Fort Worth-based Range Resources Corporation ( RRC - Analyst Report ) registered fourth quarter 2012 production growth of 35% from the year-ago quarter mainly from the continued success of its drilling program in the liquid-rich high return plays. This resulted in 41% liquid production growth.

Fort Worth, Texas-based independent oil and gas company’s quarterly production of 844 million cubic feet equivalent per day (MMcfe/d) surged 35% over the prior-year quarter and 7% sequentially.

The fourth quarter average net production volumes of oil, natural gas liquids (NGLs) and natural gas were 9,863 barrels per day (BPD), 21,652 BPD and 655 MMcf per day, respectively. This constituted 78% of natural gas, while the balance was for NGL and crude oil.

Range Resources also reported its preliminary fourth quarter 2012 commodity price realizations (including the impact of hedges and derivative settlements) of $5.35 per thousand cubic feet equivalent (Mcfe). This represents a year-over-year decrease of 11% but a sequential increase of 10%. Realized prices for each commodity, per the preliminary fourth quarter estimates, were $4.22 per Mcf for natural gas, $43.56 per barrel for natural gas liquids and $82.30 for crude oil.

The company has a track record of growing production at a double-digit rate while reducing its finding and development (F&D) costs and sustaining an industry leading low-cost structure. This can be attributed to increased production from the low-cost Marcellus region.

However, with the majority of Range Resources’ reserves tilted toward natural gas, the company’s results are vulnerable to fluctuations in natural gas markets. The timid gas price environment compelled the company to reduce its exposure to natural gas drilling. Range Resources highlighted that it will trim dry gas drilling activity, mostly in northeastern Pennsylvania, where it intends to lessen its activity from four to five rigs in 2012 to one rig in 2013.

We appreciate the company’s initiative of deploying more funds toward liquids, a trend common even among its peers, ConocoPhillips ( COP - Analyst Report ) and Chesapeake Energy Corp. ( CHK - Analyst Report ) .

We maintain our long-term Neutral recommendation for the company, which retains a Zacks Rank #3 (short-term Hold rating).