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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): February 24, 2021 (February 23, 2021)

 

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 February 23, 2021 Range Resources Corporation issued a press release announcing its 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 February 23, 2021

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:  February 24, 2021

 

 

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EXHIBIT 99.1

NEWS RELEASE

Range Announces Fourth Quarter 2020 Results

FORT WORTH, TEXAS, FEBRUARY 23, 2021…RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its fourth quarter 2020 financial results, proved reserves and plans for 2021.  

Highlights –

 

 

Commenting on the results and 2021 plans, Jeff Ventura, the Company’s CEO said, “During 2020, Range reduced debt while purchasing over eight million shares, refinanced near-term maturities, lowered well costs, improved our cost structure and delivered our operational plan safely and for less than budgeted.  These results reflect the organization’s continuing focus on capital discipline and further strengthening our financial position as we develop the most prolific natural gas and NGL play in North America.  Our resilience is further demonstrated by the underlying efficiency of our 2021 capital program that can maintain production at 2.15 Bcfe per day for only $425 million of all-in capital.  Further, our corporate sustainability report displays our industry-leading environmental and safety efforts and aggressive emissions targets.  Looking forward, I believe Range’s high-quality asset base, capital discipline, operational efficiencies and leading environmental efforts provide a sustainable business generating competitive free cash flow and returns for shareholders.” 

 

2021 Capital Program

 

Range’s 2021 all-in capital budget is $425 million. The capital budget includes approximately $400 million for drilling and recompletions, and $25 million for leasehold and other investments.  The Company expects to turn to sales 59 Marcellus wells in 2021 with an expected average lateral length of approximately 12,000 feet. Approximately 65% of lateral feet turned to sales in 2021 is expected to be in Range’s liquids rich acreage. Range also anticipates keeping in-progress well inventory approximately unchanged going into 2022, allowing for a repeatable and capital efficient program each year.  

 

The table below summarizes expected 2021 activity and 2020 regarding the number of wells to sales in each area.  

 

 

 

 

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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.

 

Capital Expenditures

 

Fourth quarter 2020 drilling and completions expenditures were $93 million and $15 million was invested in acreage and gathering facilities. Total 2020 capital expenditures were $411 million, including $377 million on drilling and completion, and a combined $34 million on acreage, gas gathering systems and other.  

 

Financial Position

 

Range reduced outstanding debt by $86 million during 2020, marking the third consecutive year of debt reduction which totals $1.0 billion since the end of 2017. As of December 31, 2020, Range had total debt outstanding of $3.1 billion, consisting of $702 million in bank debt, $2.4 billion in senior notes and $37 million in senior subordinated notes.  

 

During the year, Range repurchased in the open market and retired approximately $161 million in principal amount of its senior and subordinated notes at a weighted average discount to par of 25%.  Range also repurchased 8.2 million shares of the Company’s common stock during the year at an average price of $2.80 per share. 

 

In January 2021, Range issued $600.0 million aggregate principal amount of 8.25% senior notes due 2029 and used net proceeds to repay borrowings under its bank credit facility. Proforma the offering, the Company has approximately $2.0 billion of borrowing capacity available under the commitment amount. Range has less than $0.3 billion in notes that mature through 2022, which are expected to be redeemed via free cash flow at strip pricing.

 

Fourth Quarter 2020 Results

 

GAAP revenues for fourth quarter 2020 totaled $599 million, GAAP net cash provided from operating activities (including changes in working capital) was $90 million, and GAAP net income was $38 million ($0.15 per diluted share).  Fourth quarter earnings results include a $86 million mark-to-market derivative gain due to decreases in commodity prices.  

 

Non-GAAP revenues for fourth quarter 2020 totaled $531 million, and cash flow from operations before changes in working capital, a non-GAAP measure, was $108 million.  Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $4 million ($0.02 per diluted share) in fourth quarter 2020.

 

 

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The following table details Range’s fourth quarter 2020 unit costs per mcfe^(a):

 

 

 

 

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

 

 

Range’s fourth quarter production was approximately 2.1 Bcfe net per day, including the impact of curtailed production during fourth quarter in response to low prices and infrastructure maintenance.  The deferred production has benefited from improving prices across all products into mid-December and early 2021.  By area, southwest Marcellus production averaged 2.0 Bcfe per day while the northeast Marcellus assets averaged 83 net Mmcf per day during the quarter.

 

Fourth quarter 2020 natural gas, NGLs and oil price realizations (including the impact of cash-settled hedges and derivative settlements which correspond to analysts’ estimates) averaged $2.41 per mcfe.  

 

 

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Transportation and Gathering

 

Since the end of 2018, Range has reduced transportation and gathering expenses per unit of production by $0.17 per mcfe, from $1.51 to $1.34 in the fourth quarter of 2020. The two-year improvement has been driven by full utilization of both gathering and firm transport infrastructure. In 2021, Range will have an additional 5,000 barrels per day of Mariner East capacity, which is expected to be fully utilized with existing production.  Range continues to expect near-term and long-term benefits of NGL exports out of the Northeast as international demand for NGL products continues to grow.   NGL export out of Marcus Hook provides a unique supply option for that demand. In 2021, Range expects to export over 80% of its propane and butane, the highest percentage of propane and butane exported by any U.S. independent, leading to strong year-over-year improvements in NGL pricing and margins. Higher realized NGL prices for Range in 2021 will lead to a slight increase in processing costs as Range’s processing costs are based on the price received, providing a natural hedge against NGL price changes as the expense follows the direction of NGL prices.

 

Beyond 2021, Range anticipates transportation and gathering expenses to decline in absolute terms assuming continued maintenance of existing production levels. By 2025 Range expects annual gathering expense relative to 2021 to decline by approximately $70 million, and more than $100 million per year by 2030. Importantly, the cost improvements are a result of existing gathering arrangements and do not reflect targeted amounts.  Further improvements are also expected beyond 2030 in a production maintenance scenario. Range also has multiple firm transportation agreements with renewal elections during this timeframe and Range will have the option of letting capacity expire depending on market conditions. Transportation renewals relative to 2021 represent an additional $175 million in potential cost improvements by 2030.

 

2020 Proved Reserves

 

Year-end 2020 proved reserves were 17.2 Tcfe, essentially unchanged year-over-year after adjusting for asset sales and price revisions. By volume, proved reserves were 65% natural gas, 33% natural gas liquids and 2% crude oil and condensate.  Proved developed reserves represent 57% of the Company’s reserves.  

 

 

During 2020, Range added 1.3 Tcfe of proved reserves through the drill-bit, driven by the Marcellus shale development.  Field level performance increased reserves by 312 Bcfe due to continued improvement in the well performance of existing Marcellus producing wells and 109 Bcfe of reserves associated with proved undeveloped

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locations which have re-entered the Company’s five-year drilling program. Range removed 961 Bcfe of proved undeveloped reserves that now fall outside the SEC mandated five-year development window, but the Company expects these proved undeveloped reserves to be added back in future years.  The Company sold approximately 828 Bcfe of reserves during the year, associated with the North Louisiana asset.  As shown in the table below the present value (PV₁₀) of reserves under SEC methodology was $3.1 billion at December 31, 2020.  The valuation was impacted by lower first-of-month pricing required under SEC methodology.  For comparison, the PV₁₀ using NYMEX reference prices of $2.75 per Mmbtu for natural gas and $50 per barrel of oil would have been $8.6 billion, assuming the same proven reserve volumes.  

 

 

Year-end 2020 reserves included 7.4 Tcfe of proved undeveloped reserves from 361 wells planned to be developed within the next five years with an expected development cost of $0.32 per Mcfe.  Beyond the five-year reserve calculation window, Range has approximately 2,700 additional Marcellus locations available for development in Southwest Pennsylvania.  Range also has a network of over 200 existing well pads designed to accommodate an average of 20 wells per pad from any combination of Marcellus, Utica or Upper Devonian horizons.  On average, existing pads currently contain six producing wells, providing Range the opportunity to develop thousands of future wells while utilizing existing roads, pads and infrastructure.  In 2021, over 60% of the wells planned to turn to sales are from pad sites with existing production, similar to recent years.

 

The table below reflects Range’s estimate of the remaining core drilling inventory for the Marcellus.

 

Estimated Future Marcellus Drilling Locations - December 31, 2020

(Excludes Utica and Upper Devonian locations)

 

 

 

 

Guidance – 2021  

 

Capital & Production Guidance

 

Range’s 2021 all-in capital budget is $425 million. Production for full-year 2021 is expected to average approximately 2.15 Bcfe per day, with ~30% attributed to liquids production.

 

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Full Year 2021 Expense Guidance  

 

 

 

Full Year 2021 Price Guidance

 

Based on current market indications, Range expects to average the following price differentials for its production in 2021.  

 

 

(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 volumes to increase the predictability of cash flow and to help maintain a strong, flexible financial position. As of January 31^st, Range had approximately 70% of its expected 2021 natural gas production hedged at an average ceiling price of $2.79 per Mmbtu and an average floor price of $2.60 per Mmbtu.  Similarly, Range hedged approximately 50% of projected 2021 crude oil production at an average floor price of $46.84 per barrel and approximately 20% of its expected 2021 NGL revenue.   Please see the detailed hedging schedule posted on the Range website under Investor Relations - Financial Information.

 

Range has also hedged Marcellus and other basis differentials for natural gas and NGL exports to limit volatility between benchmarks and regional prices.  The combined fair value of the natural gas basis, NGL freight and spread hedges as of December 31, 2020 was a net gain of $5.6 million.    

 

 

Conference Call Information

 

A conference call to review the financial results is scheduled on Wednesday, February 24 at 9:00 a.m. ET. To participate in the call, please dial (877) 928-8777 and provide conference code 1058978 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 March 24.

 

 

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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).  On its website, the Company provides additional comparative information on prior periods along with non-GAAP revenue disclosures.  

 

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 income statement line 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 Annual Report on Form 10-K.  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.

  

Finding and development cost per unit is a non-GAAP metric used in the exploration and production industry by companies, investors and analysts. Drill-bit development cost per mcfe is based on estimated and unaudited drilling, development and exploration costs incurred divided by the total of reserve additions, performance and price revisions.  These calculations do not include the future development costs required for the development of proved undeveloped reserves. This reserves metric may not be comparable to similarly titled measurements used by other companies.  The U.S. Securities and Exchange Commission (the “SEC”) method of computing finding costs contains additional cost components and results in a higher number.  A reconciliation of the two methods is shown on our website at www.rangeresources.com.

 

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The reserve replacement ratio and finding and development cost per unit are statistical indicators that have limitations, including their predictive and comparative value.  As an annual measure, the reserve replacement ratio can be limited because it may vary widely based on the extent and timing of new discoveries and the varying effects of changes in prices and well performance.  In addition, since the reserve replacement ratio and finding and development cost per unit do not consider the cost or timing of future production of new reserves, such measures may not be an adequate measure of value creation.  

 

We believe that the presentation of PV₁₀ 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, PV₁₀ is based on prices and discount factors that are consistent for all companies. Because of this, PV₁₀ 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 natural gas and NGL producer with operations focused on stacked-pay projects in the Appalachian Basin. 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

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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.

 

 

 

2021-04

SOURCE:   Range Resources Corporation

 

 

Range Investor Contacts:

 

Laith Sando, Vice President – Investor Relations

817-869-4267

lsando@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-K.

(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-K.

(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-K.

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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, processing 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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SEE WEBSITE FOR OTHER SUPPLEMENTAL INFORMATION

AND HEDGING DETAILS

 

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