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UNITED STATES

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

Date of Report (Date of earliest event reported): October 30, 2020 (October 29, 2020)

 

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 Street, Suite 1200 Fort Worth, Texas		76102
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (817) 870-2601

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value		RRC		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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ITEM 2.02 Results of Operations and Financial Condition

On October 29, 2020 Range Resources Corporation issued a press release announcing its third quarter 2020 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 29, 2020

104  Cover Page Interactive Data File (embedded within the Inline XBRL document)

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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/ Mark S. Scucchi
	Mark S. Scucchi
	Chief Financial Officer

Date:  October 30, 2020

 

 

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Exhibit 99.1

NEWS RELEASE

Range Announces Third Quarter 2020 Financial Results

FORT WORTH, TEXAS, October 29, 2020…RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its third quarter 2020 financial results.  

 

Third Quarter Highlights –

 

 

Commenting on the quarter, Jeff Ventura, the Company’s CEO said, “Range continued to make steady progress in the third quarter by operating safely, improving our cost structure, reducing debt, extending our maturity runway, and methodically developing our core asset with peer-leading well costs and capital efficiency.  As a result of efficient operations, we were able to reduce our capital budget for 2020 while accomplishing our operational objectives, setting us up well for 2021.   Looking forward, our shallow base decline of less than 20% and peer leading well costs provide Range a sustaining capital requirement per unit of production that we believe is the best among peers, providing us a solid foundation for generating corporate returns.  With an improved price outlook for natural gas and natural gas liquids, Range is well-positioned to generate durable free cash flow, which at today’s stock price equates to a free cash flow yield that competes with any sector.”

 

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.

 

GAAP revenues for third quarter 2020 totaled $299 million, GAAP net cash provided from operating activities (including changes in working capital) was an outflow of $24 million, and GAAP earnings was a loss of $680 million ($2.83 per diluted share).  Third quarter earnings include $522 million exit and termination costs associated with the sale of North Louisiana assets and a $125 million non-cash derivative loss due to increases in commodity prices.

 

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Non-GAAP revenues for third quarter 2020 totaled $510 million, and cash flow from operations before changes in working capital, a non-GAAP measure, was $91 million.  Adjusted earnings comparable to analysts’ estimates, a non-GAAP measure, was a loss of $11 million ($0.05 per diluted share) in third quarter 2020.

 

 

Capital Expenditures

 

Third quarter 2020 drilling and completion expenditures were $60 million.  In addition, during the quarter, a combined $3.5 million was invested in acreage and gathering systems.  Total year-to-date expenditures were $298 million at the end of the third quarter.  Well costs, including all facilities, averaged less than $600 per foot in the third quarter, the lowest normalized well costs in Appalachia.  Given the realized efficiencies year-to-date, Range is lowering its anticipated capital spending by $15 million for 2020 to $415 million or less.

 

 

Asset Sale and Financial Position

 

In August, Range finalized the sale of its North Louisiana assets for gross proceeds of $245 million, with the potential for $90 million in additional proceeds contingent on future commodity prices.  

 

During the quarter, Range issued $300 million aggregate principal amount of 9.25% senior notes due 2026. Proceeds from the senior notes offering and North Louisiana divestiture were used to redeem $500 million aggregate principal amount of the Company’s notes due 2021 through 2023. In addition, Range retired approximately $2.9 million in principal amount of senior and subordinated notes through open market repurchases during the third quarter at a weighted average discount to par of 7%.  In total during 2020, Range has reduced note maturities through 2024 by approximately $1.2 billion through refinancing and repayments.  

 

At the end of the quarter, pursuant to the scheduled semi-annual borrowing base redetermination process, Range received reaffirmation of its $3.0 billion borrowing base under the Company’s existing revolving credit facility. Aggregate lender commitments under the credit facility remain at $2.4 billion.  Range had $706 million drawn on its revolver and approximately $1.4 billion of additional borrowing capacity under the commitment amount as of September 30, 2020.

 

 

Unit Costs and Pricing

 

The following table details Range’s unit costs per mcfe^(a):

 

 

 

 

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The following table details Range’s average production and realized pricing for third quarter 2020:

 

 

 

Third quarter 2020 natural gas, NGLs and oil price realizations (including the impact of derivative settlements which correspond to analysts’ estimates) averaged $2.32 per mcfe.  Additional detail on commodity price realizations can be found in the Supplemental Tables provided on the Company’s website.  

 

 

 

 

Operational Discussion

 

The table below summarizes estimated activity for 2020 regarding the number of wells to sales for each area.  

 

 

Production by Area

 

Total production for third quarter 2020 averaged approximately 2.19 Bcfe net per day.  The southwest Appalachia area averaged 2.04 Bcfe net per day during the quarter, reflecting strategic production curtailments in September, as discussed below.  The northeast Marcellus properties averaged 81 Mmcf net per day and North Louisiana, which was sold in August, averaged approximately 73 Mmcfe net per day during the third quarter.  

 

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Marketing and Transportation

 

During the third quarter, Appalachian natural gas storage remained higher than normal while the basin experienced maintenance on multiple infrastructure projects, causing weakness in local prices.  In response to low in-basin natural gas prices, Range curtailed up to 210 Mmcf per day of gross natural gas production during the last two weeks of September and the majority of October.  Range expects local price to improve with the onset of winter weather, as demonstrated by improving basis futures, leading to improving corporate natural gas differentials into 2021.  The deferred production is expected to receive the benefit of higher future prices, thereby increasing cash flow. As of October 28^th, all curtailed production had been returned to sales.  

 

Range continues to see strong NGL export premiums at Marcus Hook relative to the Mont Belvieu index.  Range’s NGL pre-hedge price realizations in the third quarter improved by $3.47 per barrel versus the previous quarter and a $1.21 per barrel improvement compared to the prior-year quarter, despite hurricane-related demand weakness on the Gulf Coast.   Looking ahead, Range expects NGL balances to tighten further with ongoing declines in associated NGL production and improving demand. With respect to propane and butane, the start of winter should boost domestic demand while new LPG export capacity becomes operational on the Gulf Coast.  At the same time, global LPG balances are expected to tighten by more than 10% between October and the first quarter of 2021.  These strengthening fundamentals set the stage for stronger propane and butane prices moving into 2021. In this environment, Range’s flexible transportation portfolio creates opportunities to maximize value by optimizing sales into both domestic and international markets, supporting the Company’s premium differentials to Mont Belvieu.

 

Third quarter condensate production was lower versus the prior quarter as a result of the sale of North Louisiana and relatively light activity in the super-rich area for 2020. Condensate prices improved by almost 50% during the quarter, trending with crude prices.  Consequently, Range experienced a sharp increase in condensate price realizations to $31.47/bbl. The Company expects condensate price differentials to WTI to tighten in fourth quarter 2020 and early 2021 as regional production continues to decline, while demand for transportation fuels appears likely to recover.  

 

 

Corporate Sustainability Report

 

In August, Range published an updated Corporate Sustainability Report. The 2020 Corporate Sustainability Report covers a broader and deeper set of topics, with a focus on material issues for the business and key stakeholders, underscoring the Company’s commitment to increased transparency.  Included in the report, Range set industry-leading emissions goals. The Company’s medium-term goal is to achieve the objective of net zero greenhouse gas (GHG) emissions by 2025 through continued emissions reductions and the use of carbon offsets associated with reforestation and forest management. As an additional interim goal, Range intends to further reduce GHG emissions intensity relative to 2019 levels by 15 percent by 2025.

 

To achieve these targets, Range continues to invest in new technologies and engineering solutions, implement best-in-class emissions reductions practices and develop improved methods to measure emissions. These efforts have positioned Range as a leader in emissions reductions amongst peers. Based on third-party data from Rystad Energy, an independent energy research firm, Range had the lowest CO2 emissions intensity in a group of 58 global oil and natural gas producers.  The full report is available at csr.rangeresources.com.

 

 

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Guidance – 2020  

 

Production per day Guidance

 

Accounting for the strategic production curtailments, Range expects fourth quarter production to average approximately 2.10 Bcfe per day.  Production for full-year 2020 is expected to average approximately 2.24 Bcfe per day, reflecting adjustments associated with the sale of the North Louisiana assets and strategic curtailments.  

 

Full Year 2020 Expense Guidance  

 

 

 

 

Full Year 2020 Price Guidance

 

Based on current market indications and including the mid-August North Louisiana assets divestiture, Range expects to average the following price differentials for its production in 2020.  

 

 

(1) Including basis hedging.
(2) Weighting based on 53% ethane, 27% propane, 7% normal butane, 4% iso-butane and 9% natural gasoline.

 

 

Hedging Status

 

Range hedges portions of its expected future production to increase the predictability of cash flow and to help maintain a more flexible financial position.  Range has over 75% of its remaining 2020 projected natural gas production hedged at a weighted average floor price of $2.62 per Mmbtu.  Similarly, Range has hedged over 80% of its remaining 2020 projected crude oil production at an average floor price of $58.02.  For 2021, Range has hedged 1.0 Bcf per day of natural gas production with an average floor price of $2.60 and an average ceiling price of $2.80.  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 natural gas basis to limit volatility between NYMEX and regional prices.  The fair value of basis hedges was a gain of $5.4 million as of September 30, 2020.  The Company also has propane basis swap contracts and freight swaps which lock in the differential between Mont Belvieu and international propane indices.  The combined fair value of these contracts was a loss of $1.9 million at September 30, 2020.  

 

 

 

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Conference Call Information

A conference call to review the financial results is scheduled on Friday, October 30 at 9:00 a.m. ET.  A webcast of the call may be accessed at www.rangeresources.com. The webcast will be archived for replay on the Company's website until November 30, 2020.

To participate in the call, dial 877-928-8777 and provide conference code 1041049 about 15 minutes prior to the scheduled start time.

 

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 were historically 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.

  

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RANGE RESOURCES CORPORATION (NYSE: RRC) is a leading U.S. independent natural gas and NGL producer with operations focused in stacked-pay projects in the Appalachian Basin. The Company pursues an organic development 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 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.  

 

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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.

 

 

 

2020-23

SOURCE:   Range Resources Corporation

 

 

Investor Contacts:

 

Laith Sando, Vice President – Investor Relations

817-869-4267

lsando@rangeresources.com

 

John Durham, Senior Financial Analyst

817-869-1538

jdurham@rangeresources.com

 

 

Range Media Contacts:

 

Mark Windle, Director of Corporate Communications
724-873-3223
mwindle@rangeresources.com

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RANGE RESOURCES CORPORATION

(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.

(e)  Included in interest expense in the 10-Q.

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RANGE RESOURCES CORPORATION

 

 

 

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RANGE RESOURCES CORPORATION

 

 

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RANGE RESOURCES CORPORATION

 

(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.

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RANGE RESOURCES CORPORATION

 

 

(a)  Deferred taxes are estimated to be approximately 25% for 2020 and 2019.

 

    

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RANGE RESOURCES CORPORATION

 

 

 

 

 

 

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RANGE RESOURCES CORPORATION

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RANGE RESOURCES CORPORATION

 

 

HEDGING POSITION AS OF September 30, 2020 – (Unaudited)  

 

 

 

 

 

SEE WEBSITE FOR OTHER SUPPLEMENTAL INFORMATION FOR THE PERIODS

AND ADDITIONAL HEDGING DETAILS

 

 

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