams delivered outstanding results in the third quarter. The Marcellus
Division exited the quarter with average production of 191 Mmcfe net per day, providing confidence
that Range will meet or exceed its 2010 production exit rate target of 200 to 210 Mmcfe per day
net. The majority of Marcellus drilling to date has been focused on the liquids-rich portion of
the play in southwestern Pennsylvania. As a result, 29% of our Marcellus production is currently
comprised of natural gas liquids and condensate. During the third quarter, the Marcellus Division
brought online a total of 18 horizontal wells in southwestern Pennsylvania. Twenty three
additional wells have been drilled in this liquids-rich area and are expected to be completed
before year end. Of the 18 wells brought online in the third quarter, the initial seven-day gross
production rate averaged 8.5 Mmcfe per day under somewhat constrained conditions. Based on initial
production results, we expect the average estimated ultimate recovery (EUR) of these 18 wells to
exceed our average reserve estimate of 5.0 Bcfe per well for the southwest portion of Pennsylvania.
In response to lower natural gas prices, Range plans to utilize moderate-length laterals and fewer
wells per pad in the near-term, to efficiently develop its leasehold while conserving capital. In
the meantime, our upside potential from existing acreage continues to expand. As previously
announced, Range has drilled and completed an initial horizontal test well to the Upper Devonian
shales. The average seven-day test rate for the initial well was 5.1 Mmcfe per day. Additional
Upper Devonian test wells are planned in 2011.
2
The Marcellus infrastructure build-out continues to make solid progress in both the southwestern
and northeastern portions of the play. In the southwestern portion of the play, committed wet gas
processing capacity has increased to 185 Mmcf per day and has scheduled expansions of 165 Mmcf per
day in the first half of 2011 and another 40 Mmcf per day in the second half of 2011. Range also
has access to an additional 40 Mmcf per day of wet gas processing on an interruptible basis during
these same periods. Dry gas capacity is currently 25 Mmcf per day in southwestern Pennsylvania,
increasing to 65 Mmcf per day by year-end 2010. In the northeastern portion of the play, the build
out of the first phase 150 Mmcf per day Lycoming County gathering system is on schedule for a
year-end 2010 start up, with capacity increasing to as much as 350 Mmcf per day by year-end 2011.
In summary, Range currently has dry and wet gas capacity of 250 Mmcf per day, which is anticipated
to rise to 440 Mmcf per day by year-end 2010 and to 805 Mmcf per day by year-end 2011.
Range has also announced strong results across its portfolio of properties in various oil plays.
The Southwestern Division deepened three wells to the Strawn formation and recompleted another well
into the Wolfcamp formation in its West Texas Conger field. The three Strawn deepenings yielded a
combined daily average rate of 551 (468 net) Boe, approximately 80% liquids. The Wolfcamp
recompletion added 594 (505 net) Boe per day, approximately 92% liquids. In the Ardmore Basin,
Range announced its first two completions this year in the horizontal Woodford play. One well
averaged 1,176 (362 net) Boe per day, approximately 68% liquids. The second completion averaged
1,514 (702 net) Boe per day or approximately 70% liquids. Range also announced a successful well
in the 5,000-foot deep horizontal Mississippian Lime play in northern Oklahoma, which averaged 410
(318 net) Boe per day, approximately 63% liquids. Two additional wells in the play are currently
drilling. In the emerging Cana Shale play in the Anadarko Basin, Range controls approximately
80,000 (42,000 net) legacy acres that are all held by production. Range plans to take a “wait and
see approach,” as other operators de-risk surrounding acreage. While it is still early, the Upper
Devonian, Cana and Utica shales have the potential to significantly expand the Company’s unrisked
resource potential. Excluding the Upper Devonian, Cana and Utica potential, the Company’s acreage
position is currently estimated to hold 24 to 32 Tcfe of unproven resource potential, or enough to
grow its proved reserves by 10 times.
Conference Call Information
The Company will host a conference call on Thursday, October 28 at 1:00 p.m. ET to review these
results. To participate in the call, please dial 877-407-0778 and ask for the Range Resources’
third quarter financial results conference call. A replay of the call will be available through
November 4 at 877-660-6853. The account number is 286 and the conference ID for the replay is
359502. Additional financial and statistical information about the period not included in this
release but to be presented in the conference call will be available on our home page at
www.rangeresources.com.
A simultaneous webcast of the call may be accessed over the Internet at www.rangeresources.com or
www.vcall.com. To listen, please go to either website in time to register and install any
necessary software. The webcast will be archived for replay on the Company’s website for 15 days.
Non-GAAP Financial Measures and Supplemental Tables:
Third quarter 2010 results included several items. An $18.3 million non-cash mark-to-market loss
on unrealized derivatives, non-cash unproved property impairments of $20.5 million, a $5.4 million
charge on the early extinguishment of debt, $5.3 million non-cash gain recorded for the
mark-to-market in the deferred compensation plan, $9.7 million of non-cash stock compensation
expense and $469,000 for lawsuit settlements were recorded. Excluding these items, net income
would have been $18.9 million or $0.12 per share ($0.12 fully diluted). Excluding similar items from the
prior-year quarter, net income
3
would have been $41 million or $0.26 per share ($0.26 fully
diluted). By excluding these items from our earnings, we believe we present our earnings in a
manner consistent with the presentation used by analysts in their projection of the Company’s
earnings. (See accompanying table for calculation of these non-GAAP measures.)
“Cash flow from operations before changes in working capital” 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 operating, 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 from operating activities” 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.
Hedging and Derivatives
In this news release, Range has reclassified within total revenues its financial reporting of the
cash settlement of its commodity derivatives. Under this presentation those hedges considered
“effective” under ASC 815 are included in “Oil and gas sales” when settled. For those hedges
designated to regions where the historical correlation between NYMEX and regional prices is
“non-highly effective” or is “volumetric ineffective” due to sale of the underlying reserves, they
are deemed to be “derivatives” and the cash settlements are included in a separate line item shown
as “Derivative fair value income (loss)” in the consolidated statements of operations included in
the Company’s Form 10-Q along with the change in mark-to-market valuations of such unrealized
derivatives. The Company has provided additional information regarding oil and gas sales in a
supplemental table included with this release, which would correspond to amounts shown by analysts
for oil and gas sales realized, including cash-settled derivatives.
RANGE RESOURCES CORPORATION (NYSE: RRC) is an independent natural gas company operating in the
Southwestern and Appalachian regions of the United States.
Except for historical information, statements made in this release such as expected drill-bit
finding and development costs, high-quality and high-return projects, attractive returns on
capital, expected operating costs, expected production growth and exit rates, expected capital
funding sources, reduction of future unit costs, attractive hedge positions, solid financial
position, estimated ultimate recovery and unproved resource potential and planned property sale are
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. 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, including, but not limited to, the volatility of oil and gas
prices, the results of our hedging transactions, the costs and results of drilling and operations,
the timing of production, mechanical and other inherent risks associated with oil and gas
production, weather, the availability of drilling equipment, changes in interest rates, litigation,
uncertainties about reserve estimates, environmental risks and regulatory changes. Range undertakes
no obligation to publicly update or revise any forward-looking statements. Further information on risks and
uncertainties is available in
4
Range’s filings with the Securities and Exchange Commission (“SEC”),
which are incorporated by reference.
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. Beginning with year-end reserves for 2009, the SEC permits the optional disclosure of
probable and possible reserves. Range has elected not to disclose the Company’s probable and
possible reserves in its filings with the SEC. Range uses certain broader terms such as “resource
potential,” or “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 being actually
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, unrisked resource potential has not been fully risked by Range’s management.
Actual quantities that may be ultimately recovered from Range’s interests will 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. Investors are
urged to consider closely the disclosure in our Quarterly Report on Form 10-Q filed on July 27,
2010 for the period ending June 30, 2010, 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-Q by calling the SEC at 1-800-SEC-0330.
| 2010-26 | ||||||
Contacts:
|
Rodney Waller, Sr. Vice President | 817-869-4258 | ||||
| David Amend, Investor Relations Manager | 817-869-4266 |
Karen Giles, Corporate Communications Manager 817-869-4238
| Main number: | 817-870-2601 | |||
| www.rangeresources.com |
5
RANGE RESOURCES CORPORATION
STATEMENTS OF INCOME
Based on GAAP reported earnings with additional
details of items included in each line in Form 10-Q
details of items included in each line in Form 10-Q
(Unaudited, in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues |
||||||||||||||||
Natural gas, NGL and oil sales (a) |
$ | 219,560 | $ | 202,122 | $ | 663,104 | $ | 597,834 | ||||||||
Cash-settled derivative gain (loss) (a)(c) |
10,179 | 53,227 | 16,878 | 149,085 | ||||||||||||
Early cash-settled derivative gain |
15,697 | — | 15,697 | — | ||||||||||||
Transportation and gathering |
(1,351 | ) | 2,659 | 2,059 | 4,769 | |||||||||||
Transportation and gathering — non-cash stock
compensation (b) |
(283 | ) | (215 | ) | (926 | ) | (678 | ) | ||||||||
Change in mark-to-market on unrealized
derivatives (c) |
(18,284 | ) | (53,323 | ) | 23,885 | (83,393 | ) | |||||||||
Ineffective hedging gain (loss) (c) |
2,389 | (386 | ) | 2,400 | (483 | ) | ||||||||||
Equity method investment (d) |
(845 | ) | (1,022 | ) | (1,830 | ) | (6,548 | ) | ||||||||
Gain (loss) on sale of properties (d) |
67 | 32 | 79,111 | 39 | ||||||||||||
Other (d) |
(168 | ) | 547 | (121 | ) | (115 | ) | |||||||||
| 226,961 | 203,641 | 11% | 800,257 | 660,510 | 21% | |||||||||||
Expenses |
||||||||||||||||
Direct operating |
33,681 | 30,313 | 93,378 | 99,123 | ||||||||||||
Direct operating — non-cash stock compensation (b) |
606 | 798 | 1,724 | 2,357 | ||||||||||||
Production and ad valorem taxes |
8,873 | 7,600 | 25,033 | 23,421 | ||||||||||||
Exploration |
14,213 | 9,923 | 41,113 | 32,676 | ||||||||||||
Exploration — non-cash stock compensation (b) |
1,023 | 979 | 3,231 | 2,933 | ||||||||||||
Abandonment and impairment of unproven properties |
20,534 | 24,053 | 46,438 | 84,579 | ||||||||||||
General and administrative |
28,233 | 22,382 | 71,093 | 61,235 | ||||||||||||
General and administrative — non-cash stock
compensation (b) |
7,821 | 7,546 | 26,401 | 22,706 | ||||||||||||
General and administrative — lawsuit settlements |
469 | — | 3,035 | — | ||||||||||||
Termination costs |
— | 840 | 5,138 | 840 | ||||||||||||
Termination costs — non-cash stock compensation
(b) |
— | — | 2,800 | — | ||||||||||||
Deferred compensation plan (e) |
(5,347 | ) | 16,445 | (25,194 | ) | 29,635 | ||||||||||
Interest expense |
33,806 | 30,633 | 94,872 | 86,817 | ||||||||||||
Loss on early extinguishment of debt |
5,351 | — | 5,351 | — | ||||||||||||
Depletion, depreciation and amortization |
91,768 | 97,208 | 271,391 | 270,241 | ||||||||||||
Proved property impairment |
— | — | 6,505 | — | ||||||||||||
| 241,031 | 248,720 | -3% | 672,309 | 716,563 | -6% | |||||||||||
(Loss) income from operations before income taxes |
(14,070 | ) | (45,079) | 69% | 127,948 | (56,053) | 328% | |||||||||
Income taxes |
||||||||||||||||
Current |
(10 | ) | (695 | ) | (10 | ) | (76 | ) | ||||||||
Deferred |
(5,892 | ) | (14,566 | ) | 49,495 | (18,884 | ) | |||||||||
| (5,902 | ) | (15,261 | ) | 49,485 | (18,960 | ) | ||||||||||
Net (loss) income |
$ | (8,168 | ) | $ | (29,818) | 73% | $ | 78,463 | $ | (37,093) | 312% | |||||
(Loss) income per share |
||||||||||||||||
Basic |
$ | (0.05 | ) | $ | (0.19) | 74% | $ | 0.49 | $ | (0.24) | 304% | |||||
Diluted |
$ | (0.05 | ) | $ | (0.19) | 74% | $ | 0.49 | $ | (0.24) | 304% | |||||
Weighted average shares outstanding, as reported |
||||||||||||||||
Basic |
157,109 | 154,653 | 2% | 156,777 | 154,257 | 2% | ||||||||||
Diluted |
157,109 | 154,653 | 2% | 158,493 | 154,257 | 3% | ||||||||||
| (a) | See separate natural gas, NGL and oil sales information table. | |
| (b) | 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. | |
| (c) | Included in Derivative fair value income (loss) in the 10-Q. | |
| (d) | Included in Other revenues in the 10-Q. | |
| (e) | Reflects the change in the market value of the vested Company stock held in the deferred compensation plan. |
6
RANGE RESOURCES CORPORATION
BALANCE SHEETS
(in thousands)
(in thousands)
| September 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
| (Unaudited) | (Audited) | |||||||
Assets |
||||||||
Current assets |
$ | 123,378 | $ | 153,735 | ||||
Current unrealized derivative gain |
153,585 | 21,545 | ||||||
Natural gas and oil properties |
5,195,004 | 4,898,819 | ||||||
Transportation and field assets |
78,749 | 91,835 | ||||||
Unrealized derivative gain |
46,412 | 4,107 | ||||||
Other |
240,037 | 225,840 | ||||||
| $ | 5,837,165 | $ | 5,395,881 | |||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities |
$ | 374,244 | $ | 297,170 | ||||
Current asset retirement obligation |
2,446 | 2,446 | ||||||
Current unrealized derivative loss |
1,957 | 14,488 | ||||||
Bank debt |
165,000 | 324,000 | ||||||
Subordinated notes |
1,686,260 | 1,383,833 | ||||||
Total long-term debt |
1,851,260 | 1,707,833 | ||||||
Deferred taxes |
842,228 | 776,965 | ||||||
Unrealized derivative loss |
— | 271 | ||||||
Deferred compensation liability |
116,601 | 135,541 | ||||||
Long-term asset retirement obligation and other |
73,159 | 82,578 | ||||||
Common stock and retained earnings |
2,482,999 | 2,380,132 | ||||||
Treasury stock |
(7,716 | ) | (7,964 | ) | ||||
Other comprehensive income |
99,987 | 6,421 | ||||||
Total stockholders’ equity |
2,575,270 | 2,378,589 | ||||||
| $ | 5,837,165 | $ | 5,395,881 | |||||
7
RANGE RESOURCES CORPORATION
CASH FLOWS FROM OPERATING ACTIVITIES
(Unaudited, in thousands)
(Unaudited, in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Net (loss) income |
$ | (8,168 | ) | $ | (29,818 | ) | $ | 78,463 | $ | (37,093 | ) | |||||
Adjustments to reconcile net cash provided from operating activities: |
||||||||||||||||
Loss (gain) from equity investment |
845 | 1,022 | 1,830 | 6,548 | ||||||||||||
Deferred income tax expense (benefit) |
(5,892 | ) | (14,566 | ) | 49,495 | (18,884 | ) | |||||||||
Depletion, depreciation and amortization and impairment of proved properties |
91,767 | 97,208 | 277,896 | 270,241 | ||||||||||||
Exploration dry hole costs |
1,661 | 211 | 1,661 | 342 | ||||||||||||
Abandonment and impairment of unproved properties |
20,534 | 24,053 | 46,438 | 84,579 | ||||||||||||
Mark-to-market (gains) losses on oil and gas derivatives not designated as
hedges |
18,284 | 53,323 | (23,885 | ) | 83,393 | |||||||||||
Unrealized derivative (gain) loss |
(2,389 | ) | 386 | (2,400 | ) | 483 | ||||||||||
Allowance for bad debts |
— | 1,151 | — | 1,151 | ||||||||||||
Amortization of deferred financing costs and other |
6,524 | 2,957 | 8,891 | 5,290 | ||||||||||||
Deferred and stock-based compensation |
4,447 | 26,050 | 10,313 | 58,844 | ||||||||||||
(Gain) loss on sale of assets and other |
(67 | ) | (1,982 | ) | (79,111 | ) | (39 | ) | ||||||||
Changes in working capital: |
||||||||||||||||
Accounts receivable |
(5,113 | ) | (8,080 | ) | 10,279 | 38,373 | ||||||||||
Inventory and other |
(2,745 | ) | 1,347 | (2,407 | ) | (807 | ) | |||||||||
Accounts payable |
(1,494 | ) | 4,932 | 12,365 | (67,076 | ) | ||||||||||
Accrued liabilities |
20,237 | 17,140 | 9,040 | 18,423 | ||||||||||||
Net changes in working capital |
10,885 | 15,339 | 29,277 | (11,087 | ) | |||||||||||
Net cash provided from operating activities |
$ | 138,431 | $ | 175,334 | $ | 398,868 | $ | 443,768 | ||||||||
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)
ACTIVITIES, AS REPORTED, TO CASH FLOW FROM OPERATIONS
BEFORE CHANGES IN WORKING CAPITAL, a non-GAAP measure
(Unaudited, in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Net cash provided from operating activities, as reported |
$ | 138,431 | $ | 175,334 | $ | 398,868 | $ | 443,768 | ||||||||
Net change in working capital |
(10,885 | ) | (15,339 | ) | (29,277 | ) | 11,087 | |||||||||
Exploration expense |
12,552 | 9,912 | 39,452 | 32,534 | ||||||||||||
Office closing severance/exit accrual |
— | 840 | 5,138 | 840 | ||||||||||||
Lawsuit settlements |
469 | — | 3,035 | — | ||||||||||||
Non-cash compensation and other |
209 | 335 | 384 | (2,083 | ) | |||||||||||
Cash flow from operations before changes in working capital, a
non-GAAP measure |
$ | 140,776 | $ | 171,082 | $ | 417,600 | $ | 486,146 | ||||||||
ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING
(Unaudited, in thousands)
(Unaudited, in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Basic: |
||||||||||||||||
Weighted average shares outstanding |
160,038 | 157,407 | 159,582 | 156,820 | ||||||||||||
Stock held by deferred compensation plan |
(2,929 | ) | (2,754 | ) | (2,805 | ) | (2,563 | ) | ||||||||
| 157,109 | 154,653 | 156,777 | 154,257 | |||||||||||||
Dilutive: |
||||||||||||||||
Weighted average shares outstanding |
160,038 | 157,407 | 159,582 | 156,820 | ||||||||||||
Dilutive stock options under treasury method unless anti-dilutive |
(2,929 | ) | (2,754 | ) | (1,089 | ) | (2,563 | ) | ||||||||
| 157,109 | 154,653 | 158,493 | 154,257 | |||||||||||||
8
RANGE RESOURCES CORPORATION
RECONCILIATION OF NATURAL GAS, NGL AND OIL SALES AND DERIVATIVE
FAIR VALUE INCOME (LOSS) TO CALCULATED CASH REALIZED NATURAL GAS, NGL
AND OIL SALES, PRODUCTION PRICES AND DIRECT OPERATING CASH COSTS, a
non-GAAP measure
(Unaudited, in thousands, except per unit data)
(Unaudited, in thousands, except per unit data)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||
Natural gas, NGL and oil sales components: |
||||||||||||||||||||||||||
Natural gas sales |
$ | 129,557 | $ | 97,004 | $ | 416,250 | $ | 300,646 | ||||||||||||||||||
NGL sales |
43,562 | 16,886 | 112,061 | 36,455 | ||||||||||||||||||||||
Oil sales |
30,825 | 33,870 | 99,622 | 101,892 | ||||||||||||||||||||||
Cash-settled hedges (effective): |
||||||||||||||||||||||||||
Natural gas |
15,616 | 54,122 | 35,148 | 146,594 | ||||||||||||||||||||||
Crude oil |
— | 240 | 23 | 12,247 | ||||||||||||||||||||||
Total natural gas, NGL and oil, as reported |
$ | 219,560 | $ | 202,122 | 9 | % | $ | 663,104 | $ | 597,834 | 11 | % | ||||||||||||||
Derivative fair value income (loss) components: |
||||||||||||||||||||||||||
Cash-settled derivatives (ineffective): |
||||||||||||||||||||||||||
Natural gas |
$ | 10,179 | $ | 53,200 | $ | 16,874 | $ | 41,510 | ||||||||||||||||||
Crude oil (c) |
15,697 | 27 | 15,701 | 7,575 | ||||||||||||||||||||||
Change in mark-to-market on unrealized derivatives |
(18,284 | ) | (53,323 | ) | 23,885 | (83,393 | ) | |||||||||||||||||||
Unrealized ineffectiveness |
2,389 | (386 | ) | 2,400 | (483 | ) | ||||||||||||||||||||
Total derivative fair value income (loss), as reported |
$ | 9,981 | $ | (482 | ) | $ | 58,860 | $ | 65,209 | |||||||||||||||||
Natural gas, NGL and oil sales, including cash-settled derivatives: |
||||||||||||||||||||||||||
Natural gas sales |
$ | 155,352 | $ | 204,326 | $ | 468,272 | $ | 588,750 | ||||||||||||||||||
Natural gas liquid sales |
43,562 | 16,886 | 112,061 | 36,455 | ||||||||||||||||||||||
Gas sales |
30,825 | 34,137 | 99,649 | 121,714 | ||||||||||||||||||||||
| $ | 229,739 | $ | 255,349 | $ | 679,982 | $ | 746,919 | |||||||||||||||||||
Early settled derivatives (c) |
15,697 | — | 15,697 | — | ||||||||||||||||||||||
Total |
$ | 245,436 | $ | 255,349 | -4 | % | $ | 695,679 | $ | 746,919 | -7 | % | ||||||||||||||
Production during the period (a): |
||||||||||||||||||||||||||
Natural gas (mcf) |
35,818,171 | 33,747,972 | 6 | % | 104,320,417 | 96,205,898 | 8 | % | ||||||||||||||||||
Natural gas liquid (bbl) |
1,279,751 | 543,005 | 136 | % | 2,989,106 | 1,492,259 | 100 | % | ||||||||||||||||||
Oil (bbl) |
461,145 | 534,399 | -14 | % | 1,460,565 | 1,987,603 | -27 | % | ||||||||||||||||||
Equivalent (mcfe) (b) |
46,263,547 | 40,212,396 | 15 | % | 131,018,443 | 117,085,070 | 12 | % | ||||||||||||||||||
Production – average per day (a): |
||||||||||||||||||||||||||
Natural gas (mcf) |
389,328 | 366,826 | 6 | % | 382,126 | 352,403 | 8 | % | ||||||||||||||||||
Natural gas liquid (bbl) |
13,911 | 5,902 | 136 | % | 10,949 | 5,466 | 100 | % | ||||||||||||||||||
Oil (bbl) |
5,012 | 5,809 | -14 | % | 5,350 | 7,281 | -27 | % | ||||||||||||||||||
Equivalent (mcfe) (b) |
502,865 | 437,091 | 15 | % | 479,921 | 428,883 | 12 | % | ||||||||||||||||||
Average prices realized, including cash-settled hedges and derivatives: |
||||||||||||||||||||||||||
Natural gas (mcf) |
$ | 4.34 | $ | 6.05 | -28 | % | $ | 4.49 | $ | 6.12 | -27 | % | ||||||||||||||
Natural gas liquid (bbl) |
$ | 34.04 | $ | 31.10 | 9 | % | $ | 37.49 | $ | 24.43 | 53 | % | ||||||||||||||
Oil (bbl) |
$ | 66.84 | $ | 63.88 | 5 | % | $ | 68.23 | $ | 61.24 | 11 | % | ||||||||||||||
Equivalent (mcfe) (b) |
$ | 4.97 | $ | 6.35 | -22 | % | $ | 5.19 | $ | 6.38 | -19 | % | ||||||||||||||
Direct operating cash costs per mcfe (d): |
||||||||||||||||||||||||||
Field expenses |
$ | 0.71 | $ | 0.68 | 4 | % | $ | 0.68 | $ | 0.80 | -15 | % | ||||||||||||||
Workovers |
0.02 | 0.07 | -71 | % | 0.03 | 0.05 | -40 | % | ||||||||||||||||||
Total direct operating cash costs |
$ | 0.73 | $ | 0.75 | -3 | % | $ | 0.71 | $ | 0.85 | -16 | % | ||||||||||||||
| (a) | Represents volumes sold regardless of when produced. | |
| (b) | Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel. | |
| (c) | Average prices for three months and the nine months ended September 30, 2010 excludes early settled oil collars of $15.7 million. | |
| (d) | Excludes non-cash stock compensation. |
9
RANGE RESOURCES CORPORATION
RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES
AS REPORTED TO INCOME FROM OPERATIONS BEFORE INCOME TAXES
EXCLUDING CERTAIN ITEMS, a non-GAAP measure
(Unaudited, in thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
(Loss) income from operations before income taxes, as reported |
$ | (14,070 | ) | $ | (45,079 | ) | 69 | % | $ | 127,948 | $ | (56,053 | ) | 328 | % | |||||||
Adjustment for certain non-cash items |
||||||||||||||||||||||
(Gain) loss on sale of properties |
(67 | ) | (32 | ) | (79,111 | ) | (39 | ) | ||||||||||||||
Equity method impairment |
— | — | — | 2,950 | ||||||||||||||||||
Change in mark-to-market on unrealized derivatives (gain)
loss |
18,284 | 53,323 | (23,885 | ) | 83,393 | |||||||||||||||||
Ineffective hedging (gain) loss |
(2,389 | ) | 386 | (2,400 | ) | 483 | ||||||||||||||||
Abandonment and impairment of unproven properties |
20,534 | 24,053 | 46,438 | 84,579 | ||||||||||||||||||
Loss on early extinguishment of debt |
5,351 | — | 5,351 | — | ||||||||||||||||||
Proved property impairment |
— | — | 6,505 | — | ||||||||||||||||||
Termination costs |
— | 840 | 7,938 | 840 | ||||||||||||||||||
Lawsuit settlements |
469 | — | 3,035 | — | ||||||||||||||||||
Transportation and gathering – non-cash stock compensation |
283 | 215 | 926 | 678 | ||||||||||||||||||
Direct operating – non-cash stock compensation |
606 | 798 | 1,724 | 2,357 | ||||||||||||||||||
Exploration expenses – non-cash stock compensation |
1,023 | 979 | 3,231 | 2,933 | ||||||||||||||||||
General & administrative – non-cash stock compensation |
7,821 | 7,546 | 26,401 | 22,706 | ||||||||||||||||||
Deferred compensation plan – non-cash stock compensation |
(5,347 | ) | 16,445 | (25,194 | ) | 29,635 | ||||||||||||||||
Income from operations before income taxes, as adjusted |
32,498 | 59,474 | -45 | % | 98,907 | 174,462 | -43 | % | ||||||||||||||
Income taxes, adjusted |
||||||||||||||||||||||
Current |
(10 | ) | (695 | ) | (10 | ) | (76 | ) | ||||||||||||||
Deferred |
13,620 | 19,205 | 40,007 | 61,456 | ||||||||||||||||||
Net income excluding certain items, a non-GAAP measure |
$ | 18,888 | $ | 40,964 | -54 | % | $ | 58,910 | $ | 113,082 | -48 | % | ||||||||||
Non-GAAP earnings per share |
||||||||||||||||||||||
Basic |
$ | 0.12 | $ | 0.26 | -54 | % | $ | 0.38 | $ | 0.73 | -48 | % | ||||||||||
Diluted |
$ | 0.12 | $ | 0.26 | -54 | % | $ | 0.37 | $ | 0.71 | -48 | % | ||||||||||
Non-GAAP diluted shares outstanding, if dilutive |
160,389 | 158,865 | 158,493 | 158,391 | ||||||||||||||||||
HEDGING POSITION
As of October 1, 2010
(Unaudited)
As of October 1, 2010
(Unaudited)
| Gas | Oil | |||||||||||||||||||
| Volume | Average | Volume | Average | |||||||||||||||||
| Hedged | Hedge | Hedged | Hedge | |||||||||||||||||
| (Mmbtu/d) | Prices | (Bbl/d) | Prices | |||||||||||||||||
4Q 2010 |
Collars | 335,000 | $ | 5.56 - $7.20 | 1,000 | $ | 75.00- $93.75 | |||||||||||||
Total 2011 |
Collars | 408,200 | $ | 5.56 - $6.48 | — | — | ||||||||||||||
| Calls | — | — | 5,500 | $ | 80.00 | |||||||||||||||
Total 2012 |
Collars | 119,641 | $ | 5.50 - $6.25 | 2,000 | $ | 70.00 - $80.00 | |||||||||||||
| Calls | — | — | 4,700 | $ | 85.00 | |||||||||||||||
| Note: | Details as to the Company’s hedges are posted on its website and are updated periodically. See website for Supplemental Tables 6 and 7 detailing any premiums paid or received in connection with the hedges above. |
SEE WEBSITE FOR OTHER SUPPLEMENTAL INFORMATION FOR THE PERIODS
10